The perception that China’s urbanization is still in full swing is untrue for nearly one-third of Chinese cities, whose populations are shrinking, according to new findings by a research team from Tsinghua University in Beijing. The university used satellite imagery to monitor the intensity of night lights in more than 3,300 cities and towns between 2013 and 2016. In 28% of the cities, light intensity was reduced. China now has 938 shrinking cities, according to Long Ying, an urban planning expert at Tsinghua University, who founded and led the research group, Beijing City Lab. This is more than any other nation on earth.

The findings are indicative of declining populations and economic activity across almost one-third of the cities monitored, at a time when official economic data also shows that China is facing significant economic and demographic challenges. The problem is getting worse. Between 2000 and 2012, previous analysis showed that China had fewer shrinking cities than France, Germany, the UK and the U.S. Long told a seminar in Shanghai that he is looking forward to China’s 2020 census to see whether the trend of shrinking cities is confirmed.

The Chinese cities under the greatest pressure of shrinking include those heavily dependent on natural resources, such as the coal mining town of Hegang in Heilongjiang province. Also diminishing are cities “in the process of transformation”, such as Yiwu in Zhejiang province, once the “largest small commodity wholesale market in the world” and famous for its sprawling networks of stalls selling counterfeit goods.

Another huge problem facing China is that the urban shrinkage identified in images beamed back from outer space is going unnoticed by those planning cities on the ground. The country’s city planners, which take orders from municipal authorities, are still drawing up plans based upon the assumption that China’s urban areas will grow indefinitely, the South China Morning Post reports.

The rapid growth of mobile payments in China has brought about a decline in bank self-service terminals including automatic, video and smart teller machines, initiating industry transformation. As of the end of 2018, the number of ATMs at banks nationwide dropped by 17,800 quarter-on-quarter to 1.11 million. The average number of ATMs per 10,000 people also fell 1.6% from the previous quarter to 7.99, said the latest report on the overall operation of payment systems by the People’s Bank of China (PBOC), the central bank. The decrease in ATM numbers triggered a decline in the performance of several companies principally engaged in the manufacturing, distribution and operation of such devices.

Beijing ATMVI Technology Co, a designer and manufacturer of kiosks, enclosures and housing for ATMs, disclosed preliminary earnings estimates on February 28, announcing that it posted a 32.52% decrease in operating income year-on-year in 2018 and a CNY6.99 million net loss attributable to shareholders. “During the reporting period, the deployment of bank self-service terminals, including ATMs, kept slowing down due to the rapid development of mobile payments. It caused a slump in demand for related products and services of the company and a large decline in our business income,” the company said. Guangzhou Kingteller Technology Co, another major ATM manufacturer and operator in China, also posted a 32.77% drop in operating income year-on-year in 2018 and a CNY96.22 million net loss. ATM supplier GRGBanking also stepped up efforts for transformation and upgrading, focussing on biometrics, smart video, smart voice and big data.

Contrary to waning demand for ATMs, mobile payments have been growing fast. Last year, banking institutions handled 60.53 billion mobile payment transactions in China with a total volume of CNY277.39 trillion, increasing by 61% and 37% year-on-year respectively. According to a survey by the Payment and Clearing Association of China last year, 80% of mobile payment users used the service every day. For 43% of the users, the average amount for a single payment was below CNY100. About 96% of the users chose mobile payments because of its convenience, and more than 80% favored the service as they no longer need to carry cash or bank cards. Nearly 46% of users said mobile payments will eventually replace cash, the China Daily reports.

China will implement measures to cut the value-added tax (VAT) rates, making sure that tax burdens on all industries will only go down, not up, the Chinese government decided at an executive meeting presided over by Premier Li Keqiang. This year’s government work report set out the plan for larger-scale tax cuts, including lowering the VAT rate in manufacturing and other industries from 16% to 13%, and the VAT rate in transportation, construction and other industries from 10% to 9%. A host of concrete measures were decided upon at the meeting to achieve such targets, which will be enacted from April 1.

“The planned VAT cuts must be delivered in no time. Its implementation must be closely monitored to ensure that tax burdens are meaningfully reduced in the major industries and lowered to various extents in some industries. All industries will see their taxes go down, not up,” Premier Li Keqiang said. “In case of increased tax burden due to inadequate deductions in certain individual industries, the government will work out targeted solutions,” he added. In the government work report, Li said the government’s moves to cut tax on this occasion aim to strengthen the basis for sustained growth while also considering the need to ensure fiscal sustainability. It is also a major measure to lighten the burden on businesses and boost market dynamism.

In 2018, taxes and fees levied on enterprises and individuals were reduced by around CNY1.3 trillion as a result of multiple preferential tax policies introduced by the government. The meeting also decided on adjustments to the export tax rebate rates of certain goods and services and to the tax deduction rate of purchases of farm produce. It was also decided to increase transfer payments to local governments, focusing on supporting the central and western regions and counties and prefectures in difficulty. “The share that goes to enterprises in the national income distribution needs to be increased to boost market vitality. This will help keep employment stable, expand tax sources and make public finance sustainable,” Li said, as reported by the Shanghai Daily.

Five premium automotive brands have cut the prices of their models sold in China after the announced of a reduction of 3 percentage points in VAT in the manufacturing sector. Mercedes-Benz cut prices by CNY7,000 for a smart-branded car to CNY64,000 for a Mercedes-AMG. Its move was followed by BMW and Volvo, which offered similar cuts. Jaguar Land Rover slashed the prices of selected Range Rover models by CNY85,000. Ford’s premium arm Lincoln cut the prices of its models by up to CNY20,000. Car sales in China, the world’s largest vehicle market, stood at 1.48 million in February, down 13.8% year-on-year, the eighth month of decline in a row.

Bank of Beijing (BOB) has received the necessary board approvals for the establishment of a joint venture bank with Netherlands-based ING Bank, in which the latter will be the majority partner. With a total investment of CNY3 billion, the forthcoming joint-venture bank, which is still awaiting regulatory approval, may become China’s first commercial lender in which a foreign shareholder has a controlling interest. ING Bank will hold a 51% stake, and Bank of Beijing 49%. Drawing on the experience of ING Bank in the successful development of direct banking services, the joint venture will build a brand in the area of digital banking with the help of financial technologies and try to become a benchmark to further open up China’s financial sector to foreign investors.

Different from the traditional counter-based model, the direct banking model uses e-channels to provide financial products and therefore has no restriction of time, regions or geographic branches. “The decision to set up a joint-venture bank is a sensible commercial choice for both parties in the context of the further opening up of China’s financial sector,” said Xiong Qiyue, Research Fellow at the Institute of International Finance at the Bank of China (BOC).

ING Bank developed a strategic alliance with BOB in 2005 by acquiring a minority holding. ING Bank held a 13.03% stake in BOB as of September 30. For ING, the aim of establishing a digital banking joint venture with BOB is to gain a share of the online banking market in China, where the combination of technology and financing is creating new business opportunities. “The opportunity we see with Bank of Beijing is to set up a joint venture in the regulatory environment and excel in customer service through mobile phones,” said Ralph Hamers, CEO of ING Group, in an interview with China Daily last year.

The Flanders-China Chamber of Commerce organized the China Immersion Programme: ‘Negotiating with the Chinese and China Entry Strategies’ on 19 March in Ghent.

Mr. Bo Ji, Chief Representative Europe & Assistant Dean Global Executive Education of the Cheung Kong Graduate School of Business, was the keynote speaker.

Attendees gained a comparative understanding of the practical Chinese and Western approaches to negotiation as well as sharpened their own negotiation skills through learning from multiple case studies and real-life contexts. Furthermore, they will identified the cultural roots behind business scenarios, which will provide them with the knowledge to reshape their strategies and tactics. The attending business leaders also learned to optimize their approach to a win-win value creation through negotiating with the Chinese to achieve a sustainable partnership.
There was a comprehensive discussion of Chinese culture and the business environment in China. There was also a large selection of real-life case studies of Western companies that have failed in China, which could deepen understanding of how to avoid mistakes. Finally, the course aimed to find the right China entry strategies and business models.

The morning session focussed on “Negotiating with the Chinese: Cultural Roots & Practical Recommendations”, while the afternoon session discussed “Win in China: Business Models & China Entry Strategies”.

Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce, presented the opening remarks and introduction. Q&A about China and a networking session concluded the event.