Demand for IC chips manufactured by Chinese companies is on the rise and already hit a record high at the beginning of last year. Demand has been “far more than what was expected”, according to Dou Qiang, President of Tianjin Phytium Information Technology, a Chinese manufacturer of server chips. The Chinese government has intensified efforts to develop chips domestically so as to reduce reliance on the foreign semiconductor industry. That move toward self-reliance comes amid Sino-U.S. trade frictions, which drove capital into the domestic chip industry. Last year, investors poured more than CNY200 billion in the industry – much higher than the approximately CNY70 billion in 2019. The annual tone-setting Central Economic Work Conference in December highlighted the importance of “technological innovations” to solve major problems that restrict the nation’s economic development. The conference said China will ensure better implementation of key  projects targeting breakthroughs in key technologies and solutions to bottleneck problems while encouraging businesses to focus on their areas of strength and forge new cutting-edge technologies. 

Zhang Yansheng, Chief Researcher of the China Center for International Economic Exchanges, said that starting this year, China will take developing its own technology as a fundamental guiding principle. Jia Kang, Chief Economist of the China Academy of New Supply-Side Economics, said that another focus of the conference was  “bottleneck problems”, which refers to technologies at the forefront of innovation and futuristic vision, such as high-end  chips. 

China has also introduced tax incentives for chip manufacturers. Qualifying IC companies or projects that have been in operation for more than 15 years and that make 28-nanometer or smaller-scale advanced chips will be exempt from corporate income taxes for up to 10 years. Companies producing 65-nanometer to 28-nanometer chips will get five years of tax exemption and a 50% discount on the corporate tax rate for the subsequent five years. The tax incentives are expected to boost the competitiveness of the nation’s semiconductor industry on the global stage. Chinese technology companies will increasingly turn to domestic chip manufacturers. In May last year, the U.S. started requiring contract chip producers anywhere in the world that use U.S. semiconductor equipment and technology to obtain approval before producing chips designed by Huawei’s subsidiary HiSilicon.

Data from the China Semiconductor Industry Association’s IC Design Branch show that the total sales volume of China’s IC design industry is expected to grow about 24% year-on-year to reach nearly CNY382 billion by the end of 2020, accounting for nearly 13% of the total sales revenue in the global IC design market. Full-year industry data for 2020 are yet to be compiled and confirmed. China’s top chipmaker SMIC saw its revenue rise by nearly 33% on a yearly basis to a record USD1.08 billion during the third quarter of last year, after debuting on the technology-focused STAR Market of the Shanghai Stock Exchange in July. Founded in 2000, SMIC has successfully mass-produced a smartphone processor for Huawei Technologies with its 14-nanometer manufacturing process, marking a breakthrough in China’s efforts to boost its chip-making industry, the China Daily reports.

China’s economy grew by 4.9% year-on-year in the third quarter of the year, versus 3.2% in the second one, the National Bureau of Statistics (NBS) said. The country’s GDP growth reached 0.7% year-on-year over the first three quarters of this year, turning positive from a negative 1.6% in the first half, the NBS said. The Chinese economy posted a continuous recovery in the first nine months and achieved significant results in coordinating development with epidemic prevention, the NBS said in a statement. The growth in fixed-asset investment (FAI) came in at 0.8% during the January-September period, turning positive for the first time this year and compared with a 3.1% slide in the first six months. Retail sales increased by 3.3% year-on-year last month, sharply up from an 0.5% rise in August. The country registered a 6.9% industrial output growth in September, compared with 5.6% in August.

China’s actual use of foreign capital rose again in the first three quarters of the year, both in yuan and dollar terms. Foreign direct investment (FDI) in China grew by 5.2% on a yearly basis to CNY718.81 billion between January and September. In dollar terms it increased by 2.5% to USD103.26 billion. China’s early recovery from the Covid-19 pandemic, new business models and the growing size of the domestic market will prompt global companies to continue investing in China for long-term success, said Zhang Yongjun, Researcher at the Beijing-based China Center for International Economic Exchanges. FDI in China rose 25.1% on a yearly basis in September to CNY99.03 billion, the sixth consecutive month of growth.

China’s non-financial outbound direct investment in economies involved in the Belt and Road Initiative also surged 29.7% on a yearly basis to USD13.02 billion in the first three quarters. Chinese companies’ investment in these markets accounted for 16.5% of its total ODI. The share was up by 4.1 percentage points from the same period last year. China’s ODI structure continued to diversify, with investment mainly flowing into sectors such as leasing and business services, wholesale and retail, as well as petrochemicals and water conservation projects in global markets. China’s ODI fell by 0.6% on a yearly basis to CNY551.51 billion during the first nine months of the year. Chinese companies signed 518 project deals with a contract value of more than USD50 million each in the first three quarters. The total value of these projects reached USD124.88 billion.

Meanwhile, China’s auto market hit a new high for the year in September in terms of both production and sales, and the trend is expected to continue into the fourth quarter, according to the China Association of Automobile Manufacturers (CAAM). Sales rose 12.8% in September year-on-year, with 2.57 million vehicles sold during the month－China’s fifth straight month of double-digit sales growth. Sales of passenger vehicles rose 8% year-on-year in September to 2.09 million vehicles. Sales for the first nine months this year are still down 6.9% at a total of 17.12 million vehicles, as the market was hit by the Covid-19 pandemic in the beginning of the year. CAAM forecast that the fourth quarter will continue to show positive growth and expects a 7% decline on the whole year, the China Daily reports.

The Flanders-China Chamber of Commerce and Flanders Investment & Trade are organizing a webinar on “Financial support measures for doing business with China”. This webinar will take place on September 18 at 10 am CEST.

During this session, experts of the Flemish administration will provide information about the subsidies they offer for doing business with China. A second subject on financing possibilities for investments will be presented in a second session on October 1, 2020.

Program:

10:00 – 10:05: Introduction by Ms Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce/EU-China Business Association

10:05 – 10:40: New extra support measures for internationalization by Mr. Yves Roekens, Head Subsidies and Financing, Flanders Investment & Trade and Mrs. Lise Betjes, Expert Subsidies, Flanders Investment & Trade

10:40 – 10:55: SME growth subsidies for internationalization projects by Mr. Luc Royackers, Region Coach Contact Center, Agency for Innovation and Entrepreneurship

10:55 – 11:15: Q&A session

Practical Information:

Date and time: September 18, 2020, 10 am CEST

Location: Online via Zoom

Price for members: Free

SUBSCRIBE HERE

The Covid-19 outbreak in Beijing, which was first reported on June 11, seems the be over as no new cases were reported for the past nine consecutive days. However, Beijing is still under Level II emergency management, with temperature and QR-code checks performed when entering restaurants, office buildings and housing compounds. Travelers wishing to leave Beijing no longer need to show the result of a recent nucleic acid test but are allowed to travel upon presentation of a green QR-code, indicating they have not recently visited a red zone or come into contact with a Covid-19 patient. In the past four weeks, the average number of new cases steadily declined in Beijing, from an average of 22.6 in the first week, to 15.9, 8.6 and 0.9 in the following weeks. The last Covid-19 infection was reported on July 6, bringing the total of this outbreak in Beijing to 335. Less than 250 patients are still being treated in hospital. Many Beijing residents believe this trend is a positive sign that they will soon be able to return to normal life. Beijing started to gradually release about 74,000 quarantined people who were exposed to the Xinfadi market. However, Beijing’s announcement of no new infections does not mean no risks, said Pang Xinghuo, Deputy Director of the Beijing Center for Disease Control and Prevention.

In the past nine days, in the whole of China, only a few new cases were reported – all imported – in addition to a few asymptomatic cases.

The largest organized activity in the country since the outbreak of Covid-19 took place in early July as more than 10 million high school students took the university entrance examinations in one of 7,000 examination sites across the country. The exam, which usually takes place in June, was postponed till July due to Covid-19. In Hubei province, of which Wuhan is the capital, more students than usual opted to apply to study medicine.

Besides Covid-19, China also had to cope with other incidents. Beijing residents felt a slight tremor at 06:38 h. on July 12 as a 5.1 earthquake shook the city of Tangshan in Hebei province, where the devastating 7.8-magnitude earthquake on July 28, 1976 claimed at least 242,000 lives. This time there were no casualties and only limited material damage. Wuhan, where the first Covid-19 patients were identified in December last year, and the neighboring province of Jiangxi, are battling heavy rainfall and flooding of rivers and lakes.

Meanwhile, Hong Kong is battling a third wave of the coronavirus pandemic in the city. Dr Chuang Shuk-kwan, head of the communicable disease branch of the Center for Health Protection, said he was worried there would be a massive community outbreak. Hong Kong has now registered 1,323 cases with seven deaths. A care home for the elderly is at the center of the new community outbreak, as well as two restaurants. Experts point to a lack of Covid-19 testing and issues with quarantine exemptions as key factors for the new outbreak. Foreign domestic workers, mainly coming from the Philippines and Indonesia, would be required to take a Covid-19 test before coming to Hong Kong and undergo a 14-day quarantine in hotel accommodation paid for by their employers. Aircrew, who are now also exempted from quarantine, would be required to submit deep-throat saliva samples on arrival at Hong Kong International Airport. The spate of new local infections of unknown origin could push back the establishment of health codes and travel bubbles with neighboring regions, Chuang said.

Chinese media reported an outbreak of an “unknown pneumonia” in neighboring Kazakstan, and added that the disease was more deadly than Covid-19. But Kazakh authorities said the reports were inaccurate. Based on the little information disclosed thus far, it is difficult to conclude whether the pneumonia found in Kazakhstan is Covid-19 or a new pneumonia, Wang Guangfa, a leading Chinese respiratory expert at Peking University First Hospital in Beijing, told the Global Times. The World Health Organization (WHO) said it had no information about a new kind of pneumonia in Kazakhstan.

Coronavirus has been detected in China on the packaging of frozen shrimps imported from Ecuador, and online platforms and restaurants have halted imports of the shrimps. The contaminated products were found by customs authorities in Dalian and Xiamen after the testing of food imports had been strengthened.

This overview is based on reporting by the Global Times, China Daily, South China Morning Post and Shanghai Daily.