World Newsletter

10 August 2020



China's senior diplomat, Yang Jiechi, urged Washington on Friday to avoid strategic miscalculation about China-US relations and work with Beijing to bring bilateral ties back to the right track.


Yang, a member of the Political Bureau of the Central Committee of the Communist Party of China and director of the Office of the Foreign Affairs Commission of the CPC Central Committee, made the remark in a signed article that focuses on the Sino-US relationship amid growing tensions between the two largest world economies.


In the article, Yang reviewed the development of bilateral ties since China and the United States established diplomatic relations in 1979 and the contributions that generations of Chinese and US leaders have made in normalizing ties and promoting the countries' cooperation. He also highlighted the political foundation of China-US ties.


He rejected assertions made by some US politicians recently that the US policy of engagement with China had become a total failure, calling such allegations a "fanfare for ideological confrontation and the Cold War mentality".


"They are nothing short of discrediting the enormous efforts and contributions made throughout decades by people across the two societies to promote the development of China-US relations," Yang said.


The diplomat included a long list of achievements through bilateral exchanges and cooperation in various fields as well as their teamwork in the settlement of regional and international issues. He said China-US relations have made historic progress despite ups and downs along the way. "It has brought enormous benefits to the two peoples and contributed significantly to world peace, stability and prosperity."


Yang said that what has happened shows that no obstacle is insurmountable for China and the US. "The key lies in a true commitment to mutual respect, equality and seeking common ground while shelving differences. It lies in the courage to take up the responsibility for history and the people."


Yang stressed that issues related to Taiwan, the Hong Kong Special Administrative Region and the Tibet and Xinjiang Uygur autonomous regions concern China's sovereignty and territorial integrity and bear on China's core interests. "We urge the US side to handle relevant issues properly with prudence and immediately stop interfering in China's internal affairs."





The People's Bank of China will likely shift its policy focus to long-term economic resilience from short-term pressures, as the central bank seeks to navigate the economy through protracted challenges, experts said on Friday.


The comments came on the heels of the second-quarter monetary policy report released by the PBOC on Thursday, in which it has replaced the words strengthening "countercyclical" adjustment in the first-quarter report with improving "cross-cyclical" policy design when it comes to future policy direction.


Unlike countercyclical measures that smoothen the ups and downs within a business cycle, a cross-cyclical policy framework focuses on dealing with longer-term issues faced by the economy that extend into several cycles, they said.


"To achieve a long-term balance between growth stabilization and risk prevention, the PBOC will improve cross-cyclical policy design and adjustment while coordinating the goals of stabilizing growth, safeguarding employment, adjusting economic structure, preventing risks and controlling inflation," the report said.


The policy orientation to long-term goals comes as economic challenges have increased and are set to remain for a long time, said the report. External instabilities have intensified as the global economy is mired in a deep recession and the COVID-19 pandemic is yet to run its full course, even as geopolitical tensions are rising. Structural and institutional problems still linger in the domestic economy, it said.


Song Xuetao, chief macroeconomic analyst with TF Securities, said the cross-border monetary policy framework will help China overcome the mid-to long-term challenges as it will help preserve policy space and rectify structural problems such as property bubbles and implicit debt.


"The room for conventional monetary policy still exists in China but has narrowed. The central bank should set aside some policy space to deal with medium-and long-term issues," Song said.


The macro leverage ratio has risen as monetary policy eased in the first half to counter the epidemic impact, the PBOC said. It also highlighted the drawbacks in adopting very low interest rates and pledged more targeted efforts to help ailing small businesses and steer the monetary policy toward economic restructuring.





The US faces a multitude of challenges including the COVID-19 pandemic, with a significant number of businesses either facing closure or having closed, and unemployment being at an all-time high.


To turn the tide and stimulate the economy, the Federal Reserve has lowered the interest rate to zero, and more aggressively promoted quantitative easing. Which have increased the Fed's asset liabilities from a steady $4 trillion since 2014 to $7 trillion in July in just three months.


By the end of this year, the asset liabilities are expected to further increase to $8.5 trillion, which would be a jump of $4.5 trillion since the beginning of 2020. Such a strategic monetary move is akin to a modern version of alchemy. So long as the US dollar's exchange rate remains sufficiently strong, and the interest rates and prices remain stable, the world would accept unlimited quantitative easing by the US.


Using the above as preamble, the US can print more currency notes, and keep borrowing to finance its debt. And when the debt expires, it can simply "print more US dollar bills" to pay its "debtors". In this way, the US can avoid repaying the principals and interests of old debts. This means the US can "raise funds" to stimulate its economy almost without any constraints.


While QE policies may have proven successful in the past, this time around the US administration has failed in its endeavor. Many countries' central banks and institutional investors, including the People's Bank of China, are no longer willing to purchase US bonds in bulk. They are reluctant because the impact of the pandemic on the global economy is no longer as serious as it was a couple of months ago. In fact, some economies have started to rebound, which has decreased the demand for more US dollars or US debt as a hedge−and a number of countries have been losing confidence in dollar assets.


For most of the second half of the 20th century, US dollars were printed with the words "Gold Coin", meaning the greenback was backed by gold. But since 1971, when the US terminated the guarantee of exchanging dollars for an equivalent amount of gold, "Gold Coin" has been replaced by "Federal Reserve Note" on dollar bills, making the dollar "only" an IOU. Since the dollar is no longer backed by gold, the phrase "In God We Trust" has replaced "In Gold We Trust". So now if a person wants dollar bills redeemed, he or she has to approach the Almighty.





China's timely resumption of its industrial production and the gradual return of overseas demand have helped put the country's foreign trade recovery on a firm footing, and the trend is expected to continue in the second half of the year, experts and business leaders said on Friday.


The comments came as China's foreign trade volume rose by 6.5 percent on a yearly basis to 2.93 trillion yuan ($412.1 billion) in July, according to the General Administration of Customs.


China's exports beat market expectations in July, surging by 10.4 percent year-on-year to 1.69 trillion yuan, while the country's imports grew by 1.6 percent to 1.24 trillion yuan.


Experts called the July trade data an encouraging sign that the country's trade policy measures have produced positive results. Despite the COVID-19 pandemic and other global economic uncertainties, China's new "dual-cycle" development pattern proposed by the central leadership, the country's potential for consumer purchases and its fast-growing digital economy will also help strengthen the country's foreign trade, they added.


The advantage for China's foreign trade lies in the integration of processing and manufacturing, general trade and cross-border e-commerce, which has been conducive to stabilizing the nation's industrial chain and easing external pressure over the past several months, said Wei Jianguo, vice-chairman of the China Center for International Economic Exchanges.


He said that China's foreign trade, backed by well-developed rail and maritime shipping networks, has seen new formats since January. Among them, cross-border e-commerce has developed notably, and many export-oriented firms have increasingly relied on this method to gain new orders from both developed and developing markets.


The country's foreign trade reached 17.16 trillion yuan, dropping 1.7 percent year-on-year in the first seven months of this year, representing a narrowing by 1.5 percentage points compared with the decline in the first half, customs officials said.


In the meantime, China's foreign trade with the Association of Southeast Asian Nations, its largest trading partner, jumped 6.6 percent year-on-year to 2.51 trillion yuan in the first seven months, while its trade volume with the European Union grew 0.1 percent on a yearly basis to 2.41 trillion yuan.


Guo Yongbin, an analyst at Everbright Securities, said China's exports growth in July was stronger than expected and the gradual resumption of business activities in overseas markets has helped drive the growth.





Nearly 400 A-level tourist attractions in Hubei province will offer free admission to domestic tourists from Saturday to the end of this year as a token of gratitude for the nation's assistance to the province during the COVID-19 outbreak, a senior official said on Friday.


Zhang Wenbing, vice-governor of Hubei province, said tourists from low-risk areas in China can visit the tourist sites after they book the free tickets online with their real names, show their health QR codes and have their temperatures checked.


An online booking platform for the tourist attractions is expected to begin operating on Saturday and the number of visitors allowed is capped at 50 percent of the maximum daily capacity, he said at a news conference.


Tour groups from around 10 provincial regions have visited the province, raising confidence in reviving an industry marred by the pandemic, he said.


More than 1,000 travel agencies and over 350 star-level hotels in the province have decided to join the government-subsidized campaign by offering discounts, Zhang said.


Liu Dongru, deputy director of the Hubei Health Commission, said the province lowered its emergency level for the pandemic from the second-to the third-highest on June 13.


The province conducted nucleic acid tests on 2.71 million people in July, while 335,000 environmental samples from public areas, frozen food production sites and sales outlets had also been tested as of Thursday, with all results negative, he said.


"All of this proves that Wuhan is a safe place to travel and Hubei people are all healthy people." Liu said.


Online searches for tickets at Hubei's tourist sites tripled after the new policy was issued on Friday, according to Beijing-based online travel-service provider Qunar.


Searches for hotels in the province's capital, Wuhan, grew by 40 percent, and searches for one-day tours of the city grew by 20 percent compared with last week, the platform said.





China expressed firm opposition on Friday to executive orders issued by United States President Donald Trump that would ban the use of social media apps Tik-Tok and WeChat in the US, calling the move "an outright hegemonic act".


"With the pretext of national security, the US is abusing the use of state power to wantonly oppress non-American enterprises," Foreign Ministry spokesman Wang Wenbin told reporters at a regular news briefing in Beijing.


The orders, announced on Thursday and effective in 45 days, will ban US transactions with the Chinese owners of the two popular apps. It is the latest move in the US administration's escalating crackdown on Chinese-owned apps over alleged national security concerns.


Wang said the US was engaging in willful political manipulation and oppression by sacrificing the interests of US users and companies, and it will only lose its moral high ground with a damaged image and a deficit of trust.


Noting that many people in the US and from the international community have raised criticisms and doubts about recent US actions, Wang said that China urged the US side to heed rational voices, correct its wrongdoing and stop politicizing economic issues or oppressing related companies.


"We urge the US to provide a fair, just and nondiscriminatory business environment for companies of all countries," he said.


In a statement released on Friday, TikTok's parent company, ByteDance, said it was "shocked" by the order and will take legal action in US courts if it is not treated fairly by the US government.


"We will pursue all remedies available to us in order to ensure that the rule of law is not discarded and that our company and our users are treated fairly," it said.


The company reiterated that it had never shared users' data with the Chinese government or censored content at Beijing's request.


Wang also said that China had supplied 26.5 billion masks, 330 million protective suits, 31 million pairs of goggles, 610 million pairs of surgical gloves and 11,500 respirators to the US as of Sunday.


"We hope that the US will combat the COVID-19 pandemic at an early date," Wang said, adding that China hopes that a handful of US politicians will stop politicizing the virus or shifting blame to China.





More than 70 percent of Chinese surveyed had abnormal fundus - the surface area at the rear of the eye - which might lead to impaired vision or blindness without intervention, according to a report.


Those aged over 40 and who have high blood pressure, diabetes or are overweight showed higher incidences of the abnormality, the report added.


The data was collected from over 1 million Chinese aged 20 years and older across 23 provincial-level regions from May 2018 to July 2020, who underwent fundus imaging scans using artificial intelligence during medical examinations.


The aim is to evaluate public eye health, predict potential diseases and give guidance on better health management, according to iKang Healthcare Group, which released the report on Thursday.


The most common abnormalities included refractive errors of 40.6 percent, retinal blood vessel abnormalities of 39.9 percent and yellow spot abnormalities of 33.7 percent. Interviewees working in IT, education, finance, gaming and academic research showed the worst results, according to the report.


Eye health is a major public health and social issue related to people's livelihoods, according to China's 13th Five-Year Plan (2016-20) for eye health.


It's also a big challenge in the country, as the population is aging and more young people are exhibiting vision problems, said Wei Wenbin, vice-president of Beijing Tongren Hospital.


"It's important to do early screening, early intervention and long-term supervision with the help of AI and information science, to optimize personalized health management."





A two-month-long Great Wall cultural festival will open in Beijing Saturday, which will allow tourists to visit the Badaling section of the ancient wall on weekend nights.


Visitors can reserve night tours of the Badaling Great Wall every Friday and Saturday during the festival that will end on Oct 7, said Chen Mingjie, head of the Beijing municipal administration of cultural heritage, said at a press conference held in Beijing Friday.


An evening gala of the Mid-Autumn Festival, a cultural fair on Chinese traditional costumes and online lectures including one about cultural heritage protection that is co-organized by the Hadrian's Wall of Britain, are also scheduled during the festival, said Chen.


The Great Wall, with a total length of more than 20,000 km, is a UNESCO World Heritage Site and consists of many interconnected walls. Beijing has a total of 520 km of Great Wall sections within its territory, of which, the Badaling section is the most visited.





There is nothing so agonizing to the fine skin of vanity as the application of a rough truth. - Edward Bulwer-Lytton


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