The evasion of VAT for the import of digital services from China is a growing problem for the EU. Rather than waiting for the completion of a European single digital market, loopholes for non-EU suppliers should be closed now.
China aims to fight growing risks in its financial sector with restrictions on shadow banking assets and interbank lending. But a sudden reduction of liquidity could increase rather than reduce the risk of a financial panic and dampen growth.
Air pollution is a severe problem across China, but the levels of pollution vary greatly between regions. Though still a major challenge, air quality in urban centers like Beijing and Guangzhou is improving. Cities in the industrial heartland on the other hand have seen little to no Progress.
Charlotte Roehren (via The Diplomat)
With its growing international integration, China is becoming a major actor in global health issues. Beijing has valuable experience in fighting pandemics and in providing health and medical support to Africa. The G20 Summit in Hamburg will be an opportunity for China to step up its multilateral health engagement.
Punitive levies on Chinese imports would hurt American consumers and U.S. companies that are part of the global supply chain. At the same time, they would strengthen Beijing's resolve to speed up its quest for independence from foreign technology.
(via The Diplomat)
International businesses in China struggle to comply with new regulations, which force them to store critical data within China's borders, limit the application of foreign encryption services, and require handing over customer data of terror suspects.
China sets its hopes on e-mobility. Smart and forceful industrial policies are geared toward grooming domestic brands and keeping foreign competition at bay. Governments and manufacturers in industrial countries will have to act fast to counter this trend.
China’s industrial policies aim to build national champions via acquiring technological knowledge abroad. This goal may be in line with the current worldwide wave of economic nationalism, but it is likely to collide with the strategic aims of increasingly globalized Chinese companies.
In the French election campaign, trade with China and Chinese investment raise similar controversies as in the U.S. last fall. Even if a moderate candidate wins, France is likely to adopt a tougher stance vis-à-vis China.
The U.S. withdrawal from TPP and TTIP leaves the EU as the main advocate of high regulatory standards in international trade agreements. The Trump administration’s anti-trade rhetoric may have created an opening for Brussels to get concessions from Beijing and to bolster its position through agreements with other Asian countries.
In the absence of U.S. and European leadership, China is emerging as the world’s best hope in the fight for climate change. Despite tremendous near-term challenges, Beijing’s political commitment and forward-looking policies could turn China into a model for building an alternative energy economy.
As China imposes tighter controls on capital outflows, China’s global M&A activities may decelerate. However, German companies are likely to remain attractive targets for Chinese buyers for strategic, geopolitical, and business reasons.
Interview with Philippe Le Corre (via Young China Watchers)
As the recent surge of investment from China has fueled heated debate in Europe, Chinese investors struggle with the challenge of becoming a part of the European corporate landscape. Young China Watchers spoke about this dilemma with Philippe Le Corre, visiting fellow in the Center of the United States and Europe at Brookings Institution, and author of a new book on "China's Offensive in Europe."
(via The Diplomat)
Berlin wants to manage the geopolitical implications and to ensure the economic sustainability of China’s pet Project.
US President-elect Donald Trump has continued branding China as a currency manipulator – accusing the country of keeping the yuan low to help Chinese exports and harming jobs in the US. But in fact China’s currently intervenes in the opposite direction to prevent a weakening of the yuan – supporting American Jobs.
Government intervention has so far averted a crisis in China’s booming property market. But local and central efforts to prevent bubbles from building up have created new risks for the economy.
The EU should speed up negotiations about a Bilateral Investment Treaty with China. With US trade policy in limbo after the election of Donald Trump, there is an opportunity for Brussels to move ahead with Beijing.
Central European countries vie to position themselves as transit hubs in China’s ambitious Eurasian trade corridors. The enthusiasm is tempered by concerns that the new transportation lines will ultimately increase the region’s trade deficit with China.
European efforts to build up ASEAN as a strategic partner are thwarted by Beijing’s increasing economic and diplomatic influence on individual South East Asian governments.
Several studies show the correlation between China’s growing impact on the world’s economies and political populism in the US and European societies.
China’s leaders place high hopes on the vibrancy of the economy’s service sector, but in reality it has not been able to fill the void left by the decline of manufacturing. The inability of services to pick up the slack in turn creates a temptation for the government to delay overdue structural reforms while maintaining a reliance on investment-driven growth.
At first glance, China is not a factor in this year’s US presidential election, despite Donald Trump’s occasional efforts to make it one. Yet in the toxic brew of American politics, the economic relationship with China plays a role that seems set to grow and might increasingly poison the bilateral relationship.
The International Monetary Fund’s decision to add the Yuan to its basket of Special Drawing Rights currencies honors the Chinese currency's ongoing internationalization. The Yuan will soon play a bigger role in Asia and in financial markets for development aid. But it will take much longer for it to become accepted as a reserve currency in private markets.
There is a growing risk that China will be the origin or epicenter of global economic turbulences. To prevent negative spillover effects from homemade shocks, China has to improve the quality of economic data, set more realistic targets, improve communication and rely on market signals.