China maneuvers to boost home prices as cycle peaks

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In order to raise home prices ahead of the customary high period in late September and October, China’s economic officials have decided to reduce transaction numbers and mortgage interest rates for consumers.

According to a joint statement released by the People’s Bank of China( PBoC ) and the National Administration of Financial Regulation( NAFR ), the minimum down payment ratio for first-time homebuyers will be lowered from 30 % to 20 % and that for second, time buyers, it will decrease from 40 % to 30 %. & nbsp,

The minimum and nbsp mortgage rate for second-time homebuyers is set at 20 basis points higher than the loan prime rate( LPR ), which is the same as the initial rate. A schedule point is one tenth of a percentage point.

Analysts claimed that the new regulations, which went into effect on Friday, may help entice new homebuyers to enter the industry in first – and second-tier places, but not in lower tier people. Additionally, they claimed that the procedures would harm Chinese banks’ profit margins.

On Friday, A-shares of the Bank of China fell 1.07 % while Industrial and Commercial Banks’ shares fell 1.08 percent. China’s Agricultural Bank experienced a 0.58 percent decline. As a super storms known as Saola approached the capital, Hong Kong’s stock markets shut down.

The Shanghai Composite Index increased by 0.43 % on Friday to close at 3, 133. & nbsp, It came after the Caixin / S & amp, P Global manufacturing purchasing managers’ index( PMI ) rose from 49.2 in July to 51.0 in August, surpassing analysts’ predictions of 48.1 and representing the highest reading since February. A reading above & nbsp, 50, indicates expansion, whereas a reading below & bnp.50 indicates contraction.

In the meantime, the PBoC announced its intention to release liquidity totaling about$ 16.4 billion into the banking system by reducing foreign exchange reserve requirement ratios( RRRs ) by 200 basis points from 6 % to 4 %. & nbsp,

On September 15, the RRR cut, which supports the Chinese yuan and is targeted at & nbsp, will go into effect. & nbsp,

As of late August, Renminbi had depreciated by 5.3 % this year, reaching a value of about 7.29 yuan to one US dollars. The price of the currency increased by 0.4 % to 7.26 on Friday.

First payment

Besides their Thursday night speech on changes in lower payments and rates, the PBoC and NAFR said in another assertion that first – time homebuyers who had already borrowed mortgage loans before August 31 can restructure their rates with banks starting September 25.

” Many of the existing homeowners, who are having their mortgage rates at 5 – 6 %, will be entitled to slash their rates by more than 100 basis points”, said Zhang Dawei, chief analyst at & nbsp, Centaline & nbsp, Property Agency Ltd.” People who borrowed one million yuan ( US$ 137, 798 ) for 30 years can lower their monthly mortgage payment by 839 yuan from 5, 995 to 5, 156 yuan”.

Tang Guanghua, head of research at Shenyin & amp, Wanguo Futures Co Ltd, said the average interest rate on mortgage loans borrowed in the first half of this year is 4.18 %, compared with 5.15 % for those borrowed between 2019 and 2022. Tang said mortgage & nbsp, deals involving about 25 trillion yuan, or two – third of all the outstanding mortgage loans of 39 trillion yuan, will have to be renegotiated.

An unknown director for the PBoC told the media that the mortgage rate reduce will not only help homeowners save money, it will also prevent people from making first repayment, a problem that has troubled Chinese banks over the past two years. & nbsp,

Economic experts said since China’s home bubble burst in late – 2021, Chinese banks have slowly lowered their loan rates. They said many owners who were taking out mortgage loans at levels of around 5.8 % two years ago wanted to repay their loan debts earlier as they were angry that they could not like the lowered prices, which are close to 4 %.

They also pointed out that two years ago, people was like an interest rate of 6 – 10 % by investing in money management goods in China and use this income to pay their loan. They said that, with the yields of most success control products now falling below the mortgage rates, many people prefer to have early payments.

” Some Chinese lenders are very concerned about this flood of early payment”, He Yi, a Beijing – based financial journalist, says in an article published earlier this year. & nbsp,” Loan loans are one of the highest value property for lenders. A big wave of early payment will make lenders drop their high – quality property”.& nbsp,

He said many people seeking to make early repayment were asked by their & nbsp, businesses to go to their branches. He said some folks had waited for several weeks before their apps were handled.

” In the first quarter of 2021, individuals were also queuing up in front of banks to borrow loan money but now they are queuing up for payment”, He said.

The PBoC suddenly announced on Thursday that people could revise their loan deals with bankers from September 25. It means people will finally enjoy lower mortgage rates and be less determined to have early settlement.

Home and regional debt problems

Since April, the & nbsp, situation of China’s home markets has deteriorated as property developers cut selling prices to boost sales and replenish their cash for debt repayment. However, as more people experience unpredictable income, the total demand for real estate has decreased.

According to the National Bureau of Statistics( NBS ), 44 of China’s 70 largest cities saw year-over-year declines in new home prices in July. Out of the 70 locations, 42 saw a decrease in the cost of new homes in June.

It will be more challenging for property programmers to improve their financial situations as a result of the nation’s declining real estate prices, according to some academics. They claimed that the real estate problems would also depress property sale markets and exacerbate local governments’ debt issues.

They claimed that raising house prices and boosting homebuyer trust are the only ways to put an end to both problems.

According to Tang, the most recent reduction in maximum down payment ratios will help stabilize the real estate industry and drive up house prices in first – and second-tier places.

However, it is still unclear whether this action will increase real estate prices in lower-tier places. & nbsp,

In fact, early this year, Heze, a prefecture-level city in Shandong province( a fourth-tier city ), lowered the minimum down payment ratios for first-time homebuyers from 30 % to 20 %. However, the action did not have any impact.

Many real estate developers have reduced their selling prices by hundreds of thousands or even millions of renminbi, but their sales have not increased. A Hunan-based house author claims in an article that a decrease in the lower payment ratio will have no effect. All consumers are aware that if they make a down payment of 20 % rather than 30 %, they will eventually have to pay more attention.

He claims that many homebuyers won’t provide the markets until house prices start to rise once more.

Read: China’s corporate earnings are harmed by home and regional debt.

@ jeffpao3 Follow Jeff Pao on Twitter at & nbsp.

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Fukushima: China’s anger at Japan is fuelled by disinformation

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This picture shows a sign reading "Suspend the sale of all fish products imported from Japan" an area of Japanese restaurants in Beijing on August 27, 2023shabby Graphics
Derek Cai
Singapore-based BBC News

Hundreds of angry telephone calls, protest threats, and rocks thrown at colleges are just a few examples of how Chinese people have expressed their displeasure with Japan in recent weeks.

What was the accelerator? Japan’s discharge of treated waste water into the ocean from the Fukushima nuclear herb that has been damaged.

The majority of professionals concur that the effects won’t be significant, but China has vehemently objected to the launch.

And in China, misinformation has only served to increase fear and anxiety.

According to a report by the UK-based data research firm Logically, which seeks to combat misconceptions, the Chinese government and state media have been actively pursuing the launch of waste water in disinformation campaigns since January.

As a result, well-known Chinese media outlets have frequently questioned the research of the discharge of nuclear waste water.

Since the fluids was released on August 24 and stoked people ire, the speech has only gotten worse.

A Chinese elementary school in Qingdao recently received a rock, and some eggs were thrown into the grounds of another Shandong school. This year, a cement was also thrown at the Chinese embassy in Beijing.

Tokyo has demanded that Beijing ensure the safety of its members, despite the fact that there have been no reports of injured Chinese nationals or damaged businesses in China.

Yet its people in China were cautioned by Japan’s foreign government to exercise caution and refrain from speaking Japanese loudly in public.

In response to the demand, China’s foreign ministry spokesperson Wang Wenbin remarked that Beijing had taken into account the” so-called issues of the Japanese side” and that” China always protects the security and legitimate rights and interests of foreigners in China, in accordance with rules.”

An aerial view shows the Fukushima Daiichi nuclear power plant, which started releasing treated radioactive water into the Pacific Ocean, in Okuma town, Fukushima prefecture, Japan August 24, 2023, in this photo taken by Kyodo.

Reuters

Logically’s information also revealed that state-owned media have been running paid advertisements about the dangers of the waste water launch in numerous nations and languages, including English, German, and Khmer, without caveats, on Facebook and Instagram.

Hamsini Hariharan, a Naturally expert from China, told the BBC,” It is quite obvious that this is politically encouraged.” She continued by saying that false information obtained from resources connected to the Chinese government had heightened the public protest.

China has experienced numerous controversies relating to food security, so this isn’t about that. The US and its supporters propagate an unbalanced world order, and the Chinese narrative has frequently positioned itself as an” different head” in it, she noted.

Weibo posted dozens of images of terrified masses purchasing enormous sugar sacks in advance of the Fukushima water release on Chinese social media. Some were concerned about a contaminated supply in the future. Others mistakenly thought that water shielded them from rays.
In an obvious attempt to capitalize on the frenzy, a Shanghai restaurant advertised” anti-radiation” foods with false claims that they would lessen skin damage and cell renewal. Why did I spend 28 yuan on a tomato with seasoning, asked grimly on social media?

However more people online have criticized the Fukushima release in and of itself. They also made fun of Japan’s strategy to demonstrate the protection of its shellfish, which featured a picture of Prime Minister Fumio Kishida consuming what he described as” delicious” fresh fish.

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Some people compared notes on which Chinese cosmetics to stay away from. One person shared a picture of her returning Shiseido products, the top cosmetics company in Japan. ” Profit them all, don’t buy, please!” she remarked.

Shiseido does not use water in its makeup, a spokesman for the company responded.

Japan’s borders have also been affected by the rage. Since last Thursday, numbers with Taiwanese dialing codes have been making a barrage of aggressive phone calls, according to local businesses in Tokyo and Fukushima.

It is also anticipated that Japan’s business will suffer. China, Japan’s largest seafood importer, immediately imposed a ban on all underwater goods from the nation after the water was discharged.

In response, Mr. Kishida offered a rescue package that included measures to boost domestic consumption and locate innovative international markets to aid Japan’s fish industry.

This month, Tokyo even made a suggestion that it might complain about the restrictions to the World Trade Organization. According to Asian media, Mr. Kishida has asked Toshihiro Nikai, who is regarded as the Liberal Democratic Party’s most pro-China lawmaker, to travel to China to settle the dispute.

Since Japan’s first 1900s invasion of China, Beijing and Tokyo have had a tense relationship. Recent developments haven’t helped sometimes, as Beijing’s assertive conflict with US allies, including Japan, in the area.

Due to a marine territorial dispute between the two nations, hordes of aggressive protesters targeted Chinese businesses in China in 2012.

There have been oppositions from China, South Korea, and Hong Kong against the Fukushima nuclear plan

shabby Graphics

To Beijing’s chagrin, Japan and the US and South Korea issued a joint declaration this month denouncing what they referred to as” dangerous and extreme behavior” by China in the area.

China has continued to be incensed over the Fukushima water launch despite receiving approval from the UN’s nuclear watchdog.

The International Atomic Energy Agency ( IAEA ) concluded that the impact on people and the environment would be negligible after approving Japan’s plan in July. The plan was announced two years prior and caused a stir throughout Asia.

A total of 1.34 million tonnes of treated water — enough to fill 500 Olympic-sized pools — will be released into the Pacific over the course of the next 30 years. Since the Fukushima plant was destroyed by the tsunami in 2011 and a nuclear panic resulted, it has accumulated.

Beijing, however, branded the strategy as foolish and charged Tokyo with treating the sea like a” personal sewer.”

The Chinese government has also been split on the matter. Additionally, various neighbors, such as Hong Kong and South Korea, which have outlawed seafood from the waters surrounding Fukushima, have expressed their worries. Despite protests in Seoul, the government has backed the spark and has made an effort to refute untrue states that have gone viral on social media.

Thoughts are even divided within the medical community. Others have claimed that more research is required even though some claim the energy level is too small to be dangerous.

Kelly Ng provided extra monitoring.

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China’s xFusion to invest US6m over 3 years in Penang

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Build its maiden Global Supply Center in partnership with NationGate
Annual capacity of 150k units of computing equipment including GPUs

China based provider of computing power infrastructure and services xFusion International Pte Ltd has chosen Malaysia to house its maiden Global Supply Center with plans to invest up to US$366 million (RM1.7 billion)…Continue Reading

Goodbye from Southeast Asia Globe – Southeast Asia Globe

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We want to start this letter by saying it’s a privilege to do what we do. Even on days when the news is slow or the work has piled up, there’s not a moment that passes where we’d rather turn our backs on the journalistic pursuit.

So it’s with a heavy heart today that we must announce the suspension of publishing at Southeast Asia Globe, effective at the end of September. This is not a decision made lightly, nor as a reflection of the work of our staff, but rather the painful outcome of intensifying financial challenges unfortunately common to our industry.

We’ll touch on some of those in this letter. But first, we want to say these past 16 years have been a fantastic run.

We embarked on this journey in 2007 with the idea of bringing an international style publication to Cambodia, and we achieved our aim. From high quality stories and reporting on Southeast Asia and Cambodia showcasing world class photography and design, we made a commitment to turn out a premium, 100-page magazine every month. We maintained that commitment for 12 years without interruption, expanding to new markets and distributing the magazine in eight countries throughout the region by 2014.

A selection of Southeast Asia Globe magazine covers from over the years.

With the rise of digital publishing and social media paired against the mounting costs of print and distributing magazines, we closed out the print version of Globe with our December 2018 edition. We then turned our attention to building the Globe you know today as a digital platform. From the start, we had embarked with a mission of sharing stories from around the region that promote a more informed, inclusive and sustainable future to a readership that cherishes well-written and designed articles. Looking back, we believe we’ve stayed true to those principles while honouring the standards we set at our founding.

Since moving the publication online, we’ve seen tremendous growth of our audience. Readers come to our website every month from more than 100 countries – something that would have been impossible to achieve in print. The shift to a digital-only publication model coincided with the launch of our membership programme and other services to boost revenue and fill the holes left by the loss of print-based advertising revenues. 

The building out of the subscription model and some of these other paid services, also coincided with the onset of the Covd-19 pandemic, presenting an important means of adapting to the new realities of the media market. But it also side-tracked us from focusing on the publication as we urgently worked to create new income and stay afloat. Upon reflection, this juncture was a critical moment in the Globe’s arc. 

Though we succeeded in diversifying the business side of our operations to create incomes that funded our journalism, this diversification also led to a larger team and increased costs. The shift diverted important resources away from nurturing the publication and, ultimately, growing the membership model. This most certainly was not the only factor leading to today’s announcement, but it was an important one along the way.

Beyond the challenges faced during the Covid-19 pandemic and the trajectory we set from its consequences, the current reality is that it has become increasingly difficult to pay competitive salaries, making it impossible to grow. We’re one of the few publications that has remained financially and editorially independent in a difficult market and challenging media environment. With that, we’ve never relied on big donors or large grants, instead focusing on the support of our readers through memberships while providing services to clients through our parent company, Globe Media Asia.

Globe Media Asia team
The Globe Media Asia team at a staff event in 2022.

While ultimately we failed to make the Globe sustainable, this important fact has allowed us to keep our reporting both independent and uninfluenced.

We’re proud of this fact, but without some level of financing and readily available capital, the resources needed to secure the Globe as a sustainable venture are untenable, at least for now. The current economic outlook projects a situation where we continue to flounder and the entire organisation fails.  

Our accomplishments would not have been possible without the hard work and dedication of this collective team

The decision to cut Globe was extremely difficult for us to make. We take some consolation in knowing that at any given moment in the past 16 years, we were passionate and proud of our work. We believe we’ve educated, enlightened, inspired and hopefully made a tangible impact through the stories we’ve shared. This is true mostly because we’ve worked with so many amazing people over the years, both as regular members of our staff but also as freelancers and contributors, friends and allies. 

Our accomplishments would not have been possible without the hard work and dedication of this collective team. We want to thank each and every one of you out there and will be sharing a special post dedicated to you later this month.

Our collective body of work won’t be going away, and Globe will not be entirely shutting down. We will keep the website open and available – without a paywall – as we believe these stories have lasting value and meaning. For our paid subscribers, there should be no further charges made to your account. If you have any questions, please do get in touch with us by email or phone. 

Going through our archives, we hope you’ll find our reporting has helped to set the record on a time and place throughout the years. We’ll be re-sharing some of our favourite articles over the next few weeks and still have a number of exciting original pieces that we’ll be publishing throughout September. That includes more episodes of our Anakut podcast about Cambodia’s future, as well as dispatches from the country’s forests and increasingly closed political realm. 

Looking past the end of September, we’ll still be publishing new articles here and there, and will be investing some of our energies into relaunching our website focus-cambodia.com, where we plan to expand our coverage and take a more homed in and multimedia approach to covering Cambodia as it enters a new era. We’ll also be releasing a print version of Focus Cambodia magazine in early 2024. Finally, you can expect us to continue sharing updates through this newsletter, which we hope to build out as more of a micro-publication for our 50,000-plus subscribers. 

As for Globe, we hope this is not the end, but it’s certainly goodbye for now as we go back to the drawing board in search of a business model that works. We’ve learned a lot over the past few years and are open to any and all conversations with those who might be interested in working together or taking over the publication.

In the meantime, our inbox is open, so please feel free to drop us a line. We’d love to hear from you. And before we go, we’d like to say thank you again to all of our readers, partners and amazing teammates and colleagues from over the years. We could not have come this far without you.

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Philippines curbs rice prices as inflation worry mounts

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MANILA: The Philippines announced price ceilings for rice on Friday (Sep 1) to protect consumers, as the rising cost of the national staple probably caused August inflation to accelerate for the first time in seven months. One of the world’s biggest rice importers, the Southeast Asian nation is cracking downContinue Reading

UAE’s BRICS move shows global role of middle powers

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For much of the 20th century, international diplomacy was primarily molded by a global framework where superpowers held sway over most of the world’s political and economic assets. The early 1990s, however, marked a shift toward a singular dominant power structure, with the United States taking the role as global leader.

Yet today, a fresh transformation is under way, one in which a multipolar landscape positions middle powers as crucial actors.

The decision to invite six new members – Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates (all of which are considered middle powers) – into the BRICS group of economies brings substantial value to advancing economic diplomacy and political reconciliation in a rapidly changing global landscape.

Cooperation has become essential in a world grappling with shared global challenges. However, the existing framework of international relations is buckling beneath the weight of enduring and emerging geopolitical rivalries.

The rekindling of prolonged land warfare through Russia’s invasion of Ukraine shattered the notion that such conflict was consigned to history. The impending divergence in trade and technology between the US and China has far-reaching implications.

The specter of rising isolationism and protectionism looms. Meanwhile, the rapid ascent of artificial intelligence and pressing concern over food scarcity further compounds the array of issues global leaders must confront.

World is transitioning

The transition to a multipolar world order means middle powers now have an active role in shaping norms, mediating conflicts, and fostering collaboration. The complexities of challenges like climate change, health crises, and terrorism demand collective solutions, and middle powers, armed with diplomatic acumen and adaptability, step in to bridge divides.

For the UAE, joining the BRICS grouping, comprising Brazil, Russia, India, China and South Africa, signifies the nation’s ambition to amplify its geopolitical sway, encourage multilateral cooperation, and adapt to a multipolar world.

As a nation that has navigated its way to prominence on the world stage, the UAE’s interest in aligning with the BRICS takes on significance beyond mere financial considerations. The move presents a forum that resonates with the UAE’s pursuit of global strategic partnerships.

One of the standout advantages for the UAE lies in economic diversification and growth opportunities.

By aligning with key partners through a network of Comprehensive Economic Partnership Agreements (CEPAs), the UAE could expand trade possibilities. The UAE has already inked CEPAs with India, Israel, Indonesia, Turkey and Cambodia, with plans for more in the pipeline. Coupled with its membership in BRICS, these steps could fortify the UAE’s global trade and logistics standing.

A testament to this potential is the thriving UAE-India bilateral trade, projected to reach US$100 billion by 2030. Trade between the UAE and Brazil also increased by a whopping 32% between 2021 and 2022. 

BRICS nations boast robust economies that account for a significant portion of the global GDP. China, in particular, has emerged as the UAE’s largest non-oil trading partner, and bilateral relations remain strong. Technological cooperation is flourishing, ranging from Covid-19 vaccine research and production to collaboration on space missions like the UAE’s Rashid lunar rover. 

By aligning with the BRICS economies, the UAE can diversify its trade relationships, tap into new markets, and extend its economic reach while maintaining its traditional European and North American connections. This diversification is pivotal for achieving the UAE’s goal of doubling its gross domestic product by 2030, reducing oil dependency, and fostering a knowledge-based economy.

Through engagement with the BRICS, the UAE stands to attract talent and investment. Indian information-technology (IT) companies already leverage the UAE as a hub to tap into nearby regional markets.

Education partnerships with Brazilian universities can also contribute to the UAE’s innovation landscape. In 2022, Abu Dhabi-based Mubadala invested in two medical universities in Brazil with around 2,000 students.

High-profile events like an annual UAE-BRICS tech summit could stimulate professional networking. Similarly, a UAE-BRICS startup accelerator would amplify the UAE’s attractiveness as a hub for innovation, investment, and talent acquisition.

At a time when global confrontation is on the rise, Abu Dhabi sees long-term investment in cooperation as the best way forward. The UAE’s foreign policy aims to strengthen relations with various actors, including the US, China, India, Russia and the European Union.

This aligns with Abu Dhabi’s broader initiatives, fostering relations from the Global North to the Global South. As the UAE gears up to host the COP28 climate-change summit, its perspectives could enrich BRICS deliberations on critical matters such as sustainable development, climate change, counterterrorism, and regional stability.

The UAE does not see its accession to the BRICS as joining a bloc. On the contrary, it sees it as diversifying its partnerships and markets while preserving its traditional relations with the rest of the world.

This was made clear by UAE Foreign Minister Sheikh Abdullah bin Zayed when he said: “The UAE has consistently championed the value of multilateralism in supporting peace, security, and development globally.”

BRICS membership empowers the UAE to bolster its multi-alignment strategy by fostering its diplomatic ties with the US through initiatives like I2U2 (Israel, India, UAE and US) and with China through the BRICS group.

The intricate challenges confronting our world necessitate collaborative efforts that transcend individual superpowers. The ability of middle powers to bridge cultural gaps, foster economic ties, and uphold global values makes them indispensable players in international governance.

This article was provided by Syndication Bureau, which holds copyright.

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New WM Motors EV aims for global market lead

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Chinese electric vehicle (EV) maker WM Motors on August 22 announced it has reached an in-depth strategic cooperation agreement with Giga Carbon Neutrality (GCN), a global leader in new energy vehicle equipment and services.

According to the announcement, the two companies agreed to restructure WM Motor’s overseas unit WM New Energy Commercial Vehicle Group to include a new business segment to compete with American EV maker Rivian and Tesla’s Cybertruck.

As part of the agreement, WM will fully integrate GCN’s intelligent commercial vehicle ecosystem of equipment and services. Headquartered in Shanghai, WM Motors is privately held.

Company officials say that, as a Chinese auto industry pioneer, WM already enjoys competitive advantages in safety features, autonomous driving technology, internet connectivity and production capacity. The company’s “smart parking” system integrates vehicle smart technologies with environmental sensors and mobile platforms to provide a closed-loop parking system.

In 2022, WM’s EX5 model was given the EU’s WVTA high-volume certificate, and the company received the bloc’s SSTA low-volume certification for its E5 model. That same year, WM signed orders for more than 10,000 units of overseas sales. WM Motor’s safety test performance ranks high among new energy vehicles, company officials say.

The impact of the pandemic on raw material prices, as well as a chip supply crisis aggravated by geopolitics, weighed on the global auto industry at the beginning of 2023. These headwinds drove WM into a loss last year, but the company says it expects a return to profitability as the new energy commercial vehicle market expands.

GCN provides an ecosystem of services for commercial new energy vehicles such as heavy trucks, aiming to become a global leader in new energy mining trucks and construction machinery, as well as heavy and light truck equipment. The company provides a proprietary “AI internet of things” (AIoT) OpenV2X (vehicle-connected everything) technology.

GCN claims bragging rights for being the first new energy commercial vehicle equipment and service company to offer a smart IoT-level operating system, equipped to become the total solution provider of equipment, operating system, energy data and carbon credit services.

(Chinese-American entrepreneur Bruno Wu, who is also a shareholder of Asia Times’s holding company, is GCN’s founder).

Already established as one of China’s leading new automakers, WM boasts substantial R&D capabilities, proprietary technology and intellectual property, strong production capacity and an established customer base. As WM works to meet production and distribution challenges, its officials say, synergy with GCN’s management and technical team is well-timed to help WM to overcome current obstacles.

According to the company, WM Commercial will build a light commercial vehicle ecosystem that integrates supply chain, energy data and carbon credits services with intelligent lightweight logistics vehicles.

WM aims to become a global leading enterprise both in vehicle orders and long-term service revenue on the strength of its digital skateboard chassis technology as well as driverless and intelligent technology applications. Logistics vehicles and light commercial pickup truck sales will target China and overseas markets.

WM Commercial stresses that it will focus on the technical advantages and development achievements of both companies, quickly integrating GCN’s equipment and services into industrial applications. Plans are underway to launch commercial transport vehicles and two pickup truck products, respectively, between 2023 to 2025.

The company hopes these vehicle designs will establish market leadership  in the lightweight and intelligent design that helped WM’s original passenger car business in developing domestic and overseas markets, including government official vehicles and ride-hailing vehicle sales.

GCN will also help WM Motor transform its business with the provision of services. WM Commercial aims to secure a long-term share of the global retail commodity supply chain and energy service markets, transforming the original product sales model into a product-plus-service model, and become a new energy commercial vehicle operator that can provide integrated solution capabilities.

With a base of 100,000 commercial vehicles, the company says it expects annual supply chain service revenue to exceed 100 billion yuan, providing a revenue stream to reduce reliance on vehicle sales alone for profit.

WM Commercial has reported orders for 200,000 logistics vehicles and distribution vehicles injected from GCN, which it claims places it atop world rankings. It has also received orders for tens of thousands of official cars and ride-hailing vehicles in the coming year. WM Motor will build a virtual factory production management center for WM Commercial on the smart production platform in China.

A spokesman for WM Motor said: “Through this cooperation with GCN to build the ‘New WM’, WM Motor will accelerate efforts to overcome the unfavorable situation of heavy assets and long-term losses from the passenger-car era, rapidly improve its balance sheet and cash flow and explore a path of integration and transformation and development for new energy passenger vehicles.”

WM Commercial boasts that its products rival those of competitors Rivian and Tesla’s Cybertruck, which have previously reached a maximum market valuation of US$1.4 trillion US dollars, and are currently valued at $195.20 billion. The company says it stacks up not only in terms of the technical characteristics of its vehicles, but also in terms of mass production and delivery capabilities.

The delivery of 200,000 logistics and distribution vehicles injected by GCN to start delivery immediately looks to put the company well ahead of the competition. At the same time, it says it also has orders for tens of thousands of ride-hailing and official cars next year.

It is also actively looking for investors and production partners for the pick-up truck market in the Middle East and EU, with plans to adopt a technology licensing and management output, asset-light and high-return expansion model. A spokesman for WM Motor further said that it expects the integration of the company with GCN to be completed soon.

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China risks losing the battle of market perceptions

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President Xi Jinping is prodding China’s largest banks to slash rates on mortgages and deposits.

Yet here’s what’s most interesting about Beijing harnessing roughly US$5.3 trillion of mortgages, equivalent to the combined gross domestic product (GDP) of the UK and Italy: how little excitement the news generated in global markets.

One reason for the dearth of enthusiasm is that investors reckon China has way more yet to do to stabilize economic growth and contain its spiraling property crisis. The bigger question, though, is the extent to which Xi’s team is internalizing this message.

As Asia Times has reported extensively, Xi, Premier Li Qiang and the People’s Bank of China (PBOC) are determined to do more with less during this downswing. In past downturn cycles, including in 2008 and 2015, the response was of the “kitchen sink” variety: Beijing countered headwinds with overwhelming force to keep GDP growth north of 5% against all odds.

Fast forward to 2023, policy caution is winning the day. On the one hand, Xi’s team is reluctant to squander its success in recent years to reduce leverage across the economy. That includes the troubled property sector, which in the past would have been bailed out aggressively in the circumstances.

On the other, devaluing the yuan — an easy call amid past crises — could backfire this time. In doing so, Team Xi would set back progress in internationalizing the yuan’s use in trade and finance. A weaker yuan might make dollar-denominated debt harder to manage, increasing default risks. And it might cause a political riot in Washington as the 2024 US election cycle heats up.

That helps explain why Xi’s economic team is prodding banks to add liquidity around the margins rather than fire its stimulus bazooka again. By cutting rates on the nation’s 38.6 trillion yuan (US$5.3 trillion) of outstanding mortgages, Beijing is looking to support growth with less fanfare.

Yet Beijing is at risk of losing the perception battle.

Accurate or not, a narrative is taking hold that China’s growth “miracle” is over and that “Japanification” risks abound. It doesn’t make it so, but in these social media-driven meme-stock times, in which algorithmic trading trumps gut-feeling responses to global uncertainties, false narratives can take on a life of their own. And damaging ones can metastasize quicker than Xi’s inner circle may realize.

Along with unfavorable demographics, China confronts slipping exports, growing risks from the decoupling/derisking dynamics of recent years and persistent questions about China’s true innovative powers.

At the moment, “there is confusion and, as long as there is confusion, then there’s lack of credibility and that means investors are more likely to stay away,” says strategist Seema Shah at Principal Global Investors, a US-based capital market company. Because there is a lack of confidence, Shah argues, “the only way out is to step up fiscal stimulus.”

The ways in which Beijing’s 2020 clampdown on Jack Ma and fellow private tech firm founders backfired remains a cautionary tale. Beijing’s spin that scrapping a $37 billion initial public offering by Ma’s Ant Group was about “reform” fell flat with many global investors. Markets read it as the political empire striking back at billionaires who thought they had real power.

Jack Ma getting loose during an event to mark the 20th anniversary of Alibaba in Hangzhou. As Ma was achieving an ever-higher profile as the most recognizable face in Asian business, Chinese regulators abruptly slammed on the brakes. Photo: AFP / Stringer

China has been in damage control mode ever since. In March, Xi handed the rebuild-investor-trust portfolio to new Premier Li. Since then, Li has taken pains to argue Beijing is stepping up efforts to normalize China’s regulatory environment. The goal, Li said, is to “reduce the costs of compliance and promote the healthy development of industry.”

Li added that “on the journey of building a modern socialist country, the platform economy has great potential” and that tech chieftains should “push to increase their international competitiveness and dare to compete on the global stage.”

Though such rhetoric checks many boxes, the recent bankruptcy of China Evergrande Group and default drama surrounding developer Country Garden has global investors on crisis watch. The question becomes: Have China’s property woes already been largely priced into the market? Or might additional bad developer news drive shares and the yuan even lower?

This is surely the scenario China is pushing on global investors. But what drowns out this message is China’s demographic trajectory as the population ages and waning export competitiveness dampens the longer-term outlook.

The fallout from US President Joe Biden’s China-focused trade policies is doing some serious damage to Asia’s biggest economy. This, too, runs afoul of conventional wisdom. It’s fair to say, though, that Biden’s meticulously targeted moves to limit Chinese access to vital technology are taking a toll.

To be sure, many will argue that Xi’s economic team is running circles around Biden’s. Yet it’s hard not to wonder if Biden’s tech curbs have been the equivalent of pouring sugar into China’s economic gas tank.

Whereas Donald Trump’s tariffs generated headlines, Biden’s death-by-a-thousand-cuts approach is slowly but surely slamming China’s export engine.

That’s dreadful news for the global economy. “China’s huge economy is the planetary body around which all others in Asia revolve,” says economist Vincent Tsui at Gavekal Dragonomics. “That dependency stems from trade linkages – whether as suppliers of raw materials or functioning in some complex supply chain – and from financial relationships through capital flows and currency markets. Hence, to borrow an old adage, when China sneezes, Asia catches a cold.”

The onus is on Beijing to convince markets it’s acting boldly enough to combat slowing growth and deflation. This means moving faster to strengthen capital markets, incentivize innovation, grow the size of the private sector and build bigger social safety nets to encourage consumption over savings.

In a recent note to clients weighing recent stock trading reforms, economists at Nomura Holdings said: “We believe these latest measures are in line with the directive from the July Politburo meeting, when the authorities pledged to invigorate China’s capital markets, but do not represent a meaningful increment in policy support for reviving the real economy.”

China’s stock market reforms may or may not revive investor interest. Photo: Sohu.com

As such, explains Nomura chief China economist Ting Lu, “the measures over the past weekend are not enough to stem the downward spiral” and their impact will be short-lived if not followed by measures for supporting the real economy. “Without additional and more aggressive policy stimulus,” Lu says, “these stock-focused policies alone have little sustainable positive impact.”

In China, what’s needed more than stimulus is credible steps to build a more dynamic and resilient financial system. Along with short-term stimulus, policymakers must look past today’s uncertainty and implement bold and credible reforms, many analysts argue.

The worry, says professor Victor Shih at the University of California, San Diego, is that because Beijing’s policymakers “believe the financial system to be so fragile, they fear any shock could cause a crisis.” If “authorities are so afraid of any sign of instability,” Shih explains, prospects may dim for major upgrades.

The political will for change in Beijing is still unclear, says analyst Charlene Chu at Autonomous Research. The problem is that engineering the transition from state sector-driven growth to a private sector-innovation model is difficult because of how “it directly conflicts with the top-down manner in which the Communist Party typically manages the economy.”

For all the talk of Chinese contagion, global markets aren’t yet panicking. Economist Jay Bryson at Wells Fargo & Co argues that a “debt-induced economic downturn in China likely would not trigger another global financial crisis ala 2008.” That’s partly because the US, Europe and Japan, for all their challenges, are more stable than they were 15 years ago.

Economist Brad Setser at the Council on Foreign Relations adds that there “aren’t realistic channels for financial contagion” from the second-biggest economy to the US. As such, he sees “no real scenario” in which China “disrupts” American markets in ways the US Federal Reserve can’t handle.

Yet the depth of China’s GDP downshift is surprising to even many of the naysayers. And it’s exacerbating concerns about widening cracks in the financial system.

In recent days, Beijing stepped up scrutiny of Zhongrong International Trust’s books, sending markets buzzing about a state-led rescue of the notoriously opaque shadow banking system. Indeed, concern is growing about the health of China’s $2.9 trillion trust sector as the property slump deepens and GDP flatlines.

Zhongrong International Trust is at the heart of China’s opaque shadow banking industry. Photo: Handout

“Demand from key trading partners is diminishing. Both the US and Eurozone Manufacturing PMIs have fallen below the expansion threshold of 50 for nine and 14 consecutive months, respectively,” says economist Taimur Baig at DBS.

As a result, the PBOC’s balancing act might become more challenging over time. The central bank’s recent cuts “suggest that the authorities’ concern about the state of the macroeconomy is mounting,” says economist Robert Carnell at ING Bank. “But that doesn’t mean that they are about to undertake unorthodox policy measures.”

For now, at least. So far, new PBOC Governor Pan Gongsheng is putting financial retooling ahead of stimulus. For example, according to the state-run Securities Times, Pan’s team is devising new plans to give private businesses increased access to funding.

Ma Jianyang, deputy head of the PBOC’s financial market department, says it’s now a “clear goal” to increase private firms’ share of loans.

At the same time, financial news outlet Cailian reports that Beijing will increase support for private companies seeking to go public or execute secondary share offerings.

The Shanghai Stock Exchange, meantime, is working to streamline the IPO process, increase the efficiency of corporate acquisitions and facilitate restructuring efforts among tech companies.

China Inc isn’t without its bright spots at the moment. Shenzhen-based Huawei Technologies cheered mainland markets with a savvy new US$960 smartphone this week. It was the latest sign that China’s biggest companies are finding creative ways around US tech sanctions.

Though Chinese foreign direct investment is likely to decline through year-end, says analyst Karl Shen at Fitch Ratings, “FDI into the high-tech manufacturing sector is likely to stay more resilient.”

Shen notes that year-on-year declines in total FDI inflows accelerated to 9.8% in the first seven months of 2023 versus a 3.3% drop in the first four months. “We believe the Chinese government’s latest plan to further attract foreign investment is unlikely to produce a significantly positive effect in the short term,” Shen says.

But, he adds, “We expect high-tech manufacturing to remain a bright spot, supporting FDI inflows in the medium term. High-tech manufacturing FDI has continuously grown faster than total FDI and high-tech FDI since 2021 and remained resilient in 2023 – growing at 25.3% year-on-year” in the January-July period.

Overall, though, China faces growing market perceptions that its responses to domestic troubles and collateral damage from trade tensions are unequal to the challenge.

It doesn’t make it so. But Xi, Li and Pan would be wise to read the global room and signal that Beijing is well on top of things. At the moment, this message is getting lost in translation.

Follow William Pesek on X, formerly known as Twitter, at @WilliamPesek

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