Foreign Trade Data - Taiwan Drills - Green Loans - Impact of Tax Easing Policy - Wang Yi's Dhaka Visit - Debt Trap Narrative Pushback
Here are the stories and pieces that I found noteworthy in the Monday, August 8, 2022, edition of the People’s Daily.
Page 1: I guess we can assume that the top leadership is in Beidaihe for the annual meeting. It’s been more than a few days with no reports on any of the senior leaders’ activities. At the top of the page today is a report about China’s foreign trade, which has been rather positive. The piece informs:
In the first seven months, China’s total foreign trade value was 23.6 trillion yuan, an increase of 10.4% over the same period last year.
Exports were 13.37 trillion yuan, a year-on-year increase of 14.7%
Imports were 10.23 trillion yuan, a year-on-year increase of 5.3%.
The trade value in July was 3.81 trillion yuan, up 16.6% year-on-year; exports were 2.25 trillion yuan, up 23.9% and imports were 1.56 trillion yuan, up 7.4%.
In the first seven months, the import and export of Chinese private enterprises was 11.8 trillion yuan, up 15.3%; of foreign-invested enterprises was 7.97 trillion yuan, up 2.7%; and of SoEs was.8 trillion yuan, up 15.5%.
In terms of trading partners, trade with ASEAN was 3.53 trillion yuan, up 13.2%; with the EU was 3.23 trillion yuan, up 8.9%; with the US was 2.93 trillion yuan, up 11.8%;
Trade with BRI countries was 7.55 trillion yuan, up 19.8 percent year on year. Exports were 4.27 trillion yuan, up 19.8%; imports were 3.28 trillion yuan, up 19.8%
Exports of mechanical and electrical products expanded to 7.57 trillion yuan, up 10.1% to account for 56.6% of the total. Among these: “automatic data processing equipment and its parts were 918.2 billion yuan, up 4.4%; mobile phones were 494.63 billion yuan, up 2%; automobiles were 175.74 billion yuan, up 54.4%.”
Exports of labour-intensive products increased 15.2%
In H1, FDI into the Chinese mainland, in actual use, expanded 17.4% year on year to 723.31 billion yuan.
Really interesting thread this on China’s exports:
The other top story on the page is about Shaanxi “bearing in mind” Xi’s instructions to further open up and integrate its development with the BRI agenda. The piece talks about the Chang'an China-Europe freight train services. It says that in 2021, there were around 3,841 Chang’an train journeys. The Chang'an services accounted for a quarter of all China-Europe freight train journeys last year. The article informs of a pilot tax refund initiative, where exporters can acquire their tax refunds; previously it would take at least a month after delivery of goods that one would be able to get their refunds. The article also talks about expanded air freight routes to 41, with air cargo volume now being around 400,000 tons.
The piece informs that Xi’an's foreign trade rose against the trend amid the pandemic. Last year, the total import and export value exceeded 400 billion yuan for the first time. The piece then talks about the Shaanxi Free Trade Zone. There are some 112,479 market entities established in the FTZ, the piece informs. It also talks about the improvement of legal services in the context of BRI. In this regard, the article mentions the establishment of the International Commercial Court in Xi’an and the establishment of the:
China-Shanghai Cooperation Organization Legal Services Committee Xi'an Center
BRI Lawyers Alliance, Xi’an Center
Xi’an BRI International Commercial Dispute Resolution Center
Next, there’s a report on China’s green loans balance. It is currently 19.55 trillion yuan, up 40.4% year-on-year, 7.4 percentage points higher than the end of last year. This figure includes both RMB and foreign currency loans. In H1 this year, 3.53 trillion yuan were added.
The outstanding loans for green infrastructure upgradation, clean energy, and energy conservation and environmental protection industries were 8.82 trillion yuan, 5.04 trillion yuan, and 2.63 trillion yuan, respectively, up 32.2 percent, 40.8 percent and 62.8 percent year-on-year, respectively. The balance of green loans for electricity, heating, gas and water production and supply industries was 5.08 trillion yuan, up 30.8% year-on-year. This figure grew by 603.9 billion yuan in the first half of the year; the balance of green loans in transportation, warehousing and postal services was 4.39 trillion yuan, up 10.3% year on year; the figure increased by 263.1 billion yuan in the first half of the year. 分用途看，基础设施绿色升级产业、清洁能源产业和节能环保产业贷款余额分别为8.82万亿元、5.04万亿元和2.63万亿元，同比分别增长32.2%、40.8%和62.8%。分行业看，电力、热力、燃气及水生产和供应业绿色贷款余额5.08万亿元，同比增长30.8%，上半年增加6039亿元；交通运输、仓储和邮政业绿色贷款余额4.39万亿元，同比增长10.3%，上半年增加2631亿元.
Page 2: There’s a report talking about the “remarkable” success of the tax easing and support policies in “reducing the burden of enterprises, stimulating innovation vitality, optimising the economic structure and promoting consumption.” 调研结果及国家税务总局的统计数据显示，组合式税费支持政策成效显著，在减轻企业负担、激发创新活力、优化经济结构、促进居民消费等方面发挥了重要作用. In making this point, the report cites a survey by the Ministry of Finance on work progress and policy effectiveness in Jiangsu, Hubei, Guangdong, Sichuan, Yunnan, and Shaanxi and data from the State Taxation Administration.
The piece informs that in order to efficiently implement the tax refund and support policies for enterprises the the Ministry of Finance, State Taxation Administration and the People's Bank of China established a consultation mechanism. Since April, the three departments have jointly held seven special meetings to address issues in policy implementation. 为推进留抵退税政策的高效落实，财政部、国家税务总局、中国人民银行建立了落实留抵退税政策三部门会商机制，加强沟通协调。4月以来，三部门联合召开7次专题会议，推动解决重点难点问题，确保企业留抵退税申报、审核、拨付及时到位.
In addition, all localities have set up tax and fee reduction working groups, set up inter-departmental cooperation mechanisms, and strengthened the linkage between the upper and lower levels. 各地建立了减税降费工作组，搭建跨部门协作机制，加强上下联动.
So far, the Ministry of Finance has issued three batches of 1.2 trillion yuan in transfer subsidies to support local governments in implementing tax rebates, tax and fee cuts, and key livelihood payments. At the same time, efforts to tighten belts, consolidate local responsibilities and speed up implementation have been intensified. 截至目前，财政部已下达3批支持地方落实退税、减税降费和重点民生等转移支付补助1.2万亿元。同时，加大过“紧日子”力度，并压实地方责任，加快执行进度.
The piece informs that in Zhejiang, Henan, Hubei, Chongqing, and Sichuan, local authorities have cut down the ‘six taxes and two fees’ for small and micro enterprises, small-scale taxpayers, and individual industrial and commercial households by a maximum of 50%.
(Quick aside: For those who might not know, the six taxes refer to:
Resource tax
Urban maintenance and construction tax
Property tax
Urban land use tax
Stamp duty (excluding securities transaction stamp duty)
Farmland occupation tax
The two fees refer to:
Education surcharges
Local education surcharges)
The report informs that in Shaanxi, entities engaged in tourism, accommodation, catering and other sectors greatly affected by the epidemic have been exempted from water conservancy construction charges. Jiangsu has exempt those impacted by the pandemic from the annual property tax and urban land use tax. 例如，浙江、河南、湖北、重庆、四川等地对小微企业、小规模纳税人、个体工商户“六税两费”按照50%顶格减征；陕西对旅游、住宿、餐饮等受疫情影响较大的行业企业，免征水利建设基金；江苏免征受疫情影响严重的6个行业纳税人和小规模纳税人全年房产税、城镇土地使用税.
The piece also warns of strict action in case of inaction, slow action or disorderly action by local officials. Anyway, towards the end, the report talks about the MoF survey. It says that in Shenzhen, the manufacturing sector benefited the most from the tax refund policy; in Zhejiang, the policy has led to 77.3% of enterprises becoming more optimistic about their growth expectations and the development confidence of 96.1% of enterprises being boosted.
Page 3: A lot of the page is still about developments following Nancy Pelosi’s Taiwan visit. But let’s begin with Wang Yi’s visit to Dhaka, where he spoke about the US’ ‘three mistakes’ on the Taiwan issue.
The “U.S. side grossly interfered in China’s internal affairs, adding that despite China's repeated notifications and warnings, the United States went on its own way, and arranged for the third-ranking U.S. government official to make the so-called ‘visit’ to China’s Taiwan region. It must be understood that Taiwan is not a part of the United States, but a part of Chinese territory, and the U.S. side has made a public commitment about this, said Wang, adding that the U.S. side’s action is therefore a serious infringement on China’s sovereignty.”
“The United States connived at and supported the ‘Taiwan independence’ forces, he said, noting that any country must safeguard national unity and never allows separatist elements to behave recklessly. Wang said the ruling Democratic Progressive Party in the Taiwan region has included the pursuit of ‘independence’ in its party platform, and in recent years it has tried every possible means to seek incremental ‘Taiwan independence’ and create ‘two Chinas’ or ‘one China, one Taiwan.’ The speaker of the U.S. House of Representatives openly backed it up, siding with the separatist forces against the Chinese people, he added.”
“Thirdly, it deliberately sabotaged peace across the Taiwan Strait. The United States, as known to all, always creates a problem first and then uses it to achieve its own strategic end, Wang said. He noted that there are signs showing that the United States, by orchestrating Pelosi's reckless tour to Taiwan, is trying to repeat its old tricks. Washington is taking the opportunity to build up its military deployment in the region, which deserves high vigilance and resolute boycott from all sides, Wang warned. He said China's firm stance, as well as its justified, reasonable, lawful, necessary, open and proportionate countermeasures are aimed at safeguarding China's sacred sovereignty and territorial integrity, preventing the U.S. attempt from "using Taiwan to contain China," crushing the Taiwan authorities' illusion of "seeking U.S. support for their independence agenda," and earnestly safeguarding peace across the Taiwan Strait and regional stability.”
“Wang emphasized that the principle of non-interference in each other's internal affairs is the ‘golden rule’ for the development of state-to-state relations and the ‘magic tool’ for developing countries to protect their sovereignty and security. Wang said China appreciates the understanding and support for China's position by various countries, adding that as unilateral bullying acts happen from time to time, the international community should reach an even clearer consensus and make an even louder voice so as to jointly uphold the basic norms governing international relations and international law, and safeguard the legitimate rights and interests of all developing countries.”
(Quick thought: It’s fascinating how he is framing this as a developing world vs developed world argument. Complete and utter nonsense. But fascinating, nonetheless. And there is much more of this in Wang’s conversations with Bangladeshi leaders.)
While in the country, Wang Yi met with Bangladeshi Foreign Minister A. K. Abdul Momen and Prime Minister Sheikh Hasina. Xinhua reports that while meeting PM Hasina, Wang said that:
“China has always been a reliable strategic partner of Bangladesh, and will continue to firmly support the South Asian country in safeguarding its national independence and dignity, adhering to a development path suitable to its own national conditions, and playing a greater role in international and regional affairs…He noted that China is willing to enhance the dovetailing of the Belt and Road Initiative with Bangladesh's Vision 2041, share development experiences and advanced technologies, and deepen cooperation in infrastructure, digital economy, green development and clean energy.”
For her part, Hasina said Bangladesh pursues a foreign policy of ‘friendship for all, no enemy for all,’ values its traditional friendship with China, and regards China as an important partner in maintaining peace and seeking common development. Bangladesh looks forward to deepening the mutually beneficial cooperation between the two sides, and would like to learn from China's successful experiences in poverty reduction and alleviation, she said.”“She pledged Bangladesh's firm commitment to the one-China policy, saying Bangladesh disapproves of the provocative acts of certain countries, and hopes to jointly maintain a peaceful and stable environment for development.”
“China appreciates the vast majority of developing countries including Bangladesh for having openly stood up and voiced their support for the one-China principle and China’s legitimate position, Wang said. Wang stressed that the U.S. action seriously infringed on China’s sovereignty, acutely interfered in China's internal affairs and severely violated the basic norms governing international relations. China's countermeasures are aimed at defending its sovereignty and territorial integrity and truly maintaining peace across the Taiwan Strait, in Asia and the world at large, he noted. Wang stressed that the 21st century is an era of revitalization for developing countries, and developing countries' jointly striding toward modernization is huge progress of human civilization. ‘We should continue to support each other, remove disturbances, focus on development and stride forward with confidence towards the stated goal of achieving the revitalization of our respective nations,’ he said.
The report on Wang’s engagement with his counterpart Momen says that:
“Wang elaborated on China's position on the Taiwan question, expressed appreciation for Bangladesh's immediate support for China's legitimate claim, and stressed that China is willing to work with the vast majority of developing countries to jointly safeguard each other's sovereignty and territorial integrity, jointly uphold the basic norm governing international relations of non-interference in others' internal affairs, jointly maintain global and regional peace and stability, jointly oppose and contain all secessionist activities, and jointly strive for a favorable external environment for development.”
“Momen said Bangladesh firmly adheres to the one-China principle, believes that Taiwan is part of China's territory, and supports China in safeguarding its core interests and addressing major concerns. Some countries do not want to see developing countries grow and try every means to create various obstacles, Momen said, stressing that the world needs the strength and voice of China, and Bangladesh will stand firmly with China. The Bangladeshi foreign minister said his country advocates multilateralism, adheres to the five principles of peaceful coexistence and maintains that the purposes and principles of the United Nations Charter must be upheld, resolutions of the UN General Assembly be implemented, and separatism be effectively contained, otherwise, it will be a disaster for the whole world.”
“The two sides agreed to strengthen cooperation in the areas of infrastructure, economic and industrial parks, and cultural and people-to-people exchanges, to expand cooperation in local currency settlement, 5G and clean energy, and to maintain close communication and coordination in international and regional affairs. Wang announced that China's zero-tariff treatment for 98 percent of taxable items exported to China from Bangladesh will officially take effect on Sept. 1, adding that China welcomes the export of Bangladeshi specialty products to it.”
The two sides signed cooperation documents on infrastructure, disaster prevention and mitigation, culture and tourism, and maritime affairs. I am curious about the maritime affairs agreement but can’t seem to locate what this is. Nothing so far on the Bangladesh foreign ministry’s website too. If anyone can point me to the document that would be really helpful.
Also Read:
Amid Taiwan crisis, Chinese Foreign Minister Wang thanks Bangladesh for following ‘One China’ policy
Gross mistreatment of locals in Chinese financed projects in Bangladesh unearthed
Moving on, there’s a report about foreign politicians and analysts agreeing with China’s criticism of Nancy Pelosi’s visit; and another one in the same vein. You can also read this Xinhua English compilation if you prefer. There’s also a report with ambassadors from different countries, Algeria, Iraq, Ghana, DRC, São Tomé and Príncipe, Namibia, Mali, Iran and Syria, etc., being critical of the US on the Taiwan issue. All of them apparently adhere to the one-China principle. There’s also a report, citing the Middle East News Agency, with Egyptian President Abdel-Fattah al-Sisi saying that Egypt’s policy on the Taiwan question has been consistent and firm. Egypt pursues the one-China principle and believes that it is conducive to maintaining world security and stability.
Outside of PD, I think a couple of reports are worth noting.
First, this is an incredibly useful thread on the developments in the Taiwan Strait.
On the military exercises, do check out this WSJ report too. It argues:
“What the drills demonstrated, military analysts said, is the progress China has made coordinating different branches of its armed services, a hallmark of a modern military. China appeared to lack the military assets to impose a total blockade on Taiwan, they said, but Beijing showed it had enough maritime firepower to severely disrupt the island’s economy…The drills also reaffirmed before the eyes of the world President Xi Jinping’s intent to turn a sprawling military industrial complex into a cohesive fighting force that, one day, might dominate the Asia Pacific. China’s exercises featured fighter and bomber sorties, along with naval maneuvers, and they showcased what is believed to have been the first time China has launched missiles over the Island of Taiwan. The People’s Liberation Army said Sunday it had conducted joint training in waters and airspace near the island to test its capacity for striking ground targets and engaging in long-range aerial combat…”
“A Beijing-backed group, South China Sea Strategic Situation Probing Initiative, said on its Twitter account that the U.S. deployed surveillance and reconnaissance aircraft to the area, including RC-135s, P-8s and E-3s, with KC-135 tankers on hand for midair refueling…Military analysts say that while China deployed some of its latest weapons for the exercises there appeared to be no military hardware that wasn’t already known about. And some said China didn’t use enough ships to show they could impede ship traffic from reaching Taiwan. Instead, it used ships like destroyers and cruisers during its exercise, which aren’t ideal for conducting a blockade, naval observers said. Even though they exercised with as many as 50 ships, the Chinese navy didn’t use enough smaller, more agile ships, like frigates, that could better sustain something like a blockade around Taiwan, said Bryan Clark, a senior fellow at the Hudson Institute…“What we saw during the exercise is that China did not use enough ships to divert those coming in, inspect or hold them and cut off access to Taiwanese ports. They have enough to quickly inspect ships coming in and slow down the Taiwanese economy,” Mr. Clark said. “This was more like a demonstration of a quarantine than showing they can cut off Taiwan. But for China, it would be a good first step.” Christopher Twomey, an associate professor of national security affairs at the U.S. Naval Postgraduate School in Monterey, Calif., said potentially useful intelligence that might be gained from the exercises included assessments of how missile brigades coordinated with each other and conducted evaluations of battle damage from the strikes. Such information could be obtained from intercepted communications, he said…Several close observers of the Chinese military noted that the drills fell far short of a full rehearsal for an invasion of Taiwan…An attempt to seize and control the island would involve an amphibious invasion across the 100-mile wide Taiwan Strait, but there were no signs of the mobilization of amphibious forces during the latest exercises.”
And do also check out this Reuters report, which suggests that the PLA will now try to ensure that such aggressive drills become a routine matter in the Taiwan Strait, thereby changing the status quo.
Second, Wang Yi spoke about the South China Sea issue at the 12th East Asia Summit Foreign Ministers' Meeting in Phnom Penh. Xinhua reports:
“China's position on the South China Sea issue is supported by abundant historical and legal basis. China has never changed the basis and scope of its position which has seen no excessive claims, Wang said…Over the years, China and ASEAN countries have worked together to maintain the overall stability in the South China Sea, providing a stable environment for their development and prosperity, Wang said, pointing out that at present, the biggest risk to peace and stability in the South China Sea is the inappropriate intervention and frequent interference by major countries outside the region. For a long time, the U.S. side had not raised any objections to China's sovereignty, rights and interests in the South China Sea, saying that it does not take a position on the sovereignty of the islands there, and now it has turned to total negation of China's position, Wang saidressing it is baseless in terms of logic, law and justice. What is the credibility of a major country if it changes its established policies so arbitrarily according to its own political needs? How can it win the trust of others in the future? Wang said. In recent years, an increasing number of U.S. warships and aircraft have frequently headed to the South China Sea. China and other coastal countries couldn't help but wonder what on earth is the U.S. side intended to do? Wang added. Countries outside the region should scrupulously abide by their duty and faithfully respect regional countries' efforts to safeguard peace and stability in the South China Sea, he said. The Chinese side and ASEAN countries are now speeding up consultation on the Code of Conduct in the South China Sea, and will join forces to upgrade the DOC and set effective regional rules with practical significance.”
Third, Wang’s three-point proposal at the East Asia meeting:
Insist on carrying out dialogues on political security in a constructive way, i.e., all parties should adhere to “the principle of sovereign independence, conduct dialogues and exchanges on an equal footing, and refrain from interfering in internal affairs of other countries. ‘We should consolidate the ASEAN-centered regional cooperation architecture and oppose bloc confrontation in the region’.”
Strengthen the summit’s impetus for development and cooperation.
Enhance capability of jointly addressing risks and challenges, i.e., build regional vaccine production and distribution centers, cooperate on global food security, energy security, accessibility, and supply, support the liberalisation and facilitation of trade and investment, and maintain the stability and smooth flow of industrial and supply chains.
Fourth, Wang met with Sergey Lavrov in Cambodia. Xinhua reports:
“Wang gave a comprehensive elaboration on China’s legitimate position on the Taiwan question, and appreciated Russia's immediate reiteration of firm support for the one-China principle and opposition to any act that infringes on China's sovereignty and territorial integrity, which testifies to the high-level strategic coordination between the two sides. China stands ready to work with Russia to safeguard in a more vigorous way the international system with the United Nations at its core and the international order underpinned by international law to achieve more effectively lasting security and sustainable development, Wang said. Wang said that under the current situation, China and Russia should jointly promote regional development, calling for boosting mutually beneficial cooperation with regional countries in the fields of fighting COVID-19, health, connectivity, digital economy, as well as green and low-carbon development and building stable and reliable regional industrial and supply chains. China and Russia should support that the ASEAN Outlook on the Indo-Pacific adheres to independence, ASEAN leadership and the ASEAN approach, Wang said. It is also important to guide countries in the region to pursue a vision of true security that is common, comprehensive, cooperative and sustainable, rather than the false security of seeking supremacy and confrontation, and uphold a genuine order based on the purposes and principles of the UN Charter and oppose a fake order based on hegemony and bullying, Wang said.”
Interestingly, no specific mention of the two talking about Ukraine. But they did talk about “BRICS cooperation, the Iranian nuclear issue and the situation on the Korean Peninsula.”
Finally, envoys from 30 Islamic countries visited Xinjiang from Aug. 1 to 5 at the invitation of China’s Ministry of Foreign Affairs.
Page 17: On the international page today, the lead story pushes back against the narrative that Chinese debt is responsible for financial instability in African countries. Instead, the piece argues that it is Western private lending that’s the problem. The piece quotes a new report titled The Trap of Financial Capital: The Impact of International Bonds on the Debt Sustainability of Developing Countries. The report was recently launched at an event held by Tsinghua University’s Department of International Relations and the China Forum under the Center for International Security and Strategy.
PD says that as per the report,
Statistics show that from 2008 to 2020, international bonds issued by low- and middle-income countries increased by nearly 400%, reaching $1,737.2 billion in 2020, accounting for more than 50% of the external debt of these countries. In terms of the interest expenditure of low- and middle-income countries, international bond interest accounts for 63.2%, far exceeding traditional bilateral and multilateral debt. This has become the main factor of debt pressure of issuing countries. At present, 20 African countries have issued international sovereign bonds, the amount of which has increased fivefold in the past decade, while bilateral debt has roughly doubled in the same period. At the same time, most of the international bonds are denominated in US dollars. During the US dollar interest rate hike cycle, the double rise in exchange rates and interest rates has significantly increased the repayment pressure of debt-issuing countries. 统计显示，2008年至2020年，中低收入国家发行的国际债券增长近400%，2020年达到17372亿美元，占这些国家外债比例超50%。在中低收入国家的利息支出中，国际债券利息占63.2%，远超传统的双边与多边债务，成为发债国家债务压力的主要因素。目前已有超过20个非洲国家发行了国际主权债券，数额近10年间翻了5倍，而同时期双边债务增长约一倍。同时，国际债券大多以美元计价，在美元加息周期中，汇率与利息双重上涨显著增加了发债国的还款压力.
According to the data of the World Bank, of the total foreign debt of 49 African countries with data available of $696 billion, borrowing from multilateral financial institutions and private financial institutions (excluding China) accounts for about three-quarters of the total debt. According to a report released by the British charity "Debt Justice", 35% of the external debt of African countries comes from Western private lenders, the total amount is almost three times that of China's loans to Africa, and the average interest rate is about twice that of China's loans to Africa. 根据世界银行的数据，在49个有数据可查的非洲国家共计6960亿美元外债中，借自多边金融机构和私人金融机构（不含中国）的合计约占债务总量的3/4。英国慈善机构“债务正义”发布的报告显示，非洲国家35%的外债来自西方私人贷款机构，其总额几乎是中国对非贷款的3倍，平均利率约为中国对非贷款的2倍.
The piece later adds that the “China Debt Trap Theory” is “a tool for Western countries to smear China.” The piece says that China has always adhered to the correct concept of justice and benefit in dealing with issues such as lending and debt relief…China has actively implemented the G20 debt suspension initiative, and has signed debt suspension agreements or reached a consensus on debt suspension with 19 African countries. China is the country with the largest debt suspension amount among the G20 members. For countries that have been particularly severely hit by the pandemic and are facing great stress, China will work with relevant parties to provide debt mitigation support on a case-by-case basis. 中国一直秉持正确义利观处理借贷、缓债等问题，将真实亲诚等原则切实落到实处，受到非洲有关国家肯定和欢迎。中国积极落实二十国集团（G20）缓债倡议，同19个非洲国家签署了缓债协议或达成了缓债共识，是G20成员中缓债金额最多的国家。对于疫情特别重、压力特别大的国家，中方同有关方一道，通过个案处理的方式提供债务减缓方面的支持.
All of this is particularly useful to note in the context of recent developments with regard to Zambia. Here are two related stories: