FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

China Business Weekly10 June 2020

FCCC/EUCBA ACTIVITIESWebinar: “European Business in China – Business Confidence Survey 2020”12 June 10:00 am CESTThe EU-China Business Association and the Flanders-China Chamber of Commerce are organizing a webinar focused onthe results of the annual Business Confidence Survey of European Business in China. This survey was conducted by theEuropean Union Chamber of Commerce in China, in cooperation with Roland Berger. The webinar will take place on 12June 2020 at 10.00 am CEST.

Many of the initial findings of the survey, conducted in February 2020, painted an outlook for 2020 that no longeraccurately represents the views of the vast majority of member companies that have endured a tumultuous first half of theyear. However, survey respondents have provided extensive data pinpointing underlying issues that fall under the controlof the Chinese government.

• In 2019, 41% of companies reported at least some market opening.

• Almost half of the respondents continue to face market access barriers.

• Doing business in China has become more difficult over the past year for 49% of members, a four-percentagepoint decrease from 2019 – a marginal improvement.

• Almost half of the respondents believe that state-owned enterprises (SOEs) will gain opportunities at theexpense of the private sector in 2020.

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

10:05–10:30 “European Business in China – Business Confidence Survey 2020” by Mrs. Charlotte Roule, Vice-President, European Union Chamber of Commerce in China

10:30-10:45 Panel discussion with Mr. Johan Verstraete, Vice-President Weaving Machines, Picanol/ Board Member, Flanders-China Chamber of Commerce and Mrs. Chalotte Roule

10:45–11:00 Q&A and final discussion

Mrs. Charlotte RouleCEO, ENGIE CHINA, Vice-President European Union Chamber of Commerce in China

Charlotte Roule joined ENGIE China back in 2016 initially as COO, Head of BusinessDevelopment and Innovation. In line with ENGIE’s strategy and values, she promoted anddeveloped there clean energy (mainly solar and electrical mobility) as well as energyefficiency. ENGIE China now operates directly 6 joint ventures in these areas, coveringdesign and engineering, development and operations.

Before working in China, Mrs. Roule was based in Cheshire, UK, where, jointly with herteam, she’s been developing the largest onshore underground gas storage of the country.Prior to this, she served as VP, Audit and Risks and VP, HR in Storengy, ENGIE’s affiliatededicated to underground gas storage, based near Paris.

Mrs. Roule is a member of the Jinan Mayor’s International Economic ConsultationCommittee. She also acts as mentor of the Board of the Women in Renewables Asia(WiRA) organization.

She is also external trade advisor to the French Governmen

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

China Business Weekly10 June 2020

FCCC/EUCBA ACTIVITIESWebinar: “European Business in China – Business Confidence Survey 2020”12 June 10:00 am CESTThe EU-China Business Association and the Flanders-China Chamber of Commerce are organizing a webinar focused onthe results of the annual Business Confidence Survey of European Business in China. This survey was conducted by theEuropean Union Chamber of Commerce in China, in cooperation with Roland Berger. The webinar will take place on 12June 2020 at 10.00 am CEST.

Many of the initial findings of the survey, conducted in February 2020, painted an outlook for 2020 that no longeraccurately represents the views of the vast majority of member companies that have endured a tumultuous first half of theyear. However, survey respondents have provided extensive data pinpointing underlying issues that fall under the controlof the Chinese government.

• In 2019, 41% of companies reported at least some market opening.

• Almost half of the respondents continue to face market access barriers.

• Doing business in China has become more difficult over the past year for 49% of members, a four-percentagepoint decrease from 2019 – a marginal improvement.

• Almost half of the respondents believe that state-owned enterprises (SOEs) will gain opportunities at theexpense of the private sector in 2020.

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

10:05–10:30 “European Business in China – Business Confidence Survey 2020” by Mrs. Charlotte Roule, Vice-President, European Union Chamber of Commerce in China

10:30-10:45 Panel discussion with Mr. Johan Verstraete, Vice-President Weaving Machines, Picanol/ Board Member, Flanders-China Chamber of Commerce and Mrs. Chalotte Roule

10:45–11:00 Q&A and final discussion

Mrs. Charlotte RouleCEO, ENGIE CHINA, Vice-President European Union Chamber of Commerce in China

Charlotte Roule joined ENGIE China back in 2016 initially as COO, Head of BusinessDevelopment and Innovation. In line with ENGIE’s strategy and values, she promoted anddeveloped there clean energy (mainly solar and electrical mobility) as well as energyefficiency. ENGIE China now operates directly 6 joint ventures in these areas, coveringdesign and engineering, development and operations.

Before working in China, Mrs. Roule was based in Cheshire, UK, where, jointly with herteam, she’s been developing the largest onshore underground gas storage of the country.Prior to this, she served as VP, Audit and Risks and VP, HR in Storengy, ENGIE’s affiliatededicated to underground gas storage, based near Paris.

Mrs. Roule is a member of the Jinan Mayor’s International Economic ConsultationCommittee. She also acts as mentor of the Board of the Women in Renewables Asia(WiRA) organization.

She is also external trade advisor to the French Governmen

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

Mr. Johan VerstraeteVice-President Weaving Machines, Picanol

Board Member, Flanders-China Chamber of Commerce

ModeratorMs. Gwenn SonckExecutive Director

Flanders-China Chamber of Commerce/EU-China Business Association

Practical Information:Date and time: June 12, 2020 - 10:00 AM - 11:00 AM CESTLocation: Online (Zoom)Price for members: FreePrice for non-members: €35 (Excl. VAT)

SUBSCRIBE HERE

Webinar: Best IP Practices for R&D in China – 17 June 2020, 10:30 am CEST

Event Details:Event Type: Webinar

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

Mr. Johan VerstraeteVice-President Weaving Machines, Picanol

Board Member, Flanders-China Chamber of Commerce

ModeratorMs. Gwenn SonckExecutive Director

Flanders-China Chamber of Commerce/EU-China Business Association

Practical Information:Date and time: June 12, 2020 - 10:00 AM - 11:00 AM CESTLocation: Online (Zoom)Price for members: FreePrice for non-members: €35 (Excl. VAT)

SUBSCRIBE HERE

Webinar: Best IP Practices for R&D in China – 17 June 2020, 10:30 am CEST

Event Details:Event Type: Webinar

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

Date: 17 June / 10:30 - 11:30 CEST

Event Description:The Flanders-China Chamber of Commerce (FCCC) is organizing in partnership with the China IPR SME Helpdesk awebinar on the best practices for R&D activities in China from an IP perspective, in partnership with the Flanders-ChinaChamber of Commerce (FCCC). The session will be held by the IP Business Advisor Matias Zubimendi, who will give apresentation on a successful IP strategy when investing in R&D in China. The webinar will end with a Q&A session whereattendees can raise their questions and interact with the speakers.

Agenda10:30 – Introduction to the webinar and the services of the China IPR SME Helpdesk – Peter Sczigel (China IPR SMEHelpdesk)

10:35 – Presentation of the Flanders-China Chamber of Commerce – Gwenn Sonck (FCCC)

10:40 – Best practices for R&D in China – by Matias Zubimendi (China IPR SME Helpdesk)

11:15 – Q&A session

11:30 – Closing remarks

RegistrationRegister for the free event at this page.

Earlier session: The PPT and video recording of an earlier session can be accessed HERE.

About the China IPR Helpdesk:The China IPR SME Helpdesk provides free information, first-line advice and training to SMEs to protect and enforce theirIPR in China. The Helpdesk’s services are free to European SMEs and SME intermediaries (including EU embassies) andinclude training events in China and Europe; online tools and materials at www.china-iprhelpdesk.eu and tailored advicefrom our experts by phone, email or through the website.

Webinar: Cleantech Opportunities for SMEs in China – 23 June 10:00 am

The Flanders-China Chamber of Commerce and the Province of East-Flanders have the pleasure to invite you to a webinar focused on the Cleantech Opportunities for SME's in China. This webinar will take place on 23 June from 10.00 to 11.00 am.

The programme is as follows:

10.00 am: Introduction by Ms Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce10.05 am: “Cleantech Opportunities in China” by Mr Johnny Browaeys, National Vice-Chair of the Environmental Working Group of the European Union Chamber of Commerce in China and Director Greenment Environment10.20 am: Testimonal of a European Cleantech Company in China

10.35 am: Introduction of Cleantech Flanders by Mr. Frans Snijkers, Director, Cleantech Flanders10.40 am: Announcement from the interprovincial Cleantech project by Mr Pierre Faché, Project Manager I²PCC and Smart Hub Manager Cleantech Flemish Brabant10.45 am: Question and answer session.

Practical Information:Date and time: June 23, 2020 - 10:00 AM - 11:00 AM CEST

Location: Online (Zoom)

Price for members: Free

Price for non-members: Free

SUBSCRIBE HERE

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

Date: 17 June / 10:30 - 11:30 CEST

Event Description:The Flanders-China Chamber of Commerce (FCCC) is organizing in partnership with the China IPR SME Helpdesk awebinar on the best practices for R&D activities in China from an IP perspective, in partnership with the Flanders-ChinaChamber of Commerce (FCCC). The session will be held by the IP Business Advisor Matias Zubimendi, who will give apresentation on a successful IP strategy when investing in R&D in China. The webinar will end with a Q&A session whereattendees can raise their questions and interact with the speakers.

Agenda10:30 – Introduction to the webinar and the services of the China IPR SME Helpdesk – Peter Sczigel (China IPR SMEHelpdesk)

10:35 – Presentation of the Flanders-China Chamber of Commerce – Gwenn Sonck (FCCC)

10:40 – Best practices for R&D in China – by Matias Zubimendi (China IPR SME Helpdesk)

11:15 – Q&A session

11:30 – Closing remarks

RegistrationRegister for the free event at this page.

Earlier session: The PPT and video recording of an earlier session can be accessed HERE.

About the China IPR Helpdesk:The China IPR SME Helpdesk provides free information, first-line advice and training to SMEs to protect and enforce theirIPR in China. The Helpdesk’s services are free to European SMEs and SME intermediaries (including EU embassies) andinclude training events in China and Europe; online tools and materials at www.china-iprhelpdesk.eu and tailored advicefrom our experts by phone, email or through the website.

Webinar: Cleantech Opportunities for SMEs in China – 23 June 10:00 am

The Flanders-China Chamber of Commerce and the Province of East-Flanders have the pleasure to invite you to a webinar focused on the Cleantech Opportunities for SME's in China. This webinar will take place on 23 June from 10.00 to 11.00 am.

The programme is as follows:

10.00 am: Introduction by Ms Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce10.05 am: “Cleantech Opportunities in China” by Mr Johnny Browaeys, National Vice-Chair of the Environmental Working Group of the European Union Chamber of Commerce in China and Director Greenment Environment10.20 am: Testimonal of a European Cleantech Company in China

10.35 am: Introduction of Cleantech Flanders by Mr. Frans Snijkers, Director, Cleantech Flanders10.40 am: Announcement from the interprovincial Cleantech project by Mr Pierre Faché, Project Manager I²PCC and Smart Hub Manager Cleantech Flemish Brabant10.45 am: Question and answer session.

Practical Information:Date and time: June 23, 2020 - 10:00 AM - 11:00 AM CEST

Location: Online (Zoom)

Price for members: Free

Price for non-members: Free

SUBSCRIBE HERE

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

Follow the Flanders-China Chamber of Commerce onLinkedIn – Click here

NEWS FROM OUR PARTNERS“FYDH” International Yacht Club

The FYDH International Yacht Club is hoping to attract yacht builders and investors in berths and clubbuildings, including restaurants, shops, and lounges. A yacht builder in Weihai is also seeking Westerndesigners or design companies for new models. Part-time designers are also welcome. Interested yachtbuilders and investors may send an email to info@flanders-china.be for further information.

Project IntroductionⅠWeihai is located at the eastern tip of the Shandong Peninsula, as well as in the center of Northeast Asia. It is China'snearest city to Korea across the sea.

The Club is located in Weihai Rushan Silver Beach tourist resort, which is known as “China's most beautiful coastline”,“the best beach of the world” and “Oriental Hawaii”.

The sea area of the project is 802,530 square meters, with a total building area of 145,000 square meters. The mainconstructions include 800 yacht berths – 180 berths for small yachts, 380 berths for medium-sized yachts, and 240berths for large yachts – 137,000 square meters of membership clubs; 5,000 square meters waiting hall andcommercial facilities; 3,000 square meters of training and maintenance base; a wharf of 3,000 tons; and a mainbreakwater of 1,629 meters, west breakwater of 230 m, and island breakwater of 311 m.

Project AdvantagesⅡThe Rushan Silver Beach Tourist Resort, where the International Yacht Club is located, has three large beaches, whichcan accommodate 100,000 tourists. The golden coastline stretching 21.7 kilometers is appealing to tourists and is anideal place for travel and holidays.

Rushan City, where the project is located, is in the central area of the three major coastal cities of Qingdao, Yantai andWeihai, with convenient sea, land and air transportation. It is the core area of the Blue Economic Zone of the ShandongPeninsula, the key area of cooperation between China, Japan and South Korea, the gathering area of emerging

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

Follow the Flanders-China Chamber of Commerce onLinkedIn – Click here

NEWS FROM OUR PARTNERS“FYDH” International Yacht Club

The FYDH International Yacht Club is hoping to attract yacht builders and investors in berths and clubbuildings, including restaurants, shops, and lounges. A yacht builder in Weihai is also seeking Westerndesigners or design companies for new models. Part-time designers are also welcome. Interested yachtbuilders and investors may send an email to info@flanders-china.be for further information.

Project IntroductionⅠWeihai is located at the eastern tip of the Shandong Peninsula, as well as in the center of Northeast Asia. It is China'snearest city to Korea across the sea.

The Club is located in Weihai Rushan Silver Beach tourist resort, which is known as “China's most beautiful coastline”,“the best beach of the world” and “Oriental Hawaii”.

The sea area of the project is 802,530 square meters, with a total building area of 145,000 square meters. The mainconstructions include 800 yacht berths – 180 berths for small yachts, 380 berths for medium-sized yachts, and 240berths for large yachts – 137,000 square meters of membership clubs; 5,000 square meters waiting hall andcommercial facilities; 3,000 square meters of training and maintenance base; a wharf of 3,000 tons; and a mainbreakwater of 1,629 meters, west breakwater of 230 m, and island breakwater of 311 m.

Project AdvantagesⅡThe Rushan Silver Beach Tourist Resort, where the International Yacht Club is located, has three large beaches, whichcan accommodate 100,000 tourists. The golden coastline stretching 21.7 kilometers is appealing to tourists and is anideal place for travel and holidays.

Rushan City, where the project is located, is in the central area of the three major coastal cities of Qingdao, Yantai andWeihai, with convenient sea, land and air transportation. It is the core area of the Blue Economic Zone of the ShandongPeninsula, the key area of cooperation between China, Japan and South Korea, the gathering area of emerging

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

industries and the pilot zone of the innovative economy.

The market environment of the project is good, and competition from the same industry, substitutes or potentialcompetitors is not very strong, so there are greater market development opportunities.

Fast growing China already has a considerable number of potential consumers. There are more than 400 yachts in theWeihai area alone with no place to dock. The project site has a vast sea area with industrial foundation of shipmanufacturing and maintenance, and is very suitable for the development of the yacht economy.

The local government attaches great importance to the project and has formulated a series of preferential policies,which will provide strong support for the project.

Investment EstimateⅢThe total investment of the project is estimated to be €83 million.

TRAVELNumber of flights to and from China slowly increasing

After U.S. President Donald Trump said he would barChinese airlines from flying to the U.S. starting on June 16,he partly retracted the measure by allowing Chineseairlines to schedule two flights a week to the U.S. TheU.S. is unhappy because the Chinese aviation regulatordoes not yet agree to let U.S. airlines resume the numberof services they used to offer before the Covid-19pandemic. Before the coronavirus epidemic, on average17,000 people traveled between China and the U.S. everysingle day and flights connecting the two would take offand land every 17 minutes, Wang Yi, the Chinese ForeignMinister, was quoted as saying in media reports in 2019.

The Civil Aviation Administration of China (CAAC) onlyallows one weekly passenger flight on one route per airlineand carriers can't schedule more flights than they carriedout on March 12. Because U.S. passenger airlines hadstopped all flights by March 12, China “effectivelyprecludes U.S. carriers from reinstating scheduledpassenger flights to China,” the U.S. TransportationDepartment said. Delta Air Lines and United Airlineshave asked to resume flights to China this month.According to the latest CAAC flight plan, as many as 64international flights could be added this week, bringing

total international arrivals to about 33,000 a week. As earlyas in May, CAAC Deputy Director Li Jian said it wouldconsider increasing international flights as long as importedvirus risks are under control.

The CAAC is to implement what it calls a “circuit-breaker and reward mechanism” that could determinethe future operations of each airline based on the numberof potential Covid-19 cases that are detected among itspassengers. For instance, if all passengers on one airlinetest negative for three weeks straight, the airline will bepermitted to add one more flight; if five passengers on aflight test positive, the responsible airline would have to haltoperations for a week; if 10 tested positive, the airlinewould be banned for four weeks. All passengers wouldhave to undergo a nucleic acid test upon arrival.

China's market could be a “lifesaver” for Europeanairlines, some of whom have been pushed to the brink ofbankruptcy under the fallout of Covid-19 that has groundedmost planes, industry insiders said. With China steadilyrestarting its economy and the opening of more charteredflights between China and foreign countries, someEuropean business representatives told the Global Timesthat they have been looking to China to “play a role” inboosting European carriers' revenues and for otherreforms in Beijing in the post-virus era to ameliorate theirfinances. Major European airlines including LufthansaGroup and Air France-KLM reported massive net losses inthe first quarter due to the pandemic. The operating lossesof Lufthansa, the largest European carrier, hit €1.2 billionduring the first three months of the year. Industry insiderspredict that the second-quarter performance will be worsethan the first quarter.

While the recovery of the European aviation market hingeson the extent to which the Covid-19 pandemic is broughtunder firm control, “what China could do is at some pointallow European airlines to resume flights to China undercertain testing and quarantine procedures,” Joerg Wuttke,President of the EUCCC, told the Global Times. “Whentravel resumes, China can play a role. And there is a

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

industries and the pilot zone of the innovative economy.

The market environment of the project is good, and competition from the same industry, substitutes or potentialcompetitors is not very strong, so there are greater market development opportunities.

Fast growing China already has a considerable number of potential consumers. There are more than 400 yachts in theWeihai area alone with no place to dock. The project site has a vast sea area with industrial foundation of shipmanufacturing and maintenance, and is very suitable for the development of the yacht economy.

The local government attaches great importance to the project and has formulated a series of preferential policies,which will provide strong support for the project.

Investment EstimateⅢThe total investment of the project is estimated to be €83 million.

TRAVELNumber of flights to and from China slowly increasing

After U.S. President Donald Trump said he would barChinese airlines from flying to the U.S. starting on June 16,he partly retracted the measure by allowing Chineseairlines to schedule two flights a week to the U.S. TheU.S. is unhappy because the Chinese aviation regulatordoes not yet agree to let U.S. airlines resume the numberof services they used to offer before the Covid-19pandemic. Before the coronavirus epidemic, on average17,000 people traveled between China and the U.S. everysingle day and flights connecting the two would take offand land every 17 minutes, Wang Yi, the Chinese ForeignMinister, was quoted as saying in media reports in 2019.

The Civil Aviation Administration of China (CAAC) onlyallows one weekly passenger flight on one route per airlineand carriers can't schedule more flights than they carriedout on March 12. Because U.S. passenger airlines hadstopped all flights by March 12, China “effectivelyprecludes U.S. carriers from reinstating scheduledpassenger flights to China,” the U.S. TransportationDepartment said. Delta Air Lines and United Airlineshave asked to resume flights to China this month.According to the latest CAAC flight plan, as many as 64international flights could be added this week, bringing

total international arrivals to about 33,000 a week. As earlyas in May, CAAC Deputy Director Li Jian said it wouldconsider increasing international flights as long as importedvirus risks are under control.

The CAAC is to implement what it calls a “circuit-breaker and reward mechanism” that could determinethe future operations of each airline based on the numberof potential Covid-19 cases that are detected among itspassengers. For instance, if all passengers on one airlinetest negative for three weeks straight, the airline will bepermitted to add one more flight; if five passengers on aflight test positive, the responsible airline would have to haltoperations for a week; if 10 tested positive, the airlinewould be banned for four weeks. All passengers wouldhave to undergo a nucleic acid test upon arrival.

China's market could be a “lifesaver” for Europeanairlines, some of whom have been pushed to the brink ofbankruptcy under the fallout of Covid-19 that has groundedmost planes, industry insiders said. With China steadilyrestarting its economy and the opening of more charteredflights between China and foreign countries, someEuropean business representatives told the Global Timesthat they have been looking to China to “play a role” inboosting European carriers' revenues and for otherreforms in Beijing in the post-virus era to ameliorate theirfinances. Major European airlines including LufthansaGroup and Air France-KLM reported massive net losses inthe first quarter due to the pandemic. The operating lossesof Lufthansa, the largest European carrier, hit €1.2 billionduring the first three months of the year. Industry insiderspredict that the second-quarter performance will be worsethan the first quarter.

While the recovery of the European aviation market hingeson the extent to which the Covid-19 pandemic is broughtunder firm control, “what China could do is at some pointallow European airlines to resume flights to China undercertain testing and quarantine procedures,” Joerg Wuttke,President of the EUCCC, told the Global Times. “Whentravel resumes, China can play a role. And there is a

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

necessity for a uniform approach when opening up again,”Wuttke added. Under the “Five-One” policy launched bythe Chinese government in March that aims to curbimported Covid-19 infections, one European airline can flyto one Chinese city per week, and occasionally charteredflights between China and European nations are allowed.The EUCCC also said in a report that European countrieshave been looking to upgrade air traffic rights with China. Italso urged the aviation regulator in China to reform slotallocation procedures, financial support practices, and theair traffic management system to bring operations more inline with international norms, the Global Times reports.

Two Lufthansa charter flights already landed in Chinain the past two weeks to return managers and staff ofmainly German enterprises to China. They neededspecial visas to be able to return and were required to stay

14 days in quarantine. One engineer tested positive for thecoronavirus upon arrival. All the German passengers tooka nucleic acid test before departure, and they will take dualtests (nucleic acid and antibodies) during the quarantineperiod. A survey by the German Chamber of Commerce inMay showed about 2,000 to 2,500 Germany experts,employees and their families want to fly back to China onchartered planes.

There is also a fast track entry mechanism between Chinaand South Korea since May 1. South Koreans are requiredto take three coronavirus tests – one before departure, oneat Chinese customs and the third one before resumingwork. They must observe the epidemic prevention rules oflocal governments in the places where they work.

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

FOREIGN TRADEMaster plan for Hainan free trade port unveiled

China unveiled a much-anticipated 14,000 wordsmaster plan for the Hainan free trade port, aiming tobuild the 35,000 sq km tropical island province into aglobally influential free trade port by the middle of thecentury. Chinese President Xi Jinping announced thedecision to develop Hainan into a pilot free trade zoneduring a visit to the island in April 2018. The blueprintsinclude numerous policies, such as duty-free import statusfor a broad range of industries, the gradual opening-up ofthe capital account, more data access, and freer cross-border flows of people and capital. To achieve these goals,a set of free trade port policies focusing on trade andinvestment liberalization and facilitation across the entireisland of Hainan will be rolled out by 2025 and be refinedby 2035, according to the plan jointly issued by the CentralCommittee of the Communist Party of China and theChinese government. The authorities expect to makeHainan, China’s largest special economic zone, thefrontline of China’s integration into the global economicsystem. Chinese President Xi Jinping called for moreefforts to free minds and enable bold innovations soreform measures can be rolled out immediately aftersuccessful test runs.

Chinese experts said the rise of a world-class free trade

port from what are now picturesque beaches will redefineChina's relationships with its major trading and investmentpartners in the decades to come. “Hainan will morph frombeing the remote southernmost province of China tobecome the focal point of three large regions: the Chinesehinterland, Northeast Asia featuring South Korea andJapan, and the vast market of the Association of SoutheastAsian Nations (ASEAN),” said Liang Haiming, Dean of theBelt and Road Institute at Hainan University. ASEAN isbecoming increasingly important as a trade and investmentpartner of China amid intensifying trade conflicts betweenChina and the U.S. ASEAN overtook the EU as China'slargest trading partner in the first quarter of 2020 andASEAN's standing will be further supported by the signingof the Regional Comprehensive Economic Partnership freetrade agreement expected later in 2020.

The China-proposed Belt and Road Initiative (BRI) willalso have Hainan as a vital node. “Companies fromcountries and regions along the route of the BRI areexpected to flock in to invest in China's special zones,”Liang said. New foreign direct investment (FDI) in thetourism, modern services and high-tech sectors will beexempted from corporate income tax until 2025, accordingto the blueprint. Foreign educational institutions in science,engineering, agriculture, and in medical and technicaltraining, can also set up wholly-owned entities on theisland. Tian Yun, Vice Director of the Beijing EconomicOperation Association, told the Global Times that theHainan free trade port will be an experiment in how Chinacan become a globally recognized developed country. “It isa pilot project with China in the driver's seat to lead thenext round of globalization, amid a wave of anti-globalization sentiment in some major Western countries,”Tian noted. The master plan also contains proposals tobuild innovation centers and trial areas for blockchaintechnology, cruise ships and the yacht sector, the GlobalTimes reports.

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

necessity for a uniform approach when opening up again,”Wuttke added. Under the “Five-One” policy launched bythe Chinese government in March that aims to curbimported Covid-19 infections, one European airline can flyto one Chinese city per week, and occasionally charteredflights between China and European nations are allowed.The EUCCC also said in a report that European countrieshave been looking to upgrade air traffic rights with China. Italso urged the aviation regulator in China to reform slotallocation procedures, financial support practices, and theair traffic management system to bring operations more inline with international norms, the Global Times reports.

Two Lufthansa charter flights already landed in Chinain the past two weeks to return managers and staff ofmainly German enterprises to China. They neededspecial visas to be able to return and were required to stay

14 days in quarantine. One engineer tested positive for thecoronavirus upon arrival. All the German passengers tooka nucleic acid test before departure, and they will take dualtests (nucleic acid and antibodies) during the quarantineperiod. A survey by the German Chamber of Commerce inMay showed about 2,000 to 2,500 Germany experts,employees and their families want to fly back to China onchartered planes.

There is also a fast track entry mechanism between Chinaand South Korea since May 1. South Koreans are requiredto take three coronavirus tests – one before departure, oneat Chinese customs and the third one before resumingwork. They must observe the epidemic prevention rules oflocal governments in the places where they work.

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

FOREIGN TRADEMaster plan for Hainan free trade port unveiled

China unveiled a much-anticipated 14,000 wordsmaster plan for the Hainan free trade port, aiming tobuild the 35,000 sq km tropical island province into aglobally influential free trade port by the middle of thecentury. Chinese President Xi Jinping announced thedecision to develop Hainan into a pilot free trade zoneduring a visit to the island in April 2018. The blueprintsinclude numerous policies, such as duty-free import statusfor a broad range of industries, the gradual opening-up ofthe capital account, more data access, and freer cross-border flows of people and capital. To achieve these goals,a set of free trade port policies focusing on trade andinvestment liberalization and facilitation across the entireisland of Hainan will be rolled out by 2025 and be refinedby 2035, according to the plan jointly issued by the CentralCommittee of the Communist Party of China and theChinese government. The authorities expect to makeHainan, China’s largest special economic zone, thefrontline of China’s integration into the global economicsystem. Chinese President Xi Jinping called for moreefforts to free minds and enable bold innovations soreform measures can be rolled out immediately aftersuccessful test runs.

Chinese experts said the rise of a world-class free trade

port from what are now picturesque beaches will redefineChina's relationships with its major trading and investmentpartners in the decades to come. “Hainan will morph frombeing the remote southernmost province of China tobecome the focal point of three large regions: the Chinesehinterland, Northeast Asia featuring South Korea andJapan, and the vast market of the Association of SoutheastAsian Nations (ASEAN),” said Liang Haiming, Dean of theBelt and Road Institute at Hainan University. ASEAN isbecoming increasingly important as a trade and investmentpartner of China amid intensifying trade conflicts betweenChina and the U.S. ASEAN overtook the EU as China'slargest trading partner in the first quarter of 2020 andASEAN's standing will be further supported by the signingof the Regional Comprehensive Economic Partnership freetrade agreement expected later in 2020.

The China-proposed Belt and Road Initiative (BRI) willalso have Hainan as a vital node. “Companies fromcountries and regions along the route of the BRI areexpected to flock in to invest in China's special zones,”Liang said. New foreign direct investment (FDI) in thetourism, modern services and high-tech sectors will beexempted from corporate income tax until 2025, accordingto the blueprint. Foreign educational institutions in science,engineering, agriculture, and in medical and technicaltraining, can also set up wholly-owned entities on theisland. Tian Yun, Vice Director of the Beijing EconomicOperation Association, told the Global Times that theHainan free trade port will be an experiment in how Chinacan become a globally recognized developed country. “It isa pilot project with China in the driver's seat to lead thenext round of globalization, amid a wave of anti-globalization sentiment in some major Western countries,”Tian noted. The master plan also contains proposals tobuild innovation centers and trial areas for blockchaintechnology, cruise ships and the yacht sector, the GlobalTimes reports.

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

Instead of rushing for quick results, China will advance theplan gradually, the Shanghai Daily adds. Hainan will begiven more autonomy in reform and will be encouraged tomake both the laws and the regulatory system moreflexible and efficient, thus clearing institutional obstacleshampering the flow of production factors. The constructionof the free trade port will provide support to nationalstrategic goals in terms of institutional innovation, growthimpetus and greater opening-up. The master plan alsoenvisions grasping opportunities in the technological andindustrial revolution, focusing on tourism, modern servicesand high-tech industries.

Shanghai’s free trade zone (FTZ) unveiled a raft ofmeasures aimed to further open up the YangshanSpecial Comprehensive Bonded Zone. The eventual aimis to turn Yangshan, covering just over 8 kilometers and akey gateway to the East China sea, into an internationallyrecognized free trade port. The zone includes smallYangshan island, Luchao Port and the southern part of the

Pudong International airport. Shanghai also wants todevelop the integration of onshore and off-shore business,finance, trade and industry, Wu Wei, Deputy Director of theLingang Special Area Administrative Committee, said.Yangshan island will focus on shipping and logistics, portservices, the international trans-shipment trade,international transfer and assembly, and otherbusinesses. Luchao Port will focus on attracting majorinternational companies to establish their regionalheadquarters and becoming a hub for bulk commodities. Italso aims to be a center for financial leasing, offshoretrade, cross-border finance, international research anddevelopment, and manufacturing and to become amultifunctional cross-border trade hub. The southern partof the Pudong international airport will become a civilaviation innovation demonstration area, prioritizing aviationresearch and development and manufacturing, air freightcold chain logistics, and aviation services, the ShanghaiDaily reports.

RETAIL

“618” shopping festival off to a strong start as consumers are eager to spend

China's first nationwide shopping spree after theCovid-19 endemic got off to a strong start, reflecting agradual revival of consumer confidence amid brightereconomic prospects. Live-streaming on Alibaba-backedTmall.com generated transactions valued at CNY2 billionwithin the first 90 minutes on the first day of the “618”shopping festival, which lasts until June 20. The companysaid it will invite 600 entrepreneurs to give live-streamingpresentations during the shopping festival, including DongMingzhu, Chairwoman of Chinese home appliance firmGree Electric Appliances, which operates more than30,000 brick-and-mortar stores across the country. Apple’sperformance during the largest mid-year shopping festivalin China is in the spotlight. Sales of iPhones on Alibaba-backed Tmall exceeded CNY500 million within five hourson June 1 – a record for iPhone on the platform andequivalent to a day's sales in China, said Alibaba. Anothere-commerce platform JD.com also had a better-than-expected performance on the first day of the shoppingfestival, with sales of luxury products skyrocketing 400%year-on-year in the first hour, and sales of cosmetics

surging 500%.

One white-collar worker in Beijing commented to theGlobal Times that “as most Chinese cities have come outof lockdown, I believe that more consumers want to spendafter a long period of staying inside”. Dong Dengxin,Director of the Finance and Securities Institute at theWuhan University of Science and Technology, told theGlobal Times that online shopping will be a highlight ofChina's economic growth this year. He predicted the sectorwill grow at least 20% in the second quarter. The numberof packages handled in May in Zhejiang province reached1.68 billion, up 52.5% year-on-year. Wei Jianguo, formerChinese Vice Commerce Minister, told the Global Timesthat China is expected to exceed the U.S. to become thelargest consumption market this year. “Domestic retailsales are expected to reach CNY45 trillion in 2020, up 8%year-on-year, with new types of consumption predicted tobe robust,” he said.

The Shanghai Daily remarks that new habits of shoppingand even dining are appearing. Research and data firmKantar, in a global survey of more than 45,000 consumersin late April, found a third of households increased theironline spending during lockdown. At the same time, thepercentage of people who say they will pay more attentionto prices has increased to 68% from 59% about one monthago. Much discretionary spending will be put on hold, asthe risks and uncertainties experienced during thepandemic made people save more. “E-commerce andparticularly ensuring a great customer experience need tobecome a mainstay of every consumer brand,” said RosieHawkins, Chief Innovation Officer at Kantar.

About two-thirds of respondents in the Kantar surveysaid they prefer to purchase goods and services from

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

Instead of rushing for quick results, China will advance theplan gradually, the Shanghai Daily adds. Hainan will begiven more autonomy in reform and will be encouraged tomake both the laws and the regulatory system moreflexible and efficient, thus clearing institutional obstacleshampering the flow of production factors. The constructionof the free trade port will provide support to nationalstrategic goals in terms of institutional innovation, growthimpetus and greater opening-up. The master plan alsoenvisions grasping opportunities in the technological andindustrial revolution, focusing on tourism, modern servicesand high-tech industries.

Shanghai’s free trade zone (FTZ) unveiled a raft ofmeasures aimed to further open up the YangshanSpecial Comprehensive Bonded Zone. The eventual aimis to turn Yangshan, covering just over 8 kilometers and akey gateway to the East China sea, into an internationallyrecognized free trade port. The zone includes smallYangshan island, Luchao Port and the southern part of the

Pudong International airport. Shanghai also wants todevelop the integration of onshore and off-shore business,finance, trade and industry, Wu Wei, Deputy Director of theLingang Special Area Administrative Committee, said.Yangshan island will focus on shipping and logistics, portservices, the international trans-shipment trade,international transfer and assembly, and otherbusinesses. Luchao Port will focus on attracting majorinternational companies to establish their regionalheadquarters and becoming a hub for bulk commodities. Italso aims to be a center for financial leasing, offshoretrade, cross-border finance, international research anddevelopment, and manufacturing and to become amultifunctional cross-border trade hub. The southern partof the Pudong international airport will become a civilaviation innovation demonstration area, prioritizing aviationresearch and development and manufacturing, air freightcold chain logistics, and aviation services, the ShanghaiDaily reports.

RETAIL

“618” shopping festival off to a strong start as consumers are eager to spend

China's first nationwide shopping spree after theCovid-19 endemic got off to a strong start, reflecting agradual revival of consumer confidence amid brightereconomic prospects. Live-streaming on Alibaba-backedTmall.com generated transactions valued at CNY2 billionwithin the first 90 minutes on the first day of the “618”shopping festival, which lasts until June 20. The companysaid it will invite 600 entrepreneurs to give live-streamingpresentations during the shopping festival, including DongMingzhu, Chairwoman of Chinese home appliance firmGree Electric Appliances, which operates more than30,000 brick-and-mortar stores across the country. Apple’sperformance during the largest mid-year shopping festivalin China is in the spotlight. Sales of iPhones on Alibaba-backed Tmall exceeded CNY500 million within five hourson June 1 – a record for iPhone on the platform andequivalent to a day's sales in China, said Alibaba. Anothere-commerce platform JD.com also had a better-than-expected performance on the first day of the shoppingfestival, with sales of luxury products skyrocketing 400%year-on-year in the first hour, and sales of cosmetics

surging 500%.

One white-collar worker in Beijing commented to theGlobal Times that “as most Chinese cities have come outof lockdown, I believe that more consumers want to spendafter a long period of staying inside”. Dong Dengxin,Director of the Finance and Securities Institute at theWuhan University of Science and Technology, told theGlobal Times that online shopping will be a highlight ofChina's economic growth this year. He predicted the sectorwill grow at least 20% in the second quarter. The numberof packages handled in May in Zhejiang province reached1.68 billion, up 52.5% year-on-year. Wei Jianguo, formerChinese Vice Commerce Minister, told the Global Timesthat China is expected to exceed the U.S. to become thelargest consumption market this year. “Domestic retailsales are expected to reach CNY45 trillion in 2020, up 8%year-on-year, with new types of consumption predicted tobe robust,” he said.

The Shanghai Daily remarks that new habits of shoppingand even dining are appearing. Research and data firmKantar, in a global survey of more than 45,000 consumersin late April, found a third of households increased theironline spending during lockdown. At the same time, thepercentage of people who say they will pay more attentionto prices has increased to 68% from 59% about one monthago. Much discretionary spending will be put on hold, asthe risks and uncertainties experienced during thepandemic made people save more. “E-commerce andparticularly ensuring a great customer experience need tobecome a mainstay of every consumer brand,” said RosieHawkins, Chief Innovation Officer at Kantar.

About two-thirds of respondents in the Kantar surveysaid they prefer to purchase goods and services from

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

their own country. China has become the top countryunder the “buy local” slogan, with 87% of people hereexpressing that view, followed by consumers in Italy, SouthKorea and Spain. Retailers or manufacturers that wereslow to respond to the online shift will be left behind forcertain, Christine Peng, Manager of the China ConsumerSector at Swiss investment bank UBS said. “In the shortterm, discounts will be a major driver of consumerspending,” Peng added. Out of 10 categories whereconsumers said they intend to increase spending in thenext six months, the majority are related to dailynecessities. Nutritional supplements were the oneexception. Over 55% of respondents said they havepurchased more lower-price products following the virus

outbreak, and 57% said they intend to buy moresustainable or environmentally friendly products in thefuture.

JD.com came up with the idea of a mid-year sale morethan ten years ago and it has since become the secondbiggest shopping festival after Singles Day on November11. The June 18 sales campaign has turned into a multi-week event and this year online retailers are offering bigdiscounts to woo consumers gradually returning to theirshopping routines. More than 25,000 brands from 92countries and regions are offering over 400,000 newproducts through Alibaba’s imported goods subsidiaryTmall Global.

CHINA NEWS ROUND-UPHong Kong to relax quarantine rules for executives of largest listed firms Hong Kong plans to relax the 14-day quarantinerequirement on entering the territory for executives of480 of the largest companies listed in Hong Kong. “Wewant to open the border step-by-step”, says ChristopherHui, Secretary for Financial Services and the Treasury.Those companies will be able to send two directors orexecutives every month to the city for the signing of deals,to attend meetings and for other company affairs. Auditorswho need to visit mainland Chinese companies, as well asdirectors who need to come to Hong Kong for regulatorymeetings, such as initial public offering (IPO) hearings,have been allowed to move across the border withmainland China without being quarantined since lastmonth. The latest announcement expands the relaxation ofquarantine rules to cover other business activities. Therelaxation will cover mainland Chinese companies such asTencent Holdings and Alibaba Group Holding, the twolargest companies listed in Hong Kong. Moreover,executives of insurer AIA or HSBC, for instance, who needto go to mainland China for these purposes, will not bequarantined on their return to Hong Kong.

The move is the Hong Kong government’s latest effortaimed at bringing back deals and other business activity toreboot the city’s economy, Hui said. “We want to open theborder step-by-step, and it will be better to allow a limitednumber of people first, before expanding it further. It is,however, an important step to allow large companies toresume cross-border business travel to handle theirbusiness activities,” Hui said.

The 480 companies for whom cross-border travel has beeneased represent about 95% of the total marketcapitalization – HKD34 trillion – of the Hong Kong stockmarket. Mike Wong, Chief Executive of The Chamber ofHong Kong Listed Companies, welcomed the move, butsaid he wanted to see all listed companies covered. The

relaxation excludes about 1,900 smaller players. “All2,400-plus listed companies have a lot of cross-borderbusiness. It is important to relax the quarantine rule andresume normal business activity,” Wong said.

MOFCOM: EU-China investment agreement still on track China and the European Union have not changed theirgoal of concluding talks regarding the EU-ChinaComprehensive Agreement on Investment in 2020, setafter the 21st China-EU leaders' meeting in Brussels lastyear, the Ministry of Commerce (MOFCOM) said. MinistrySpokesman Gao Feng said China and the EU hope thisagreement will benefit companies and investors from bothsides at an early date, especially in the context of theimpact of the Covid-19 epidemic on the global economy.An early deal is conducive to deepening China-EUeconomic and trade cooperation and facilitating globaleconomic recovery, Gao said. He added that negotiatingteams from both sides have overcome the difficultiescaused by the epidemic and actively promoted negotiationsin recent months. They held three rounds of talks withfruitful results between March and May. The two sideshave agreed on the negotiation arrangements for the nextfew months. Investment treaty talks between China and theEuropean Union are entering their final phase, but issuessuch as the role of state-owned enterprises (SOEs) andthe hefty subsidies they enjoy remain major stumblingblocks. The Chinese government is expected to unveil athree-year action plan for SOE reform soon.

Affected by the Covid-19 outbreak, China's foreign tradevolume fell to CNY9.07 trillion in the first four months of thisyear, declining 4.9% year-on-year. However, the country'simports and exports recovered in April, according to theGeneral Administration of Customs. MOFCOM SpokesmanGao reiterated that China has always opposed politicizingeconomic and trade issues. Because the epidemic has hada comprehensive impact on global manufacturing activities

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

their own country. China has become the top countryunder the “buy local” slogan, with 87% of people hereexpressing that view, followed by consumers in Italy, SouthKorea and Spain. Retailers or manufacturers that wereslow to respond to the online shift will be left behind forcertain, Christine Peng, Manager of the China ConsumerSector at Swiss investment bank UBS said. “In the shortterm, discounts will be a major driver of consumerspending,” Peng added. Out of 10 categories whereconsumers said they intend to increase spending in thenext six months, the majority are related to dailynecessities. Nutritional supplements were the oneexception. Over 55% of respondents said they havepurchased more lower-price products following the virus

outbreak, and 57% said they intend to buy moresustainable or environmentally friendly products in thefuture.

JD.com came up with the idea of a mid-year sale morethan ten years ago and it has since become the secondbiggest shopping festival after Singles Day on November11. The June 18 sales campaign has turned into a multi-week event and this year online retailers are offering bigdiscounts to woo consumers gradually returning to theirshopping routines. More than 25,000 brands from 92countries and regions are offering over 400,000 newproducts through Alibaba’s imported goods subsidiaryTmall Global.

CHINA NEWS ROUND-UPHong Kong to relax quarantine rules for executives of largest listed firms Hong Kong plans to relax the 14-day quarantinerequirement on entering the territory for executives of480 of the largest companies listed in Hong Kong. “Wewant to open the border step-by-step”, says ChristopherHui, Secretary for Financial Services and the Treasury.Those companies will be able to send two directors orexecutives every month to the city for the signing of deals,to attend meetings and for other company affairs. Auditorswho need to visit mainland Chinese companies, as well asdirectors who need to come to Hong Kong for regulatorymeetings, such as initial public offering (IPO) hearings,have been allowed to move across the border withmainland China without being quarantined since lastmonth. The latest announcement expands the relaxation ofquarantine rules to cover other business activities. Therelaxation will cover mainland Chinese companies such asTencent Holdings and Alibaba Group Holding, the twolargest companies listed in Hong Kong. Moreover,executives of insurer AIA or HSBC, for instance, who needto go to mainland China for these purposes, will not bequarantined on their return to Hong Kong.

The move is the Hong Kong government’s latest effortaimed at bringing back deals and other business activity toreboot the city’s economy, Hui said. “We want to open theborder step-by-step, and it will be better to allow a limitednumber of people first, before expanding it further. It is,however, an important step to allow large companies toresume cross-border business travel to handle theirbusiness activities,” Hui said.

The 480 companies for whom cross-border travel has beeneased represent about 95% of the total marketcapitalization – HKD34 trillion – of the Hong Kong stockmarket. Mike Wong, Chief Executive of The Chamber ofHong Kong Listed Companies, welcomed the move, butsaid he wanted to see all listed companies covered. The

relaxation excludes about 1,900 smaller players. “All2,400-plus listed companies have a lot of cross-borderbusiness. It is important to relax the quarantine rule andresume normal business activity,” Wong said.

MOFCOM: EU-China investment agreement still on track China and the European Union have not changed theirgoal of concluding talks regarding the EU-ChinaComprehensive Agreement on Investment in 2020, setafter the 21st China-EU leaders' meeting in Brussels lastyear, the Ministry of Commerce (MOFCOM) said. MinistrySpokesman Gao Feng said China and the EU hope thisagreement will benefit companies and investors from bothsides at an early date, especially in the context of theimpact of the Covid-19 epidemic on the global economy.An early deal is conducive to deepening China-EUeconomic and trade cooperation and facilitating globaleconomic recovery, Gao said. He added that negotiatingteams from both sides have overcome the difficultiescaused by the epidemic and actively promoted negotiationsin recent months. They held three rounds of talks withfruitful results between March and May. The two sideshave agreed on the negotiation arrangements for the nextfew months. Investment treaty talks between China and theEuropean Union are entering their final phase, but issuessuch as the role of state-owned enterprises (SOEs) andthe hefty subsidies they enjoy remain major stumblingblocks. The Chinese government is expected to unveil athree-year action plan for SOE reform soon.

Affected by the Covid-19 outbreak, China's foreign tradevolume fell to CNY9.07 trillion in the first four months of thisyear, declining 4.9% year-on-year. However, the country'simports and exports recovered in April, according to theGeneral Administration of Customs. MOFCOM SpokesmanGao reiterated that China has always opposed politicizingeconomic and trade issues. Because the epidemic has hada comprehensive impact on global manufacturing activities

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

and market demand, countries should strengthencooperation and take concrete actions to help the recoveryof the global economy as soon as possible, he added.China will continue to unswervingly expand reform andopening-up, relax market access, actively raise imports,strengthen international cooperation, and contribute to thestable growth of the world economy and trade, said Gao.

China has rolled out a wide range of policies and measuresto help exporters resume production since the epidemicbroke out. The government introduced incentives to givefirms financial support, help employees return to theworkplace and reduce operational costs, the China Dailyreports.

The United Kingdom is currently conducting a jointtrade and investment review with China, UK Secretaryof State for International Trade Elizabeth Truss said,adding that she looks forward to co-chairing a meeting ofthe UK-China Joint Economic and Trade Commission withChinese Minister of Commerce Zhong Shan later this yearto discuss the trade review. The UK's bilateral trade withChina reached GBP104.5 billion in 2019, surpassingGBP100 billion for the first time and growing more quicklythan any other region. In the first four months of this year,trade between China and the UK amounted to CNY147.74billion, falling 17% on a yearly basis, the China Dailyreports.

China reports new successes in fight against coronavirusChina’s capital Beijing has adjusted its emergencyresponse level to the coronavirus epidemic to thelowest – the third level – and lifted restrictions on varioussectors, including residential community management,outdoor activities, movement of people from outside thecapital and tourism starting on June 6, as the capital hasseen zero new Covid-19 cases for 50 consecutive days.Beijing residential communities will no longer conducttemperature checks on residents, and deliverymen andthose from outside the community will be allowed to enter iftheir health QR code check is green. Outdoor exercisingand entertainment facilities will be reopened. Beijing willgradually allow domestic group tours, although outboundtourism will remain suspended. Beijing will also allowpatients from outside the capital to seek medical treatmentat Beijing's hospitals. Beijing will gradually open parks,scenic spots, gyms, libraries, museums and certain indoorvenues, but cinemas are still not included. All passengersand crew of international flights to Beijing should stillundergo screening and nucleic acid tests before and afterentering Beijing.

Wang Guangfa, a respiratory expert at Peking UniversityFirst Hospital, told the Global Times that Beijing's loweringof its Covid-19 response level shows the capital isreturning to normal and is taking a further step to restartingthe economy. If there is no outbreak of the virus in onemonth, indoor entertainment facilities, such as cinemas,can reopen, and facial masks can be taken off whenpeople are indoors at that time, Wang told the GlobalTimes.

On June 7, China announced there were no longer any

high-risk regions nationwide after Fengman district inJilin province adjusted its Covid-19 response level to low.Meanwhile, Wuhan has completed screening the entire cityfor Covid-19 infections, completing 9.89 million nucleic acidtests between May 14 and June 1. “No confirmed caseshave been found during the tests and a total of 300symptomatic patients have been found in Wuhan while nocases of asymptomatic persons infecting others have beenfound,” an official said. The last three Covid-19 patients inWuhan, the Chinese city most affected by the pandemic,have recovered and been discharged from hospital. In thesurrounding Hubei province, all patients have also beendischarged. In total, the province reported 68,135 cases,with 4,512 deaths. The province announced it hadachieved “seven zeros”: zero new Covid-19 cases, zeronew suspected cases, zero new deaths, zero silentcarriers, zero imported cases, zero existing confirmedcases and zero existing suspected cases, the GlobalTimes reports.

On June 7, the State Council Information Office publisheda White Paper entitled “Fighting COVID-19: China inAction”, which can be read here.

New home sales in Shanghai soaring to new highs New home sales in Shanghai soared to a 44-monthhigh in May amid a burst of pent-up demand frombuyers as the negative impact of the coronavirus outbreaksubsides in China, the latest market data showed. By area,the amount of new residential properties sold, excludinggovernment-subsidized affordable housing, jumped 72.5%from April to surpass 1.05 million square meters, accordingto a regular monthly report by Shanghai Centaline PropertyConsultancy. “April’s abundant new supply did help boostmomentum among home seekers with luxury productsregistering robust sales, raising the monthly average priceto the highest since November 2018,” said Lu Wenxi,Centaline’s Senior Research Manager. “However, thestrength might not extend for another month, partly due toa recent fall in new supply, while June is the traditional lowmonth for property sales as the annual plum rain seasonapproaches.”

The average price of a new home rose 5.3% from April toCNY63,341 per square meter due to a shift toward high-end properties. Across the city, a luxury development inBiyun in the Pudong New Area, outperformed all lastmonth after selling 42,446 sq m, or 154 apartments, for anaverage price of CNY110,255 per sq m. It was trailed by aChina Vanke project in outlying Qingpu district, whichunloaded nearly 30,000 sq m, or 252 units, for an averageprice of over CNY58,000 per sq m. By price point, half ofMay’s 10 bestselling projects bore a price tag of overCNY90,000 per sq m with three of them exceeding theCNY100,000-per-sq-m mark, Centaline data showed.

On the supply side, around 603,000 square meters of newhouses covering all segments from luxury to low-end werelaunched last month, a drop of 36.5% from April. Buyingmomentum among home seekers in Shanghai continued tobuild in the last week of May as expected, despite a drop innew supply. The total area of new residential properties

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

and market demand, countries should strengthencooperation and take concrete actions to help the recoveryof the global economy as soon as possible, he added.China will continue to unswervingly expand reform andopening-up, relax market access, actively raise imports,strengthen international cooperation, and contribute to thestable growth of the world economy and trade, said Gao.

China has rolled out a wide range of policies and measuresto help exporters resume production since the epidemicbroke out. The government introduced incentives to givefirms financial support, help employees return to theworkplace and reduce operational costs, the China Dailyreports.

The United Kingdom is currently conducting a jointtrade and investment review with China, UK Secretaryof State for International Trade Elizabeth Truss said,adding that she looks forward to co-chairing a meeting ofthe UK-China Joint Economic and Trade Commission withChinese Minister of Commerce Zhong Shan later this yearto discuss the trade review. The UK's bilateral trade withChina reached GBP104.5 billion in 2019, surpassingGBP100 billion for the first time and growing more quicklythan any other region. In the first four months of this year,trade between China and the UK amounted to CNY147.74billion, falling 17% on a yearly basis, the China Dailyreports.

China reports new successes in fight against coronavirusChina’s capital Beijing has adjusted its emergencyresponse level to the coronavirus epidemic to thelowest – the third level – and lifted restrictions on varioussectors, including residential community management,outdoor activities, movement of people from outside thecapital and tourism starting on June 6, as the capital hasseen zero new Covid-19 cases for 50 consecutive days.Beijing residential communities will no longer conducttemperature checks on residents, and deliverymen andthose from outside the community will be allowed to enter iftheir health QR code check is green. Outdoor exercisingand entertainment facilities will be reopened. Beijing willgradually allow domestic group tours, although outboundtourism will remain suspended. Beijing will also allowpatients from outside the capital to seek medical treatmentat Beijing's hospitals. Beijing will gradually open parks,scenic spots, gyms, libraries, museums and certain indoorvenues, but cinemas are still not included. All passengersand crew of international flights to Beijing should stillundergo screening and nucleic acid tests before and afterentering Beijing.

Wang Guangfa, a respiratory expert at Peking UniversityFirst Hospital, told the Global Times that Beijing's loweringof its Covid-19 response level shows the capital isreturning to normal and is taking a further step to restartingthe economy. If there is no outbreak of the virus in onemonth, indoor entertainment facilities, such as cinemas,can reopen, and facial masks can be taken off whenpeople are indoors at that time, Wang told the GlobalTimes.

On June 7, China announced there were no longer any

high-risk regions nationwide after Fengman district inJilin province adjusted its Covid-19 response level to low.Meanwhile, Wuhan has completed screening the entire cityfor Covid-19 infections, completing 9.89 million nucleic acidtests between May 14 and June 1. “No confirmed caseshave been found during the tests and a total of 300symptomatic patients have been found in Wuhan while nocases of asymptomatic persons infecting others have beenfound,” an official said. The last three Covid-19 patients inWuhan, the Chinese city most affected by the pandemic,have recovered and been discharged from hospital. In thesurrounding Hubei province, all patients have also beendischarged. In total, the province reported 68,135 cases,with 4,512 deaths. The province announced it hadachieved “seven zeros”: zero new Covid-19 cases, zeronew suspected cases, zero new deaths, zero silentcarriers, zero imported cases, zero existing confirmedcases and zero existing suspected cases, the GlobalTimes reports.

On June 7, the State Council Information Office publisheda White Paper entitled “Fighting COVID-19: China inAction”, which can be read here.

New home sales in Shanghai soaring to new highs New home sales in Shanghai soared to a 44-monthhigh in May amid a burst of pent-up demand frombuyers as the negative impact of the coronavirus outbreaksubsides in China, the latest market data showed. By area,the amount of new residential properties sold, excludinggovernment-subsidized affordable housing, jumped 72.5%from April to surpass 1.05 million square meters, accordingto a regular monthly report by Shanghai Centaline PropertyConsultancy. “April’s abundant new supply did help boostmomentum among home seekers with luxury productsregistering robust sales, raising the monthly average priceto the highest since November 2018,” said Lu Wenxi,Centaline’s Senior Research Manager. “However, thestrength might not extend for another month, partly due toa recent fall in new supply, while June is the traditional lowmonth for property sales as the annual plum rain seasonapproaches.”

The average price of a new home rose 5.3% from April toCNY63,341 per square meter due to a shift toward high-end properties. Across the city, a luxury development inBiyun in the Pudong New Area, outperformed all lastmonth after selling 42,446 sq m, or 154 apartments, for anaverage price of CNY110,255 per sq m. It was trailed by aChina Vanke project in outlying Qingpu district, whichunloaded nearly 30,000 sq m, or 252 units, for an averageprice of over CNY58,000 per sq m. By price point, half ofMay’s 10 bestselling projects bore a price tag of overCNY90,000 per sq m with three of them exceeding theCNY100,000-per-sq-m mark, Centaline data showed.

On the supply side, around 603,000 square meters of newhouses covering all segments from luxury to low-end werelaunched last month, a drop of 36.5% from April. Buyingmomentum among home seekers in Shanghai continued tobuild in the last week of May as expected, despite a drop innew supply. The total area of new residential properties

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

sold, excluding government-subsidized affordable housing,rose 22% on the week to around 261,000 square m, theShanghai Daily reports.

Deliveries of NEVs up 43% in first four months Chinese new-energy vehicle (NEV) startups delivered atotal of 23,600 vehicles in the first four months of theyear, a 43% rise year-on-year, according to insurancedata. In April, the startups delivered a total of 9,706vehicles, a jump of 111.7% on-year, driven by more newproducts and a recovery in consumer confidence. China’sauto sales rose 4.4% to 2.07 million vehicles in April,according to the China Association of AutomobileManufacturers (CAAM). NIO reported total sales of 6,951vehicles in the first four months to top the list. LixiangAutomotive ranked second with 5,783, while XpengMotors’ 3,565 vehicles put it in third place. Sales of the topfive NEV startups accounted for most of the total, as therewere very few sales by lower ranked companies, some ofwhom are facing difficulties to survive in a highlycompetitive market.

Independent Market Analyst Zhang Xiaofeng said:“Chinese NEV startups also face competition from U.S.electric carmaker Tesla as the company already lowered itsModel 3 prices in China in early May to CNY271,550,which is very competitive for consumers.” Shanghai-basedWM Motor, which came fourth in the sales list, registered1,047 vehicles in April and 3,284 in the first four months.Fifth-ranked Hozon Auto registered 865 vehicles in Apriland 2,613 from January to April. In the first four mouths,76% of all cars were bought by individuals, the ShanghaiDaily reports.

Construction of charging piles is expected toaccelerate in China this year and companies areinvesting billions of dollars in the electric vehiclebattery support sector, responding to a governmentappeal to develop high-tech infrastructure. China had morethan 1.24 million EV charging piles by the end of 2019,including 531,000 public charging piles and 712,000private ones. The number is expected to reach 5 million bythe end of this year with the ratio of charging piles to EVsat the time seen as one to one. As China's electric fleet isexpected to swell to 162 million vehicles by 2040,according to forecasts by Bloomberg New Energy Finance,it's important to help EV users charge their cars whereverthey go.

China’s vehicle sales are estimated to rise 11.7% on yearin May to 2.14 million, cementing hopes of a recovery inthe world’s biggest auto market with the first back to backmonthly sales increase in about two years. The CAAMexpects January to May auto sales in China to fall23.1% year-on-year to 7.9 million units. In April, China’sauto sales hit 2.07 million units, up 4.4% year-on-year. Still,China’s auto sales are expected to drop 15% this year,from over 25 million vehicles in 2019, according to theShanghai Daily.

China’s exports up 1.4% in May, importsdown 12.7% year-on-yearChina's exports rose by 1.4% year-on-year in yuanterms to CNY1.46 trillion in May. Imports fell by 12.7%to CNY1.01 trillion last month, resulting in a trade surplusof CNY442.75 billion, the General Administration ofCustoms said. Part of the plunge in the value of importscould be explained by falling commodity prices worldwide,said Rajiv Biswas of IHS Markit. Iris Pang, ING ChiefEconomist for China, said another reason was likely a dropin parts bought for re-exports – imported goods that areshipped out after further processing – due to theuncertainty of global demand. Foreign trade of goodsdecreased by 4.9% year-on-year in May to CNY2.47trillion. In the first five months, foreign trade of goodsdropped by 4.9% year-on-year to CNY11.54 trillion,maintaining the same level of decrease during theJanuary-April period.

Medical exports supported Chinese shipments in April andMay, with shipments of textile yarns, fabrics and productsrising 21.3% for the first five months on-year. During theJanuary-May period, ASEAN was China’s largest tradingpartner with trade up by 4.2% year-on-year to CNY1.7trillion, accounting for 14.7% of China’s total foreign trade.Trade with the European Union, the United States andJapan decreased during the period. “Exports benefitedfrom the ASEAN market and exchange rate depreciation,while imports were affected by insufficient domesticdemand and commodity price declines,” said Wang Jun,Chief Economist of Zhongyuan Bank. During the sameperiod, the foreign trade volume of private enterprisesexpanded by 1.8% to CNY5.11 trillion, accounting for44.3% of China’s total foreign trade volume, up by 2.9percentage points from the same period last year. Generaltrade, which represents a longer production chain andhigher added-value, decreased by 4.7% year-on-year inthe first five months, the Shanghai Daily reports.

The recovery in exports over the past two months wasmainly driven by surging shipments of automatic dataprocessing equipment and its parts, textile and plasticproducts, face masks and medical goods, experts said,urging the country's export-oriented companies to analyzeglobal market demand during the post-pandemic era assoon as possible in order to remain competitive. Globalmarket demand for ventilators, face masks, protectiveclothing and testing kits, which are urgently needed in theCovid-19 fight, was the main contributor to boostingChina’s exports of electromechanical, textile and plasticgoods over the past three months, said Zhang Yongjun,Researcher at the China Center for International EconomicExchanges. China exported 70.6 billion face masks, 340million items of protective clothing, 96,700 ventilators, 225million testing kits and 40.29 million infrared thermometersto over 200 countries and regions from March 1 to May 31.But shipments of other major exports such as furniture,clothing, shoes and automobiles all dropped notably inrecent months, showing that the country's foreign trade stillfaces downward pressure, Zhang said, as reported by theChina Daily.

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

sold, excluding government-subsidized affordable housing,rose 22% on the week to around 261,000 square m, theShanghai Daily reports.

Deliveries of NEVs up 43% in first four months Chinese new-energy vehicle (NEV) startups delivered atotal of 23,600 vehicles in the first four months of theyear, a 43% rise year-on-year, according to insurancedata. In April, the startups delivered a total of 9,706vehicles, a jump of 111.7% on-year, driven by more newproducts and a recovery in consumer confidence. China’sauto sales rose 4.4% to 2.07 million vehicles in April,according to the China Association of AutomobileManufacturers (CAAM). NIO reported total sales of 6,951vehicles in the first four months to top the list. LixiangAutomotive ranked second with 5,783, while XpengMotors’ 3,565 vehicles put it in third place. Sales of the topfive NEV startups accounted for most of the total, as therewere very few sales by lower ranked companies, some ofwhom are facing difficulties to survive in a highlycompetitive market.

Independent Market Analyst Zhang Xiaofeng said:“Chinese NEV startups also face competition from U.S.electric carmaker Tesla as the company already lowered itsModel 3 prices in China in early May to CNY271,550,which is very competitive for consumers.” Shanghai-basedWM Motor, which came fourth in the sales list, registered1,047 vehicles in April and 3,284 in the first four months.Fifth-ranked Hozon Auto registered 865 vehicles in Apriland 2,613 from January to April. In the first four mouths,76% of all cars were bought by individuals, the ShanghaiDaily reports.

Construction of charging piles is expected toaccelerate in China this year and companies areinvesting billions of dollars in the electric vehiclebattery support sector, responding to a governmentappeal to develop high-tech infrastructure. China had morethan 1.24 million EV charging piles by the end of 2019,including 531,000 public charging piles and 712,000private ones. The number is expected to reach 5 million bythe end of this year with the ratio of charging piles to EVsat the time seen as one to one. As China's electric fleet isexpected to swell to 162 million vehicles by 2040,according to forecasts by Bloomberg New Energy Finance,it's important to help EV users charge their cars whereverthey go.

China’s vehicle sales are estimated to rise 11.7% on yearin May to 2.14 million, cementing hopes of a recovery inthe world’s biggest auto market with the first back to backmonthly sales increase in about two years. The CAAMexpects January to May auto sales in China to fall23.1% year-on-year to 7.9 million units. In April, China’sauto sales hit 2.07 million units, up 4.4% year-on-year. Still,China’s auto sales are expected to drop 15% this year,from over 25 million vehicles in 2019, according to theShanghai Daily.

China’s exports up 1.4% in May, importsdown 12.7% year-on-yearChina's exports rose by 1.4% year-on-year in yuanterms to CNY1.46 trillion in May. Imports fell by 12.7%to CNY1.01 trillion last month, resulting in a trade surplusof CNY442.75 billion, the General Administration ofCustoms said. Part of the plunge in the value of importscould be explained by falling commodity prices worldwide,said Rajiv Biswas of IHS Markit. Iris Pang, ING ChiefEconomist for China, said another reason was likely a dropin parts bought for re-exports – imported goods that areshipped out after further processing – due to theuncertainty of global demand. Foreign trade of goodsdecreased by 4.9% year-on-year in May to CNY2.47trillion. In the first five months, foreign trade of goodsdropped by 4.9% year-on-year to CNY11.54 trillion,maintaining the same level of decrease during theJanuary-April period.

Medical exports supported Chinese shipments in April andMay, with shipments of textile yarns, fabrics and productsrising 21.3% for the first five months on-year. During theJanuary-May period, ASEAN was China’s largest tradingpartner with trade up by 4.2% year-on-year to CNY1.7trillion, accounting for 14.7% of China’s total foreign trade.Trade with the European Union, the United States andJapan decreased during the period. “Exports benefitedfrom the ASEAN market and exchange rate depreciation,while imports were affected by insufficient domesticdemand and commodity price declines,” said Wang Jun,Chief Economist of Zhongyuan Bank. During the sameperiod, the foreign trade volume of private enterprisesexpanded by 1.8% to CNY5.11 trillion, accounting for44.3% of China’s total foreign trade volume, up by 2.9percentage points from the same period last year. Generaltrade, which represents a longer production chain andhigher added-value, decreased by 4.7% year-on-year inthe first five months, the Shanghai Daily reports.

The recovery in exports over the past two months wasmainly driven by surging shipments of automatic dataprocessing equipment and its parts, textile and plasticproducts, face masks and medical goods, experts said,urging the country's export-oriented companies to analyzeglobal market demand during the post-pandemic era assoon as possible in order to remain competitive. Globalmarket demand for ventilators, face masks, protectiveclothing and testing kits, which are urgently needed in theCovid-19 fight, was the main contributor to boostingChina’s exports of electromechanical, textile and plasticgoods over the past three months, said Zhang Yongjun,Researcher at the China Center for International EconomicExchanges. China exported 70.6 billion face masks, 340million items of protective clothing, 96,700 ventilators, 225million testing kits and 40.29 million infrared thermometersto over 200 countries and regions from March 1 to May 31.But shipments of other major exports such as furniture,clothing, shoes and automobiles all dropped notably inrecent months, showing that the country's foreign trade stillfaces downward pressure, Zhang said, as reported by theChina Daily.

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

China quietly implementing phase onetrade dealChina appears to be quietly moving ahead withimplementing the phase one trade deal with the UnitedStates despite the continuing deterioration in relationsbetween the two countries. In a subtle move behind thescenes, Beijing has shifted the day-to-day authority overChina’s purchases of U.S. farm products, such assoybeans, to the Ministry of Agriculture and Rural Affairsfrom the Ministry of Commerce (MOFCOM). An official atthe Ministry of Commerce confirmed that agriculturalproduct purchases were now in the hands of the Ministry ofAgriculture. The Commerce Ministry, which was the keyministry supporting the trade negotiations with the U.S.headed by Vice Premier Liu He, is not directly involved inthe arrangements for purchase volume or shipments ofU.S. farm products, the official said. The adjustmentsuggests that authority to make the purchases of anadditional USD32 billion in agricultural goods required bythe trade deal is now seen as more of a bureaucratic taskof combining domestic demand with market conditionsrather than a political task.

Beijing still sees the deal as an important way to displaygoodwill even as tensions between Beijing andWashington continue to escalate on other issues, includingthe national security law in Hong Kong and the origin of thecoronavirus, analysts said. The change in authority overChina’s purchase of U.S. farm goods means that China’sstate-owned grain importers could be subject to moreintensive and technical directives from the AgricultureMinistry, which, given its remit, is more sensitive inresponding to domestic demand and supply conditions, aswell as prices from different suppliers, analysts added.

“Implementing the phase one trade deal is crucial tomaintaining U.S.-China relations – both sides shouldsafeguard it,” said Cui Fan, Professor at the University ofInternational Business and Economics in Beijing. Chinesebuyers bought another 200,984 tons of Americansoybeans in the week that ended May 28 for deliverybefore September, and ordered 264,000 tons for the nextmarketing year starting in September, both higher than thefigures for the previous week.

China imported a total of over 7.81 million tons of U.S.soybeans in the first quarter of 2020, three times theamount during the same trade war-depressed period lastyear. But the figure was still just half of the 15.4 million tonsbought in the first three months of 2017, indicating thatChina is lagging far behind the commitment in the phaseone deal, which requires China to more than double itspurchase of U.S. farm goods over two years compared to2017 levels.

U.S. President Donald Trump also said last week thatthe trade deal with China was intact. He added thatChina was buying “a lot of American goods” but that apositive outcome was not guaranteed. But U.S. swingstates, on which Trump is relying for reelection, benefitgreatly from Chinese purchases. U.S. TradeRepresentative Robert Lighthizer also said “on thestructural changes, China has done a pretty good job” aspart of the phase one trade deal and that “we’ve seensignificant purchases over the course of the last many

weeks”, the South China Morning Post reports.

Huawei hiring global talent to expand R&D Huawei's semiconductor chips subsidiary is hiringglobal talent amid the U.S. chip ban in a show ofconfidence it would be able to become self-sufficientin chips supply in about two years. Huawei's chip designcompany HiSilicon announced that it is recruiting talentedyoung people from around the world, and offeringcompetitive salaries and positions, targeting outstandingpost-graduate and doctoral students who have graduatedor will graduate from January 1, 2017 to December 31,2021. Hiring more global talent will allow the company toexpand the scope of its research and development (R&D).To shield its operations from U.S. crackdowns, Huawei hasstockpiled up to two years' worth of crucial chips,according to the Nikkei Asian Review. The stockpile showsthat Huawei is confident of upgrading its manufacturingability within two years, experts said.

If the U.S. really strangles Huawei, its own industry willalso suffer greatly, Xiang Ligang, an industry analyst, toldthe Global Times. ”For U.S. semiconductor companies,Huawei is a very big customer. If they do not sell toHuawei, they will face huge losses. The ban will also forceEuropean and Japanese companies to think twice beforethey build factories in the U.S. Some local U.S. companiesmay move outside the U.S. to find a way to sell to Huawei,"Xiang said.

Meanwhile, domestic chipmaker SemiconductorManufacturing International Corp (SMIC) is planning anIPO on the Sci-Tech Innovation Board to give it a much-needed shot in the arm to speed up research anddevelopment into 7-nanometer chips and assume the roleof leading player Taiwan-based TSMC in supplying Huaweiin the coming two to three years, industry insiders say.Facing a U.S. ban that could cut off supplies from TSMC,SMIC – with its present 14-nm mass production capacity –is still unable to equip Huawei's state-of-the-art products.This means that in the short term, Huawei needs a back-upplan to resolve crucial supplies. Hong Kong-listed SMICplans to raise about CNY20 billion through its secondarylisting in Shanghai. The IPO proceeds will be used for its12-inch chip project, supplementing its cash flow as well asproviding reserve capital for other advanced R&D projects.The IPO prospectus revealed that SMIC has started R&Don its second-generation 14-nm FinFET manufacturingtechnology. “Once the project is completed, SMIC'smanufacturing level could inch closer to the 7-nm scale,”Ma Jihua, a veteran industry analyst, told the GlobalTimes. With the capital injection, SMIC could startproduction of 7-nm and even 5-nm wafers in the comingthree years, Ma said. The key takeaways from SMIC's IPOprospectus are that it will invest CNY8 billion in its 12-inchSN1 chip, which industry insiders believe will elevate itschip manufacturing ability to a more advanced level,smaller than 14-nm. Moreover, there will be risinginvestment from other state players, which shows that the“national team” is deploying the resources on hand to fullysupport the chipmaker's technological breakthrough amid arelentless U..S crackdown.

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

China quietly implementing phase onetrade dealChina appears to be quietly moving ahead withimplementing the phase one trade deal with the UnitedStates despite the continuing deterioration in relationsbetween the two countries. In a subtle move behind thescenes, Beijing has shifted the day-to-day authority overChina’s purchases of U.S. farm products, such assoybeans, to the Ministry of Agriculture and Rural Affairsfrom the Ministry of Commerce (MOFCOM). An official atthe Ministry of Commerce confirmed that agriculturalproduct purchases were now in the hands of the Ministry ofAgriculture. The Commerce Ministry, which was the keyministry supporting the trade negotiations with the U.S.headed by Vice Premier Liu He, is not directly involved inthe arrangements for purchase volume or shipments ofU.S. farm products, the official said. The adjustmentsuggests that authority to make the purchases of anadditional USD32 billion in agricultural goods required bythe trade deal is now seen as more of a bureaucratic taskof combining domestic demand with market conditionsrather than a political task.

Beijing still sees the deal as an important way to displaygoodwill even as tensions between Beijing andWashington continue to escalate on other issues, includingthe national security law in Hong Kong and the origin of thecoronavirus, analysts said. The change in authority overChina’s purchase of U.S. farm goods means that China’sstate-owned grain importers could be subject to moreintensive and technical directives from the AgricultureMinistry, which, given its remit, is more sensitive inresponding to domestic demand and supply conditions, aswell as prices from different suppliers, analysts added.

“Implementing the phase one trade deal is crucial tomaintaining U.S.-China relations – both sides shouldsafeguard it,” said Cui Fan, Professor at the University ofInternational Business and Economics in Beijing. Chinesebuyers bought another 200,984 tons of Americansoybeans in the week that ended May 28 for deliverybefore September, and ordered 264,000 tons for the nextmarketing year starting in September, both higher than thefigures for the previous week.

China imported a total of over 7.81 million tons of U.S.soybeans in the first quarter of 2020, three times theamount during the same trade war-depressed period lastyear. But the figure was still just half of the 15.4 million tonsbought in the first three months of 2017, indicating thatChina is lagging far behind the commitment in the phaseone deal, which requires China to more than double itspurchase of U.S. farm goods over two years compared to2017 levels.

U.S. President Donald Trump also said last week thatthe trade deal with China was intact. He added thatChina was buying “a lot of American goods” but that apositive outcome was not guaranteed. But U.S. swingstates, on which Trump is relying for reelection, benefitgreatly from Chinese purchases. U.S. TradeRepresentative Robert Lighthizer also said “on thestructural changes, China has done a pretty good job” aspart of the phase one trade deal and that “we’ve seensignificant purchases over the course of the last many

weeks”, the South China Morning Post reports.

Huawei hiring global talent to expand R&D Huawei's semiconductor chips subsidiary is hiringglobal talent amid the U.S. chip ban in a show ofconfidence it would be able to become self-sufficientin chips supply in about two years. Huawei's chip designcompany HiSilicon announced that it is recruiting talentedyoung people from around the world, and offeringcompetitive salaries and positions, targeting outstandingpost-graduate and doctoral students who have graduatedor will graduate from January 1, 2017 to December 31,2021. Hiring more global talent will allow the company toexpand the scope of its research and development (R&D).To shield its operations from U.S. crackdowns, Huawei hasstockpiled up to two years' worth of crucial chips,according to the Nikkei Asian Review. The stockpile showsthat Huawei is confident of upgrading its manufacturingability within two years, experts said.

If the U.S. really strangles Huawei, its own industry willalso suffer greatly, Xiang Ligang, an industry analyst, toldthe Global Times. ”For U.S. semiconductor companies,Huawei is a very big customer. If they do not sell toHuawei, they will face huge losses. The ban will also forceEuropean and Japanese companies to think twice beforethey build factories in the U.S. Some local U.S. companiesmay move outside the U.S. to find a way to sell to Huawei,"Xiang said.

Meanwhile, domestic chipmaker SemiconductorManufacturing International Corp (SMIC) is planning anIPO on the Sci-Tech Innovation Board to give it a much-needed shot in the arm to speed up research anddevelopment into 7-nanometer chips and assume the roleof leading player Taiwan-based TSMC in supplying Huaweiin the coming two to three years, industry insiders say.Facing a U.S. ban that could cut off supplies from TSMC,SMIC – with its present 14-nm mass production capacity –is still unable to equip Huawei's state-of-the-art products.This means that in the short term, Huawei needs a back-upplan to resolve crucial supplies. Hong Kong-listed SMICplans to raise about CNY20 billion through its secondarylisting in Shanghai. The IPO proceeds will be used for its12-inch chip project, supplementing its cash flow as well asproviding reserve capital for other advanced R&D projects.The IPO prospectus revealed that SMIC has started R&Don its second-generation 14-nm FinFET manufacturingtechnology. “Once the project is completed, SMIC'smanufacturing level could inch closer to the 7-nm scale,”Ma Jihua, a veteran industry analyst, told the GlobalTimes. With the capital injection, SMIC could startproduction of 7-nm and even 5-nm wafers in the comingthree years, Ma said. The key takeaways from SMIC's IPOprospectus are that it will invest CNY8 billion in its 12-inchSN1 chip, which industry insiders believe will elevate itschip manufacturing ability to a more advanced level,smaller than 14-nm. Moreover, there will be risinginvestment from other state players, which shows that the“national team” is deploying the resources on hand to fullysupport the chipmaker's technological breakthrough amid arelentless U..S crackdown.

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

Your banner at the FCCC website or newsletterCompanies interested in posting a banner/anadvertisement on the FCCC website or FCCC weeklynewsletter are kindly invited to contact the FCCC at:info@flanders-china.be

Organisation and founding members of theFlanders- China Chamber of CommerceChairmanMr. Stefaan Vanhooren, President Agfa Graphics,Member of the Executive Committee of the Agfa GevaertGroup, NV THE AGFA-GEVAERT GROUP SA

Vice-ChairmenMr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Philippe Van der Donckt, Director Government AffairsAsia, NV UMICORE SA

Secretary and TreasurerWim Eraly, Senior General Manager, NV KBC Bank SA

Executive DirectorMs. Gwenn Sonck

Members of the Board of Directors and FoundingMembers:Mr. Stefaan Vanhooren, President Agfa Graphics, Memberof the Executive Committee of the Agfa Gevaert Group, NVTHE AGFA-GEVAERT GROUP SAMr. Carl Peeters, Chief Financial Officer, NV AHLERS SAMr. Filip Pintelon, Senior Vice President, GM Healthcare, NV BARCO SAMr. Philip Eyskens, General Counsel, Senior Vice

President Legal IP GRC, NV BEKAERT SAMr. Philip Hermans, General Manager, NV DEME SAMr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Wim Eraly, Head of Corporate and Transaction Banking, KBC Bank SAMr. Johan Verstraete, Vice-President Marketing, Sales &Services Weaving Solutions, NV PICANOL SAMr. Philippe Van der Donckt, Director Government AffairsAsia, NV UMICORE SA

Membership rates for 2019 (excl. VAT)● SMEs: €405 (€490.05 incl. VAT)● Large enterprises: €1,025 (€1,240.25 incl. VAT)

ContactFlanders-China Chamber of CommerceOffice: Ajuinlei 1, B-9000 Gent, BelgiumNew telephone and fax numbers:T ++32/9/269.52.46F ++32/9/269.52.99E info@flanders-china.beW www.flanders-china.be

Share your storyTo send your input for publication in a future newslettermail to: info@flanders-china.be The FCCC Newsletters are edited by Michel Lens,who is based in Beijing and can be contacted by e-mailmichel.jc.lens@gmail.com

Disclaimer: the views expressed in this newsletter are notnecessarily those of the FCCC or its Board of Directors.

FCCC-VCKK – CHINA BUSINESS WEEKLY 10 JUNE 2020

Your banner at the FCCC website or newsletterCompanies interested in posting a banner/anadvertisement on the FCCC website or FCCC weeklynewsletter are kindly invited to contact the FCCC at:info@flanders-china.be

Organisation and founding members of theFlanders- China Chamber of CommerceChairmanMr. Stefaan Vanhooren, President Agfa Graphics,Member of the Executive Committee of the Agfa GevaertGroup, NV THE AGFA-GEVAERT GROUP SA

Vice-ChairmenMr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Philippe Van der Donckt, Director Government AffairsAsia, NV UMICORE SA

Secretary and TreasurerWim Eraly, Senior General Manager, NV KBC Bank SA

Executive DirectorMs. Gwenn Sonck

Members of the Board of Directors and FoundingMembers:Mr. Stefaan Vanhooren, President Agfa Graphics, Memberof the Executive Committee of the Agfa Gevaert Group, NVTHE AGFA-GEVAERT GROUP SAMr. Carl Peeters, Chief Financial Officer, NV AHLERS SAMr. Filip Pintelon, Senior Vice President, GM Healthcare, NV BARCO SAMr. Philip Eyskens, General Counsel, Senior Vice

President Legal IP GRC, NV BEKAERT SAMr. Philip Hermans, General Manager, NV DEME SAMr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Wim Eraly, Head of Corporate and Transaction Banking, KBC Bank SAMr. Johan Verstraete, Vice-President Marketing, Sales &Services Weaving Solutions, NV PICANOL SAMr. Philippe Van der Donckt, Director Government AffairsAsia, NV UMICORE SA

Membership rates for 2019 (excl. VAT)● SMEs: €405 (€490.05 incl. VAT)● Large enterprises: €1,025 (€1,240.25 incl. VAT)

ContactFlanders-China Chamber of CommerceOffice: Ajuinlei 1, B-9000 Gent, BelgiumNew telephone and fax numbers:T ++32/9/269.52.46F ++32/9/269.52.99E info@flanders-china.beW www.flanders-china.be

Share your storyTo send your input for publication in a future newslettermail to: info@flanders-china.be The FCCC Newsletters are edited by Michel Lens,who is based in Beijing and can be contacted by e-mailmichel.jc.lens@gmail.com

Disclaimer: the views expressed in this newsletter are notnecessarily those of the FCCC or its Board of Directors.