FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

China Business Weekly15 July 2020

ACTIVITIES SUPPORTED BY FCCC11th Weihai Online Food Expo – 24-27 July 2020 – Online

The 11th Weihai Online Food Expo will be held from 24 to 27 July 2020 in the form of an online cloud exhibition. We'd liketo invite the exhibitors and purchasers from Europe to participate in this online Expo.

The Weihai Online Food Expo is focusing on and promoting the quality and safety of exported food and agriculturalproducts. It is taking “based on Weihai, highlighting Japan and South Korea, facing Northeast Asia, radiating the world” asthe goal, and “internationalization, marketization, specialization, branding” as the guidance. Based on the advantages ofthe Weihai food industry, the Expo gathers global food industry resources, and has been successfully held for ten timessince 2010. It has gradually grown into a local high-end international exhibition, making due contributions to thetransformation and upgrading of the Weihai food industry and the rapid development of the modern service industry.

This year, in the context of the normalization of epidemic prevention and control, according to the unified deployment ofthe Weihai municipal party committee and government, in order to further strengthen the popularity and influence of ourcity's brand self exhibition, and innovate and study a new mode of exhibition service, the Food Expo of this year will beheld through the online cloud exhibition mode, guiding, mobilizing and supporting enterprises to participate in onlineexhibition, making full use of 5G, big data and other modern information technology, and promoting “cloud exhibition”,“cloud docking”, “cloud negotiation” and “cloud signing” within and outside the exhibition period. The Expo will build a“cloud” platform for the Weihai food trade and realize the “never ending” Food Expo.

Participation in the Expo is free of charge.

The website of this Expo: http://www.weihaishipin.com/index_expo.htm

The link for overseas promotion: https://weihaifoodexhibition.linkjoint.cn/

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

China Business Weekly15 July 2020

ACTIVITIES SUPPORTED BY FCCC11th Weihai Online Food Expo – 24-27 July 2020 – Online

The 11th Weihai Online Food Expo will be held from 24 to 27 July 2020 in the form of an online cloud exhibition. We'd liketo invite the exhibitors and purchasers from Europe to participate in this online Expo.

The Weihai Online Food Expo is focusing on and promoting the quality and safety of exported food and agriculturalproducts. It is taking “based on Weihai, highlighting Japan and South Korea, facing Northeast Asia, radiating the world” asthe goal, and “internationalization, marketization, specialization, branding” as the guidance. Based on the advantages ofthe Weihai food industry, the Expo gathers global food industry resources, and has been successfully held for ten timessince 2010. It has gradually grown into a local high-end international exhibition, making due contributions to thetransformation and upgrading of the Weihai food industry and the rapid development of the modern service industry.

This year, in the context of the normalization of epidemic prevention and control, according to the unified deployment ofthe Weihai municipal party committee and government, in order to further strengthen the popularity and influence of ourcity's brand self exhibition, and innovate and study a new mode of exhibition service, the Food Expo of this year will beheld through the online cloud exhibition mode, guiding, mobilizing and supporting enterprises to participate in onlineexhibition, making full use of 5G, big data and other modern information technology, and promoting “cloud exhibition”,“cloud docking”, “cloud negotiation” and “cloud signing” within and outside the exhibition period. The Expo will build a“cloud” platform for the Weihai food trade and realize the “never ending” Food Expo.

Participation in the Expo is free of charge.

The website of this Expo: http://www.weihaishipin.com/index_expo.htm

The link for overseas promotion: https://weihaifoodexhibition.linkjoint.cn/

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

SAVE THE DATE: I2PCC, your cleantech bridge to promising regions in China30 September 2020 – 16:00-19:00 h.

The Flemish provinces, together with Cleantech Flanders and FIT, and supported by the Flanders-China Chamber ofCommerce, are working on the close collaboration with the Chinese regions of Chengdu, Chongqing, Guangdong,Hebei and Shaanxi.

Within the I²PCC project, we are further opening this network to our Flemish cleantech companies: we provide uniquecontacts in very promising Chinese regions and niche markets.

Discover on 30 September what I²PCC may mean for your company in the future. Learn from our inspiring experiencesand those of fellow companies and discover the new offers of support for your internationalization toward China.

When: 30 September 2020, 16:00-19:00 h.

Where: House of the Province of Antwerp, Koningin Elisabethlei 22, 2018 Antwerp

(All recommendations and measures concerning Covid-19 will be respected. When appropriate, a virtual presence willbe made available.)

An invitation and program will follow, already save the date in your agenda!

Call: If you are interested in making your company visible to our Chinese contacts and through international fairs inChina, but do not yet have a company file in the I²PCC-c atalog ue of Flemish cleantech companies? Contactsara.landuydt@pomantwerpen.be by July 10 to make a company profile and we will include your activities in ourpublicity.

More information on the project on our website.

I²PCC is a common project of the provinces of Antwerp, Limburg, East-Flanders and Flemish-Brabant, supported byCleantech Flanders and Flanders Investment & Trade. The project is receiving financial support from the EuropeanFund for Regional Development (EFRD).

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

SAVE THE DATE: I2PCC, your cleantech bridge to promising regions in China30 September 2020 – 16:00-19:00 h.

The Flemish provinces, together with Cleantech Flanders and FIT, and supported by the Flanders-China Chamber ofCommerce, are working on the close collaboration with the Chinese regions of Chengdu, Chongqing, Guangdong,Hebei and Shaanxi.

Within the I²PCC project, we are further opening this network to our Flemish cleantech companies: we provide uniquecontacts in very promising Chinese regions and niche markets.

Discover on 30 September what I²PCC may mean for your company in the future. Learn from our inspiring experiencesand those of fellow companies and discover the new offers of support for your internationalization toward China.

When: 30 September 2020, 16:00-19:00 h.

Where: House of the Province of Antwerp, Koningin Elisabethlei 22, 2018 Antwerp

(All recommendations and measures concerning Covid-19 will be respected. When appropriate, a virtual presence willbe made available.)

An invitation and program will follow, already save the date in your agenda!

Call: If you are interested in making your company visible to our Chinese contacts and through international fairs inChina, but do not yet have a company file in the I²PCC-c atalog ue of Flemish cleantech companies? Contactsara.landuydt@pomantwerpen.be by July 10 to make a company profile and we will include your activities in ourpublicity.

More information on the project on our website.

I²PCC is a common project of the provinces of Antwerp, Limburg, East-Flanders and Flemish-Brabant, supported byCleantech Flanders and Flanders Investment & Trade. The project is receiving financial support from the EuropeanFund for Regional Development (EFRD).

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

PAST EVENTSWebinar: Report from China by the Flemish Economic Representatives, 9 July 2020

The Flanders-China Chamber of Commerce and Flanders Investment & Trade organized a webinar with the FlemishEconomic Representatives in China on 9 July 2020. Marc Struyvelt in Beijing, Bart Boschmans in Shanghai and EvaVerstraelen, currently in quarantine in Xian before taking up her post in Guangzhou, explained how they experienced thepast few months, described the situation in their locality, and discussed the consequences of the Covid-19 pandemic forour Flemish exporters.

Ms Gwenn Sonck welcomed the Flemish Economic Representatives to the webinar. Despite Covid-19 the Chinesemarket is still offering opportunities to our Flemish exporters. It is important that every company has a China strategyand determines the possibilities of their goods and services in China through exports, e-commerce, licensing, investmentor through cooperation with Chinese companies in Flanders. China is a very innovative and competitive market. It isimportant that our companies can react quickly in this fast-evolving market. Ms Gwenn Sonck introduced the role andactivities of the Flanders-China Chamber of Commerce.

Mr Bart Boschmans has been posted in Shanghai since April 2019. He joined FIT in 2013 following a career in theprivate sector. His first posting for FIT was in Stuttgart. FIT Shanghai evidently covers Shanghai and surroundingprovinces including some important cities such as Suzhou, Hangzhou, Nanjing, Wuhan, Chengdu and Chongqing. MrBoschmans explained that he read an article about the famous virus in December last year but gave it little thought. Hereturned to Belgium for Chinese New Year, stayed till mid-March, and returned to Shanghai just before the most stringentquarantine measures were implemented. Together with his family he stayed in quarantine for 14 days, luckily at home andnot in a hotel as is currently the requirement. The number of cases in Shanghai was relatively limited at about 700 in sucha giant metropolis. Shanghai never experienced a Wuhan-style lockdown, but an efficient testing and contact tracingsystem was set up to find suspected cases. Measures were strictly implemented and you could see the stronginvolvement of the people. We have been able to continue our services, Mr Boschmans explained, as FIT implementeddigitalization early on and he could also resume traveling without much problems. Normal life has returned to Shanghai,but people are still wearing face masks in shops and on public transport. Restaurants are full again, but some businesseshave disappeared and the retail sector is still suffering. Economically, China is expected to restart growth in the secondquarter at 1.2 to 1.5%. But Chinese consumers are refraining from spending as they did before.

Mr Marc Struyvelt has been posted in Beijing since September 2019, his seventh consecutive posting. He covers NorthChina and Mongolia. All Chinese New year festivities were canceled as of January 24 and quarantines were implemented.He also went to Belgium and returned to Beijing on March 14, spending 14 days in quarantine. Shops and restaurantsreopened fairly quickly, thanks to the wearing of face masks, the use of alcohol gel, and the disciplined behavior of theChinese. Important is also the huge number of people China is able to mobilize to control and coordinate everything. Untilmid-April, there were only 594 corona cases and 8 deaths in Beijing, a city of more than 20 million. Since April 14, therewere 56 days without any new cases, but still life had not been normalized. Business kept working on a rotating basis, nopublic activities were organized, and the bars remained closed. Mr Struyvelt could not resume traveling due to strict travelrestrictions. In many hotels, foreigners were not allowed to check in. Following the 56 days of no new cases a relaxation

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

PAST EVENTSWebinar: Report from China by the Flemish Economic Representatives, 9 July 2020

The Flanders-China Chamber of Commerce and Flanders Investment & Trade organized a webinar with the FlemishEconomic Representatives in China on 9 July 2020. Marc Struyvelt in Beijing, Bart Boschmans in Shanghai and EvaVerstraelen, currently in quarantine in Xian before taking up her post in Guangzhou, explained how they experienced thepast few months, described the situation in their locality, and discussed the consequences of the Covid-19 pandemic forour Flemish exporters.

Ms Gwenn Sonck welcomed the Flemish Economic Representatives to the webinar. Despite Covid-19 the Chinesemarket is still offering opportunities to our Flemish exporters. It is important that every company has a China strategyand determines the possibilities of their goods and services in China through exports, e-commerce, licensing, investmentor through cooperation with Chinese companies in Flanders. China is a very innovative and competitive market. It isimportant that our companies can react quickly in this fast-evolving market. Ms Gwenn Sonck introduced the role andactivities of the Flanders-China Chamber of Commerce.

Mr Bart Boschmans has been posted in Shanghai since April 2019. He joined FIT in 2013 following a career in theprivate sector. His first posting for FIT was in Stuttgart. FIT Shanghai evidently covers Shanghai and surroundingprovinces including some important cities such as Suzhou, Hangzhou, Nanjing, Wuhan, Chengdu and Chongqing. MrBoschmans explained that he read an article about the famous virus in December last year but gave it little thought. Hereturned to Belgium for Chinese New Year, stayed till mid-March, and returned to Shanghai just before the most stringentquarantine measures were implemented. Together with his family he stayed in quarantine for 14 days, luckily at home andnot in a hotel as is currently the requirement. The number of cases in Shanghai was relatively limited at about 700 in sucha giant metropolis. Shanghai never experienced a Wuhan-style lockdown, but an efficient testing and contact tracingsystem was set up to find suspected cases. Measures were strictly implemented and you could see the stronginvolvement of the people. We have been able to continue our services, Mr Boschmans explained, as FIT implementeddigitalization early on and he could also resume traveling without much problems. Normal life has returned to Shanghai,but people are still wearing face masks in shops and on public transport. Restaurants are full again, but some businesseshave disappeared and the retail sector is still suffering. Economically, China is expected to restart growth in the secondquarter at 1.2 to 1.5%. But Chinese consumers are refraining from spending as they did before.

Mr Marc Struyvelt has been posted in Beijing since September 2019, his seventh consecutive posting. He covers NorthChina and Mongolia. All Chinese New year festivities were canceled as of January 24 and quarantines were implemented.He also went to Belgium and returned to Beijing on March 14, spending 14 days in quarantine. Shops and restaurantsreopened fairly quickly, thanks to the wearing of face masks, the use of alcohol gel, and the disciplined behavior of theChinese. Important is also the huge number of people China is able to mobilize to control and coordinate everything. Untilmid-April, there were only 594 corona cases and 8 deaths in Beijing, a city of more than 20 million. Since April 14, therewere 56 days without any new cases, but still life had not been normalized. Business kept working on a rotating basis, nopublic activities were organized, and the bars remained closed. Mr Struyvelt could not resume traveling due to strict travelrestrictions. In many hotels, foreigners were not allowed to check in. Following the 56 days of no new cases a relaxation

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

was announced to commence on June 15, which was not carried out due to a new outbreak, which was actually worsethan the first one in February-March. Everybody who wanted to leave Beijing needed to pass a nucleic acid test which wasnot required previously. Until the end of June there were 325 cases, and since July 6 there are again no new casesreported so the risk level may be lowered soon.

Ms Eva Verstraelen's flight to China was diverted to Xian due to the quarantine requirements. In Xian she was tested forCovid-19 and put in quarantine in a hotel without a fridge or airco. Ms Verstraelen started at FIT on May 1, following a 20-year career at the Ministry of Foreign Affairs as a diplomat and Consul, including in Beijing between 2006 and 2010. Thequarantine in Xian is very strict and she is not allowed to leave her hotel room or have any outside contacts. Her meals areput outside her hotel room door three times a day. The hotel personnel is all wearing fully protective clothing. Also inGuangzhou there have been no new cases in the past weeks and life is returning back to normal.

Following the introductions, the economic representatives answered questions. Which sectors are considered a priorityby the Chinese authorities? Mr Struyvelt: There are four large priority sectors. The first one is environment andcleantech under the slogan “blue skies, clean water and pure land”. In medicine and health, the focus is on diseaseprevention and treatment, and drugs and vaccine development. The greying of the population and care for the elderly isalso important. Digitalization covers many things, including online video conferences, virtual trade fairs, and live-streaming, which is booming in China. The fourth priority sector is infrastructure, traditional ones such as high speed rail,but also what China calls “new infrastructure”, such as the development of the 5G network. By the end of 2020, there willbe total 5G coverage in 300 Chinese cities. Also included in “new infrastructure” are new energy vehicles, artificialintelligence and industrial internet. What about the air quality? Air quality is constantly improving in Beijing thanks to theefforts of the authorities to close polluting industries.

Which sectors offer opportunities for Flemish SMEs as a result of Covid-19? Mr Boschmans: We need to berealistic, there are no miracle sectors where everything needs to come from abroad. Important is to continue focussing onyour strong points as a company, while trying to make use of opportunities in the “new normal”. Mr Boschmans mentionedtwo trends: the low-touch economy, including online shopping, contactless delivery, the cashless society and tele-medicine. The trend towards autonomy in the semiconductor sector offers opportunities to suppliers. Mr Struyveltmentioned sports and sport technology as a promising sector. FIT is planning to organize a sports mission to China nextyear as three big sports events are to be organized: the Universiad in Chengdu in 2021, the Asian Games in Guangzhouin 2022, and the Winter Olympics in Beijing in 2022. Due to Covid-19, Chinese consumers have become more interestedin fitness and food supplements. Ms Verstraelen: There is an increasing interest in fresh food, such as fruits. Flemishpears are already a success story in China. Milk and dairy products also offer opportunities to Flemish companies.Investment in cold chain logistics is increasing.

What about opportunities in new regions? Mr Boschmans: Besides the Yangtze River Delta, Chengdu and Chongqingare also interesting areas as the entry points to Western China. A group business trip is planned to both cities in 2021depending on the circumstances at that time. Ms Verstraelen: The Pearl River Delta is focussing on robotics andcleantech. We also need to keep an eye on the Hainan Free Port Zone. Mr Struyvelt: Through the I²PCC initiative, thereare good relations between Flemish and Chinese provinces in the field of cleantech.

Which sectors are facing hard times due to Covid-19? Mr Boschmans: Anything related to hospitality and travel hasbeen hit hard, including conferences and trade fairs. But as Chinese can't currently travel abroad, they opt to spend theirholidays in the country, leading to a hotel room occupancy of 60% to 70% in some tourist cities. Mr Struyvelt: The foodsector has been hit recently as some imports have been halted. We also see a switch in sales channels from shops toonline. Ms Verstraelen: The Chinese consumers are less inclined to spend money on luxury items.

Which are the most important challenges for our Flemish SMEs? Ms Verstraelen: As long as the borders remainclosed, traveling is very difficult, certainly internationally, but currently travel to and from Beijing is also problematic.Companies which are now entering the Chinese market face challenges to build relations of trust and sign contracts. Tothe Chinese, personal contact is very important and this will be difficult in the coming weeks, but we are ready to assistFlemish companies. Mr Boschmans: In the current circumstances companies will be even more minding their expendituresand cash flow. Contacts will move further online. Through online fairs you can easily reach a huge audience. Some fairsare resuming, such as a beer fair in Wuhan. Mr Struyvelt: Flemish SMEs will need to reflect how to promote their newgoods and services while the borders remain closed. They will need to present their products much more online such asthrough virtual stores on Tmall.

Is there a fast track for essential travel? Mr Struyvelt: Since March 28, foreigners are not allowed entry to China, withonly a few exceptions such as diplomats. Also Belgian citizens with a valid residence permit are not allowed to return.People who are already living and working in China could apply to return, but recently only one in ten was successful.Business trips are still impossible. There is no information when there would be a relaxation. China is very strictdomestically, I do not see them opening the borders to Europeans where in many countries there are still 80 or 100 newdaily cases. I don't expect business people to be able to travel to China before October or November.

How can a Flemish SME prepare its export story? Ms Verstraelen: Although the circumstances are difficult, thefundamental recommendations haven't changed: make a detailed analysis of your strong and weak points, define whichmarket you want to focus on, and which distribution channels you plan to use. Mr Boschmans: Remain in touch with yourbusiness partners and show your commitment even if you can't travel. Mr Struyvelt: Don't hesitate to use our services as

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

was announced to commence on June 15, which was not carried out due to a new outbreak, which was actually worsethan the first one in February-March. Everybody who wanted to leave Beijing needed to pass a nucleic acid test which wasnot required previously. Until the end of June there were 325 cases, and since July 6 there are again no new casesreported so the risk level may be lowered soon.

Ms Eva Verstraelen's flight to China was diverted to Xian due to the quarantine requirements. In Xian she was tested forCovid-19 and put in quarantine in a hotel without a fridge or airco. Ms Verstraelen started at FIT on May 1, following a 20-year career at the Ministry of Foreign Affairs as a diplomat and Consul, including in Beijing between 2006 and 2010. Thequarantine in Xian is very strict and she is not allowed to leave her hotel room or have any outside contacts. Her meals areput outside her hotel room door three times a day. The hotel personnel is all wearing fully protective clothing. Also inGuangzhou there have been no new cases in the past weeks and life is returning back to normal.

Following the introductions, the economic representatives answered questions. Which sectors are considered a priorityby the Chinese authorities? Mr Struyvelt: There are four large priority sectors. The first one is environment andcleantech under the slogan “blue skies, clean water and pure land”. In medicine and health, the focus is on diseaseprevention and treatment, and drugs and vaccine development. The greying of the population and care for the elderly isalso important. Digitalization covers many things, including online video conferences, virtual trade fairs, and live-streaming, which is booming in China. The fourth priority sector is infrastructure, traditional ones such as high speed rail,but also what China calls “new infrastructure”, such as the development of the 5G network. By the end of 2020, there willbe total 5G coverage in 300 Chinese cities. Also included in “new infrastructure” are new energy vehicles, artificialintelligence and industrial internet. What about the air quality? Air quality is constantly improving in Beijing thanks to theefforts of the authorities to close polluting industries.

Which sectors offer opportunities for Flemish SMEs as a result of Covid-19? Mr Boschmans: We need to berealistic, there are no miracle sectors where everything needs to come from abroad. Important is to continue focussing onyour strong points as a company, while trying to make use of opportunities in the “new normal”. Mr Boschmans mentionedtwo trends: the low-touch economy, including online shopping, contactless delivery, the cashless society and tele-medicine. The trend towards autonomy in the semiconductor sector offers opportunities to suppliers. Mr Struyveltmentioned sports and sport technology as a promising sector. FIT is planning to organize a sports mission to China nextyear as three big sports events are to be organized: the Universiad in Chengdu in 2021, the Asian Games in Guangzhouin 2022, and the Winter Olympics in Beijing in 2022. Due to Covid-19, Chinese consumers have become more interestedin fitness and food supplements. Ms Verstraelen: There is an increasing interest in fresh food, such as fruits. Flemishpears are already a success story in China. Milk and dairy products also offer opportunities to Flemish companies.Investment in cold chain logistics is increasing.

What about opportunities in new regions? Mr Boschmans: Besides the Yangtze River Delta, Chengdu and Chongqingare also interesting areas as the entry points to Western China. A group business trip is planned to both cities in 2021depending on the circumstances at that time. Ms Verstraelen: The Pearl River Delta is focussing on robotics andcleantech. We also need to keep an eye on the Hainan Free Port Zone. Mr Struyvelt: Through the I²PCC initiative, thereare good relations between Flemish and Chinese provinces in the field of cleantech.

Which sectors are facing hard times due to Covid-19? Mr Boschmans: Anything related to hospitality and travel hasbeen hit hard, including conferences and trade fairs. But as Chinese can't currently travel abroad, they opt to spend theirholidays in the country, leading to a hotel room occupancy of 60% to 70% in some tourist cities. Mr Struyvelt: The foodsector has been hit recently as some imports have been halted. We also see a switch in sales channels from shops toonline. Ms Verstraelen: The Chinese consumers are less inclined to spend money on luxury items.

Which are the most important challenges for our Flemish SMEs? Ms Verstraelen: As long as the borders remainclosed, traveling is very difficult, certainly internationally, but currently travel to and from Beijing is also problematic.Companies which are now entering the Chinese market face challenges to build relations of trust and sign contracts. Tothe Chinese, personal contact is very important and this will be difficult in the coming weeks, but we are ready to assistFlemish companies. Mr Boschmans: In the current circumstances companies will be even more minding their expendituresand cash flow. Contacts will move further online. Through online fairs you can easily reach a huge audience. Some fairsare resuming, such as a beer fair in Wuhan. Mr Struyvelt: Flemish SMEs will need to reflect how to promote their newgoods and services while the borders remain closed. They will need to present their products much more online such asthrough virtual stores on Tmall.

Is there a fast track for essential travel? Mr Struyvelt: Since March 28, foreigners are not allowed entry to China, withonly a few exceptions such as diplomats. Also Belgian citizens with a valid residence permit are not allowed to return.People who are already living and working in China could apply to return, but recently only one in ten was successful.Business trips are still impossible. There is no information when there would be a relaxation. China is very strictdomestically, I do not see them opening the borders to Europeans where in many countries there are still 80 or 100 newdaily cases. I don't expect business people to be able to travel to China before October or November.

How can a Flemish SME prepare its export story? Ms Verstraelen: Although the circumstances are difficult, thefundamental recommendations haven't changed: make a detailed analysis of your strong and weak points, define whichmarket you want to focus on, and which distribution channels you plan to use. Mr Boschmans: Remain in touch with yourbusiness partners and show your commitment even if you can't travel. Mr Struyvelt: Don't hesitate to use our services as

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

an intermediary to remain in touch with your business partners.

Any golden tips to be successful in China? Mr Boschmans: Golden tips haven't changed due to the pandemic, some ofthem you can find on the FIT website. WeChat is very important as communication medium in China. E-mail is used lessfrequently. A company needs to determine which area and market segment to focus on. Mr Struyvelt: Chinese are verygood negotiators, so you need to be very well prepared. You need to be patient and determined. Contracts and regulationsin China are rather vague so there is much room for interpretation. In Europe a contract is considered to be an end point,while in China it is much more a promise to cooperate. A contract can still be amended according to the requirements ofthe company. Personal relations are more important than the contract. Ms Verstraelen: It is important to be a good host. Tothe Chinese, hospitality is very important. Personally go to the airport to welcome your guests, don't leave them alone,including after business hours. Exchanging gifts is also required.

What do you expect in the coming weeks and months and what will be your focus? Ms Verstraelen: After I –hopefully – arrive in Guangzhou on July 22, I will start visiting companies and building up contacts. Mr Boschmans: I willcontinue to build up my network, not only in Shanghai, but in other areas as well, and I will also be visiting fairs. In the fallFIT will start organizing virtual events and we advise businesses not to await the resumption of travel to be active. MrStruyvelt: I hope the situation will return to normal soon, restrictions will be lifted and there will be no new outbreaks.

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

HEALTHNo new Covid-19 cases reported in Beijing for 9 consecutive days

The Covid-19 outbreak in Beijing, which was firstreported on June 11, seems the be over as no newcases were reported for the past nine consecutivedays. However, Beijing is still under Level II emergencymanagement, with temperature and QR-code checksperformed when entering restaurants, office buildings andhousing compounds. Travelers wishing to leave Beijing nolonger need to show the result of a recent nucleic acid testbut are allowed to travel upon presentation of a green QR-code, indicating they have not recently visited a red zone orcome into contact with a Covid-19 patient. In the past fourweeks, the average number of new cases steadily declinedin Beijing, from an average of 22.6 in the first week, to15.9, 8.6 and 0.9 in the following weeks. The last Covid-19infection was reported on July 6, bringing the total of this

outbreak in Beijing to 335. Less than 250 patients are stillbeing treated in hospital. Many Beijing residents believethis trend is a positive sign that they will soon be able toreturn to normal life. Beijing started to gradually releaseabout 74,000 quarantined people who were exposed to theXinfadi market. However, Beijing’s announcement of nonew infections does not mean no risks, said Pang Xinghuo,Deputy Director of the Beijing Center for Disease Controland Prevention.

In the past nine days, in the whole of China, only a few newcases were reported – all imported – in addition to a fewasymptomatic cases.

The largest organized activity in the country since theoutbreak of Covid-19 took place in early July as more than10 million high school students took the university entranceexaminations in one of 7,000 examination sites across thecountry. The exam, which usually takes place in June, waspostponed till July due to Covid-19. In Hubei province, ofwhich Wuhan is the capital, more students than usualopted to apply to study medicine.

Besides Covid-19, China also had to cope with otherincidents. Beijing residents felt a slight tremor at 06:38 h.on July 12 as a 5.1 earthquake shook the city ofTangshan in Hebei province, where the devastating 7.8-magnitude earthquake on July 28, 1976 claimed at least242,000 lives. This time there were no casualties and onlylimited material damage. Wuhan, where the first Covid-19patients were identified in December last year, and theneighboring province of Jiangxi, are battling heavy rainfall

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

an intermediary to remain in touch with your business partners.

Any golden tips to be successful in China? Mr Boschmans: Golden tips haven't changed due to the pandemic, some ofthem you can find on the FIT website. WeChat is very important as communication medium in China. E-mail is used lessfrequently. A company needs to determine which area and market segment to focus on. Mr Struyvelt: Chinese are verygood negotiators, so you need to be very well prepared. You need to be patient and determined. Contracts and regulationsin China are rather vague so there is much room for interpretation. In Europe a contract is considered to be an end point,while in China it is much more a promise to cooperate. A contract can still be amended according to the requirements ofthe company. Personal relations are more important than the contract. Ms Verstraelen: It is important to be a good host. Tothe Chinese, hospitality is very important. Personally go to the airport to welcome your guests, don't leave them alone,including after business hours. Exchanging gifts is also required.

What do you expect in the coming weeks and months and what will be your focus? Ms Verstraelen: After I –hopefully – arrive in Guangzhou on July 22, I will start visiting companies and building up contacts. Mr Boschmans: I willcontinue to build up my network, not only in Shanghai, but in other areas as well, and I will also be visiting fairs. In the fallFIT will start organizing virtual events and we advise businesses not to await the resumption of travel to be active. MrStruyvelt: I hope the situation will return to normal soon, restrictions will be lifted and there will be no new outbreaks.

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

HEALTHNo new Covid-19 cases reported in Beijing for 9 consecutive days

The Covid-19 outbreak in Beijing, which was firstreported on June 11, seems the be over as no newcases were reported for the past nine consecutivedays. However, Beijing is still under Level II emergencymanagement, with temperature and QR-code checksperformed when entering restaurants, office buildings andhousing compounds. Travelers wishing to leave Beijing nolonger need to show the result of a recent nucleic acid testbut are allowed to travel upon presentation of a green QR-code, indicating they have not recently visited a red zone orcome into contact with a Covid-19 patient. In the past fourweeks, the average number of new cases steadily declinedin Beijing, from an average of 22.6 in the first week, to15.9, 8.6 and 0.9 in the following weeks. The last Covid-19infection was reported on July 6, bringing the total of this

outbreak in Beijing to 335. Less than 250 patients are stillbeing treated in hospital. Many Beijing residents believethis trend is a positive sign that they will soon be able toreturn to normal life. Beijing started to gradually releaseabout 74,000 quarantined people who were exposed to theXinfadi market. However, Beijing’s announcement of nonew infections does not mean no risks, said Pang Xinghuo,Deputy Director of the Beijing Center for Disease Controland Prevention.

In the past nine days, in the whole of China, only a few newcases were reported – all imported – in addition to a fewasymptomatic cases.

The largest organized activity in the country since theoutbreak of Covid-19 took place in early July as more than10 million high school students took the university entranceexaminations in one of 7,000 examination sites across thecountry. The exam, which usually takes place in June, waspostponed till July due to Covid-19. In Hubei province, ofwhich Wuhan is the capital, more students than usualopted to apply to study medicine.

Besides Covid-19, China also had to cope with otherincidents. Beijing residents felt a slight tremor at 06:38 h.on July 12 as a 5.1 earthquake shook the city ofTangshan in Hebei province, where the devastating 7.8-magnitude earthquake on July 28, 1976 claimed at least242,000 lives. This time there were no casualties and onlylimited material damage. Wuhan, where the first Covid-19patients were identified in December last year, and theneighboring province of Jiangxi, are battling heavy rainfall

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

and flooding of rivers and lakes.

Meanwhile, Hong Kong is battling a third wave of thecoronavirus pandemic in the city. Dr Chuang Shuk-kwan, head of the communicable disease branch of theCenter for Health Protection, said he was worried therewould be a massive community outbreak. Hong Kong hasnow registered 1,323 cases with seven deaths. A carehome for the elderly is at the center of the new communityoutbreak, as well as two restaurants. Experts point to alack of Covid-19 testing and issues with quarantineexemptions as key factors for the new outbreak. Foreigndomestic workers, mainly coming from the Philippines andIndonesia, would be required to take a Covid-19 test beforecoming to Hong Kong and undergo a 14-day quarantine inhotel accommodation paid for by their employers. Aircrew,who are now also exempted from quarantine, would berequired to submit deep-throat saliva samples on arrival atHong Kong International Airport. The spate of new localinfections of unknown origin could push back theestablishment of health codes and travel bubbles withneighboring regions, Chuang said.

Chinese media reported an outbreak of an “unknownpneumonia” in neighboring Kazakstan, and added that thedisease was more deadly than Covid-19. But Kazakhauthorities said the reports were inaccurate. Based on thelittle information disclosed thus far, it is difficult to concludewhether the pneumonia found in Kazakhstan is Covid-19 ora new pneumonia, Wang Guangfa, a leading Chineserespiratory expert at Peking University First Hospital inBeijing, told the Global Times. The World HealthOrganization (WHO) said it had no information about a newkind of pneumonia in Kazakhstan.

Coronavirus has been detected in China on the packagingof frozen shrimps imported from Ecuador, and onlineplatforms and restaurants have halted imports of theshrimps. The contaminated products were found bycustoms authorities in Dalian and Xiamen after the testingof food imports had been strengthened.

This overview is based on reporting by the Global Times,China Daily, South China Morning Post and ShanghaiDaily.

IT & TELECOMProgress reported in Chinese ICs, cloud services and Huawei's HarmonyOS

The first completely homegrown memory chips arecurrently in mass production in Shenzhen, breaking theforeign technology monopoly and serving as an alternativeto imported chips, the Global Times reports. PowevElectronic Technology Co, a high-tech storage packagingand testing firm based in Shenzhen, is now producingmemory chips and solid-state drives (SSDs) on a massscale. The company's chip lineup includes the first suchproducts to be wholly domestically produced, with eachintegrated circuit and all production processes completedwithin China. The company's products were first releasedon JD.com in May, and their sales have reached 25,000 onthe platform. “The lineup was developed to resolve asupply bottleneck faced by the domestic IC industry,” saidDeputy General Manager Zhang. The company said thechips and SSDs are used in personal computers andservers, and at least three domestic PC companies haveincorporated the chips in their offerings. Powev's productscan now compete with most middle-end foreign memorychips in price and capacity. “For the mainstream storagechips market, we pose a strong competition to importedchips," Zhang said. Although the price of the chips remainsroughly the same compared to its foreign rivals, Zhang saidit is important for Chinese companies to step into the highly

exclusive market. The company's business volumeincreased to CNY350 million in 2019, up from 2018'sCNY20 million.

The Suzhou Institute of Nano-tech and Nano-Bionics underthe Chinese Academy of Sciences (Sinano), along with theNational Center for Nanoscience and Technology, havemade a breakthrough in a new type of 5 nanometer(nm) laser lithography technology, which industryinsiders believe could lay the foundation for research into aself-developed advanced lithography machine, a field inwhich China lags behind some developed Westerncountries. But they stressed that China remains “far away”from producing such a chip-making machine as there arestill technological barriers. Lack of sufficient capital alsopresents an obstacle to translate the theoretical findingsinto production power. The new tech could be used toproduce up to 500,000 special nano electrodes an hour.Xiang Ligang, a Beijing-based veteran industry analyst,told the Global Times that the new technology will equipChinese researchers to make forays into makinghomegrown lithography machines. “But it will take years forChina to close the gap with the advanced Westernsuppliers, in particular ASML,” Xiang said.

Chinese public cloud service providers such asAlibaba Cloud and Tencent Cloud have grown quicklythanks to surging demand for remote education andworking due to the Covid-19 pandemic, and theircompetitiveness in global markets has increased. Due to asurge in the stock market, Alibaba Cloud said it hadreceived requests for expanded capacity from several keyChinese brokers in order to deal with the current limitedcapacity and frequent delays in the trading system. In

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

and flooding of rivers and lakes.

Meanwhile, Hong Kong is battling a third wave of thecoronavirus pandemic in the city. Dr Chuang Shuk-kwan, head of the communicable disease branch of theCenter for Health Protection, said he was worried therewould be a massive community outbreak. Hong Kong hasnow registered 1,323 cases with seven deaths. A carehome for the elderly is at the center of the new communityoutbreak, as well as two restaurants. Experts point to alack of Covid-19 testing and issues with quarantineexemptions as key factors for the new outbreak. Foreigndomestic workers, mainly coming from the Philippines andIndonesia, would be required to take a Covid-19 test beforecoming to Hong Kong and undergo a 14-day quarantine inhotel accommodation paid for by their employers. Aircrew,who are now also exempted from quarantine, would berequired to submit deep-throat saliva samples on arrival atHong Kong International Airport. The spate of new localinfections of unknown origin could push back theestablishment of health codes and travel bubbles withneighboring regions, Chuang said.

Chinese media reported an outbreak of an “unknownpneumonia” in neighboring Kazakstan, and added that thedisease was more deadly than Covid-19. But Kazakhauthorities said the reports were inaccurate. Based on thelittle information disclosed thus far, it is difficult to concludewhether the pneumonia found in Kazakhstan is Covid-19 ora new pneumonia, Wang Guangfa, a leading Chineserespiratory expert at Peking University First Hospital inBeijing, told the Global Times. The World HealthOrganization (WHO) said it had no information about a newkind of pneumonia in Kazakhstan.

Coronavirus has been detected in China on the packagingof frozen shrimps imported from Ecuador, and onlineplatforms and restaurants have halted imports of theshrimps. The contaminated products were found bycustoms authorities in Dalian and Xiamen after the testingof food imports had been strengthened.

This overview is based on reporting by the Global Times,China Daily, South China Morning Post and ShanghaiDaily.

IT & TELECOMProgress reported in Chinese ICs, cloud services and Huawei's HarmonyOS

The first completely homegrown memory chips arecurrently in mass production in Shenzhen, breaking theforeign technology monopoly and serving as an alternativeto imported chips, the Global Times reports. PowevElectronic Technology Co, a high-tech storage packagingand testing firm based in Shenzhen, is now producingmemory chips and solid-state drives (SSDs) on a massscale. The company's chip lineup includes the first suchproducts to be wholly domestically produced, with eachintegrated circuit and all production processes completedwithin China. The company's products were first releasedon JD.com in May, and their sales have reached 25,000 onthe platform. “The lineup was developed to resolve asupply bottleneck faced by the domestic IC industry,” saidDeputy General Manager Zhang. The company said thechips and SSDs are used in personal computers andservers, and at least three domestic PC companies haveincorporated the chips in their offerings. Powev's productscan now compete with most middle-end foreign memorychips in price and capacity. “For the mainstream storagechips market, we pose a strong competition to importedchips," Zhang said. Although the price of the chips remainsroughly the same compared to its foreign rivals, Zhang saidit is important for Chinese companies to step into the highly

exclusive market. The company's business volumeincreased to CNY350 million in 2019, up from 2018'sCNY20 million.

The Suzhou Institute of Nano-tech and Nano-Bionics underthe Chinese Academy of Sciences (Sinano), along with theNational Center for Nanoscience and Technology, havemade a breakthrough in a new type of 5 nanometer(nm) laser lithography technology, which industryinsiders believe could lay the foundation for research into aself-developed advanced lithography machine, a field inwhich China lags behind some developed Westerncountries. But they stressed that China remains “far away”from producing such a chip-making machine as there arestill technological barriers. Lack of sufficient capital alsopresents an obstacle to translate the theoretical findingsinto production power. The new tech could be used toproduce up to 500,000 special nano electrodes an hour.Xiang Ligang, a Beijing-based veteran industry analyst,told the Global Times that the new technology will equipChinese researchers to make forays into makinghomegrown lithography machines. “But it will take years forChina to close the gap with the advanced Westernsuppliers, in particular ASML,” Xiang said.

Chinese public cloud service providers such asAlibaba Cloud and Tencent Cloud have grown quicklythanks to surging demand for remote education andworking due to the Covid-19 pandemic, and theircompetitiveness in global markets has increased. Due to asurge in the stock market, Alibaba Cloud said it hadreceived requests for expanded capacity from several keyChinese brokers in order to deal with the current limitedcapacity and frequent delays in the trading system. In

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

February, when the Covid-10 pandemic was severe inChina, DingTalk, the Alibaba-owned chat, video-conferencing and task management tool saw its user basepeaking when 200 million employees of about 10 millionenterprises worked from home and about 50 millionstudents started online courses. To deal with the risingdemand, more than 10,000 cloud servers were additionallydeployed in two hours, a record for the rapid expansion ofAlibaba Cloud. “Chinese public cloud vendors havegrasped the opportunity to expand their business in thecountry amid the epidemic, mainly triggered by onlineeducation and home-based work,” Liu Dingding, a Beijing-based internet analyst, told the Global Times. Chinesecloud computing players have nearly reached the level oftheir international peers like Amazon Web Services (AWS)and Microsoft Azure, according to Liu.

The visit by Chinese Premier Li Keqiang to a big Tencentdata center in Guizhou province also shows thegovernment's emphasis on developing “new infrastructure”projects. Due to its suitable climate and geographicalconditions, together with favorable electricity prices,Guizhou has attracted world-leading tech companies to setup data centers in the region, which used to be one of themost impoverished provinces in China, but now is knownas the home of “China's Data Valley,” the Global Timesreports.

Meanwhile, Google abandoned plans to offer a majornew cloud service in China due in part to concerns overgeopolitical tensions and the pandemic. The plan was partof the initiative known as “Isolated Region”, which soughtto address nations’ desires to control data within theirborders. Abandoning the initiative was considered a“massive strategy shift”. Alphabet’s Google is pouringmoney into cloud computing, part of a broader effort to findnew sources of growth beyond advertising. While Amazonand Microsoft have sold their cloud services in mainlandChina, Google has not, the South China Morning Postadds.

Huawei has filed a number of trademarks related to itsHarmonyOS in China, giving rise to speculation that theoperating system developed to replace Google'sAndroidOS is making significant progress. Industryanalysts said the Huawei Mate Watch could be the firstsmart-watch to use HarmonyOS, and that the OS isexpected to be tested on more devices such as watchesand computers before it can finally be used on Huaweismartphones. Ma Jihua, a veteran industry analyst, told theGlobal Times that Huawei already uses many ofHarmonyOS' functions for its P40 series, though thephones are still using Google's AndroidOS. However, Masaid HarmonyOS was still not fully ready, as it was forciblyreleased under the U.S. crackdown on the firm, and thereare still many issues to be fixed before it can be used onsmartphones.

Huawei has unveiled its first product equipped withHarmonyOS – a new smart TV under its Honor brand. InMay this year, the Trump administration moved to blockglobal chip supplies to the already blacklisted Huawei. Thecompany likely replaced Samsung as the world's topsmartphone maker in the second quarter, according tocn.nikkei.com. SK Securities estimated that from Aprilthrough June, Huawei shipments stood at 55 million whileSamsung's reached 51 million, which means Huawei mayfor the first time be crowned No 1 in smartphoneshipments.

There are an increasing number of foreign enterprisesin China telecom operating sector. By the end of Junethis year, 266 foreign-invested enterprises had receivedrelevant approvals. The Ministry of Industry andInformation Technology (MIIT) issued the licenses for 213enterprises, with a total of 324 business operating permits,while 53 enterprises in the Shanghai Free Trade Zone gotapproval from the Shanghai CommunicationsAdministration, with 61 business permits. Online data andtransaction processing, information service and domesticcall center businesses accounted for 85% of the operatingpermits.

TRAVELChina to add more than 1,000 km of Maglev railways

China will add up to nine magnetic levitation railroadsof over 1,000 kilometers in total length in the long term

to boost regional connectivity and high-end equipmentmanufacturing. They will include a tourist railway line inYunnan province, and intercity passenger lines and urbanmass transit lines in Shanxi, Xinjiang and Sichuan. Chinaaims to run high-speed maglev trains at 600 km per hourby the end of this year. Zhejiang province announced it willinvest CNY100 billion to build a maglev railroad connectingHangzhou and Shanghai. It will take about 15 minutes tocomplete the 162-km journey, said Feng Hao, Researcherat the National Development and Reform Commission'sInstitute of Comprehensive Transportation.

Compared with standard bullet trains, the high-speedmaglev trains have advantages which include reducednoise and vibration, and lower maintenance costs becausethey do not use wheels but hover centimeters above the

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

February, when the Covid-10 pandemic was severe inChina, DingTalk, the Alibaba-owned chat, video-conferencing and task management tool saw its user basepeaking when 200 million employees of about 10 millionenterprises worked from home and about 50 millionstudents started online courses. To deal with the risingdemand, more than 10,000 cloud servers were additionallydeployed in two hours, a record for the rapid expansion ofAlibaba Cloud. “Chinese public cloud vendors havegrasped the opportunity to expand their business in thecountry amid the epidemic, mainly triggered by onlineeducation and home-based work,” Liu Dingding, a Beijing-based internet analyst, told the Global Times. Chinesecloud computing players have nearly reached the level oftheir international peers like Amazon Web Services (AWS)and Microsoft Azure, according to Liu.

The visit by Chinese Premier Li Keqiang to a big Tencentdata center in Guizhou province also shows thegovernment's emphasis on developing “new infrastructure”projects. Due to its suitable climate and geographicalconditions, together with favorable electricity prices,Guizhou has attracted world-leading tech companies to setup data centers in the region, which used to be one of themost impoverished provinces in China, but now is knownas the home of “China's Data Valley,” the Global Timesreports.

Meanwhile, Google abandoned plans to offer a majornew cloud service in China due in part to concerns overgeopolitical tensions and the pandemic. The plan was partof the initiative known as “Isolated Region”, which soughtto address nations’ desires to control data within theirborders. Abandoning the initiative was considered a“massive strategy shift”. Alphabet’s Google is pouringmoney into cloud computing, part of a broader effort to findnew sources of growth beyond advertising. While Amazonand Microsoft have sold their cloud services in mainlandChina, Google has not, the South China Morning Postadds.

Huawei has filed a number of trademarks related to itsHarmonyOS in China, giving rise to speculation that theoperating system developed to replace Google'sAndroidOS is making significant progress. Industryanalysts said the Huawei Mate Watch could be the firstsmart-watch to use HarmonyOS, and that the OS isexpected to be tested on more devices such as watchesand computers before it can finally be used on Huaweismartphones. Ma Jihua, a veteran industry analyst, told theGlobal Times that Huawei already uses many ofHarmonyOS' functions for its P40 series, though thephones are still using Google's AndroidOS. However, Masaid HarmonyOS was still not fully ready, as it was forciblyreleased under the U.S. crackdown on the firm, and thereare still many issues to be fixed before it can be used onsmartphones.

Huawei has unveiled its first product equipped withHarmonyOS – a new smart TV under its Honor brand. InMay this year, the Trump administration moved to blockglobal chip supplies to the already blacklisted Huawei. Thecompany likely replaced Samsung as the world's topsmartphone maker in the second quarter, according tocn.nikkei.com. SK Securities estimated that from Aprilthrough June, Huawei shipments stood at 55 million whileSamsung's reached 51 million, which means Huawei mayfor the first time be crowned No 1 in smartphoneshipments.

There are an increasing number of foreign enterprisesin China telecom operating sector. By the end of Junethis year, 266 foreign-invested enterprises had receivedrelevant approvals. The Ministry of Industry andInformation Technology (MIIT) issued the licenses for 213enterprises, with a total of 324 business operating permits,while 53 enterprises in the Shanghai Free Trade Zone gotapproval from the Shanghai CommunicationsAdministration, with 61 business permits. Online data andtransaction processing, information service and domesticcall center businesses accounted for 85% of the operatingpermits.

TRAVELChina to add more than 1,000 km of Maglev railways

China will add up to nine magnetic levitation railroadsof over 1,000 kilometers in total length in the long term

to boost regional connectivity and high-end equipmentmanufacturing. They will include a tourist railway line inYunnan province, and intercity passenger lines and urbanmass transit lines in Shanxi, Xinjiang and Sichuan. Chinaaims to run high-speed maglev trains at 600 km per hourby the end of this year. Zhejiang province announced it willinvest CNY100 billion to build a maglev railroad connectingHangzhou and Shanghai. It will take about 15 minutes tocomplete the 162-km journey, said Feng Hao, Researcherat the National Development and Reform Commission'sInstitute of Comprehensive Transportation.

Compared with standard bullet trains, the high-speedmaglev trains have advantages which include reducednoise and vibration, and lower maintenance costs becausethey do not use wheels but hover centimeters above the

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

track through the use of magnets, avoiding friction. Asidefrom the Yangtze River Delta region, the Development andReform Commission of Shenzhen plans to introducemaglev rail lines to the Second Guangzhou-ShenzhenHigh Speed Railway to ease the operational pressure ofregular and bullet trains in the area. The SecondGuangzhou-Shenzhen High Speed Railway is to be built in2025 and is expected to be completed in 2030. Chengdu,capital of Sichuan province, also intends to launch maglevservices between the city and Chongqing in the future.

China Railway Rolling Stock Corp, the country's largestrolling stock manufacturer by production volume, is alsodeveloping wheel technology-based high-speed trains.The Europeans and Canadians have failed to competewith China in this field in recent years, said Chen Jian,Professor specializing in railways at Chongqing JiaotongUniversity. Japan remains a strong rival though indeveloping regular bullet and high-speed maglev trains. Ithas successfully tested 500 km/h and 603 km/h maglevtrains with cryogenic superconducting technologies inrecent years. Japan plans to build a high-speed maglevtrain line between Tokyo and Nagoya in 2027 or later. Inaddition to three existing maglev railroads in Beijing,Shanghai and Changsha, two short-distance low-speedmaglev railways are being constructed in Qingyuan,Guangdong province, and Fenghuang county, Hunanprovince. Both are scheduled to be operational in 2021.China laid a total of 1,178 km of new railway lines,including 605 km of high-speed lines in the first half of this

year. The country plans to lay at least 4,400 km of newrailway lines in 2020, including 2,300 km of high-speedlines, the China Daily reports.

In other railway news, China plans to invest CNY200million to build China-Europe railway distribution hubsin five cities to better use railway resources and reducecosts, according to the National Development and ReformCommission (NDRC), the country's top economic planner.The five cities – Chengdu, Zhengzhou, Chongqing, Xianand Urumqi – are all major cities for China-Europe freighttrain services or key logistics channels. As more cities startto run freight trains between China and Europe, intensivecompetition has emerged in transportation prices andrailway resources, said Wu Jingyu, Director of the Asia-Europe land bridge international freight train coordinationservice center, at the China Communications andTransportation Association.

The construction of transportation hubs will enable cities toshare resources, cut costs and improve efficiency.According to Wang Guowen, Director of the Center forLogistics and Supply Chain Management at the Shenzhen-based think tank China Development Institute, most China-Europe freight trains pass through Urumqi withoutstopping, and the establishment of the new hub will enabledomestic and foreign goods to travel on the trains at thesame time to reduce costs. Wang also suggested that partof the CNY200 million in funding be used to build platformsfor information sharing and coordinate trains runningamong the five cities, the China Daily reports.

CHINA NEWS ROUND-UPChina and U.S. implement trade deal, although phase II may be far off China and the U.S. have achieved progress in theimplementation of their phase one trade deal, despitedelays in certain imports due to technical and supplyissues on the U.S. side due to Covid-19, the Global Timesreports. The U.S. Chamber of Commerce and over 40trade associations urged top Chinese and U.S. officials,including Chinese Vice Premier Liu He, U.S. TreasurySecretary Steven Mnuchin and U.S. Trade RepresentativeRobert Lighthizer to redouble efforts to implement thephase one trade agreement. In a letter, the groups urged asignificant increase in China's purchases of U.S. goodsand services, noting that combating the coronaviruspandemic and restoring global growth partially dependupon the successful implementation of the trade deal.

Supplies may be held up due to epidemic preventionmeasures. In late June, China's customs administrationannounced that it had suspended imports of poultryproducts from a plant owned by U.S.-based meatprocessing firm Tyson over a cluster of Covid-19 cases.

Data compiled by news website marketwatch.com showsthat as of May, China's energy purchases only amountto18% of the annual target. U.S. exports data show thatChina has purchased USD2 billion in energy products fromthe U.S. as of May.

Under the phase one trade deal signed in January, Beijingpledged to buy at least USD200 billion in additional U.S.goods and services over two years, while Washingtonagreed to roll back tariffs on Chinese goods in stages.Implementation of U.S. sanctions due to alleged humanrights violations in Tibet and Xinjiang and restrictions offreedom in Hong Kong may have a negative impact on thetrade deal.

China-U.S. relations, “one of the most consequentialbilateral relationships in the world,” are faced with “themost severe challenge since the establishment ofdiplomatic ties,” Chinese State Councilor and ForeignMinister Wang Yi warned at the China-U.S. Think TanksMedia Online Forum last week. Former U.S. Secretary ofState Henry Kissinger also attended the forum. From thetrade war and competition in the field of high-tech, such as

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

track through the use of magnets, avoiding friction. Asidefrom the Yangtze River Delta region, the Development andReform Commission of Shenzhen plans to introducemaglev rail lines to the Second Guangzhou-ShenzhenHigh Speed Railway to ease the operational pressure ofregular and bullet trains in the area. The SecondGuangzhou-Shenzhen High Speed Railway is to be built in2025 and is expected to be completed in 2030. Chengdu,capital of Sichuan province, also intends to launch maglevservices between the city and Chongqing in the future.

China Railway Rolling Stock Corp, the country's largestrolling stock manufacturer by production volume, is alsodeveloping wheel technology-based high-speed trains.The Europeans and Canadians have failed to competewith China in this field in recent years, said Chen Jian,Professor specializing in railways at Chongqing JiaotongUniversity. Japan remains a strong rival though indeveloping regular bullet and high-speed maglev trains. Ithas successfully tested 500 km/h and 603 km/h maglevtrains with cryogenic superconducting technologies inrecent years. Japan plans to build a high-speed maglevtrain line between Tokyo and Nagoya in 2027 or later. Inaddition to three existing maglev railroads in Beijing,Shanghai and Changsha, two short-distance low-speedmaglev railways are being constructed in Qingyuan,Guangdong province, and Fenghuang county, Hunanprovince. Both are scheduled to be operational in 2021.China laid a total of 1,178 km of new railway lines,including 605 km of high-speed lines in the first half of this

year. The country plans to lay at least 4,400 km of newrailway lines in 2020, including 2,300 km of high-speedlines, the China Daily reports.

In other railway news, China plans to invest CNY200million to build China-Europe railway distribution hubsin five cities to better use railway resources and reducecosts, according to the National Development and ReformCommission (NDRC), the country's top economic planner.The five cities – Chengdu, Zhengzhou, Chongqing, Xianand Urumqi – are all major cities for China-Europe freighttrain services or key logistics channels. As more cities startto run freight trains between China and Europe, intensivecompetition has emerged in transportation prices andrailway resources, said Wu Jingyu, Director of the Asia-Europe land bridge international freight train coordinationservice center, at the China Communications andTransportation Association.

The construction of transportation hubs will enable cities toshare resources, cut costs and improve efficiency.According to Wang Guowen, Director of the Center forLogistics and Supply Chain Management at the Shenzhen-based think tank China Development Institute, most China-Europe freight trains pass through Urumqi withoutstopping, and the establishment of the new hub will enabledomestic and foreign goods to travel on the trains at thesame time to reduce costs. Wang also suggested that partof the CNY200 million in funding be used to build platformsfor information sharing and coordinate trains runningamong the five cities, the China Daily reports.

CHINA NEWS ROUND-UPChina and U.S. implement trade deal, although phase II may be far off China and the U.S. have achieved progress in theimplementation of their phase one trade deal, despitedelays in certain imports due to technical and supplyissues on the U.S. side due to Covid-19, the Global Timesreports. The U.S. Chamber of Commerce and over 40trade associations urged top Chinese and U.S. officials,including Chinese Vice Premier Liu He, U.S. TreasurySecretary Steven Mnuchin and U.S. Trade RepresentativeRobert Lighthizer to redouble efforts to implement thephase one trade agreement. In a letter, the groups urged asignificant increase in China's purchases of U.S. goodsand services, noting that combating the coronaviruspandemic and restoring global growth partially dependupon the successful implementation of the trade deal.

Supplies may be held up due to epidemic preventionmeasures. In late June, China's customs administrationannounced that it had suspended imports of poultryproducts from a plant owned by U.S.-based meatprocessing firm Tyson over a cluster of Covid-19 cases.

Data compiled by news website marketwatch.com showsthat as of May, China's energy purchases only amountto18% of the annual target. U.S. exports data show thatChina has purchased USD2 billion in energy products fromthe U.S. as of May.

Under the phase one trade deal signed in January, Beijingpledged to buy at least USD200 billion in additional U.S.goods and services over two years, while Washingtonagreed to roll back tariffs on Chinese goods in stages.Implementation of U.S. sanctions due to alleged humanrights violations in Tibet and Xinjiang and restrictions offreedom in Hong Kong may have a negative impact on thetrade deal.

China-U.S. relations, “one of the most consequentialbilateral relationships in the world,” are faced with “themost severe challenge since the establishment ofdiplomatic ties,” Chinese State Councilor and ForeignMinister Wang Yi warned at the China-U.S. Think TanksMedia Online Forum last week. Former U.S. Secretary ofState Henry Kissinger also attended the forum. From thetrade war and competition in the field of high-tech, such as

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

5G, to military tensions in the South China Sea and theTaiwan problem, as well as the war of words on the Covid-19 pandemic, the two countries have been competing andstruggling in almost every aspect in recent years.

As the U.S.-China trade war has now been ongoing fortwo years – the U.S. first raised tariffs on July 6, 2018 –U.S. Trade Representative Robert Lighthizer said he didn'tknow what the end goal was. “That’s a damning admissionand confirms the suspicion of many that the Trumpadministration’s trade policy is all tactics and no strategy,”said Scott Kennedy, China Business Chair at the Center forStrategic and International Studies. “Unilateral across-the-board tariffs got China to the negotiating table. Butbecause they were not done in concert with anyone else ortogether with other policies, the results were rathermeagre,” Kennedy added. The U.S. trade deficit with Chinaeased to USD26.96 billion in May, compared to USD33.71billion in June 2018, according to U.S. Census Bureaudata.

U.S. President Donald Trump last week hinted he has lostinterest in a potential phase two trade deal with China. “Idon’t think about it now,” Trump said when asked about thepossibility of another deal, adding that the U.S.-Chinarelationship “has been severely damaged”.

Shanghai becomes the world's third ranked shipping center For the first time in six years, Shanghai has become oneof the world's top three shipping centers, an industryreport showed. Shanghai ranked third in the 2020 Xinhua-Baltic Exchange International Shipping CenterDevelopment Index, second only to Singapore andLondon. The report measures port facilities, shippingservices and comprehensive shipping resources. Analystssaid Shanghai's ranking was due to its improved softpower in terms of enhanced high-end shipping services. “Inrecent years, China has also been attaching importance tothe development of shipping services and comprehensiveshipping resources, striving to improve customs clearanceefficiency and reduce logistics costs at ports,” ZhouDequan, Research Fellow with the Shanghai InternationalShipping Institute, told the Global Times. Wu Minghua, aShanghai-based independent shipping industry analyst,said the change in the global top three ranking issignificant. Hong Kong moved up from third place before2018 to second place in 2019, before falling out of the topthree in 2020. “Shanghai now beats Hong Kong in manysub-indexes,” Wu said.

In the future, Shanghai is likely to surpass London andSingapore as the top international shipping center, BaiMing, Research Fellow at the Chinese Academy ofInternational Trade and Economic Cooperation, predicted.“Becoming an international shipping center represents acomprehensive manifestation of economic developmentand the level of opening up of a country,” Bai told theGlobal Times. Nearly half of the world's top 100 containerlines have opened branches in Shanghai while themunicipality's shipping and cargo insurance businessaccounted for about one-quarter of the national total withworld-leading business volumes. In addition to Shanghai,Chinese cities including Zhoushan in Zhejiang province,

Guangzhou, capital of Guangdong province and Qingdaoin Shandong province, were placed at 11, 13 and 15.

Analysts said that Shanghai has many areas where itmust improve before it can challenge London, the leaderin global high-end shipping services, or Singapore, whichboasts all-round strengths. Wu said Shanghai still lagsbehind in maritime arbitration, insurance and finance. “Interms of maritime arbitration, for instance, Shanghai settledless than 100 cases last year while London settled severalthousand, while Singapore remains the global shippingcenter of Asia,” Wu said, as reported by the Global Times.

Rail and air freight up, sea cargo downdue to Covid-19The number of China-Europe freight train trips postednotable growth in the first half. Freight rail trips betweenChina and Europe rose 36% year-on-year to 5,122 in thefirst six months, according to the China State RailwayGroup, adding that the figure hit a record monthly high of1,169 in June. Cargo train services have become animportant logistics channel to ensure smooth trade asseaborne cargo transport has been disrupted by theCovid-19 pandemic, the company said. A total of 461,000standard-sized shipping containers of cargo weretransported by rail in the first half, up 41% year-on-year.

The Civil Aviation Administration of China (CAAC) said thecountry has seen a giant leap in international air cargotransportation capacity, thus helping maintain the smoothrunning of supply chains. Domestic and foreign-operatedinternational cargo flights in China totaled an average of2,390 per week in June, a 135.7% increase compared tobefore the coronavirus outbreak. They connected 105destinations in 45 countries and regions across the globe,said Jin Junhao, Deputy Director of the CAAC’sTransportation Department. The CAAC approved 2,083additional all-cargo charter flights in May and 1,521 inJune, a sharp rise of 578.5% and 541.8%, respectively,from the same period last year, Jin said. TheAdministration also encouraged airlines to help remedysevere shortages in freight capacity by retrofitting idlepassenger jets into cargo-ready aircraft. The country saw4,625 and 2,539 all-cargo flights via renovated passengerjets, respectively, in the past two months.

Increased air cargo flights helped alleviate the losses dueto reduced passenger traffic. China handled about 30.74million individual air passenger trips last month, a year-on-year drop of about 42.4%. But the decline narrowed 10.2percentage points from May and 42.1 percentage pointsfrom February, Jin Junhao said. Domestic routes saw 140million passenger trips while international routes reported8.52 million, equivalent to 48.6% and 23.5% of the volumefor the same period last year, respectively, the China Dailyreports.

Wall Street opposes delisting of Chinese firms from American stock exchanges During a panel discussion hosted by the Securities &Exchange Commission (SEC), executives of Vanguard,NYSE and Nasdaq questioned a bill under consideration

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

5G, to military tensions in the South China Sea and theTaiwan problem, as well as the war of words on the Covid-19 pandemic, the two countries have been competing andstruggling in almost every aspect in recent years.

As the U.S.-China trade war has now been ongoing fortwo years – the U.S. first raised tariffs on July 6, 2018 –U.S. Trade Representative Robert Lighthizer said he didn'tknow what the end goal was. “That’s a damning admissionand confirms the suspicion of many that the Trumpadministration’s trade policy is all tactics and no strategy,”said Scott Kennedy, China Business Chair at the Center forStrategic and International Studies. “Unilateral across-the-board tariffs got China to the negotiating table. Butbecause they were not done in concert with anyone else ortogether with other policies, the results were rathermeagre,” Kennedy added. The U.S. trade deficit with Chinaeased to USD26.96 billion in May, compared to USD33.71billion in June 2018, according to U.S. Census Bureaudata.

U.S. President Donald Trump last week hinted he has lostinterest in a potential phase two trade deal with China. “Idon’t think about it now,” Trump said when asked about thepossibility of another deal, adding that the U.S.-Chinarelationship “has been severely damaged”.

Shanghai becomes the world's third ranked shipping center For the first time in six years, Shanghai has become oneof the world's top three shipping centers, an industryreport showed. Shanghai ranked third in the 2020 Xinhua-Baltic Exchange International Shipping CenterDevelopment Index, second only to Singapore andLondon. The report measures port facilities, shippingservices and comprehensive shipping resources. Analystssaid Shanghai's ranking was due to its improved softpower in terms of enhanced high-end shipping services. “Inrecent years, China has also been attaching importance tothe development of shipping services and comprehensiveshipping resources, striving to improve customs clearanceefficiency and reduce logistics costs at ports,” ZhouDequan, Research Fellow with the Shanghai InternationalShipping Institute, told the Global Times. Wu Minghua, aShanghai-based independent shipping industry analyst,said the change in the global top three ranking issignificant. Hong Kong moved up from third place before2018 to second place in 2019, before falling out of the topthree in 2020. “Shanghai now beats Hong Kong in manysub-indexes,” Wu said.

In the future, Shanghai is likely to surpass London andSingapore as the top international shipping center, BaiMing, Research Fellow at the Chinese Academy ofInternational Trade and Economic Cooperation, predicted.“Becoming an international shipping center represents acomprehensive manifestation of economic developmentand the level of opening up of a country,” Bai told theGlobal Times. Nearly half of the world's top 100 containerlines have opened branches in Shanghai while themunicipality's shipping and cargo insurance businessaccounted for about one-quarter of the national total withworld-leading business volumes. In addition to Shanghai,Chinese cities including Zhoushan in Zhejiang province,

Guangzhou, capital of Guangdong province and Qingdaoin Shandong province, were placed at 11, 13 and 15.

Analysts said that Shanghai has many areas where itmust improve before it can challenge London, the leaderin global high-end shipping services, or Singapore, whichboasts all-round strengths. Wu said Shanghai still lagsbehind in maritime arbitration, insurance and finance. “Interms of maritime arbitration, for instance, Shanghai settledless than 100 cases last year while London settled severalthousand, while Singapore remains the global shippingcenter of Asia,” Wu said, as reported by the Global Times.

Rail and air freight up, sea cargo downdue to Covid-19The number of China-Europe freight train trips postednotable growth in the first half. Freight rail trips betweenChina and Europe rose 36% year-on-year to 5,122 in thefirst six months, according to the China State RailwayGroup, adding that the figure hit a record monthly high of1,169 in June. Cargo train services have become animportant logistics channel to ensure smooth trade asseaborne cargo transport has been disrupted by theCovid-19 pandemic, the company said. A total of 461,000standard-sized shipping containers of cargo weretransported by rail in the first half, up 41% year-on-year.

The Civil Aviation Administration of China (CAAC) said thecountry has seen a giant leap in international air cargotransportation capacity, thus helping maintain the smoothrunning of supply chains. Domestic and foreign-operatedinternational cargo flights in China totaled an average of2,390 per week in June, a 135.7% increase compared tobefore the coronavirus outbreak. They connected 105destinations in 45 countries and regions across the globe,said Jin Junhao, Deputy Director of the CAAC’sTransportation Department. The CAAC approved 2,083additional all-cargo charter flights in May and 1,521 inJune, a sharp rise of 578.5% and 541.8%, respectively,from the same period last year, Jin said. TheAdministration also encouraged airlines to help remedysevere shortages in freight capacity by retrofitting idlepassenger jets into cargo-ready aircraft. The country saw4,625 and 2,539 all-cargo flights via renovated passengerjets, respectively, in the past two months.

Increased air cargo flights helped alleviate the losses dueto reduced passenger traffic. China handled about 30.74million individual air passenger trips last month, a year-on-year drop of about 42.4%. But the decline narrowed 10.2percentage points from May and 42.1 percentage pointsfrom February, Jin Junhao said. Domestic routes saw 140million passenger trips while international routes reported8.52 million, equivalent to 48.6% and 23.5% of the volumefor the same period last year, respectively, the China Dailyreports.

Wall Street opposes delisting of Chinese firms from American stock exchanges During a panel discussion hosted by the Securities &Exchange Commission (SEC), executives of Vanguard,NYSE and Nasdaq questioned a bill under consideration

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

that could push Chinese businesses out of Americanstock markets. In opposing the bill they are pushing backon an escalating risk to their bottom lines: threats fromCapitol Hill and the Trump administration to dramaticallycurtail U.S. investments in Chinese companies. The billunder consideration could lead to Alibaba Group Holding,Baidu and other Chinese businesses getting kicked out ofAmerican stock markets. The intent of the legislation isto force China to comply with U.S. accounting rules,but it might just prompt Chinese companies to relocate tomarkets with less regulatory oversight, such as movingtheir listings from New York to Hong Kong. The bill clearedthe U.S. Senate unanimously in May with a companionversion now being reviewed by the House. It would triggerthe delisting of Chinese firms if they don’t allow their booksto be examined by the U.S. Public Company AccountingOversight Board (PCAOB) for three straight years – arequirement that China has long rejected. The legislation’sRepublican and Democratic backers say it is needed toprotect U.S. investors from fraud.

Vanguard is among giant money managers whose mutualfunds invest in Chinese businesses listed on U.S.exchanges, while NYSE and Nasdaq make millions ofdollars in fees by allowing Chinese shares to be traded ontheir platforms. John Tuttle, Chief Commercial Officer ofNYSE Group, said the exchange would support adding anindicator to company tickers to ensure investors are awareof risks associated with firms whose audits aren’t inspectedby the PCAOB, but he warned that the proposed legislationcould backfire. “We don’t disagree with it philosophically,”Tuttle said. “However, some of the tactics – about how theywant to get the results they want to get – we don’tnecessarily agree with that.” While he was careful to saythat Nasdaq wasn’t opposing the pending bill, John Zecca,the exchange operator’s global Chief Legal and RegulatoryOfficer, was also critical. “Legislation is a very blunt tool,”he said. “The government already has a number of tools toaddress this.”

President Donald Trump has ordered regulators to reviewChinese companies’ lack of adherence to U.S. accountingrules and submit recommendations by early August onhow to fix the problem, putting the SEC at the center of thefight. Adding urgency to the debate over Chinesecompanies is this year’s high-profile accounting scandal atLuckin Coffee. Since reaching a high of USD50 a share inJanuary, the Chinese chain's shares have dropped morethan 90% in Nasdaq trading, a plunge that has erasedabout USD11 billion of market value. Following an internalinvestigation, Luckin disclosed earlier this month thatfabricated transactions had inflated its 2019 revenue byabout USD300 million, the South China Morning Postreports.

China going all out to develop AI sectorChina is going full steam ahead to develop its artificialintelligence (AI) sector, with research and someapplications already in a leading position, businessrepresentatives and government officials said. China isworking to build a massive AI industry despite someexternal challenges, including the Covid-19 pandemic andthe U.S. government's technology blockade. The efforts

have borne positive results. By the end of 2019, China's AIcore industries, with 2,600 companies, had realizedCNY51 billion in industrial value, Minister of Industry andInformation Technology Miao Wei said at the openingceremony of the 2020 World Artificial IntelligenceConference (WAIC) in Shanghai. A spokesperson fromMicrosoft told the Global Times that China has become animportant source of innovation for the whole world. Chinais “definitely in a leading position” in AI research anddevelopment (R&D), whether it comes to Chinese paperssubmitted and published at major global AI conferences orChinese researchers who are engaged in AI research inuniversities and research organizations. Besides, China ismaking rapid progress in some AI technologies, such asquantum computing, he said. “In this environment, we haveconfidence in the development of AI in China. Given moretime and talent inputs, China will definitely play asignificant role in AI development in the world,” thespokesperson said. Minister Miao also stressed that someChinese AI technologies, such as voice recognition, arenow leading the world.

Chinese industry giants are making ambitious blueprintsfor AI development. Baidu CEO Robin Li Yanhong said thatBaidu plans to have more than five million smart cloudservers. It also aims to train 5 million AI talents in the nextfive years. Ma Huateng, CEO of Tencent Group, also saidduring the WAIC that the tech giant is “studying andapplying the new technology every day”. However, nomatter how hard the Trump administration tries to blockChinese technologies rising in the AI race, U.S. firms willnot ignore the Chinese market, which has complex AIapplication scenarios to help promote their development,analysts said.

“The restrictions on normal communications on talent andtechnologies cannot obstruct the growing momentum ofChina's AI advances,” said Zuo Shiquan, an expert in AI atthe Beijing-based China Center for Information IndustryDevelopment. Zuo told the Global Times that China isramping up efforts to carve its own advantages in the AIsector. Zhang Wenhong, head of Shanghai's Covid-19medical experts' team, said during the WAIC that AI hasplayed an important role in helping manage city life duringcoronavirus lockdowns, the Global Times reports.

China welcomes foreign investment in housekeeping servicesChina welcomes foreign firms to invest in itshousekeeping services, which is not on the negative listfor foreign investment. China implements a negative listthat designates certain sectors as off-limits to foreigninvestment. The housekeeping services sector is notincluded in the list, and foreign firms can register and setup home services businesses in the same ways as theirChinese counterparts, said Xian Guoyi, an official from theMinistry of Commerce (MOFCOM). Foreign firms arewelcomed to invest in the area, which holds tremendouspotential of growth, the Ministry added.

The rise of the middle class in China necessitates theprovision of high-quality home services, creatingopportunities for foreign businesses, Bai Ming, ResearchFellow at the Chinese Academy of International Trade and

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

that could push Chinese businesses out of Americanstock markets. In opposing the bill they are pushing backon an escalating risk to their bottom lines: threats fromCapitol Hill and the Trump administration to dramaticallycurtail U.S. investments in Chinese companies. The billunder consideration could lead to Alibaba Group Holding,Baidu and other Chinese businesses getting kicked out ofAmerican stock markets. The intent of the legislation isto force China to comply with U.S. accounting rules,but it might just prompt Chinese companies to relocate tomarkets with less regulatory oversight, such as movingtheir listings from New York to Hong Kong. The bill clearedthe U.S. Senate unanimously in May with a companionversion now being reviewed by the House. It would triggerthe delisting of Chinese firms if they don’t allow their booksto be examined by the U.S. Public Company AccountingOversight Board (PCAOB) for three straight years – arequirement that China has long rejected. The legislation’sRepublican and Democratic backers say it is needed toprotect U.S. investors from fraud.

Vanguard is among giant money managers whose mutualfunds invest in Chinese businesses listed on U.S.exchanges, while NYSE and Nasdaq make millions ofdollars in fees by allowing Chinese shares to be traded ontheir platforms. John Tuttle, Chief Commercial Officer ofNYSE Group, said the exchange would support adding anindicator to company tickers to ensure investors are awareof risks associated with firms whose audits aren’t inspectedby the PCAOB, but he warned that the proposed legislationcould backfire. “We don’t disagree with it philosophically,”Tuttle said. “However, some of the tactics – about how theywant to get the results they want to get – we don’tnecessarily agree with that.” While he was careful to saythat Nasdaq wasn’t opposing the pending bill, John Zecca,the exchange operator’s global Chief Legal and RegulatoryOfficer, was also critical. “Legislation is a very blunt tool,”he said. “The government already has a number of tools toaddress this.”

President Donald Trump has ordered regulators to reviewChinese companies’ lack of adherence to U.S. accountingrules and submit recommendations by early August onhow to fix the problem, putting the SEC at the center of thefight. Adding urgency to the debate over Chinesecompanies is this year’s high-profile accounting scandal atLuckin Coffee. Since reaching a high of USD50 a share inJanuary, the Chinese chain's shares have dropped morethan 90% in Nasdaq trading, a plunge that has erasedabout USD11 billion of market value. Following an internalinvestigation, Luckin disclosed earlier this month thatfabricated transactions had inflated its 2019 revenue byabout USD300 million, the South China Morning Postreports.

China going all out to develop AI sectorChina is going full steam ahead to develop its artificialintelligence (AI) sector, with research and someapplications already in a leading position, businessrepresentatives and government officials said. China isworking to build a massive AI industry despite someexternal challenges, including the Covid-19 pandemic andthe U.S. government's technology blockade. The efforts

have borne positive results. By the end of 2019, China's AIcore industries, with 2,600 companies, had realizedCNY51 billion in industrial value, Minister of Industry andInformation Technology Miao Wei said at the openingceremony of the 2020 World Artificial IntelligenceConference (WAIC) in Shanghai. A spokesperson fromMicrosoft told the Global Times that China has become animportant source of innovation for the whole world. Chinais “definitely in a leading position” in AI research anddevelopment (R&D), whether it comes to Chinese paperssubmitted and published at major global AI conferences orChinese researchers who are engaged in AI research inuniversities and research organizations. Besides, China ismaking rapid progress in some AI technologies, such asquantum computing, he said. “In this environment, we haveconfidence in the development of AI in China. Given moretime and talent inputs, China will definitely play asignificant role in AI development in the world,” thespokesperson said. Minister Miao also stressed that someChinese AI technologies, such as voice recognition, arenow leading the world.

Chinese industry giants are making ambitious blueprintsfor AI development. Baidu CEO Robin Li Yanhong said thatBaidu plans to have more than five million smart cloudservers. It also aims to train 5 million AI talents in the nextfive years. Ma Huateng, CEO of Tencent Group, also saidduring the WAIC that the tech giant is “studying andapplying the new technology every day”. However, nomatter how hard the Trump administration tries to blockChinese technologies rising in the AI race, U.S. firms willnot ignore the Chinese market, which has complex AIapplication scenarios to help promote their development,analysts said.

“The restrictions on normal communications on talent andtechnologies cannot obstruct the growing momentum ofChina's AI advances,” said Zuo Shiquan, an expert in AI atthe Beijing-based China Center for Information IndustryDevelopment. Zuo told the Global Times that China isramping up efforts to carve its own advantages in the AIsector. Zhang Wenhong, head of Shanghai's Covid-19medical experts' team, said during the WAIC that AI hasplayed an important role in helping manage city life duringcoronavirus lockdowns, the Global Times reports.

China welcomes foreign investment in housekeeping servicesChina welcomes foreign firms to invest in itshousekeeping services, which is not on the negative listfor foreign investment. China implements a negative listthat designates certain sectors as off-limits to foreigninvestment. The housekeeping services sector is notincluded in the list, and foreign firms can register and setup home services businesses in the same ways as theirChinese counterparts, said Xian Guoyi, an official from theMinistry of Commerce (MOFCOM). Foreign firms arewelcomed to invest in the area, which holds tremendouspotential of growth, the Ministry added.

The rise of the middle class in China necessitates theprovision of high-quality home services, creatingopportunities for foreign businesses, Bai Ming, ResearchFellow at the Chinese Academy of International Trade and

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

Economic Cooperation, told the Global Times. Theopening of the nation's housekeeping services marketcould mean an opportunity for English-speaking Filipinohousekeepers, but it is more practical for suchprofessionals to be hired as trainers for Chinese domestichome workers, Bai said.

The country unveiled a shortened negative list for foreigninvestment in late June, downsizing the number of sectorsoff limits to 33 from 40 in a bid to honor its commitment tofurther open up the economy despite the coronavirus

pandemic. The new list, jointly issued by the NationalDevelopment and Reform Commission (NDRC) andMOFCOM, allows for greater openness in the services,manufacturing and agricultural sectors. A separate listgoverning foreign investment in the country's free tradezones cut restricted items from 37 to 30. China's actualizedforeign direct investment (FDI) denominated in the yuanrose 7.5% in May from the year before, but edged down3.8% in the first five months of 2020 on a yearly basis, theGlobal Times reports.

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 2020

Economic Cooperation, told the Global Times. Theopening of the nation's housekeeping services marketcould mean an opportunity for English-speaking Filipinohousekeepers, but it is more practical for suchprofessionals to be hired as trainers for Chinese domestichome workers, Bai said.

The country unveiled a shortened negative list for foreigninvestment in late June, downsizing the number of sectorsoff limits to 33 from 40 in a bid to honor its commitment tofurther open up the economy despite the coronavirus

pandemic. The new list, jointly issued by the NationalDevelopment and Reform Commission (NDRC) andMOFCOM, allows for greater openness in the services,manufacturing and agricultural sectors. A separate listgoverning foreign investment in the country's free tradezones cut restricted items from 37 to 30. China's actualizedforeign direct investment (FDI) denominated in the yuanrose 7.5% in May from the year before, but edged down3.8% in the first five months of 2020 on a yearly basis, theGlobal Times reports.

FCCC-VCKK – CHINA BUSINESS WEEKLY 15 JULY 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 15 JULY 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.