Newsletter7 August 2018

FCCC/EUCBA ACTIVITIES

13th EU-China Business and Technology Cooperation FairQingdao – 17-18 September 2018; Chengdu – 19-24 September 2018

OverviewThe EU-China Business and Technology Cooperation Fair has been held for 12 editions, with an overall attendance of over 3,570 European enterprises, international organizations, governmental authorities, universities and research institutions as well as more than 6,520 Chinese counterparts. A total of 26,200 B2B matchmaking meetings have been held and 2,527 successful cooperation agreements between European and Chinese delegates were reached so far.

Today, the EU-China Business and Technology Cooperation Fair has become a significant event for development of China relations for most of the EU member states. Attended by wide representations of EU enterprises, as well as high-level officials, including President, Minister, Ambassador, Consul-General and Chairman of Chamber of Commerce, etc. it represents the largest platform for investment, trade and technological cooperation between European Union and China with successful promotion of local governmental cooperation, like launching direct flights, twin city relations, co-building of schools, establishment of consulates, etc.

Key data• 12 editions already held: a successful track history; • Participation of ALL European member states and over 3,570 European enterprise representatives; • Participation of over 6,520 Chinese companies; • 26,200 B2B Matchmaking sessions held, of which about 30% reached cooperation intention;• Over 60 European Chambers of Commerce/ associations/government authorities set up branches and representative

offices locally, while over 300 European companies settled in Chengdu.

Newsletter7 August 2018

FCCC/EUCBA ACTIVITIES

13th EU-China Business and Technology Cooperation FairQingdao – 17-18 September 2018; Chengdu – 19-24 September 2018

OverviewThe EU-China Business and Technology Cooperation Fair has been held for 12 editions, with an overall attendance of over 3,570 European enterprises, international organizations, governmental authorities, universities and research institutions as well as more than 6,520 Chinese counterparts. A total of 26,200 B2B matchmaking meetings have been held and 2,527 successful cooperation agreements between European and Chinese delegates were reached so far.

Today, the EU-China Business and Technology Cooperation Fair has become a significant event for development of China relations for most of the EU member states. Attended by wide representations of EU enterprises, as well as high-level officials, including President, Minister, Ambassador, Consul-General and Chairman of Chamber of Commerce, etc. it represents the largest platform for investment, trade and technological cooperation between European Union and China with successful promotion of local governmental cooperation, like launching direct flights, twin city relations, co-building of schools, establishment of consulates, etc.

Key data• 12 editions already held: a successful track history; • Participation of ALL European member states and over 3,570 European enterprise representatives; • Participation of over 6,520 Chinese companies; • 26,200 B2B Matchmaking sessions held, of which about 30% reached cooperation intention;• Over 60 European Chambers of Commerce/ associations/government authorities set up branches and representative

offices locally, while over 300 European companies settled in Chengdu.

NEWSLETTER 7 AUGUST 2018 2

The Qingdao Fair is organized in cooperation with the EU-China Business Association (EUCBA) and the Flanders-China Chamber of Commerce (FCCC).

More information is available in this PDF brochure

China Mini EMBA+London – 28-29 September 2018

China – 29 October – 2 November 2018Paris – 30 November – 1 December 2018

Are you looking to be conversant in both Eastern and Western business worlds – leading with a global perspective and China insight?

As China becomes part of the global ecosystem, innovativebusiness models are being created in China that present significant challenges and opportunities for Western companies, demanding new knowledge, new skills and newnetworks. Based in London, CKGSB Europe continuously seeks to discover Western executives and entrepreneurs who either lack original China insight or are searching for the right partner with whom to do business successfully with China.

The China Mini EMBA+ consists of three intensive modules(nine days in total) designed to help busy senior professionals gain the latest China knowledge and network with China's globally successful entrepreneurs and companies – our trusted alumni – directly impacting your business performance and activating a results-driven Chinastrategic plan.

Program Dates:• 28–29 September – London (Friday and Saturday) • 29 October–2 November – China (Monday to

Friday) • 30 November–1 December – Paris (Friday

andSaturday)

Program Fee:• GBP 9,800 (exc. VAT)• GBP 8,820 (exc. VAT) – 10% discount to

members of the EU-China Business Association• GBP 8,820 (exc. VAT) – 10% group discount –

three or more participants from the same company

(The program fee includes tuition, teaching materials and selected meals during the program. The cost of travel and accommodation are not covered)

Download the information brochure for more information ...

Application deadline: End of August 2018

For more information, please visit www.ckgsb.euTo apply please e-mail Jennifer Wang: jenniferwang@ckgsb.edu.cn

ABOUT CKGSBCheung Kong Graduate School of Business (CKGSB) aims to cultivate business leaders with a global vision, a humanistic spirit, a strong sense of social responsibility andan innovative mind-set. Established in Beijing in November 2002 with generous support from the Li Ka Shing Foundation, CKGSB is an independent, non-profit businessschool.

• 10,000+ alumni of which more than 50% are at the CEO/Chairman level

• CKGSB alumni lead one fifth of China’s most valuable brands

• 400+ China-specific cases and reports • 70+ global academic awards by faculty

More information about CKGSB ...

To find out more about the school, please visit english.ckgsb.edu.cn

ACTIVITIES SUPPORTED BYFCCC

Nexxworks: Day After Tomorrow Tour – China –16~21 September 2018

How do Chinese innovation pioneers organize for their Day After Tomorrow? Which Day After Tomorrow technologies

NEWSLETTER 7 AUGUST 2018 2

The Qingdao Fair is organized in cooperation with the EU-China Business Association (EUCBA) and the Flanders-China Chamber of Commerce (FCCC).

More information is available in this PDF brochure

China Mini EMBA+London – 28-29 September 2018

China – 29 October – 2 November 2018Paris – 30 November – 1 December 2018

Are you looking to be conversant in both Eastern and Western business worlds – leading with a global perspective and China insight?

As China becomes part of the global ecosystem, innovativebusiness models are being created in China that present significant challenges and opportunities for Western companies, demanding new knowledge, new skills and newnetworks. Based in London, CKGSB Europe continuously seeks to discover Western executives and entrepreneurs who either lack original China insight or are searching for the right partner with whom to do business successfully with China.

The China Mini EMBA+ consists of three intensive modules(nine days in total) designed to help busy senior professionals gain the latest China knowledge and network with China's globally successful entrepreneurs and companies – our trusted alumni – directly impacting your business performance and activating a results-driven Chinastrategic plan.

Program Dates:• 28–29 September – London (Friday and Saturday) • 29 October–2 November – China (Monday to

Friday) • 30 November–1 December – Paris (Friday

andSaturday)

Program Fee:• GBP 9,800 (exc. VAT)• GBP 8,820 (exc. VAT) – 10% discount to

members of the EU-China Business Association• GBP 8,820 (exc. VAT) – 10% group discount –

three or more participants from the same company

(The program fee includes tuition, teaching materials and selected meals during the program. The cost of travel and accommodation are not covered)

Download the information brochure for more information ...

Application deadline: End of August 2018

For more information, please visit www.ckgsb.euTo apply please e-mail Jennifer Wang: jenniferwang@ckgsb.edu.cn

ABOUT CKGSBCheung Kong Graduate School of Business (CKGSB) aims to cultivate business leaders with a global vision, a humanistic spirit, a strong sense of social responsibility andan innovative mind-set. Established in Beijing in November 2002 with generous support from the Li Ka Shing Foundation, CKGSB is an independent, non-profit businessschool.

• 10,000+ alumni of which more than 50% are at the CEO/Chairman level

• CKGSB alumni lead one fifth of China’s most valuable brands

• 400+ China-specific cases and reports • 70+ global academic awards by faculty

More information about CKGSB ...

To find out more about the school, please visit english.ckgsb.edu.cn

ACTIVITIES SUPPORTED BYFCCC

Nexxworks: Day After Tomorrow Tour – China –16~21 September 2018

How do Chinese innovation pioneers organize for their Day After Tomorrow? Which Day After Tomorrow technologies

NEWSLETTER 7 AUGUST 2018 3

are they investing in? What are their business models for the Day After Tomorrow?

Our tour will open your eyes to the rich possibilities of the East, shift your perspective and showcase tangible answersto the questions described above. Prepare to be blown away.

REGISTER NOW

China is well on its way to becoming one of the top innovation nations in the world. For the last years, top pioneers in China have been outnumbering – and even out-innovating – the top companies in Silicon Valley. Alibaba, Tencent and Youku Tudou are just some of the most well-known examples. But the region is also a true hotbed for fresh and leading edge start-ups and scale-ups like Xiaomi,Didi Chuxing and Lu.com. One of the most striking differences with the West is the scale & speed of their endeavours. Chinese organizations do not just 'Think Big'. They 'Think Huge': beyond their company, beyond their products, their services, their country, their target market, and their competition. We have a lot to learn from their ambition.

Join us on an eye-opening innovation tour to Beijing and Shanghai, two of the fastest growing innovation hubs in the world. Together we'll experience how Chinese organizations are able to innovate on such a mind-blowing scale, which role the government or the national culture have to play in this and what the latest tech and business trends of the East are. This tour will literally turn your perspective upside down.

We'll start this trip in Beijing, to follow the trail of money. Expect gritty start-ups, bootstrapping their way to unicornship, and – what they call – 'scale-ups', worth a whopping 4 billion dollars. We'll dive into how the venture battle works and end with some of the big guys sharing their journey to world domination.

China International Import Expo – November 5-10, 2018 – Shanghai

In May 2017, Chinese President Xi Jinping announced at the Belt and Road Forum for International Cooperation that China will hold the first China International Import Expo (CIIE) starting from 2018. It is a significant move for the Chinese Government to hold CIIE to firmly supporting tradeliberalization and economic globalization and actively opening the market to the world.

We have the pleasure to inform you that your company is kindly invited to participate in the China International ImportExpo (CIIE). This international fair will take place at the National Exhibition and Convention Center in Shanghai from 5 to 10 November 2018.

The CIIE is hosted by the Ministry of Commerce of the People’s Republic of China and the Shanghai Municipal People’s Government and supported by the World Trade Organization, United Nations Conference on Trade and Development and the United Nations Industrial Development Organization. The Fair is organised by the China International Import Expo Bureau and the China National Exhibition and Convention Center (Shanghai).

China is the second largest economy, as well as the secondlargest importer and consumer in the world. China has entered a new development stage at which consumption keeps increasing, indicating an enormous potential for the growth of consumption and import. In the next five years, China is expecting to import products and services valuing more than 10 trillion U.S. dollars, which provides a historic opportunity for enterprises across the world to enter the large Chinese market.

The following sectors will be represented in the Fair:High-end intelligent equipment; consumer electronics &

NEWSLETTER 7 AUGUST 2018 3

are they investing in? What are their business models for the Day After Tomorrow?

Our tour will open your eyes to the rich possibilities of the East, shift your perspective and showcase tangible answersto the questions described above. Prepare to be blown away.

REGISTER NOW

China is well on its way to becoming one of the top innovation nations in the world. For the last years, top pioneers in China have been outnumbering – and even out-innovating – the top companies in Silicon Valley. Alibaba, Tencent and Youku Tudou are just some of the most well-known examples. But the region is also a true hotbed for fresh and leading edge start-ups and scale-ups like Xiaomi,Didi Chuxing and Lu.com. One of the most striking differences with the West is the scale & speed of their endeavours. Chinese organizations do not just 'Think Big'. They 'Think Huge': beyond their company, beyond their products, their services, their country, their target market, and their competition. We have a lot to learn from their ambition.

Join us on an eye-opening innovation tour to Beijing and Shanghai, two of the fastest growing innovation hubs in the world. Together we'll experience how Chinese organizations are able to innovate on such a mind-blowing scale, which role the government or the national culture have to play in this and what the latest tech and business trends of the East are. This tour will literally turn your perspective upside down.

We'll start this trip in Beijing, to follow the trail of money. Expect gritty start-ups, bootstrapping their way to unicornship, and – what they call – 'scale-ups', worth a whopping 4 billion dollars. We'll dive into how the venture battle works and end with some of the big guys sharing their journey to world domination.

China International Import Expo – November 5-10, 2018 – Shanghai

In May 2017, Chinese President Xi Jinping announced at the Belt and Road Forum for International Cooperation that China will hold the first China International Import Expo (CIIE) starting from 2018. It is a significant move for the Chinese Government to hold CIIE to firmly supporting tradeliberalization and economic globalization and actively opening the market to the world.

We have the pleasure to inform you that your company is kindly invited to participate in the China International ImportExpo (CIIE). This international fair will take place at the National Exhibition and Convention Center in Shanghai from 5 to 10 November 2018.

The CIIE is hosted by the Ministry of Commerce of the People’s Republic of China and the Shanghai Municipal People’s Government and supported by the World Trade Organization, United Nations Conference on Trade and Development and the United Nations Industrial Development Organization. The Fair is organised by the China International Import Expo Bureau and the China National Exhibition and Convention Center (Shanghai).

China is the second largest economy, as well as the secondlargest importer and consumer in the world. China has entered a new development stage at which consumption keeps increasing, indicating an enormous potential for the growth of consumption and import. In the next five years, China is expecting to import products and services valuing more than 10 trillion U.S. dollars, which provides a historic opportunity for enterprises across the world to enter the large Chinese market.

The following sectors will be represented in the Fair:High-end intelligent equipment; consumer electronics &

NEWSLETTER 7 AUGUST 2018 4

appliances; apparel, accessories & consumer goods; automobile; food & agricultural products; medical equipment & medical care products, trade in services (tourism, education, emerging technologies, culture, creative design and service outsourcing).

More information and booking details can be found at the official website of the National Exhibition and Convention Center (Shanghai): www.neccsh.com.

If you are interested in participating, contact Flanders Investment & Trade Shanghai, the contact point for Belgiumfor CIIE at shanghai@fitagency.com

We also kindly ask you to send an e-mail to gwenn.sonck@flanders-china.be.

ADVERTISEMENT ANDSPONSORSHIP

Interested in advertisement in the FCCC Weekly or on the FCCC website? Send an e-mail to info@flanders-china.be

FOREIGN TRADE

The U.S. and China prepare to impose moretariffs

The administration of U.S. President Donald Trump announced that it is preparing a USD12 billion emergency aid package for farmers and is considering raising from 10% to 25% planned tariffs on USD200 billion of

Chinese imports. The Chinese government announced itwould impose retaliatory tariffs of 5% to 25% on U.S. imports worth USD60 billion. The Chinese list contains 5,207 product categories.

U.S. President Donald Trump issued a defiant defense of his trade policies, praising American farmers for weatheringChinese tariffs and telling a rally for Republican candidates in Florida that “the days of plundering American jobs and American wealth, those days are over”. “China and others have targeted our farmers. Not good. Not nice. And you know what our farmers are saying? ‘It’s OK. We can take it’,” Trump said. If the U.S. President follows through with the plan, it could significantly raise prices on televisions, clothing, bedsheets, air conditioners and other consumer products. Due to the possible increase in the tariff rate, the public comment period has been extended from August 30 to September 5.

President Trump said that the trade measures are “working far better than anyone ever anticipated.” “Tariffs will make our country much richer than it is today. Only fools would disagree,” he tweeted, adding that China was “for the first time doing poorly against us.”

According to the Foreign Trade Research Center of the Chinese Academy of International Trade and Economic Cooperation, among the 6,031 items on the most recent USD200 billion list are 67 items on which the U.S. depends wholly on Chinese imports. The U.S. is dependent 90% to 100% on Chinese imports for 127 items.For 193 items, there is 80% to 90% dependence. For 207 items, there is 70% to 80% dependence, and for 1,150 items, there is a greater than 50% dependence.

China’s Ministry of Foreign Affairs issued a sharp warning that any “pressure and blackmail” by the U.S. would be of no use, and would result in further retaliatory action. “Should the U.S. escalate the situation with further actions, China will certainly respond with countermeasures,” Foreign Ministry Spokesman Geng Shuang said, adding that China would “resolutely safeguard” its legitimate and legal rights and interests. U.S. and Chinese officials have held unofficial talks, but a deep and mutual distrust continues to hamper efforts to de-escalate the conflict. Official trade negotiations have been stalled since U.S. Commerce Secretary Wilbur Ross visited Beijing in early June.

The Chinese government is trying to assess the impact of the trade row and political sentiment in Washington, and

NEWSLETTER 7 AUGUST 2018 4

appliances; apparel, accessories & consumer goods; automobile; food & agricultural products; medical equipment & medical care products, trade in services (tourism, education, emerging technologies, culture, creative design and service outsourcing).

More information and booking details can be found at the official website of the National Exhibition and Convention Center (Shanghai): www.neccsh.com.

If you are interested in participating, contact Flanders Investment & Trade Shanghai, the contact point for Belgiumfor CIIE at shanghai@fitagency.com

We also kindly ask you to send an e-mail to gwenn.sonck@flanders-china.be.

ADVERTISEMENT ANDSPONSORSHIP

Interested in advertisement in the FCCC Weekly or on the FCCC website? Send an e-mail to info@flanders-china.be

FOREIGN TRADE

The U.S. and China prepare to impose moretariffs

The administration of U.S. President Donald Trump announced that it is preparing a USD12 billion emergency aid package for farmers and is considering raising from 10% to 25% planned tariffs on USD200 billion of

Chinese imports. The Chinese government announced itwould impose retaliatory tariffs of 5% to 25% on U.S. imports worth USD60 billion. The Chinese list contains 5,207 product categories.

U.S. President Donald Trump issued a defiant defense of his trade policies, praising American farmers for weatheringChinese tariffs and telling a rally for Republican candidates in Florida that “the days of plundering American jobs and American wealth, those days are over”. “China and others have targeted our farmers. Not good. Not nice. And you know what our farmers are saying? ‘It’s OK. We can take it’,” Trump said. If the U.S. President follows through with the plan, it could significantly raise prices on televisions, clothing, bedsheets, air conditioners and other consumer products. Due to the possible increase in the tariff rate, the public comment period has been extended from August 30 to September 5.

President Trump said that the trade measures are “working far better than anyone ever anticipated.” “Tariffs will make our country much richer than it is today. Only fools would disagree,” he tweeted, adding that China was “for the first time doing poorly against us.”

According to the Foreign Trade Research Center of the Chinese Academy of International Trade and Economic Cooperation, among the 6,031 items on the most recent USD200 billion list are 67 items on which the U.S. depends wholly on Chinese imports. The U.S. is dependent 90% to 100% on Chinese imports for 127 items.For 193 items, there is 80% to 90% dependence. For 207 items, there is 70% to 80% dependence, and for 1,150 items, there is a greater than 50% dependence.

China’s Ministry of Foreign Affairs issued a sharp warning that any “pressure and blackmail” by the U.S. would be of no use, and would result in further retaliatory action. “Should the U.S. escalate the situation with further actions, China will certainly respond with countermeasures,” Foreign Ministry Spokesman Geng Shuang said, adding that China would “resolutely safeguard” its legitimate and legal rights and interests. U.S. and Chinese officials have held unofficial talks, but a deep and mutual distrust continues to hamper efforts to de-escalate the conflict. Official trade negotiations have been stalled since U.S. Commerce Secretary Wilbur Ross visited Beijing in early June.

The Chinese government is trying to assess the impact of the trade row and political sentiment in Washington, and

NEWSLETTER 7 AUGUST 2018 5

exploring the possibility of restarting talks – although the time was “not ripe right now”, according to analysts. Teng Jianqun, head of U.S. research at the China Institute of International Studies – a think tank affiliated with the Ministry of Foreign Affairs – said, “China has never experienced such aggressive challenges” and needed a sustainable strategy for the long run. “Lessons have to be learned. We shouldn’t fight a trade war for the sake of fighting. This is not two kids throwing bricks at each other,” Teng said. “We need to plan our moves and avoid pitfalls that would endanger the nation’s grand strategy and overallpolicy design. He added that Beijing’s top priority was to ensure political and economic stability so that China could stand up to external challenges. Renmin University International Relations Professor Shi Yinhong said there was no prospect of a resumption in trade talks any time soon. Bai Ming, Senior Researcher with the Ministry of Commerce, said the trade war would force China to press ahead with reform, such as moving up the manufacturing value chain to address overcapacity.

Meanwhile, the U.S.Senate voted 87-10 for the John S. McCain National Defense Authorization Act (NDAA), including weaker provisions than earlier expected to scrutinize foreign investments in the U.S. and limit contractswith ZTE and Huawei. Federal agencies are also prohibitedfrom buying security cameras from Chinese suppliers. An earlier version would have reimposed a seven-year ban on sales by American companies to ZTE, effectively putting the company out of business. Since the bill already cleared the House of Representatives, it now goes to President Trump to be signed into law.

The offshore yuan dropped to a 15-month low of CNY6.8824 per U.S. dollar on August 4 as the U.S.-China trade war escalates, with traders projecting the Chinese currency to slip further through the year. Currently trading at a level on par with mid-May last year, the yuan has already lost 8% in the past six weeks since the trade war began. The currency has also shed 10% from its peak at CNY6.2352 per dollar in March. Traders expect the offshore yuan to trade down to close to CNY7 per dollar next year. The onshore yuan also dropped to its lowest level in 15 months at CNY6.8724 per dollar.

TRAVEL

China high-speed train network celebrates 10years of service

China launched its first high-speed railway line, the Beijing-Tianjin high-speed train service, 10 years ago on August 1, 2008. The high-speed train, running at over 300 km per hour, takes 35 minutes from Tianjin to Beijing. The daily frequency of Beijing-Tianjin intercity trains has increased from 94 one-way services to 217, with 250 millionpassengers carried in the past decade, according to the Beijing Railway Bureau. The length of high-speed railway lines in China rose from zero 10 years ago to 25,000 km by2017, accounting for 66% of the world’s total. More than4,000 bullet trains run in China, carrying 4 million passengers every day, according to the China Railway Corp.

When the first high-speed railway in north China’s Inner Mongolia Autonomous Region starts operation at the end of2019, the trains will run on the 287-kilometer-long railway passing the regional capital of Hohhot, Ulanqab City and Zhangjiakou City in neighboring Hebei province. It will reduce the travel time between Beijing and Hohhot from thecurrent nine hours to three hours. By then, all provincial-level regions on the Chinese mainland will have high-speedtrain service, except the Autonomous Region of Tibet. A network of eight east-west high-speed rail lines and eight north-south lines will be built, according to a railway development plan.

A high-speed railway connecting Beijing and Guangzhou has shortened the travel time across the 2,300 km distance to eight hours. The new Fuxing bullet trains travel at 350 km/h, going from Beijing to Shanghai in four hours and 18 minutes. By 2020, China’s high-speed rail length is

NEWSLETTER 7 AUGUST 2018 5

exploring the possibility of restarting talks – although the time was “not ripe right now”, according to analysts. Teng Jianqun, head of U.S. research at the China Institute of International Studies – a think tank affiliated with the Ministry of Foreign Affairs – said, “China has never experienced such aggressive challenges” and needed a sustainable strategy for the long run. “Lessons have to be learned. We shouldn’t fight a trade war for the sake of fighting. This is not two kids throwing bricks at each other,” Teng said. “We need to plan our moves and avoid pitfalls that would endanger the nation’s grand strategy and overallpolicy design. He added that Beijing’s top priority was to ensure political and economic stability so that China could stand up to external challenges. Renmin University International Relations Professor Shi Yinhong said there was no prospect of a resumption in trade talks any time soon. Bai Ming, Senior Researcher with the Ministry of Commerce, said the trade war would force China to press ahead with reform, such as moving up the manufacturing value chain to address overcapacity.

Meanwhile, the U.S.Senate voted 87-10 for the John S. McCain National Defense Authorization Act (NDAA), including weaker provisions than earlier expected to scrutinize foreign investments in the U.S. and limit contractswith ZTE and Huawei. Federal agencies are also prohibitedfrom buying security cameras from Chinese suppliers. An earlier version would have reimposed a seven-year ban on sales by American companies to ZTE, effectively putting the company out of business. Since the bill already cleared the House of Representatives, it now goes to President Trump to be signed into law.

The offshore yuan dropped to a 15-month low of CNY6.8824 per U.S. dollar on August 4 as the U.S.-China trade war escalates, with traders projecting the Chinese currency to slip further through the year. Currently trading at a level on par with mid-May last year, the yuan has already lost 8% in the past six weeks since the trade war began. The currency has also shed 10% from its peak at CNY6.2352 per dollar in March. Traders expect the offshore yuan to trade down to close to CNY7 per dollar next year. The onshore yuan also dropped to its lowest level in 15 months at CNY6.8724 per dollar.

TRAVEL

China high-speed train network celebrates 10years of service

China launched its first high-speed railway line, the Beijing-Tianjin high-speed train service, 10 years ago on August 1, 2008. The high-speed train, running at over 300 km per hour, takes 35 minutes from Tianjin to Beijing. The daily frequency of Beijing-Tianjin intercity trains has increased from 94 one-way services to 217, with 250 millionpassengers carried in the past decade, according to the Beijing Railway Bureau. The length of high-speed railway lines in China rose from zero 10 years ago to 25,000 km by2017, accounting for 66% of the world’s total. More than4,000 bullet trains run in China, carrying 4 million passengers every day, according to the China Railway Corp.

When the first high-speed railway in north China’s Inner Mongolia Autonomous Region starts operation at the end of2019, the trains will run on the 287-kilometer-long railway passing the regional capital of Hohhot, Ulanqab City and Zhangjiakou City in neighboring Hebei province. It will reduce the travel time between Beijing and Hohhot from thecurrent nine hours to three hours. By then, all provincial-level regions on the Chinese mainland will have high-speedtrain service, except the Autonomous Region of Tibet. A network of eight east-west high-speed rail lines and eight north-south lines will be built, according to a railway development plan.

A high-speed railway connecting Beijing and Guangzhou has shortened the travel time across the 2,300 km distance to eight hours. The new Fuxing bullet trains travel at 350 km/h, going from Beijing to Shanghai in four hours and 18 minutes. By 2020, China’s high-speed rail length is

NEWSLETTER 7 AUGUST 2018 6

expected to reach 30,000 km, covering 80% of the major cities. By the end of 2017, the high-speed trains had carriedmore than 7 billion passengers. Cargo delivery via high-speed trains started in 2016, with more than 500 cities usedas pilot areas for express services.

Recently, China has started to export its high-speed trains and technology. In 2014, China completed the construction of its first overseas high-speed rail in Turkey. In June 2015, China and Russia inked deals for 770 km of track connecting Moscow and Kazan. In October 2015, China and Indonesia signed a deal on the joint-venture construction of a high-speed railway between Jakarta and Bandung, the Shanghai Daily reports.

Chinese engineers also completed the design of the world’s longest undersea railway tunnel, connecting the mainland to Taiwan. It would be three and a half timeslonger than the 37.9 km Channel Tunnel between Britain and France, which has a 160 km/h speed limit. Trains would travel through the 135 kilometer undersea section of the tunnel at speeds of up to 250 km/h by 2030. But rising political tensions between Taipei and Beijing could still derail the project. Work on the tunnel could take three decades to complete.

E-COMMERCE

Pinduoduo IPO creates China's youngest self-made billionaire

Baidu, Alibaba and Tencent (BAT) are China’s three major internet companies, but new internet and e-commerce companies are still emerging and growing. Social commerce company Pinduoduo just went public on the Nasdaq Stock Exchange, making Founder Colin Huang,a factory worker's son, China's youngest self-made

billionaire with a net worth of USD9.89 billion, according toBloomberg's billionaire index.

Pinduoduo, now worth some USD21.1 billion, is 38 year-old Huang’s fourth company, after a string of successful previous ventures. Like Alibaba Group’s Taobao e-commerce platform, Pinduoduo allows merchants to sell items such as women’s fashion, fresh fruit and vegetables, and even electronics. The difference is that users who click on a Pinduoduo listing will be able to get the product at a cheaper price if they convince some of their friends to buy the product too in a “group buy” deal.

The social commerce model is part of the social+ model often adopted by internet companies in China, where business and social aspects are blended together to appeal to Chinese users, according to the China Internet Report co-authored by the South China Morning Post, Abacus and 500 Start-ups. The meteoric rise of social commerce company Pinduoduo in China’s trillion-dollar e-commerce market has taken many by surprise, since the industry has long been dominated by incumbents Alibaba and JD.com. Within just three years, Pinduoduo has reached some 300 million consumers and racked up gross merchandise volumes of over CNY140 billion in 2017, making it the third-largest e-commerce company in China by sales numbers.

Huang was born in 1980 to factory worker parents on the outskirts of Hangzhou, the city that is home to China’s e-commerce giant Alibaba. He graduated from the Hangzhou Foreign Languages School, an elite high school in Zhejiangprovince, were he was exposed to western culture and influence. He went on to study computer science at Zhejiang University and the University of Wisconsin in the U.S. He turned down job offers from Oracle, Microsoft and IBM to apply for a job at Google in 2004. In the three years that Huang was an engineer at Google, his stock options gave him what he called “basic financial freedom”.

Huang moved back to China in 2006, and set up e-commerce site Ouku that sold consumer electronics and home appliances. He sold the venture in 2010, then startedhis second company Leqi, which helped foreign brands market their stores on popular e-commerce platforms like Tmall and JD.com. His third company was a gaming studio called Xunmeng that created web-based role-playing games. By the time Huang launched Pinduoduo in 2015, the e-commerce space in China was already dominated by Alibaba and JD.com, but this did not deter Huang, the South China Morning Post reports.

NEWSLETTER 7 AUGUST 2018 6

expected to reach 30,000 km, covering 80% of the major cities. By the end of 2017, the high-speed trains had carriedmore than 7 billion passengers. Cargo delivery via high-speed trains started in 2016, with more than 500 cities usedas pilot areas for express services.

Recently, China has started to export its high-speed trains and technology. In 2014, China completed the construction of its first overseas high-speed rail in Turkey. In June 2015, China and Russia inked deals for 770 km of track connecting Moscow and Kazan. In October 2015, China and Indonesia signed a deal on the joint-venture construction of a high-speed railway between Jakarta and Bandung, the Shanghai Daily reports.

Chinese engineers also completed the design of the world’s longest undersea railway tunnel, connecting the mainland to Taiwan. It would be three and a half timeslonger than the 37.9 km Channel Tunnel between Britain and France, which has a 160 km/h speed limit. Trains would travel through the 135 kilometer undersea section of the tunnel at speeds of up to 250 km/h by 2030. But rising political tensions between Taipei and Beijing could still derail the project. Work on the tunnel could take three decades to complete.

E-COMMERCE

Pinduoduo IPO creates China's youngest self-made billionaire

Baidu, Alibaba and Tencent (BAT) are China’s three major internet companies, but new internet and e-commerce companies are still emerging and growing. Social commerce company Pinduoduo just went public on the Nasdaq Stock Exchange, making Founder Colin Huang,a factory worker's son, China's youngest self-made

billionaire with a net worth of USD9.89 billion, according toBloomberg's billionaire index.

Pinduoduo, now worth some USD21.1 billion, is 38 year-old Huang’s fourth company, after a string of successful previous ventures. Like Alibaba Group’s Taobao e-commerce platform, Pinduoduo allows merchants to sell items such as women’s fashion, fresh fruit and vegetables, and even electronics. The difference is that users who click on a Pinduoduo listing will be able to get the product at a cheaper price if they convince some of their friends to buy the product too in a “group buy” deal.

The social commerce model is part of the social+ model often adopted by internet companies in China, where business and social aspects are blended together to appeal to Chinese users, according to the China Internet Report co-authored by the South China Morning Post, Abacus and 500 Start-ups. The meteoric rise of social commerce company Pinduoduo in China’s trillion-dollar e-commerce market has taken many by surprise, since the industry has long been dominated by incumbents Alibaba and JD.com. Within just three years, Pinduoduo has reached some 300 million consumers and racked up gross merchandise volumes of over CNY140 billion in 2017, making it the third-largest e-commerce company in China by sales numbers.

Huang was born in 1980 to factory worker parents on the outskirts of Hangzhou, the city that is home to China’s e-commerce giant Alibaba. He graduated from the Hangzhou Foreign Languages School, an elite high school in Zhejiangprovince, were he was exposed to western culture and influence. He went on to study computer science at Zhejiang University and the University of Wisconsin in the U.S. He turned down job offers from Oracle, Microsoft and IBM to apply for a job at Google in 2004. In the three years that Huang was an engineer at Google, his stock options gave him what he called “basic financial freedom”.

Huang moved back to China in 2006, and set up e-commerce site Ouku that sold consumer electronics and home appliances. He sold the venture in 2010, then startedhis second company Leqi, which helped foreign brands market their stores on popular e-commerce platforms like Tmall and JD.com. His third company was a gaming studio called Xunmeng that created web-based role-playing games. By the time Huang launched Pinduoduo in 2015, the e-commerce space in China was already dominated by Alibaba and JD.com, but this did not deter Huang, the South China Morning Post reports.

NEWSLETTER 7 AUGUST 2018 7

CHINA NEWS ROUND-UP

US slaps export controls on dozens of Chinesefirms

Washington has slapped restrictions on dozens of key Chinese companies for reasons of national security. The U.S. Department of Commerce added 44 Chinese entities onto its export control list for posing a “significant risk” to U.S. national security or foreign policy interests. In adirect challenge to China’s ambitions to become a technological superpower, driven by the Made in China 2025 policy, the new restrictions target some of the key elements of the policy including air defense systems, satellite communications systems, semiconductors and aerospace products.

Among the eight companies and dozens of their subsidiaries to be affected were the China Aerospace Science and Industry Corp’s Second Academy – a researchunit of the largest missile systems developer in China – andcommunications system manufacturer Hebei Far East Communication System Engineering. Other research institutes under state-owned China Electronics Technology Group Corp (CETC) developing semiconductors, radar technology and micro-electronic devices were also affected.Others on the list included China Volant Industry, which exports and imports aerospace technologies, and China Hi-Tech Industry Import and Export Corp.

The U.S. controls will limit those companies’ access to products that the U.S. Commerce Department deems couldhave dual military or civilian use and may deny them key components such as nuclear materials, telecoms equipment, lasers and sensors.

Huawei becomes the world’s second-largestsmartphone vendor

China-based Huawei took the second-place spot from Apple in the global smartphone market during the second quarter of this year, according the International Data Corp (IDC). South Korea's Samsung remained the topsmartphone maker, shipping 71.5 million handsets, but Huawei moved into second position with shipments of 54.2 million, according to the IDC Worldwide Quarterly Mobile Phone Tracker. Silicon Valley-based Apple shipped 41.3 million iPhones, claiming 12.1% of the global market compared to 20.9% for Samsung and 15.8% for Huawei.

“The continued growth of Huawei is impressive, to say the least, as is its ability to move into markets where, until recently, the brand was largely unknown,” said Ryan Reith, Program Vice President with IDC’s Worldwide Mobile Device Trackers. Apple was expected to wrest back control of the market with the release of new iPhone models in the fall. Preliminary findings by IDC indicated a total of 342 million smartphones were shipped during the second quarter, 1.8% decline from the same period a year earlier. Market saturation and climbing average selling prices were among factors curbing growth in the smartphone market, the Shanghai Daily reports.

Heineken to take a 40% stake in CR Beer

China Resources Beer Co, the largest brewer in the countryand the maker of the best-selling Snow Beer brand, has signed an agreement with Dutch brewer Heineken to furtherdevelop the beer market in China. Amsterdam-based Heineken, the second-largest brewer worldwide, will acquire 40% stake in CR Beer for HKD24.35 billion. Heineken will license its brand trademark in the Chinese mainland, Hong Kong and Macao to CR Beer, and integrateits China operations with those of CR Beer, according to a CR Beer statement.

Meanwhile, China Resources Enterprise, the owner of CR Beer, which focuses on three business segments – beer, food and beverages – will spend €463.63 million to buy 0.9% of Heineken’s shares. With the help of Heineken’s global distribution network, CR Beer will be able to speed up the growth of Snow Beer and other brands in overseas markets. The company has been looking to further expand in the high-end segment with new products and rebranding to cater to the demands of young consumers. Last year, CRBeer achieved sales revenue of CNY30.24 billion, up 3.5% year-on-year. Its net profit reached CNY1.18 billion, jumping 86.8% over the previous year.

CR Beer accounts for 25.6% of China’s beer market, making up the largest market share. Heineken, which entered the Chinese mainland market in 1983, now mainly sells Heineken and Tiger. It has a smaller market share in China than Budweiser, which is owned by AB InBev. Jacco van der Linden, Managing Director of Heineken China, earlier said that Heineken sees significant growth potential for its products in China, the China Daily reports.

NEWSLETTER 7 AUGUST 2018 7

CHINA NEWS ROUND-UP

US slaps export controls on dozens of Chinesefirms

Washington has slapped restrictions on dozens of key Chinese companies for reasons of national security. The U.S. Department of Commerce added 44 Chinese entities onto its export control list for posing a “significant risk” to U.S. national security or foreign policy interests. In adirect challenge to China’s ambitions to become a technological superpower, driven by the Made in China 2025 policy, the new restrictions target some of the key elements of the policy including air defense systems, satellite communications systems, semiconductors and aerospace products.

Among the eight companies and dozens of their subsidiaries to be affected were the China Aerospace Science and Industry Corp’s Second Academy – a researchunit of the largest missile systems developer in China – andcommunications system manufacturer Hebei Far East Communication System Engineering. Other research institutes under state-owned China Electronics Technology Group Corp (CETC) developing semiconductors, radar technology and micro-electronic devices were also affected.Others on the list included China Volant Industry, which exports and imports aerospace technologies, and China Hi-Tech Industry Import and Export Corp.

The U.S. controls will limit those companies’ access to products that the U.S. Commerce Department deems couldhave dual military or civilian use and may deny them key components such as nuclear materials, telecoms equipment, lasers and sensors.

Huawei becomes the world’s second-largestsmartphone vendor

China-based Huawei took the second-place spot from Apple in the global smartphone market during the second quarter of this year, according the International Data Corp (IDC). South Korea's Samsung remained the topsmartphone maker, shipping 71.5 million handsets, but Huawei moved into second position with shipments of 54.2 million, according to the IDC Worldwide Quarterly Mobile Phone Tracker. Silicon Valley-based Apple shipped 41.3 million iPhones, claiming 12.1% of the global market compared to 20.9% for Samsung and 15.8% for Huawei.

“The continued growth of Huawei is impressive, to say the least, as is its ability to move into markets where, until recently, the brand was largely unknown,” said Ryan Reith, Program Vice President with IDC’s Worldwide Mobile Device Trackers. Apple was expected to wrest back control of the market with the release of new iPhone models in the fall. Preliminary findings by IDC indicated a total of 342 million smartphones were shipped during the second quarter, 1.8% decline from the same period a year earlier. Market saturation and climbing average selling prices were among factors curbing growth in the smartphone market, the Shanghai Daily reports.

Heineken to take a 40% stake in CR Beer

China Resources Beer Co, the largest brewer in the countryand the maker of the best-selling Snow Beer brand, has signed an agreement with Dutch brewer Heineken to furtherdevelop the beer market in China. Amsterdam-based Heineken, the second-largest brewer worldwide, will acquire 40% stake in CR Beer for HKD24.35 billion. Heineken will license its brand trademark in the Chinese mainland, Hong Kong and Macao to CR Beer, and integrateits China operations with those of CR Beer, according to a CR Beer statement.

Meanwhile, China Resources Enterprise, the owner of CR Beer, which focuses on three business segments – beer, food and beverages – will spend €463.63 million to buy 0.9% of Heineken’s shares. With the help of Heineken’s global distribution network, CR Beer will be able to speed up the growth of Snow Beer and other brands in overseas markets. The company has been looking to further expand in the high-end segment with new products and rebranding to cater to the demands of young consumers. Last year, CRBeer achieved sales revenue of CNY30.24 billion, up 3.5% year-on-year. Its net profit reached CNY1.18 billion, jumping 86.8% over the previous year.

CR Beer accounts for 25.6% of China’s beer market, making up the largest market share. Heineken, which entered the Chinese mainland market in 1983, now mainly sells Heineken and Tiger. It has a smaller market share in China than Budweiser, which is owned by AB InBev. Jacco van der Linden, Managing Director of Heineken China, earlier said that Heineken sees significant growth potential for its products in China, the China Daily reports.

NEWSLETTER 7 AUGUST 2018 8

Growth in consumer spending drops as homesales slow down

Slower income growth and fewer home sales are hurting consumer spending growth in China, although consumption is expected to pick up again as various seasonal factors recede, according to Liu Yunan, Deputy Department Director at the National Development and Reform Commission (NDRC). A slowdown in home sales growth in the first half of the year to 3.3% from 16.1% a year earlier had hit spending on housing-related items such as furniture. Weaker spending growth this year has raised some doubts about China’s efforts to rebalance the economy towards domestic consumption away from credit-driven investment.

Per capita consumption by urban residents increased 4.7% year-on-year in the first half, compared with 5.1% growth a year earlier, and weaker than the 6.8% growth in the overalleconomy. Per capita consumption including rural residents increased 6.7% in the first half. “In addition, the slowdown in household income growth may also have constrained some residents’ spending power and expectations. Our preliminary judgment is that the supporting effect of income on consumption has also weakened,” Liu said.

Retail sales growth had mainly been dragged down by delayed car purchases in anticipation of tariff cuts and a holiday in June, but spending should see “some degree of a rebound”. Liu Yunan said also that the official retail sales data did not fully capture overall consumer services spending and he believed China’s consumption growth wasstill “reasonable”. “Overall I think our country’s household consumption will maintain stable growth,” he concluded.

China’s Yantai Taihai drops bid for Germantoolmaker Leifeld

China’s Yantai Taihai dropped its attempt to buy German toolmaker Leifeld ahead of an expected veto by the German government, which said it was prepared touse its new power to veto foreign takeovers of German companies. The German government tightened controls on foreign investments last year after a series of high-profile takeovers by Chinese firms fueled concern over the security implications of Beijing’s growing appetite for European hi-tech firms.

Leifeld, a maker of metalworking tools that are crucial in thenuclear power sector, is typical of technically advanced

manufacturing firms. Majority owner Georg Koffler criticizedBerlin’s willingness to intervene, saying the security concerns about letting China’s Yantai buy into Germany’s nuclear industry were overblown. “We believe these security policy concerns are unjustified,” he said. The company would pursue a partial flotation of its shares this year as an alternative to the sale originally planned, he said. Across Europe, authorities are looking warily at bids by Chinese firms for the kinds of advanced manufacturers that underpin the continent’s relative prosperity compared to lower-value emerging-market economies.

Last month, a German state bank bought a stake in high-voltage grid operator 50Hertz to prevent China State Grid acquiring the shareholding and promised to consider ways of better protecting companies from foreign acquisition. In April, the head of Germany’s domestic intelligence service also warned that Chinese state actors seeking trade secrets could be behind bids that nominally came from private firms, highlighting a seeming correlation between a decline in hacking attempts originating from China with an increase in bids, the South China Morning Post reports.

New Beijing price-capped homes fail to excitehomebuyers

Ten projects with 4,200 “price-capped” new homes have been approved for pre-sales by the Beijing Municipal Commission of Housing and Urban-rural Development since June, but have so far received a lukewarm reception. These price-capped homes, a concept introduced last year as part of efforts to keep home prices in check, have lowered the minimum amount of money needed to buy anew home in Beijing to CNY3 million. The selling prices of all new home projects are controlled by the Commission, but builders of price-capped homes face an extra layer of control – they have to promise a specific low price when they acquire a plot. The owners of such homes cannot sell these units within five years of buying them.

Zhang Dawei, Analyst with Centaline Group, said with 20,000 such units coming to the market in the next three months, “a supply shock will come in the second halfof the year”. “This will surely drag down the city’s average home price,” he said, but added that the five-year holding period might hold back buyers. About 45,000 price-capped new homes are expected for 2018 as a whole.

One of the projects available for pre-sale, Grande HarmonyEmerald Residence, which is being developed by Sino-Ocean Group Holdings and two other developers, is located

NEWSLETTER 7 AUGUST 2018 8

Growth in consumer spending drops as homesales slow down

Slower income growth and fewer home sales are hurting consumer spending growth in China, although consumption is expected to pick up again as various seasonal factors recede, according to Liu Yunan, Deputy Department Director at the National Development and Reform Commission (NDRC). A slowdown in home sales growth in the first half of the year to 3.3% from 16.1% a year earlier had hit spending on housing-related items such as furniture. Weaker spending growth this year has raised some doubts about China’s efforts to rebalance the economy towards domestic consumption away from credit-driven investment.

Per capita consumption by urban residents increased 4.7% year-on-year in the first half, compared with 5.1% growth a year earlier, and weaker than the 6.8% growth in the overalleconomy. Per capita consumption including rural residents increased 6.7% in the first half. “In addition, the slowdown in household income growth may also have constrained some residents’ spending power and expectations. Our preliminary judgment is that the supporting effect of income on consumption has also weakened,” Liu said.

Retail sales growth had mainly been dragged down by delayed car purchases in anticipation of tariff cuts and a holiday in June, but spending should see “some degree of a rebound”. Liu Yunan said also that the official retail sales data did not fully capture overall consumer services spending and he believed China’s consumption growth wasstill “reasonable”. “Overall I think our country’s household consumption will maintain stable growth,” he concluded.

China’s Yantai Taihai drops bid for Germantoolmaker Leifeld

China’s Yantai Taihai dropped its attempt to buy German toolmaker Leifeld ahead of an expected veto by the German government, which said it was prepared touse its new power to veto foreign takeovers of German companies. The German government tightened controls on foreign investments last year after a series of high-profile takeovers by Chinese firms fueled concern over the security implications of Beijing’s growing appetite for European hi-tech firms.

Leifeld, a maker of metalworking tools that are crucial in thenuclear power sector, is typical of technically advanced

manufacturing firms. Majority owner Georg Koffler criticizedBerlin’s willingness to intervene, saying the security concerns about letting China’s Yantai buy into Germany’s nuclear industry were overblown. “We believe these security policy concerns are unjustified,” he said. The company would pursue a partial flotation of its shares this year as an alternative to the sale originally planned, he said. Across Europe, authorities are looking warily at bids by Chinese firms for the kinds of advanced manufacturers that underpin the continent’s relative prosperity compared to lower-value emerging-market economies.

Last month, a German state bank bought a stake in high-voltage grid operator 50Hertz to prevent China State Grid acquiring the shareholding and promised to consider ways of better protecting companies from foreign acquisition. In April, the head of Germany’s domestic intelligence service also warned that Chinese state actors seeking trade secrets could be behind bids that nominally came from private firms, highlighting a seeming correlation between a decline in hacking attempts originating from China with an increase in bids, the South China Morning Post reports.

New Beijing price-capped homes fail to excitehomebuyers

Ten projects with 4,200 “price-capped” new homes have been approved for pre-sales by the Beijing Municipal Commission of Housing and Urban-rural Development since June, but have so far received a lukewarm reception. These price-capped homes, a concept introduced last year as part of efforts to keep home prices in check, have lowered the minimum amount of money needed to buy anew home in Beijing to CNY3 million. The selling prices of all new home projects are controlled by the Commission, but builders of price-capped homes face an extra layer of control – they have to promise a specific low price when they acquire a plot. The owners of such homes cannot sell these units within five years of buying them.

Zhang Dawei, Analyst with Centaline Group, said with 20,000 such units coming to the market in the next three months, “a supply shock will come in the second halfof the year”. “This will surely drag down the city’s average home price,” he said, but added that the five-year holding period might hold back buyers. About 45,000 price-capped new homes are expected for 2018 as a whole.

One of the projects available for pre-sale, Grande HarmonyEmerald Residence, which is being developed by Sino-Ocean Group Holdings and two other developers, is located

NEWSLETTER 7 AUGUST 2018 9

in Beijing’s Daxing district. Outside the city’s fifth ring road and about 22 km from the city center, the project will be close to the southernmost station of Beijing’s subway line 8,on an extension which is under construction, as well as a community center that has a big park, a hospital and schools.

In compliance with a building policy that requires developers to keep at least 70% of units below 90 square meters, Sino-Ocean has built high-rise apartment blocks with 60, 80 and 90 sq m apartments. This has also allowed it to keep a bigger piece of land for town houses with areas larger than 200 sq m. The apartments cost CNY3.15 million, CNY4.2 million and CNY4.9 million to CNY5.3 million, respectively, the South China Morning Post reports.

Guo Yi, Chief Analyst at Beijing property agency Sysw1n, said the market had entered a “rational mood”, where the popularity of a project depended mostly on its location.Projects located in prime sites with easy public transport access were popular but rare, while projects in far-flung areas – such as most of the price-capped homes – win much less favor.

China’s office and industrial property marketexpected to suffer from trade war

China’s office and industrial property market will sufferfrom weaker leasing demand as a result of the escalating trade tensions between Washington and Beijing, as multi-nationals review their China strategy and manufacturers speed up factory relocations to countries such as Vietnam, according to market watchers. “From the real estate point ofview, many decisions in the second half of the year and next year will be delayed in both investment and leasing markets as corporates are waiting out the political storm,” said David Ji, Director at Knight Frank Greater China.

“It is possible that some foreign companies may hold back their occupancy decisions until the impact of the trade war is clear. However, a majority of demand for commercial realestate properties in China, especially in first-tier cities, comes from domestic instead of foreign companies,” said Elysia Tse, head of research and strategy, Asia-Pacific LaSalle Investment Management. “While it’s safe to say that there will be a short-term slowdown in corporate profits,the occupier and tenant demand in China’s first-tier cities, which is primarily driven by local supply, will remain nuanced,” said Tse. “Over the long term, China’s large and strong domestic demand base and the relatively high growth prospect by global standards are expected to

continue to attract foreign companies with a long-term business objective in China.”

CBRE, however, said U.S. companies operating in sectors subject to Chinese tariffs account for just 1.5% of total leasing volume in the office sector, meaning thatthe impact on the office market remains minimal. While the office demand from Chinese trading companies could also be negatively affected, such firms represent a very small percentage of leasing volume. “The office market in China remains fundamentally robust nationwide, with the direct impact being controllable and long-term impact being offset by other measures introduced by the government,” said Henry Chin, head of research at CBRE Asia-Pacific. In fact,the office sector is undergoing strong growth thanks to the boom in tech and multimedia companies, Ji said. However, the industrial property market in China was at greater risk from a downturn related to the trade war. “Industrial manufacturing occupiers in China are the most vulnerable and some are actively exploring alternative locations if the trade dispute ramps up further,” according toCBRE Asia-Pacific’s Chin, as reported by the South China Morning Post.

China to remain focused on reducing debt andcreating jobs

China will remain focused on reducing debt and creating jobs despite clear changes in the external economic environment, according to a statement following a meeting of the Chinese Communist Party’s decision-making Politburo, which also declared that growth was still on track. The government will deepen its “structural supply side reforms” in the second half of the year and “firmly” continue deleveraging, which has been a hallmark of President Xi Jinping’s economic policy. It will also seek to curb rising house prices. The statement said the nation’s leaders also agreed to implement a “more proactive” fiscal policy, adopt a prudent monetary policy, and put greater emphasis on “employment stability”. The Chinese government will also try to “stabilize” foreign trade and foreign investment flows, and “protect the legitimate interests of foreign businesses in China”.

The Politburo holds quarterly meetings – usually in April, July, October and December – to discuss economic activities and progress. The mid-year meeting in July sets the tone for macro-economic policies in the second half. There were no significant changes in last week’s statement compared to the one a year ago when leaders agreed to

NEWSLETTER 7 AUGUST 2018 9

in Beijing’s Daxing district. Outside the city’s fifth ring road and about 22 km from the city center, the project will be close to the southernmost station of Beijing’s subway line 8,on an extension which is under construction, as well as a community center that has a big park, a hospital and schools.

In compliance with a building policy that requires developers to keep at least 70% of units below 90 square meters, Sino-Ocean has built high-rise apartment blocks with 60, 80 and 90 sq m apartments. This has also allowed it to keep a bigger piece of land for town houses with areas larger than 200 sq m. The apartments cost CNY3.15 million, CNY4.2 million and CNY4.9 million to CNY5.3 million, respectively, the South China Morning Post reports.

Guo Yi, Chief Analyst at Beijing property agency Sysw1n, said the market had entered a “rational mood”, where the popularity of a project depended mostly on its location.Projects located in prime sites with easy public transport access were popular but rare, while projects in far-flung areas – such as most of the price-capped homes – win much less favor.

China’s office and industrial property marketexpected to suffer from trade war

China’s office and industrial property market will sufferfrom weaker leasing demand as a result of the escalating trade tensions between Washington and Beijing, as multi-nationals review their China strategy and manufacturers speed up factory relocations to countries such as Vietnam, according to market watchers. “From the real estate point ofview, many decisions in the second half of the year and next year will be delayed in both investment and leasing markets as corporates are waiting out the political storm,” said David Ji, Director at Knight Frank Greater China.

“It is possible that some foreign companies may hold back their occupancy decisions until the impact of the trade war is clear. However, a majority of demand for commercial realestate properties in China, especially in first-tier cities, comes from domestic instead of foreign companies,” said Elysia Tse, head of research and strategy, Asia-Pacific LaSalle Investment Management. “While it’s safe to say that there will be a short-term slowdown in corporate profits,the occupier and tenant demand in China’s first-tier cities, which is primarily driven by local supply, will remain nuanced,” said Tse. “Over the long term, China’s large and strong domestic demand base and the relatively high growth prospect by global standards are expected to

continue to attract foreign companies with a long-term business objective in China.”

CBRE, however, said U.S. companies operating in sectors subject to Chinese tariffs account for just 1.5% of total leasing volume in the office sector, meaning thatthe impact on the office market remains minimal. While the office demand from Chinese trading companies could also be negatively affected, such firms represent a very small percentage of leasing volume. “The office market in China remains fundamentally robust nationwide, with the direct impact being controllable and long-term impact being offset by other measures introduced by the government,” said Henry Chin, head of research at CBRE Asia-Pacific. In fact,the office sector is undergoing strong growth thanks to the boom in tech and multimedia companies, Ji said. However, the industrial property market in China was at greater risk from a downturn related to the trade war. “Industrial manufacturing occupiers in China are the most vulnerable and some are actively exploring alternative locations if the trade dispute ramps up further,” according toCBRE Asia-Pacific’s Chin, as reported by the South China Morning Post.

China to remain focused on reducing debt andcreating jobs

China will remain focused on reducing debt and creating jobs despite clear changes in the external economic environment, according to a statement following a meeting of the Chinese Communist Party’s decision-making Politburo, which also declared that growth was still on track. The government will deepen its “structural supply side reforms” in the second half of the year and “firmly” continue deleveraging, which has been a hallmark of President Xi Jinping’s economic policy. It will also seek to curb rising house prices. The statement said the nation’s leaders also agreed to implement a “more proactive” fiscal policy, adopt a prudent monetary policy, and put greater emphasis on “employment stability”. The Chinese government will also try to “stabilize” foreign trade and foreign investment flows, and “protect the legitimate interests of foreign businesses in China”.

The Politburo holds quarterly meetings – usually in April, July, October and December – to discuss economic activities and progress. The mid-year meeting in July sets the tone for macro-economic policies in the second half. There were no significant changes in last week’s statement compared to the one a year ago when leaders agreed to

NEWSLETTER 7 AUGUST 2018 10

deepen supply-side reforms, including getting rid of loss-making state-owned “zombie” companies, tackling local government debt, and improving the coordination of financial regulation to deal with systemic risk. At a cabinet meeting on July 23, Premier Li Keqiang said the government would take a “more proactive fiscal policy” and push forward a CNY1.35 trillion spending plan for local government infrastructure projects.

These efforts, along with a less aggressive monetary policy tightening, were intended to “handle uncertainties in the external environment” – an euphemistic reference to the trade war with the U.S. – and keep economic growth within the preferred range, the South China Morning Post reports.

Your banner at the FCCC website or newsletter

Companies interested in posting a banner/an advertisement on the FCCC website, FCCC weekly newsletter or bi-weekly sectoral newsletters are kindly invited to contact the FCCC at: info@flanders-china.be

Organisation and founding members of the Flanders-China Chamber of Commerce

Chairman: Mr. Stefaan Vanhooren, President Agfa Graphics, Member of the Executive Committee of the Agfa Gevaert Group, NV THE AGFA-GEVAERT GROUP SA

Vice-Chairmen: Mr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Philippe Van der Donckt, Director Government Affairs Asia, NV UMICORE SASecretary and Treasurer: Wim Eraly, Senior General Manager, NV KBC Bank SAExecutive Director: Ms. Gwenn SonckMembers of the Board of Directors and Founding Members:Mr. Stefaan Vanhooren, President Agfa Graphics, Member of the Executive Committee of the Agfa Gevaert Group, NV THE AGFA-GEVAERT GROUP SAMr. Christian Leysen, Executive Chairman, NV AHLERS SAMr. Filip Pintelon, Senior Vice President, GM Healthcare, NV BARCO SAMr. Philip Eyskens, Senior Vice President Legal, IT and M&A, NV BEKAERT SAMr. Philip Hermans, General Manager, NV DEME SAMr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Wim Eraly, Senior General Manager, KBC Bank SAMr. Johan Verstraete, Vice-President Marketing, Sales & Services Weaving Solutions, NV PICANOL SAMr. Philippe Van der Donckt, Director Government Affairs Asia, NV UMICORE SA

Membership rates for 2018 (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 – Belgium New telephone and fax numbers: Tel.: +32/9/269.52.46 – Fax: ++32/9/269.52.99E-mail: info@flanders-china.be Website: www.flanders-china.be

Share your story

To send your input for publication in a future newsletter mailto: info@flanders-china.be

The FCCC Newsletters are edited by Michel Lens, who is based in Beijing and can be contacted by e-mail michel.jc.lens@gmail.com . Disclaimer: the views expressed in this newsletter are not necessarily those of the FCCC or its Board of Directors.

NEWSLETTER 7 AUGUST 2018 10

deepen supply-side reforms, including getting rid of loss-making state-owned “zombie” companies, tackling local government debt, and improving the coordination of financial regulation to deal with systemic risk. At a cabinet meeting on July 23, Premier Li Keqiang said the government would take a “more proactive fiscal policy” and push forward a CNY1.35 trillion spending plan for local government infrastructure projects.

These efforts, along with a less aggressive monetary policy tightening, were intended to “handle uncertainties in the external environment” – an euphemistic reference to the trade war with the U.S. – and keep economic growth within the preferred range, the South China Morning Post reports.

Your banner at the FCCC website or newsletter

Companies interested in posting a banner/an advertisement on the FCCC website, FCCC weekly newsletter or bi-weekly sectoral newsletters are kindly invited to contact the FCCC at: info@flanders-china.be

Organisation and founding members of the Flanders-China Chamber of Commerce

Chairman: Mr. Stefaan Vanhooren, President Agfa Graphics, Member of the Executive Committee of the Agfa Gevaert Group, NV THE AGFA-GEVAERT GROUP SA

Vice-Chairmen: Mr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Philippe Van der Donckt, Director Government Affairs Asia, NV UMICORE SASecretary and Treasurer: Wim Eraly, Senior General Manager, NV KBC Bank SAExecutive Director: Ms. Gwenn SonckMembers of the Board of Directors and Founding Members:Mr. Stefaan Vanhooren, President Agfa Graphics, Member of the Executive Committee of the Agfa Gevaert Group, NV THE AGFA-GEVAERT GROUP SAMr. Christian Leysen, Executive Chairman, NV AHLERS SAMr. Filip Pintelon, Senior Vice President, GM Healthcare, NV BARCO SAMr. Philip Eyskens, Senior Vice President Legal, IT and M&A, NV BEKAERT SAMr. Philip Hermans, General Manager, NV DEME SAMr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Wim Eraly, Senior General Manager, KBC Bank SAMr. Johan Verstraete, Vice-President Marketing, Sales & Services Weaving Solutions, NV PICANOL SAMr. Philippe Van der Donckt, Director Government Affairs Asia, NV UMICORE SA

Membership rates for 2018 (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 – Belgium New telephone and fax numbers: Tel.: +32/9/269.52.46 – Fax: ++32/9/269.52.99E-mail: info@flanders-china.be Website: www.flanders-china.be

Share your story

To send your input for publication in a future newsletter mailto: info@flanders-china.be

The FCCC Newsletters are edited by Michel Lens, who is based in Beijing and can be contacted by e-mail michel.jc.lens@gmail.com . Disclaimer: the views expressed in this newsletter are not necessarily those of the FCCC or its Board of Directors.