China's economy grows stronger, training drone pilots for the border, and the world's problem with Chinese honey
Welcome to today's The India China Newsletter.
China’s trade data for December that was out this morning showed its exports continued to grow for the seventh straight month. The South China Morning Post reports:
Exports grew by 18.1 per cent last month from a year earlier, down from 21.1 per cent in November but above the consensus result of a survey of analysts, conducted by Bloomberg, which predicted 15.0 per cent growth. Overall in 2020, China’s exports rose 3.6 per cent compared to a year earlier, while imports dropped 1.1 per cent. China’s trade surplus last year was US$535.03 billion, the highest since 2015.
The Wall Street Journal has a must-read piece looking back on China's economy in 2020, and how, contrary to everyone’s expectations, it has ended the year stronger than it started. The piece reminds us that many of the early predictions in 2020 about this being a turning point for China’s economy may have been premature, as also expectations of a major and imminent diversification of supply chains away from China, a prospect that’s looking increasingly unlikely. The piece tells us:
A November survey by HSBC Holdings PLC of more than 1,100 global corporations found that 75%, including 70% of U.S. companies, expect to increase their supply-chain footprint in China over the next two years.
China's position of strength, it notes, is a ‘double-edged sword’ for the rest of the world:
Chinese demand has been a godsend for businesses that sell to China, including commodity producers as well as auto makers and luxury-goods companies that lost sales elsewhere. China’s renewed strength has also left businesses more exposed to a country whose leaders have made clear they want to reduce China’s reliance on foreign companies in favor of building up more of its own corporations
It’s an article that’s worth your time, read it in full here.
Liu Xiaoxue, an associate research fellow at the National Institute of International Strategy at the Chinese Academy of Social Sciences who is a frequent commentator in China on the Indian economy, writes in a piece today that India’s curbs on Chinese investment from April 2020 will hurt the start-up sector that has, since 2016, lent quite heavily on Chinese financing:
With the coronavirus pandemic ripping across the world, 2020 was an extremely tough year for global businesses, especially the startups. India has been particularly hard hit, with venture capital going to local startups dipping 34 percent year-on-year in 2020, dropping from previous year's $14.2 billion to $9.3 billion, according to industrial analysis platform KrASIA.
For starters, the Indian economy was already in a spiraling downward, even before the pandemic hit. The country's GDP growth in July-September quarter in 2019 was recorded at merely 4.5 percent, the sixth consecutive quarter to register declining growth rates, Indian media reported.
New Delhi, however, recklessly chose a path of antagonizing China, from ratcheting up border disputes to economic frictions. For instance, the Modi administration, under the disguise of protecting the country's national security, banned over 200 Chinese apps. Facing a grave crisis which has severely dampened the world's fifth largest economy, New Delhi chose to further undermine its business environment and tried to squeeze one of its major investors out of the country.
Chinese capital has accelerated inflow to the Indian market, especially in the internet sector. Chinese internet enterprises have developed rapidly in recent years, taking lead in many areas, including mobile payments and e-commerce, in the world. However, as Chinese capital has been flushed out of the Indian market, it is inevitable that there would be a declining financing for Indian startups, though there have been Western investors intending to seize the advantage to take over the market share…
Under such circumstances, cutting a major financing resource and a leading industrial player out of the picture is bad news for Indian startups, and will act as a handbrake for its emerging industry development.
China is training “grassroots cadres and police officers” in border cities in Xinjiang to become “border defence drone pilots”, reports China Military Online:
A total of 30 grassroots cadres and police officers from border cities (counties) in Xinjiang Uygur Autonomous Region, northwest China, passed the assessment for border defense drone pilots on January 12.
This border defense drone pilot training, jointly conducted by the PLA Army Academy of Border and Coastal Defense (Urumqi) and the Border Defense Commission of the Xinjiang Uygur Autonomous Region, aimed to cultivate professional backbones capable of drone operation, command, as well as maintenance for the frontier defense forces.
It is learnt that the border defense drone training mainly includes four steps, namely, theoretical study, simulation training, actual flight operation, and assessment and certification. The trainees will obtain the national civil drone pilot certificate after passing the final assessment.
China has reported its first Covid-19 death since May as it reports more cases in Hebei province, where 20 million people remain under strict lockdowns. As this latest cluster continues to emerge, expect the stringent international travel restrictions to continue for some time. The Chinese New Year holiday is coming up next month and the annual “two sessions” political meeting will convene in Beijing in early March — two events that don’t bode well for opening up. Travel from India to China for non-Chinese citizens remains essentially banned after China suspended issuing visas in November and repatriation flights by Chinese airlines (India’s flights to China have been stopped) remain few and far between.
Two members of the World Health Organization team investigating the origins of the coronavirus could not board a flight to China after testing positive for Covid-19 antibodies. The rest of the team arrived in Wuhan today.
Xi Jinping and Howard Schultz of Starbucks have become the unlikeliest of penpals. In a letter to Schultz, Xi says he is “encouraging him and the company to play a positive role in promoting China-U.S. economic and trade cooperation and bilateral relations” and says China “will provide a broader space for companies from all over the world, including American companies such as Starbucks, to develop in China.” This report from CGTN tells us Starbucks is aiming to have 6,000 stores in the country by 2022, to which my reaction was: only 6000? It feels like Beijing alone has a thousand, and the mall next to where I lived had three. This may sound like sacrilege but my daily walks to my neighbourhood Starbucks round the corner is weirdly one of the things I really miss in Beijing…
And finally….
The revelation that most major Indian honey brands were selling products adulterated with a sugar syrup imported from China was a major story in India last month. Wired has a fascinating piece exposing how this has become a global phenomenon that is also dramatically impacting bee farmers around the world:
Farming bees is, however, labour intensive, so honey is expensive – and that makes it a tempting target for adulteration with cheap substitutes. The most common fraud is the dilution of genuine honey with sugar syrup, typically manufactured from rice, corn or sugar beet…
China is the world’s biggest producer of honey, accounting for about a quarter of global output, but its rise to dominance and its low prices have long been viewed with suspicion. In the eastern province of Zhejiang, where much of the country’s beekeeping industry is concentrated, industrial plants manufacture cheap rice and corn syrup to be blended with honey. Alibaba, the Chinese online marketplaces, even advertises industrial “fructose syrup for honey” for as little as 76p per kilogram…
Beekeepers warn that the flow of adulterated honey coming out of China is so great that it’s distorting the market. In November Copa-Cogeca warned that the livelihoods of many European beekeepers were in peril after one of the worst harvests in decades, partly caused by floods in Central and Eastern Europe. In Hungary, acacia honey production was only ten per cent of the normal harvest.
Read the full piece here.
On that sweet note, wishing all readers in India and everywhere a very happy pongal and sankranti wherever you may be. Have a great weekend, and the newsletter will be back Monday.
China's economy grows stronger, training drone pilots for the border, and the world's problem with Chinese honey
"Starbucks round the corner is weirdly one of the things I really miss in Beijing"
Hope you travel soon
Happy Weekend
Jan 13 2021, Indian Express: https://indianexpress.com/article/opinion/columns/china-foreign-policy-land-disputes-xi-jinping-7144049/ Sujan Chinoy: "Based on his understanding of Chinese sources, Kissinger writes that in deciding to “knock” India back “to the negotiating table” through military action in 1962, Mao claimed to his commanders that he banked on strategic principles drawn from China’s so-called historical experience of defeating India in “one and a half” wars. Both the examples that Kissinger narrates are clearly ersatz, revealing Kissinger’s insufficient scholarship on ancient India."