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Daily News Update

Today's briefs


1. China calls for immediate reform at WTO

China has appealed to the World Trade Organization (WTO) to safeguard developing countries from what it says are coercive acts from more powerful members, Caixin reports. The move comes just days before world leaders convene in Buenos Aires for the G20 summit.

“The majority of [WTO] members, especially developing countries, should be able to participate in the reform process, rather than have a small group of members decide on the reforms,” said Wang Shouwen, Chinese vice minister of Commerce, at a WTO press conference.

The WTO must work to uphold its Dispute Settlement Body, Wang said, which is facing difficulties in appointing a new judge. The United States has blocked the reappointment of a DSB judge, leaving the bench short by one member.

This decision by the US is not simply related to its disputes with China, but represents “a disagreement between the US and all the other members of the WTO,” according to Wang.

The remarks come after the White House suggested that it might be beneficial for the organisation to eject China as a member, given that it has “misbehaved” in trade, one White House economic adviser commented on Wednesday.


2. China lowers e-commerce import taxes to boost consumption

Beijing plans to raise the tax threshold for e-commerce imports to allow consumers to spending more money on overseas goods online without paying tax. The move appears designed to boost consumption and kick-start a slowing economy, Caixin reports.

The tax quota will be increased by 30%, from RMB 20,000 to RMB 26,000 ($3,750), according to an announcement by the State Council. The limit for a single transaction will also rise from RMB 2,000 to RMB 5,000, and the policy will be expanded from 15 to 22 cities.

Chinese consumers spent RMB 1.03 trillion on imported products during the first half of 2018, with the total for the whole year expected to reach RMB 1.9 trillion, up 27% year-on-year, according to the Electronic Commerce Research Center.


3. China’s growth could cool to 6.3% next year, say economists

China’s economic growth is forecast to slow from an estimated 6.6% this year to 6.3% in 2019 as trade issues and a slowdown in demand take a larger toll on the economy, according to economists from Renmin University in Beijing.

The survey, published by the China Academy of Social Sciences over the weekend, correspond with the results of a Reuters poll taken last month to gauge anticipated fallout from the US-China trade war.

In addition to trade tensions with Washington, the economists at Renmin listed the global trade environment, falling export growth and currency depreciation among China’s major incoming headwinds.

They added that short-term policy adjustments to soften the slowdown will not be enough to tackle China’s broader structural problems, and that supply-side reforms were needed. Savings rate and domestic consumption were now the key factors of China economic development, said Liu Yuanchun, dean of the university’s School of Economics.


4. Kuka CEO to step down less than two years after Chinese buyout

The head of German robotics firm Kuka may be forced out of the company within two years of the firm’s acquisition by Chinese appliance maker Midea, the Financial Times.

The move to remove Till Reuter, who has been CEO of Kuka since 2009, comes at an awkward political moment, as European governments discuss plans to tighten investment rules to prevent China from buying up the continent’s leading technology developers.

Midea had previously pledged to take a hands-off approach to managing Kuka after acquiring the firm for 4.5 billion euros, extending Reuter’s contract till 2022 as recently as last year.

But Reuter has reportedly clashed with Midea executives over the strategic direction of the Kuka-Midea joint venture in China. Kuka’s revenue in China has grown more than tenfold to 500 million euros since 2013, but growth has slowed in the past year.


5. Tencent Music plans to go public before end of 2018

The music arm of China’s social media and gaming giant Tencent is expected to go public on December 12, people familiar with the matter told the Financial Times, defying markets’ recent bearishness on Chinese tech firms.

 According to one source, the roadshow for the IPO will begin after the G20 summit next week in Buenos Aires, at which a meeting between Presidents Xi Jinping and Donald Trump will offer a bellwether for the future trade relationship between the two countries.

Any deal or tariff ceasefire would relax markets ready for the debut, the source said, while another warned that a negative outcome of the summit could force Tencent Music to shelve the listing.

The company has already delayed its IPO once this year because of market volatility.

Tencent Music was set to be one of the largest China tech listings on record, but a series of weak debuts from other mainland tech heavyweights has soured market sentiment for the industry.

The company has already halved its plans to raise $4 billion down to $2 billion, according to the sources. It hopes to earn a valuation of $30 billion.


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