Chinese millennials in debt, plus China’s market economy debate

Business & Technology

Top China news for December 12, 2016. Get this daily digest delivered to your inbox by signing up at


The end of China’s high savings rate

China’s high household savings rate has been an economic fact for generations. Some view it as a source of strength, while others consider it an obstacle to boosting consumption and services. The latest evidence of change is a Reuters article titled “Meet the Ma family: How millennials are changing the way China thinks about money.” It says that young Chinese “are among the most indebted of their peers in Asia, taking on debt 18.5 times their income, significantly higher than their parents’ generation,” according to a report from the insurance company Manulife.

China challenges EU and U.S. at WTO over market economy status

The Financial Times writes that “China has launched a legal challenge against the EU and U.S. over their reluctance to treat it as a ‘market economy’ under World Trade Organization rules.” According to a Ministry of Commerce statement, the specific complaint is about the “surrogate country approach.” Xinhua News Agency notes that “WTO members use costs of production in a third country to calculate the value of products from countries on its ‘non-market economy’ list, which includes China,” allowing countries “to easily levy high tariffs in trade disputes.” For more on the market economy debate, see also this Washington Post report titled “Trump says China is not a market economy. That’s a big deal.”

Xi Jinping’s family values

Chinese state media is dominated today by a speech given by President Xi Jinping at an event in Beijing to honor “model families.” His speech is summarized here by China Daily. Xi said that “traditional family values have been engraved on the minds and melted into the blood of the Chinese people,” and he called on families to inculcate core socialist values in their children.

More China stories — with the most essential at the top of each section — are curated below.


    • China opens its markets to world—world says no thanks / WSJ
      Measures to increase foreign investment in China to offset capital outflows haven’t been very successful. “They’re trying desperately to get foreign capital into the country,” says Chris Balding, an economics professor at Peking University’s business school. “Unfortunately, I don’t think there’s the appetite.”
    • China: Renminbi stalls on road to being a global currency / Financial Times
      Less trade is being conducted with Chinese currency and foreign ownership of Chinese assets has decreased, among other indicators that the internationalization of the renminbi, or Chinese yuan, is stalling. As capital outflows continue and the value of the yuan tumbles, Beijing can “either row back on freeing up capital flows — as it has already begun to do this year — or relinquish control of the exchange rate and accept a hefty devaluation.” For more insight into China’s cutdown on capital outflows and to learn how it intersects with corruption and gambling in Macau, see this Reuters piece titled “Overseas casinos clean up despite China’s cash curbs.”
    • Small investors join China’s tycoons in sending money abroad / NYT
      Following the lead of wealthy investors making multimillion-dollar deals, middle-class Chinese are using a wide range of apps and services to find “new ways to spend, transfer money and even invest, sometimes in ways that surpass what people are able to do in the United States.”
    • China finds new fans in Southeast Asia as U.S. turns inward / Bloomberg
      “Aside from courting Southeast Asian nations with a proposal for a trade pact, China has almost doubled foreign direct investment into the six biggest nations in the region this year, according to estimates from Credit Suisse Group AG. The world’s second-largest economy is already the top trading partner for most of the countries in the region.”
    • Wanda boss warns U.S. on anti-China policies / Variety
      Wang Jianlin, China’s richest person and a major investor in Hollywood, warned that the 20,000 people his companies employ in the U.S. could be out of work “if something goes wrong,” and he said he had given a message to Chris Dodd, chair of the Motion Picture Association of America, to deliver to Donald Trump.
    • Opinion: China’s investors aren’t afraid of Trump / Bloomberg
      “Investors inside the No. 2 economy, unlike their American counterparts, are undaunted,” writes Matthew Winkler. “Even after Trump’s upset victory last month, their appetite for the country’s favorite companies is growing, as long as they can trade shares of them in U.S. dollars.”
    • China stocks drop as insurers face crackdown / WSJ
      “Chinese shares suffered their biggest daily drop in six months, with investors spooked by Beijing’s latest moves to crack down on what it calls speculative stock investments by several big domestic insurance companies.”
    • China should target 6.5 percent economic growth in 2017: Think tank / Reuters
      The State Information Center, a think tank affiliated with the National Development and Reform Commission, recommended the target while noting that China would be likely to exceed that goal.
    • China car sales hit record high on tax break / WSJ
      In October 2015, China halved a 10 percent purchase tax on smaller vehicles and auto sales jumped since, but with the incentive due to expire at the end of this month, “industry watchers are concerned that growth in the world’s largest automotive market could stall.”



    • ‘I don’t know why we have to be bound by a one-China policy’: Trump questions decades-long stance / SCMP
      “I fully understand the one-China policy. But I don’t know why we have to be bound by a one-China policy unless we make a deal with China having to do with other things, including trade,” Trump told Fox News Sunday.
    • No more basis for Sino-U.S. ties if one-China policy is breached, says Beijing / SCMP
      “The one-China policy is the political foundation for the healthy development of the Sino-U.S. relationship,” said foreign ministry spokesperson Geng Shuang. “If this foundation is disturbed, there are no grounds to talk about further developing the healthy and stable relationship between China and the U.S., and their bilateral cooperation in major aspects.”
    • Xinjiang, tense Chinese region, adopts strict internet controls / NYT
      Strict new regulations adopted by the regional government in Xinjiang target the online spread of “false information,” which includes “advocating religious fanaticism or undermining religious harmony,” “advocating terrorism or radicalism” and “advocating ethnic hatred or ethnic discrimination.” For more on the new crackdowns in Xinjiang and the party boss in charge of them, who had previously used similar tactics in Tibet, see this story from the South China Morning Post.
    • Lesson for Trump in Hong Kong: Try to bounce China at your peril / Financial Times
      “Trump seems to believe that he can succeed where Hong Kong’s democrats did not, by forcing Beijing to cross a red line it has said it will never cross,” writes Tom Mitchell. “It is true that the U.S. has a lot more leverage over Beijing than Hong Kong does, but recovering Taiwan is also a far more important priority for the Communist Party than Hong Kong’s constitutional development.”
    • Opinion: The End of Globalism / Foreign Affairs
      Neo-liberalism, or “globalism,” was a Trojan horse that “devoured globalization, turning it into a force that seemed unstoppable until it collapsed under the weight of its own hubris,” writes Eric X. Li. Now China and Trump appear to agree in rejecting a “one-size-fits-all model of globalism,” insisting instead on strong sovereignty and safety for citizens, bilateral over multilateral agreements, and an emphasis on building bridges — literally — at home rather than abroad.
    • Another sign that the Philippines is cozying up to China / LA Times
      “Philippine president Rodrigo Duterte said Sunday that he has decided to accept an arms deal being offered by China under concessional terms, in the latest sign of cozying relations between the once-hostile neighbors.”
    • China ‘blocks’ Mongolia border after Dalai Lama visit / Al Jazeera
      “Mongolia says China has closed a key border crossing, creating huge congestion, nearly a week after the Tibetan spiritual leader, the Dalai Lama, visited the country. Hundreds of truck drivers for the mining conglomerate Rio Tinto are stuck at the Gants Mod crossing in southeastern Mongolia in freezing temperatures.”
    • Japan protests over China’s complaint about fighter jets / Reuters
      “Japan said on Monday it had protested to China over a Chinese complaint that Japanese fighter jets had engaged in ‘dangerous and unprofessional’ behavior when they scrambled at the weekend as Chinese aircraft flew near Japanese islands.”
    • China riot police seal off city center after smog protesters put masks on statues / The Guardian
      “The protests started after the southwestern city of Chengdu was shrouded in thick smog, with some residents placing pollution masks on statues. An unknown number were taken away by police, with security forces in riot gear seen in the city’s downtown shopping area.”
    • Pro-democracy camp takes record quarter of seats on Election Committee that will choose Hong Kong’s leader / SCMP
      “A group led by Occupy Central co-founders has taken all the seats in the higher education subsector, one of six subsectors in which pro-democracy candidates won all the seats.”