A draft of anti-food waste law was submitted for deliberation
On December 22, a draft of Anti-Food Waste Law was submitted to ongoing session of the Standing Committee of the National People’s Congress of the Communist China for its first reading. The draft law specifies the responsibilities of the government, which may include enforcing tax policies and setting up supervision and inspection mechanisms, to reduce food waste. Catering service providers should adopt measures such as using poster reminders and charging consumers for leftovers to minimize food waste. The draft law also calls on catering service providers to use big data to analyze the needs of consumers. Those providers inducing or misleading consumers into ordering excessive food that leads to waste will be warned by regulators.
General Secretary Xi tacking the crisis of insufficient food supply
Although General Secretary Xi is trying to tackle food supply, but each method is not effective to stop the food crisis in Communist China. Xi emphasized on 3 ways：
- Independent research and development of high yield seeds. However, the excessive land and water pollution impacted on the grain yield.
- Stop rezoning farmland to commercial/residential is hard to be implemented. Facing the huge interest of land rezoning fees, local officials who hope to be promoted for their career path will not give up this good opportunity to increase GDP.
- c)Draft of Anti-Food Waste Law. Like the food stamps in the planned economy, food voucher can be used to individuals for food allocation hence to eliminate the “food wasting” problem.
Communist China’s dependence on imported seeds
It was recently pointed out that solving the problems of seeds and arable land has become one of the eight key tasks of the domestic economy next year. As a result, on December 21, the genetically modified and agricultural crop production sectors saw a surge. As the most important element to ensure food security, seeds are the “chips” of agriculture.
Communist China’s technological advances of the seed industry are far behind those of developed countries. Moreover, it is highly dependent on imported seeds especially the seeds of some vegetables such as tomatoes, onions, eggplants, carrots, peppers, and broccoli. Corn and potato seeds also rely on imports to a considerable extent. Recently, Russia announced that starting from January next year, it will substantially increase the export tariff rate of sunflower seeds and rapeseed from the current 6.5% to 30%.
Electricity Supply Crisis
Tight power supply in some areas in China, many departments act urgently to ensure power supply
Recently, Hunan, Jiangxi, Zhejiang and other places issued power restrictions notice or “orderly use electricity” (a decent name of power rationing) notice, some other places also confirmed that local areas may have a power shortage during peak hours. The tight power supply situation in some places may last until around next year’s Spring Festival (mid-February).
Massive power outage in Guangdong Province
There was a sudden power outage in many places in Guangdong Province in the early morning of Dec. 21. Many netizens stated on Weibo that in addition to power outages at home, electricity supply to streetlights were also disrupted leaving many city areas in complete darkness. The outages plunged the cities Guangzhou, Dongguan, Shenzhen, Zhongshan, Foshan, Huizhou and Zhuhai. Even, the power to the mobile phone transmission stations was cut off, which also affected the water supply and network signal. Power has been restored in some areas subsequently after an hour.
The Price of Raw Material
A bull market for commodities: iron ore hits 9-year high, copper and thermal coal hits 7-year high
Iron ore hit a 9-year high; copper prices, thermal coal hit a 7-year high, coke and coking coal prices approaching a 9-year high, industrial products ushered in a round of price increases.
The Chinese media has repeatedly reported that after the ban on coal imports from Australia, Communist China suffered a nationwide power crunch.
On Dec. 22, Caijingzhenxiang analyzed on Twitter that due to the price of imported coal being cheap, it will influence the high domestic coal price. Thus, the Communist China reduced coal imports to keep the high domestic coal price in the short term and helped coal companies to ease debt pressures (at least until the bond market recovers). This is the bad news for power plants because they are also under huge debt pressure. However, the electricity price was controlled by the National Development and Reform Commission, and cannot grow too quickly, otherwise Chinese industries will be directly destroyed. So, it is impossible to raise power prices in the short-term, how to overcome high coal prices?
liquefied natural gas
Since December, Communist China’s LNG (liquefied natural gas) price has soared, and the national average price has doubled in three weeks.
LNG Consulting Company LESSBETTER data shows that the national average price of LNG was RMB 8,620 per ton ($1326/ton) on Dec 22, almost doubled compared to RMB 4,415 per ton ($679/ton) on Dec 1. The price of imported LNG keeps rising as China’s demand soars. Statistics show that the CIF (Cost, Insurance, Freight) price of China’s LNG imports, rose from $5.532 per million British thermals on Oct 10 to $12.116 per million British thermals on Dec 17 (about $605.8/ton), while the highest average price in the past five years was $9.76 per million British thermal unit.
gasoline and diesel
Communist China gasoline and diesel prices increased by 155 and 150 yuan per ton respectively. On Dec 17, China’s National Development and Reform Commission (NDRC) issued a news saying that according to the recent changes in oil prices in the international market and in accordance with the current price formation mechanism for refined oil products, domestic gasoline and diesel prices will be increased by 155 yuan and 150 yuan per ton respectively from 24:00 on December 17, 2020. The equivalent liter price of No.92 gasoline increased by 0.12-yuan; No.0 diesel increased by 0.13 yuan. The retail price of refined oil appears “three consecutive increases” for the first time within 2020.
Restrictions on Imports
Anti-dumping duties on imports of EPDM Rubber
The Ministry of Commerce announced that from December 20, 2020, anti-dumping duties will be imposed on imports of EPDM rubber originating in the United States, South Korea, and the European Union for a period of 5 years. EPDM rubber has been widely used in construction, wire and cable, automotive industry and transportation areas.
Communist China’s Energy Crisis
CHINA’s coal ban on Australia has backfired. Despite the implementation of the ban and the resulting economic losses, the ban also means that the Communist China, which has always needed energy, has suffered from energy shortages during the busiest season. Beijing announced that it would sourcing coal purchasing from other regions but has not found are liable one yet.
Banks speed up IPO, asset quality will be a roadblock
China Securities Regulatory Commission recently issued the approval for Bank of Chongqing’s A-share IPO, which means that Bank of Chongqing will officially join the team of A-share listed banks. Since 2020, the bank IPO review has been progressing slowly, with 15 banks in the A-share queue so far. Bank IPOs are expected to accelerate slightly next year, while asset quality remains a serious challenge.
Internet financial platforms removed internet deposit products
A few days ago, Alipay conducted offline processing of bank deposit products on the wealth management page for users who did not hold Internet deposits. Only one day later, many Internet financial platforms successively removed Internet deposit products. On the 20th, JD Finance and Duxiaoman platforms are processing Internet deposit products. At the same time, Tencent Licaitong no longer has the option of banking products in its stable financial management at present, in the context of promoting financial services to the real economy, banks must lower the loan interest rates for small and micro enterprises. Small and medium-sized banks are the main force serving the real economy and small and micro enterprises. To reduce the financing interest rate of small and micro enterprises, we must consider the cost of bank funds. The most fundamental purpose of the high-interest savings model of supervising the suspension of smart deposits is to reduce the cost of bank liabilities and transmit them to bank loan interest rates. At the same time, it can also curb financial risks to a certain extent and curb malicious competition in commercial banks’ deposits.
Supply Chain Shortage
Taiwan pharmaceutical factory on fire and may not be extinguished until 21th
On Dec 20, 2020, after a massive explosion, a fire broke out in the SCI Pharm tech factory and may not be extinguished until the next day. SCI Pharm tech is a well-known pharmaceutical factory in Taoyuan, Taiwan, which produces hydroxychloroquine APIs and is also the world’s second largest HCQ raw material supplier.
Response to U.S. Sanctions
SMIC says US sanctions will hurt advanced-chip development
On the evening of December 20, SMIC issued a statement that, after the company’s preliminary assessment, being added to the US export control blacklist has no significant adverse impact on its short-term operations and financial performance since it is not currently mass-producing chips using technologies below 10 nanometers and below. However, the US move will negatively affect the company’s R&D and production capacity construction of advanced technologies of 10 nanometers and below. Meanwhile, SMIC is experiencing leadership turnover. The return of Jiang Shangyi, a semiconductor veteran and former COO of TSMC, to SMIC directly triggered the resignation of co-CEO Liang Mong-Song. It was also mentioned that prior to being blacklisted, SMIC had been negotiating with the Dutch ASML on the import of EUV lithography equipment crucial for the developments of its sub-7nm process technologies.
US chip industry has lost 1109.8 billion ($170.74B) -Communist China’s preach that U.S. sanctions against China are U.S. losses
According to the latest report released by market research firm —Counterpoint Research, in the third quarter of this year, MediaTek.Inc took the top spot in the global chip market sales with a 31% market share, surpassing U.S. chip giant Qualcomm (29%). Communist China’s chip powerhouse Huawei Hisilicon ranked third with a 12% share. The article said the reason why MediaTek.Inc become the global chip market “boss” is mainly because of MediaTek’s efforts to maintain cooperation with Huawei.
Peking University professor: China’s unemployment rate reached 20%, and the unemployed population exceeded 100 million
Yao Yang, director of the National Development Institute of Peking University, told the media recently that a survey conducted at the end of June showed that the unemployment rate in China was about 20 percent, and the number of unemployed people is more than 100 million. Yao also mentioned that since 2020, the unemployment rate published by the National Bureau of Statistics has remained around 6%, but this data only includes urban household population, while the official statistics do not show that the non-urban household population, which is the main group of unemployed people.
Temporary Workers’ Protest
Pegatron: temporary workers’ protest
Thousands of temporary workers gathered outside the Taiwanese-invested Pegatron facility in Shanghai turned out to protest over a pay dispute with management on Dec. 19. The protest due to Pegatron tried to transfer thousands of workers from its Shanghai factory to another facility at Kunshan, Jiangsu. Temporary workers who refused the transfer would be fired and would not be eligible for their share of finders’ fee commission usually shared between recruitment agencies and workers. The video shows that the CCP authorities dispatched large numbers of police to block their entrance to the facility, sparking clashes. Workers are rapidly suppressed and beaten to the ground.
Beijing office vacancy rate hits record high, Supply is expected to burst in 2021
Sina Finance reported, Beijing’s office market has not yet come out of its valley, both vacancy rates and rents are at the lowest in the past decade. The annual net market absorption is less than 30,000 square meters which is the worst ever in history. In 2020, the national vacancy rate of office buildings in first-tier cities are all run above 20%, a 10-year high; Shanghai and Shenzhen even exceed 25%. The national average vacancy rate exceeds 30%, and the commercial one is as high as 35%. Moreover, according to statistics from Colliers International, it is expected that nearly 1.6 million square meters of new projects will enter Beijing office building market next year in 2021.
Expand Domestic Demand
Expand domestic demand and debt-ridden youth
“China will expand domestic demand as a strategic priority.” Xi said in the Asia-Pacific Economic Cooperation (APEC) on 17 Nov 2020, caused an uproar in Chinese public opinion. However, many netizens questioned can Communist China’s debt-ridden post-90 generation and millennial continue to consume? Nielsen released the Report of Communist China’s Young Consumers’ Debt Status, the penetration rate of credit products for the young Chinese has reached 86.6%, and nearly half of them are enjoying today by spending tomorrow’s money. The fundamental reason behind this is that the CCP encouraged youth to spend more money, and online lenders promote the peer-to-peer lending services as an easy source of money to lead a glamorous life but never warn of the risk to youth. The government deliberately neglected to regulate such lenders. Sadly, excessive buying with borrowed money overwhelms the financial capability of most young people. This could trap them in an unending cycle of debt, and eventually become a “deadbeat debtor” to avoid debt.
Preparing for War
Communist China’s aircraft carrier and a group of warships sail through Taiwan Strait
On December 20, Communist China sailed its Shandong aircraft carrier through the Taiwan Strait. Liu Wensheng, spokesman for the Chinese Navy, claimed on Monday that the Shandong was on its way to conduct drills in the South China Sea as part of their normal arrangements and they would continue to organize future trainings based on training needs. The carrier’s passage through the strait was also confirmed by Taiwan’s Ministry of National Defense, which had deployed six ships and eight types of aircraft to monitor the situation.
There have been growing concerns about the risk of military confrontation between Communist China and the US especially given the recent sharp decline in communication and the increasing clashes between the two powers.
Export Business Situations
Christmas exports business languish in Yiwu, a famous International Small Commodity Trade City
In previous years, Yiwu, as a market vane of China’s foreign trade business, will export 80% of the world’s -3-Christmas supplies. However, it has ushered in the most difficult moment this year. From March to December in 2020, Lao Cui, who is running business in Yiwu, did not meet a foreign businessman at all. His sales have shrunk rapidly to one-third of the previous year, and only one-third of it comes from some old customers. He told the reporter that even though, his Christmas products business is better than others’ business such as crafts, toys in the same building.