Newsletter26 March 2019

PAST EVENTS

FCCC Meeting with Liaoning Delegation – 20 March – Ghent

Newsletter26 March 2019

PAST EVENTS

FCCC Meeting with Liaoning Delegation – 20 March – Ghent

NEWSLETTER 26 MARCH 2019 2

On 20 March 2019, the Flanders-China Chamber of Commerce, represented by Gwenn Sonck, Executive Director, received an official delegation from Liaoning Province. Bekaert, a founding member of the FCCC, has a significant and successful investment in Shenyang, capital of Liaoning Province. The delegation introduced the favorable investment environment of theProvince. Located in the south of the northeastern part of China, Liaoning is the only province in the northeast region that is both coastal and bordering.

The province's land area is 148,000 square kilometers and counts a total population of 42.71 million. Liaoning is one of the critical old industrial bases in China and is one of the largest regions in the country's industrial sector. The province’s main sectors are metallurgy, petrochemicals, steel operations, logistics, automotive, heavy manufacturing, aerospace and electronics.

Companies interested in obtaining more information can send an e-mail to gwenn.sonck@flanders-china.be

FCCC/EUCBA ACTIVITIES

China-U.S. Trade Tensions also Affect EuropeanCompanies. What about Yours? – 16 May 2019

– 08h30 – 11h30 – Ghent

The Flanders China Chamber of Commerce and KBC Bank are organizing a briefing focused on “China-U.S. Trade tensions also affect European companies. What about yours?”.

This event will take place on Thursday 16 May 2019 from 8:30-11:30 at KBC Bank, Kortrijksesteenweg 1100, 9051 Ghent.

The global economy is slowing down due to persistent uncertainties and trade conflicts. Amidst the risk of the U.S.-China trade war escalating towards Europe, Europeantrade policy aims to balance short-term interests. Europe acknowledges the unavoidable further rise of China and explores new ways of structural European-Chinese cooperation. But many question whether Europe's approach is appropriate.

Exploring various features of current Chinese and European business allows us to assess the question of whether Europe is naïve or developing a structurally smart strategy to deal with the Chinese dragon.

During this briefing, two bankers from KBC Bank will discuss the following topics.

• China Economic Update Post-Trade War - Mr. P.C. Leung, General Manager, KBC Bank N.V. ShanghaiBranch

• Is Fortress Europe ready for the Chinese Dragon? -Mr. Jan Van Hove, KBC Group's Chief Economist, and General Manager of KBC's international economic research activities

P.C. Leung Jan Van Hove

Programme08:30: Registration and networking 09:00: Introduction by Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce09:10: Presentation by P.C. Leung, General Manager, KBC Bank N.V. Shangai Branch and J. Van Hove, KBC Group's Chief Economist, and General Manager of KBC's international economic research activities.10:00: Q & A discussion

Practical InformationLocation: KBC Bank, Kortrijksesteenweg 1100, 9051 GhentPrice: for members: €66,55 (incl.21% VAT)Price: for non-members: €90,75 (incl. 21% VAT)

If you are interested in participating in this event, please subscribe before 11 May 2019 via this link.

Contact: FCCC info@flanders-china.be

NEWSLETTER 26 MARCH 2019 2

On 20 March 2019, the Flanders-China Chamber of Commerce, represented by Gwenn Sonck, Executive Director, received an official delegation from Liaoning Province. Bekaert, a founding member of the FCCC, has a significant and successful investment in Shenyang, capital of Liaoning Province. The delegation introduced the favorable investment environment of theProvince. Located in the south of the northeastern part of China, Liaoning is the only province in the northeast region that is both coastal and bordering.

The province's land area is 148,000 square kilometers and counts a total population of 42.71 million. Liaoning is one of the critical old industrial bases in China and is one of the largest regions in the country's industrial sector. The province’s main sectors are metallurgy, petrochemicals, steel operations, logistics, automotive, heavy manufacturing, aerospace and electronics.

Companies interested in obtaining more information can send an e-mail to gwenn.sonck@flanders-china.be

FCCC/EUCBA ACTIVITIES

China-U.S. Trade Tensions also Affect EuropeanCompanies. What about Yours? – 16 May 2019

– 08h30 – 11h30 – Ghent

The Flanders China Chamber of Commerce and KBC Bank are organizing a briefing focused on “China-U.S. Trade tensions also affect European companies. What about yours?”.

This event will take place on Thursday 16 May 2019 from 8:30-11:30 at KBC Bank, Kortrijksesteenweg 1100, 9051 Ghent.

The global economy is slowing down due to persistent uncertainties and trade conflicts. Amidst the risk of the U.S.-China trade war escalating towards Europe, Europeantrade policy aims to balance short-term interests. Europe acknowledges the unavoidable further rise of China and explores new ways of structural European-Chinese cooperation. But many question whether Europe's approach is appropriate.

Exploring various features of current Chinese and European business allows us to assess the question of whether Europe is naïve or developing a structurally smart strategy to deal with the Chinese dragon.

During this briefing, two bankers from KBC Bank will discuss the following topics.

• China Economic Update Post-Trade War - Mr. P.C. Leung, General Manager, KBC Bank N.V. ShanghaiBranch

• Is Fortress Europe ready for the Chinese Dragon? -Mr. Jan Van Hove, KBC Group's Chief Economist, and General Manager of KBC's international economic research activities

P.C. Leung Jan Van Hove

Programme08:30: Registration and networking 09:00: Introduction by Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce09:10: Presentation by P.C. Leung, General Manager, KBC Bank N.V. Shangai Branch and J. Van Hove, KBC Group's Chief Economist, and General Manager of KBC's international economic research activities.10:00: Q & A discussion

Practical InformationLocation: KBC Bank, Kortrijksesteenweg 1100, 9051 GhentPrice: for members: €66,55 (incl.21% VAT)Price: for non-members: €90,75 (incl. 21% VAT)

If you are interested in participating in this event, please subscribe before 11 May 2019 via this link.

Contact: FCCC info@flanders-china.be

NEWSLETTER 26 MARCH 2019 3

About the speakers• P.C. Leung, General Manager, KBC Bank N.V.

Shanghai Branch. After 10 years with the Bank of China Group, P.C. joined KBC Bank Hong Kong Branch at 1991 as Financial Controller. He started his China banking career in KBC Shanghai Branch in 1997. He also worked in KBC Bank Taiwan Branch for 3 years thereafter. He is now the General Manager of KBC Bank Shanghai Branch. P.C. earned an MBA degree and a Master of Information System degree. He is a Chartered Professional Accountant of Canada.

• Jan Van Hove, KBC Group's Chief Economist,

and General Manager of KBC's international economic research activities. In addition, he is a professor in international economics at the University of Leuven in Belgium. As Chairman of the economic commission of the Federation of Belgian Enterprises, he has intensive contacts with Belgian firms. He is specialized in international trade and international macro-economics. His work has been published in various international journals. Jan Van Hove is often consulted by companies, policy makers and international institutions on European and global economic topics. He is also an Honorary Chairman of the International Network for Economic Research and has been a Visiting Professor at various European universities.

EU-CHINA RELATIONS

Italy becomes first Western European nation tosign up for China’s Belt and Road plan

Chinese President Xi Jinping with Italian President SergioMattarella

Through agreements signed in Rome, Italy became the first of the Group of Seven industrialized nations and the first founding EU Member to participate in the Belt and Road Initiative (BRI).

China stands ready to work with Italy on the BRI by strengthening its alignment with the country’s development strategies to bring bilateral ties to a new level, President Xi Jinping wrote in an article in the Italian newspaper Corriere della Sera ahead of his trip. He called on the two sides to tap more potential for partnership in port logistics, shipping, energy, telecommunications and medicine. Italian Prime Minister Giuseppe Conte and Chinese President Xi Jinping witnessed the signing of a memorandum of understanding on the BRI. Among the 29 other agreements signed were two port management deals between China Communications Construction and the ports of Trieste and Genoa, Italy’s biggest seaport. Trieste is strategically important for China because it offers a link from the Mediterranean to landlocked countries such as Austria, Hungary, the Czech Republic, Slovakia and Serbia, all of which are markets Beijing hopes to reach through its BRI. Other deals signed cover areas including satellites, e-commerce, agriculture, beef and pork imports, media, culture, banking, natural gas and steel. The two countries also agreed to boost cooperation on innovation and science, increase bilateral trade and set up a Finance Ministers’ dialogue mechanism.

Bilateral trade topped USD50 billion last year while two-waycumulative investment reached more than USD20 billion. China’s “Belt and Road Initiative is a train that Italy cannot afford to miss”, said Italian Finance Minister Giovanni Tria. Prime Minister Giuseppe Conte also thinks Italy should jump on board, saying the multibillion-dollar Chinese infrastructure plan is “an opportunity for our country”. “The New Silk Road must be a two-way street to share not only goods but also talent, ideas, knowledge, forward-looking solutions to common problems and projects for the future,” Italian President Sergio Mattarella said. By March 6, more than 20 European countries had already signed BRI cooperation documents with China, including Russia, Portugal, Austria, Greece, and 16 Central and Eastern European countries.

Chinese President Xi Jinping visited Italy, France and Monaco from March 21 tp 26. Xi’s visit coincided with the 55th anniversary of the establishment of China-France diplomatic relations. It was Xi's first overseas trip this year, including the first visit by a Chinese President to Monaco.

NEWSLETTER 26 MARCH 2019 3

About the speakers• P.C. Leung, General Manager, KBC Bank N.V.

Shanghai Branch. After 10 years with the Bank of China Group, P.C. joined KBC Bank Hong Kong Branch at 1991 as Financial Controller. He started his China banking career in KBC Shanghai Branch in 1997. He also worked in KBC Bank Taiwan Branch for 3 years thereafter. He is now the General Manager of KBC Bank Shanghai Branch. P.C. earned an MBA degree and a Master of Information System degree. He is a Chartered Professional Accountant of Canada.

• Jan Van Hove, KBC Group's Chief Economist,

and General Manager of KBC's international economic research activities. In addition, he is a professor in international economics at the University of Leuven in Belgium. As Chairman of the economic commission of the Federation of Belgian Enterprises, he has intensive contacts with Belgian firms. He is specialized in international trade and international macro-economics. His work has been published in various international journals. Jan Van Hove is often consulted by companies, policy makers and international institutions on European and global economic topics. He is also an Honorary Chairman of the International Network for Economic Research and has been a Visiting Professor at various European universities.

EU-CHINA RELATIONS

Italy becomes first Western European nation tosign up for China’s Belt and Road plan

Chinese President Xi Jinping with Italian President SergioMattarella

Through agreements signed in Rome, Italy became the first of the Group of Seven industrialized nations and the first founding EU Member to participate in the Belt and Road Initiative (BRI).

China stands ready to work with Italy on the BRI by strengthening its alignment with the country’s development strategies to bring bilateral ties to a new level, President Xi Jinping wrote in an article in the Italian newspaper Corriere della Sera ahead of his trip. He called on the two sides to tap more potential for partnership in port logistics, shipping, energy, telecommunications and medicine. Italian Prime Minister Giuseppe Conte and Chinese President Xi Jinping witnessed the signing of a memorandum of understanding on the BRI. Among the 29 other agreements signed were two port management deals between China Communications Construction and the ports of Trieste and Genoa, Italy’s biggest seaport. Trieste is strategically important for China because it offers a link from the Mediterranean to landlocked countries such as Austria, Hungary, the Czech Republic, Slovakia and Serbia, all of which are markets Beijing hopes to reach through its BRI. Other deals signed cover areas including satellites, e-commerce, agriculture, beef and pork imports, media, culture, banking, natural gas and steel. The two countries also agreed to boost cooperation on innovation and science, increase bilateral trade and set up a Finance Ministers’ dialogue mechanism.

Bilateral trade topped USD50 billion last year while two-waycumulative investment reached more than USD20 billion. China’s “Belt and Road Initiative is a train that Italy cannot afford to miss”, said Italian Finance Minister Giovanni Tria. Prime Minister Giuseppe Conte also thinks Italy should jump on board, saying the multibillion-dollar Chinese infrastructure plan is “an opportunity for our country”. “The New Silk Road must be a two-way street to share not only goods but also talent, ideas, knowledge, forward-looking solutions to common problems and projects for the future,” Italian President Sergio Mattarella said. By March 6, more than 20 European countries had already signed BRI cooperation documents with China, including Russia, Portugal, Austria, Greece, and 16 Central and Eastern European countries.

Chinese President Xi Jinping visited Italy, France and Monaco from March 21 tp 26. Xi’s visit coincided with the 55th anniversary of the establishment of China-France diplomatic relations. It was Xi's first overseas trip this year, including the first visit by a Chinese President to Monaco.

NEWSLETTER 26 MARCH 2019 4

Following his short visit to Monaco, President Xi arrived in Nice and had dinner with French President Emmanuel Macron in Beaulieu-sur-Mer on the French Riviera before the official welcome ceremony at the Arc de Triomphe in Paris, and a meeting and state dinner at the Elysée presidential palace. President Xi also met in Paris with German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker. During Xi’s visit, Airbus signed a USD35 billion contract for 290 A320 planes and 10 of the larger A350s in a blow to rival Boeing, whose 737 Max-8 is still grounded following two crashes in five months. The Airbus contract was one of 15 signed, including a €1 billion contract for EDF to build an offshore wind farm in China. France’s Fives and the China National Building Materials Group signed a €1 billion deal to cooperate on energy savings in developing countries. CMA-CGM and the China State Shipbulding Corp. signed a€1.2 billion deal to build 10 container ships.

Chinese State Councilor and Foreign Minister Wang Yi has also just concluded a visit to EU Headquarters in Brussels for talks with EU High Representative for Foreign Affairs and Security Policy Federica Mogherini and to participate in the Ninth China- EU High-Level Strategic Dialogue. Wang underlined three points. Firstly, cooperativepartnership is the nature of China-EU relations. There is no essential conflict of interest between China and the EU. Secondly, the goal of China-EU cooperation is to achieve mutual benefit and win-win outcome, where Europe will benefit from the new round of Chinese reform and opening-up. Thirdly, respect of each other’s core interest is essentialfor the trust between China and the EU. Minister Wang Yi also met the Foreign Ministers of the 28 EU Member Statesduring an informal working lunch.

IT & TELECOM

China to become the world's largest 5G market

China is set to become the world’s largest 5G market , with 460 million users of the next-generation super-fast network by 2025. China plays a pioneering role in constructing the network and experimenting with cutting-edge applications such as remote surgeries, according to a report by the Global System for Mobile Communications Association (GSMA), which represents the interests of more than 750 mobile operators worldwide. The number of users in China is forecast to be higher than that of Europe (205 million) and the United States (187 million) combined. Mats Granryd, Director General of GSMA, said: “After spending billions over the last decade deploying 4G networks to all corners of the country, Chinese mobile operators are now set to invest a further USD58 billion over the next two years to prepare for and begin 5G rollouts, laying the groundwork for China to become one of the world’s leading 5G markets.” Backed by 5G, China’s mobile ecosystem is expected to add CNY6 trillion in value to the national economy in 2023, up from CNY5.2 trillion last year.

China’s big three mobile operators – China Mobile, China Unicom and China Telecom – are conducting 5G trialoperations in a number of cities and plan to fully commercialize the technology in 2020. This month, with technological support from Huawei and China Mobile, a patient with Parkinson’s disease underwent China’s first 5G-based remote surgery. A doctor in Sanya, Hainan province, remotely manipulated surgical instruments to implant a deep brain stimulator known as a ‘brain pacemaker’ into a patient 2,500 kilometers away in Beijing. Meanwhile, Shanghai University of Engineering and Technology (SUET) has become China’s first university to have full 5G coverage on its campus. In April, Songjiang University Town – an education hub located in Shanghai’s Songjiang district where the SUET and a few other universities are located – will have 5G coverage. Later it willbe extended to the Songjiang G60 Science and Innovation Corridor, transforming it into the country’s first industrializeddemonstration base.

Chancellor Angela Merkel signaled she is loath to cave in toU.S. pressure to bar Huawei Technologies, saying she will not single out individual vendors as Germany toughens its security requirements for mobile networks. “There are two things I don’t believe in,” Merkel said at the Global Solutions Summit in Berlin. “First, to discuss these very sensitive security questions publicly, and second, to exclude a company simply because it’s from a certain country.’’ The United States has warned it could scale back the sharing of sensitive information with Berlin if it does not exclude hardware made by Huawei from its 5G

NEWSLETTER 26 MARCH 2019 4

Following his short visit to Monaco, President Xi arrived in Nice and had dinner with French President Emmanuel Macron in Beaulieu-sur-Mer on the French Riviera before the official welcome ceremony at the Arc de Triomphe in Paris, and a meeting and state dinner at the Elysée presidential palace. President Xi also met in Paris with German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker. During Xi’s visit, Airbus signed a USD35 billion contract for 290 A320 planes and 10 of the larger A350s in a blow to rival Boeing, whose 737 Max-8 is still grounded following two crashes in five months. The Airbus contract was one of 15 signed, including a €1 billion contract for EDF to build an offshore wind farm in China. France’s Fives and the China National Building Materials Group signed a €1 billion deal to cooperate on energy savings in developing countries. CMA-CGM and the China State Shipbulding Corp. signed a€1.2 billion deal to build 10 container ships.

Chinese State Councilor and Foreign Minister Wang Yi has also just concluded a visit to EU Headquarters in Brussels for talks with EU High Representative for Foreign Affairs and Security Policy Federica Mogherini and to participate in the Ninth China- EU High-Level Strategic Dialogue. Wang underlined three points. Firstly, cooperativepartnership is the nature of China-EU relations. There is no essential conflict of interest between China and the EU. Secondly, the goal of China-EU cooperation is to achieve mutual benefit and win-win outcome, where Europe will benefit from the new round of Chinese reform and opening-up. Thirdly, respect of each other’s core interest is essentialfor the trust between China and the EU. Minister Wang Yi also met the Foreign Ministers of the 28 EU Member Statesduring an informal working lunch.

IT & TELECOM

China to become the world's largest 5G market

China is set to become the world’s largest 5G market , with 460 million users of the next-generation super-fast network by 2025. China plays a pioneering role in constructing the network and experimenting with cutting-edge applications such as remote surgeries, according to a report by the Global System for Mobile Communications Association (GSMA), which represents the interests of more than 750 mobile operators worldwide. The number of users in China is forecast to be higher than that of Europe (205 million) and the United States (187 million) combined. Mats Granryd, Director General of GSMA, said: “After spending billions over the last decade deploying 4G networks to all corners of the country, Chinese mobile operators are now set to invest a further USD58 billion over the next two years to prepare for and begin 5G rollouts, laying the groundwork for China to become one of the world’s leading 5G markets.” Backed by 5G, China’s mobile ecosystem is expected to add CNY6 trillion in value to the national economy in 2023, up from CNY5.2 trillion last year.

China’s big three mobile operators – China Mobile, China Unicom and China Telecom – are conducting 5G trialoperations in a number of cities and plan to fully commercialize the technology in 2020. This month, with technological support from Huawei and China Mobile, a patient with Parkinson’s disease underwent China’s first 5G-based remote surgery. A doctor in Sanya, Hainan province, remotely manipulated surgical instruments to implant a deep brain stimulator known as a ‘brain pacemaker’ into a patient 2,500 kilometers away in Beijing. Meanwhile, Shanghai University of Engineering and Technology (SUET) has become China’s first university to have full 5G coverage on its campus. In April, Songjiang University Town – an education hub located in Shanghai’s Songjiang district where the SUET and a few other universities are located – will have 5G coverage. Later it willbe extended to the Songjiang G60 Science and Innovation Corridor, transforming it into the country’s first industrializeddemonstration base.

Chancellor Angela Merkel signaled she is loath to cave in toU.S. pressure to bar Huawei Technologies, saying she will not single out individual vendors as Germany toughens its security requirements for mobile networks. “There are two things I don’t believe in,” Merkel said at the Global Solutions Summit in Berlin. “First, to discuss these very sensitive security questions publicly, and second, to exclude a company simply because it’s from a certain country.’’ The United States has warned it could scale back the sharing of sensitive information with Berlin if it does not exclude hardware made by Huawei from its 5G

NEWSLETTER 26 MARCH 2019 5

infrastructure, arguing that Chinese equipment could help Beijing spy on Western companies and governments. NATO’s Supreme Allied Commander Europe, U.S. General Curtis Scaparrotti, warned Germany that NATO forces would cut communications if Berlin were to work with Huawei.

Huawei Technologies was the top corporate filer of international patent applications in 2018, leading an Asia-based innovation surge accounting for over half of the applications submitted to the World Intellectual Property Organization (WIPO) last year. “Asia is now the majority filer of international patent applications via WIPO, which is an important milestone for that economically dynamic region and underscores the historical geographical shift of innovative activity from West to East,” said WIPO Director General Francis Gurry. WIPO statistics showed that 50.5% of all Patent Cooperation Treaty (PCT) applications filed in 2018 came from Asia, with Europe and North America accounting for about a quarter each. U.S.-based applicants filed 56,142 PCT applications, followed by applicants from China, 53,345, and Japan, 49,702. Huawei, with a record number of 5,405 published PCT applications, was the top corporate filer in 2018, which is “an all-time record by anyone,” Gurry said. Huawei was followed by Mitsubishi Electric (2,812), Intel (2,499), Qualcomm (2,404) and ZTE (2,080), the Shanghai Daily reports.

Meanwhile, Oppo strengthened its position as the second-largest player in the domestic smartphone market, and is pushing hard to go global. At the end of February, Oppo unveiled its first 5G smartphone and announced that four foreign telecom carriers – Swisscom, Australia’s Telstra andOptus, and SingTel of Singapore – are to be among the firstto sell the 5G model in the second quarter of this year. The 5G handset will use Qualcomm’s Snapdragon 855 chipset and X50 modem. Oppo’s smartphones are now available inmore than 40 countries and regions, including nine European markets. In the fourth quarter of 2018, Oppo outcompeted Samsung to become the largest smartphone vendor in Thailand with a market share of 22.2%, growing about 70% year-on-year, according to Canalys. In 2018, Oppo shipped 113 million smartphones worldwide, gaining a global market share of more than 8%, according to IDC. Oppo has over 40,000 employees globally, with 10 manufacturing facilities and six research institutes across the world.

FOREIGN TRADE

U.S.-China trade negotiations to resume inBeijing and Washington

Trade negotiations between China and the U.S. are to resume on March 28 and 29 in Beijing, with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer leading the U.S. delegation to the 8 th round of high-level consultations. In early April, Chinese Vice Premier Liu He is scheduled to travel to Washington for follow-up sessions. However, it is far from certain that a breakthrough is imminent. U.S. President Donald Trump has said that even if a deal is reached, tariffs would be kept in place “for a substantial period of time” to force China to implement its commitments, a measure China will certainly reject. China, historically, had had “a lot of problems living by certain deals, and we have to make sure”, Trump said.

Wei Zongyou, a specialist in China-U.S. relations at Fudan University in Shanghai, said the upcoming back-to-back negotiations were indicative of the two sides’ “willingness tonarrow the distance between their positions”. “But the U.S. has constantly emphasized the verification mechanism and use of punitive tariffs as a counterweight,” he said. “Even if they do reach an agreement there will still be contradictionsand differences on trade issues that will require them to continue interactions, negotiations and compromise.” Lighthizer told a U.S. Senate Finance Committee that he hoped the two countries were “in the final weeks of having an agreement” – the two sides had exchanged drafts of a 110 to 120-page document, he said – but stressed there were still major unresolved issues that could derail it.

Despite Trump’s demands, Allan von Mehren, China Economist at Danske Bank in Copenhagen, said that with an election looming, the U.S. President was equally keen tostrike an agreement. “I doubt Trump will say no to a deal,

NEWSLETTER 26 MARCH 2019 5

infrastructure, arguing that Chinese equipment could help Beijing spy on Western companies and governments. NATO’s Supreme Allied Commander Europe, U.S. General Curtis Scaparrotti, warned Germany that NATO forces would cut communications if Berlin were to work with Huawei.

Huawei Technologies was the top corporate filer of international patent applications in 2018, leading an Asia-based innovation surge accounting for over half of the applications submitted to the World Intellectual Property Organization (WIPO) last year. “Asia is now the majority filer of international patent applications via WIPO, which is an important milestone for that economically dynamic region and underscores the historical geographical shift of innovative activity from West to East,” said WIPO Director General Francis Gurry. WIPO statistics showed that 50.5% of all Patent Cooperation Treaty (PCT) applications filed in 2018 came from Asia, with Europe and North America accounting for about a quarter each. U.S.-based applicants filed 56,142 PCT applications, followed by applicants from China, 53,345, and Japan, 49,702. Huawei, with a record number of 5,405 published PCT applications, was the top corporate filer in 2018, which is “an all-time record by anyone,” Gurry said. Huawei was followed by Mitsubishi Electric (2,812), Intel (2,499), Qualcomm (2,404) and ZTE (2,080), the Shanghai Daily reports.

Meanwhile, Oppo strengthened its position as the second-largest player in the domestic smartphone market, and is pushing hard to go global. At the end of February, Oppo unveiled its first 5G smartphone and announced that four foreign telecom carriers – Swisscom, Australia’s Telstra andOptus, and SingTel of Singapore – are to be among the firstto sell the 5G model in the second quarter of this year. The 5G handset will use Qualcomm’s Snapdragon 855 chipset and X50 modem. Oppo’s smartphones are now available inmore than 40 countries and regions, including nine European markets. In the fourth quarter of 2018, Oppo outcompeted Samsung to become the largest smartphone vendor in Thailand with a market share of 22.2%, growing about 70% year-on-year, according to Canalys. In 2018, Oppo shipped 113 million smartphones worldwide, gaining a global market share of more than 8%, according to IDC. Oppo has over 40,000 employees globally, with 10 manufacturing facilities and six research institutes across the world.

FOREIGN TRADE

U.S.-China trade negotiations to resume inBeijing and Washington

Trade negotiations between China and the U.S. are to resume on March 28 and 29 in Beijing, with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer leading the U.S. delegation to the 8 th round of high-level consultations. In early April, Chinese Vice Premier Liu He is scheduled to travel to Washington for follow-up sessions. However, it is far from certain that a breakthrough is imminent. U.S. President Donald Trump has said that even if a deal is reached, tariffs would be kept in place “for a substantial period of time” to force China to implement its commitments, a measure China will certainly reject. China, historically, had had “a lot of problems living by certain deals, and we have to make sure”, Trump said.

Wei Zongyou, a specialist in China-U.S. relations at Fudan University in Shanghai, said the upcoming back-to-back negotiations were indicative of the two sides’ “willingness tonarrow the distance between their positions”. “But the U.S. has constantly emphasized the verification mechanism and use of punitive tariffs as a counterweight,” he said. “Even if they do reach an agreement there will still be contradictionsand differences on trade issues that will require them to continue interactions, negotiations and compromise.” Lighthizer told a U.S. Senate Finance Committee that he hoped the two countries were “in the final weeks of having an agreement” – the two sides had exchanged drafts of a 110 to 120-page document, he said – but stressed there were still major unresolved issues that could derail it.

Despite Trump’s demands, Allan von Mehren, China Economist at Danske Bank in Copenhagen, said that with an election looming, the U.S. President was equally keen tostrike an agreement. “I doubt Trump will say no to a deal,

NEWSLETTER 26 MARCH 2019 6

as this could trigger turmoil in financial markets,” he said. “He also really wants this deal as it will be a big gift to key voters in swing states. He has his eyes set on the 2020 election now and the campaigning will starting very soon.”

ADVERTISEMENT ANDSPONSORSHIP

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

CHINA NEWS ROUND-UP

China to achieve more than 6% growth this year,says World Bank Chief Economist

China’s efforts, focusing on supporting the corporate sector and consumption, will help achieve economic growth in excess of 6% this year, despite headwinds from a sluggish and uncertain external environment, Pinelopi Goldberg, Chief Economist of the World Bank, said. However, global growth is likely to slow further this year dueto downside risks from sharper-than-expected decelerations in major economies and bouts of financial market stress, she said before the China Development Forum (CDF) 2019 in Beijing. This year, China has set a growth target of between 6% and 6.5%, lower than the “around 6.5%” goal in 2018, when the GDP growth came in at 6.6%. “We do not yet see a major threat to China’s goals this year,” said Goldberg.

“We agree with Premier Li Keqiang’s comments in the annual Government Work Report this year that China should at present refrain from using a deluge of stimulus policies.” Goldberg said that China’s plan to reduce CNY2 trillion of taxes and fees this year is an attempt to provide some relief to the corporate sector and support smoother economic rebalancing. “China has the fiscal space and so itis appropriate that it considers using it, with due caution, to counter global economic headwinds,” Goldberg said. Many economies also face the challenge of rising debt, warned the World Bank economist. In China, the government is taking measures to rein in credit growth and shadow banking and prevent wasteful public investments. Policies to improve the business climate have also been put in place, including the newly approved Foreign Investment Law (FIL). The moves will reduce financial risks and

contribute to an improvement in corporate profitability and productivity, although some easing of macro-economic policy is still warranted, according to the World Bank economist.

“China should not lose focus in reducing financial risks, and we have confidence that it will succeed in this difficult task,” said Goldberg. In an earlier interview with China Daily, Zhu Min, former Deputy Managing Director at the International Monetary Fund (IMF), said that China’s debt level has stabilized since last year, although deleveraging is not an easy task to achieve. “Currently, we see a little bit of easing of monetary policy, but it is still in a neutral position, which fits the macro-economic situation quite well,” said Zhu. Goldberg suggested China address the critical challenges of a rapidly aging population and environmental degradation, the China Daily reports.

Second China International Import Expo (CIIE)to be bigger and better than last year’s event

The second edition of the China International Import Expo (CIIE), to be held this year, is set to be larger in scale and better in quality than its inaugural version last year, said the event’s organizers. More than half of the exhibition area has been booked and the number of enterprises confirming their participation has exceeded half of the planned number, said the organizers. Statistics from the CIIE Bureau show that 812 companies from 72 countries and regions had signed agreements to attend thisyear’s expo as of March 15. Altogether they have booked 180,000 square meters, accounting for more than half of the planned business exhibition section, which will be expanded from 270,000 square meters last year to 300,000sq m this year.

Companies in the fields of food, agricultural products, medical care, and quality life that were very popular among enterprise and individual purchasers at the first CIIE have shown a great interest in particular in participating in the expo this year, according to Zhang Weimin, Vice General Manager of the Shanghai International Trade Promotion Co. Minister of Commerce Zhong Shan said that some exhibition areas, such as for healthcare, have been fully booked.

Compared with the inaugural expo that took place from November 5-10 in Shanghai, the scale of the second CIIE will be bigger with more exhibitors. The event’s business exhibition section will feature seven categories as well as an outdoor exhibition area to accommodate more

NEWSLETTER 26 MARCH 2019 6

as this could trigger turmoil in financial markets,” he said. “He also really wants this deal as it will be a big gift to key voters in swing states. He has his eyes set on the 2020 election now and the campaigning will starting very soon.”

ADVERTISEMENT ANDSPONSORSHIP

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

CHINA NEWS ROUND-UP

China to achieve more than 6% growth this year,says World Bank Chief Economist

China’s efforts, focusing on supporting the corporate sector and consumption, will help achieve economic growth in excess of 6% this year, despite headwinds from a sluggish and uncertain external environment, Pinelopi Goldberg, Chief Economist of the World Bank, said. However, global growth is likely to slow further this year dueto downside risks from sharper-than-expected decelerations in major economies and bouts of financial market stress, she said before the China Development Forum (CDF) 2019 in Beijing. This year, China has set a growth target of between 6% and 6.5%, lower than the “around 6.5%” goal in 2018, when the GDP growth came in at 6.6%. “We do not yet see a major threat to China’s goals this year,” said Goldberg.

“We agree with Premier Li Keqiang’s comments in the annual Government Work Report this year that China should at present refrain from using a deluge of stimulus policies.” Goldberg said that China’s plan to reduce CNY2 trillion of taxes and fees this year is an attempt to provide some relief to the corporate sector and support smoother economic rebalancing. “China has the fiscal space and so itis appropriate that it considers using it, with due caution, to counter global economic headwinds,” Goldberg said. Many economies also face the challenge of rising debt, warned the World Bank economist. In China, the government is taking measures to rein in credit growth and shadow banking and prevent wasteful public investments. Policies to improve the business climate have also been put in place, including the newly approved Foreign Investment Law (FIL). The moves will reduce financial risks and

contribute to an improvement in corporate profitability and productivity, although some easing of macro-economic policy is still warranted, according to the World Bank economist.

“China should not lose focus in reducing financial risks, and we have confidence that it will succeed in this difficult task,” said Goldberg. In an earlier interview with China Daily, Zhu Min, former Deputy Managing Director at the International Monetary Fund (IMF), said that China’s debt level has stabilized since last year, although deleveraging is not an easy task to achieve. “Currently, we see a little bit of easing of monetary policy, but it is still in a neutral position, which fits the macro-economic situation quite well,” said Zhu. Goldberg suggested China address the critical challenges of a rapidly aging population and environmental degradation, the China Daily reports.

Second China International Import Expo (CIIE)to be bigger and better than last year’s event

The second edition of the China International Import Expo (CIIE), to be held this year, is set to be larger in scale and better in quality than its inaugural version last year, said the event’s organizers. More than half of the exhibition area has been booked and the number of enterprises confirming their participation has exceeded half of the planned number, said the organizers. Statistics from the CIIE Bureau show that 812 companies from 72 countries and regions had signed agreements to attend thisyear’s expo as of March 15. Altogether they have booked 180,000 square meters, accounting for more than half of the planned business exhibition section, which will be expanded from 270,000 square meters last year to 300,000sq m this year.

Companies in the fields of food, agricultural products, medical care, and quality life that were very popular among enterprise and individual purchasers at the first CIIE have shown a great interest in particular in participating in the expo this year, according to Zhang Weimin, Vice General Manager of the Shanghai International Trade Promotion Co. Minister of Commerce Zhong Shan said that some exhibition areas, such as for healthcare, have been fully booked.

Compared with the inaugural expo that took place from November 5-10 in Shanghai, the scale of the second CIIE will be bigger with more exhibitors. The event’s business exhibition section will feature seven categories as well as an outdoor exhibition area to accommodate more

NEWSLETTER 26 MARCH 2019 7

exhibitors. Areas dedicated to consumer electronics, smart household appliances and consumer goods are also among those that have been expanded for the second expo, which will occupy three exhibition halls in the NationalExhibition and Convention Center (Shanghai). High-end equipment will become the largest exhibition category, the China Daily reports.

Big growth expected in truck freight betweenChina and Europe

Truck freight between China and Europe is set to increase substantially after a vehicle loaded with high-tech manufacturing equipment successfully completed the 11,000 kilometer road journey from Dornstadt in Germany to Shanghai in two weeks. The freight-laden truck crossed Germany, Poland, Belarus, Russia and Kazakhstan before entering China for the final leg of its journey. It was also the first Europe-to-Shanghai truck freight by the Suzhou-based logistics company Suzhou Daoxin Supply Chain Management Co. Due to adverse weather conditions, the customer could not use airfreight to ship the products in two weeks.

There is great potential for road transport across Eurasia. In2018, China’s total trade volume with the EU amounted to CNY4.5 trillion, up 7.9% year-on-year. Major markets along the Silk Road Economic Belt and all EU countries are TIR members. With the implementation and optimization of TIR in China, road transport as a cross border tool will play a greater role in trade flows. Truck transport offers an alternative option besides air, sea and rail. Road transport can ensure a ‘door-to-door’ service, which is suitable for high-priced goods and clients with strict time requirements.

Road transport can save up to 10 days compared to rail, and it costs much less than air transport. Hu Rongyi, General Manager of Suzhou Daoxin, was one of the earliest people to spot the opportunities in road transportation between Europe and China. After paying some visits by staff members along the truck route, SuzhouDaoxin delivered its first batch of goods, a truck of steel rolls from Germany’s Stuttgart to Suzhou in Jiangsu province in March 2018. However, the pilot transport was unsatisfying as it took 21 days. “We made a few more trials,and finally managed to get the goods delivered in 12 and 13 days late last August,” said Hu. Currently, Suzhou Daoxin operates truck transport services between Europe and Chinese cities every week, the China Daily reports.

Geely expects flat sales in China this year

Geely Automobile Holdings, whose founder Li Shufu is the largest single shareholder of Daimler, said sales of its portfolio of brands including Lynk and Volvo, are likely to remain flat this year in China, as economic growth slows down in the world’s largest vehicle market. The Zhejiang-based carmaker sold 44% fewer vehicles in December, causing Geely to miss its 2018 sales target by 5% . Car sales in China sputtered last year after the nation surpassed the United States in 2009 as the largest vehicle market on earth. Sales last year fell 2.8%, as a slowing economy and the trade war with the U.S. gave consumers cause for pause in committing to their biggest non-real estate purchases. Sales slid further by 9.8% in the first two months of the year compared with the same period in 2017.

“The prevailing political and economic uncertainties should continue to affect the passenger vehicle market in China and could cause the current slowdown in motor vehicle demand to continue into 2019,” Geely said in its earnings report, adding that sales would remain flat this year. Still, 2018 sales rose 20% to 1.5 million units, driving up Geely’s revenue by 14.9% to CNY106.6 billion. Net profit jumped 18% to a record CNY12.55 billion. A reduction of VAT as of April 1 is expected to lead to lower car prices, pushing up sales.

Besides owning Volvo, Geely also operates a venture with the Swedish carmaker called Lynk. The Chinese carmaker also owns Malaysia’s once-dominant Proton brand, as well as the assembly for London’s black taxi cabs. Geely’s founder and chief executive Li owns 9.7% of Daimler, the South China Morning Post reports.

Slow sales continue in China's property market

China’s residential property companies keep on suffering from slow sales and are hence resorting to fresh discounts to destock. Xu Jiayin, Chairman of Evergrande Group, announced a marketing campaign this month. The group has 690 projects, and will offer a 10% discount on residential properties, and 20% on retail properties. Since 2011 Evergrande has been offering discounts to homebuyers. It sold 52.4 million square metersof gross floor area in 2018, second only to Country Garden’s 77.3 million sq m, according to the China Real Estate Information Corp. Home sales have brought in CNY551.1 billion for Evergrande last year. It ranked third among domestic developers, trailing Country Garden (CNY728.7 billion) and China Vanke (CNY606.9 billion).

NEWSLETTER 26 MARCH 2019 7

exhibitors. Areas dedicated to consumer electronics, smart household appliances and consumer goods are also among those that have been expanded for the second expo, which will occupy three exhibition halls in the NationalExhibition and Convention Center (Shanghai). High-end equipment will become the largest exhibition category, the China Daily reports.

Big growth expected in truck freight betweenChina and Europe

Truck freight between China and Europe is set to increase substantially after a vehicle loaded with high-tech manufacturing equipment successfully completed the 11,000 kilometer road journey from Dornstadt in Germany to Shanghai in two weeks. The freight-laden truck crossed Germany, Poland, Belarus, Russia and Kazakhstan before entering China for the final leg of its journey. It was also the first Europe-to-Shanghai truck freight by the Suzhou-based logistics company Suzhou Daoxin Supply Chain Management Co. Due to adverse weather conditions, the customer could not use airfreight to ship the products in two weeks.

There is great potential for road transport across Eurasia. In2018, China’s total trade volume with the EU amounted to CNY4.5 trillion, up 7.9% year-on-year. Major markets along the Silk Road Economic Belt and all EU countries are TIR members. With the implementation and optimization of TIR in China, road transport as a cross border tool will play a greater role in trade flows. Truck transport offers an alternative option besides air, sea and rail. Road transport can ensure a ‘door-to-door’ service, which is suitable for high-priced goods and clients with strict time requirements.

Road transport can save up to 10 days compared to rail, and it costs much less than air transport. Hu Rongyi, General Manager of Suzhou Daoxin, was one of the earliest people to spot the opportunities in road transportation between Europe and China. After paying some visits by staff members along the truck route, SuzhouDaoxin delivered its first batch of goods, a truck of steel rolls from Germany’s Stuttgart to Suzhou in Jiangsu province in March 2018. However, the pilot transport was unsatisfying as it took 21 days. “We made a few more trials,and finally managed to get the goods delivered in 12 and 13 days late last August,” said Hu. Currently, Suzhou Daoxin operates truck transport services between Europe and Chinese cities every week, the China Daily reports.

Geely expects flat sales in China this year

Geely Automobile Holdings, whose founder Li Shufu is the largest single shareholder of Daimler, said sales of its portfolio of brands including Lynk and Volvo, are likely to remain flat this year in China, as economic growth slows down in the world’s largest vehicle market. The Zhejiang-based carmaker sold 44% fewer vehicles in December, causing Geely to miss its 2018 sales target by 5% . Car sales in China sputtered last year after the nation surpassed the United States in 2009 as the largest vehicle market on earth. Sales last year fell 2.8%, as a slowing economy and the trade war with the U.S. gave consumers cause for pause in committing to their biggest non-real estate purchases. Sales slid further by 9.8% in the first two months of the year compared with the same period in 2017.

“The prevailing political and economic uncertainties should continue to affect the passenger vehicle market in China and could cause the current slowdown in motor vehicle demand to continue into 2019,” Geely said in its earnings report, adding that sales would remain flat this year. Still, 2018 sales rose 20% to 1.5 million units, driving up Geely’s revenue by 14.9% to CNY106.6 billion. Net profit jumped 18% to a record CNY12.55 billion. A reduction of VAT as of April 1 is expected to lead to lower car prices, pushing up sales.

Besides owning Volvo, Geely also operates a venture with the Swedish carmaker called Lynk. The Chinese carmaker also owns Malaysia’s once-dominant Proton brand, as well as the assembly for London’s black taxi cabs. Geely’s founder and chief executive Li owns 9.7% of Daimler, the South China Morning Post reports.

Slow sales continue in China's property market

China’s residential property companies keep on suffering from slow sales and are hence resorting to fresh discounts to destock. Xu Jiayin, Chairman of Evergrande Group, announced a marketing campaign this month. The group has 690 projects, and will offer a 10% discount on residential properties, and 20% on retail properties. Since 2011 Evergrande has been offering discounts to homebuyers. It sold 52.4 million square metersof gross floor area in 2018, second only to Country Garden’s 77.3 million sq m, according to the China Real Estate Information Corp. Home sales have brought in CNY551.1 billion for Evergrande last year. It ranked third among domestic developers, trailing Country Garden (CNY728.7 billion) and China Vanke (CNY606.9 billion).

NEWSLETTER 26 MARCH 2019 8

“The central government is expected to continue its tight control on the real estate market and strictly supervise real-estate financing, a situation which will cause some challenges to developers through 2019,” said James Shepherd, who heads China-related realty research at Cushman & Wakefield. The Top 100 property developers in China saw a month-on-month sales revenue decline of almost 23% in February, and that for the top three was nearly 11%. Evergrande’s contract value of total sales in January and February was about CNY64.7 billion, down 42.5% from a year ago.

The sales decline is across the board. In the housing market, some 9.6 million sq m of gross floor area were traded in 29 major cities in February, down 53% from January, and down 28% from the same period of 2018, a CRIC report said. Yu Liang, Chairman of Vanke, has called upon the company to keep focus on survival this year. Since February 12, widespread layoffs have been reported in Country Garden with some divisions getting downsized by half. A Savills China research report stated that in the short term, China is not expected to expand financing channels for real estate companies. However, large-sized companies will continue to have more advantages in receiving loans. Meanwhile, the government would continueto allocate resources to promote development in areas such as renovation of shanty towns, affordable housing projects and rental housing, the China Daily reports.

Almost one-third of Chinese cities are shrinking,but urban planners keep building

The perception that China’s urbanization is still in full swing is untrue for nearly one-third of Chinese cities, whose populations are shrinking, according to new findings by a research team from Tsinghua University in Beijing. Theuniversity used satellite imagery to monitor the intensity of night lights in more than 3,300 cities and towns between 2013 and 2016. In 28% of the cities, light intensity was reduced. China now has 938 shrinking cities, according to Long Ying, an urban planning expert at Tsinghua University,who founded and led the research group, Beijing City Lab. This is more than any other nation on earth.

The findings are indicative of declining populations and economic activity across almost one-third of the cities monitored, at a time when official economic data also shows that China is facing significant economic and demographic challenges. The problem is getting worse. Between 2000 and 2012, previous analysis showed that China had fewer shrinking cities than France, Germany, the

UK and the U.S. Long told a seminar in Shanghai that he islooking forward to China’s 2020 census to see whether the trend of shrinking cities is confirmed.

The Chinese cities under the greatest pressure of shrinking include those heavily dependent on natural resources, suchas the coal mining town of Hegang in Heilongjiang province. Also diminishing are cities “in the process of transformation”, such as Yiwu in Zhejiang province, once the “largest small commodity wholesale market in the world” and famous for its sprawling networks of stalls selling counterfeit goods.

Another huge problem facing China is that the urban shrinkage identified in images beamed back from outer space is going unnoticed by those planning cities on the ground. The country’s city planners, which take orders frommunicipal authorities, are still drawing up plans based upon the assumption that China’s urban areas will grow indefinitely, the South China Morning Post reports.

Growth of mobile payments lead to decline inthe number of ATMs

The rapid growth of mobile payments in China has brought about a decline in bank self-service terminals including automatic, video and smart teller machines, initiating industry transformation. As of the end of 2018, the number of ATMs at banks nationwide dropped by 17,800 quarter-on-quarter to 1.11 million. The average number of ATMs per 10,000 people also fell 1.6% from the previous quarter to 7.99, said the latest report on the overall operation of payment systems by the People’s Bank of China (PBOC), the central bank. The decrease in ATM numbers triggered a decline in the performance of several companies principally engaged in the manufacturing, distribution and operation of such devices.

Beijing ATMVI Technology Co, a designer and manufacturer of kiosks, enclosures and housing for ATMs, disclosed preliminary earnings estimates on February 28, announcing that it posted a 32.52% decrease in operating income year-on-year in 2018 and a CNY6.99 million net loss attributable to shareholders. “During the reporting period, the deployment of bank self-service terminals, including ATMs, kept slowing down due to the rapid development of mobile payments. It caused a slump in demand for related products and services of the company and a large decline in our business income,” the company said. Guangzhou Kingteller Technology Co, another major ATM manufacturer and operator in China, also posted a

NEWSLETTER 26 MARCH 2019 8

“The central government is expected to continue its tight control on the real estate market and strictly supervise real-estate financing, a situation which will cause some challenges to developers through 2019,” said James Shepherd, who heads China-related realty research at Cushman & Wakefield. The Top 100 property developers in China saw a month-on-month sales revenue decline of almost 23% in February, and that for the top three was nearly 11%. Evergrande’s contract value of total sales in January and February was about CNY64.7 billion, down 42.5% from a year ago.

The sales decline is across the board. In the housing market, some 9.6 million sq m of gross floor area were traded in 29 major cities in February, down 53% from January, and down 28% from the same period of 2018, a CRIC report said. Yu Liang, Chairman of Vanke, has called upon the company to keep focus on survival this year. Since February 12, widespread layoffs have been reported in Country Garden with some divisions getting downsized by half. A Savills China research report stated that in the short term, China is not expected to expand financing channels for real estate companies. However, large-sized companies will continue to have more advantages in receiving loans. Meanwhile, the government would continueto allocate resources to promote development in areas such as renovation of shanty towns, affordable housing projects and rental housing, the China Daily reports.

Almost one-third of Chinese cities are shrinking,but urban planners keep building

The perception that China’s urbanization is still in full swing is untrue for nearly one-third of Chinese cities, whose populations are shrinking, according to new findings by a research team from Tsinghua University in Beijing. Theuniversity used satellite imagery to monitor the intensity of night lights in more than 3,300 cities and towns between 2013 and 2016. In 28% of the cities, light intensity was reduced. China now has 938 shrinking cities, according to Long Ying, an urban planning expert at Tsinghua University,who founded and led the research group, Beijing City Lab. This is more than any other nation on earth.

The findings are indicative of declining populations and economic activity across almost one-third of the cities monitored, at a time when official economic data also shows that China is facing significant economic and demographic challenges. The problem is getting worse. Between 2000 and 2012, previous analysis showed that China had fewer shrinking cities than France, Germany, the

UK and the U.S. Long told a seminar in Shanghai that he islooking forward to China’s 2020 census to see whether the trend of shrinking cities is confirmed.

The Chinese cities under the greatest pressure of shrinking include those heavily dependent on natural resources, suchas the coal mining town of Hegang in Heilongjiang province. Also diminishing are cities “in the process of transformation”, such as Yiwu in Zhejiang province, once the “largest small commodity wholesale market in the world” and famous for its sprawling networks of stalls selling counterfeit goods.

Another huge problem facing China is that the urban shrinkage identified in images beamed back from outer space is going unnoticed by those planning cities on the ground. The country’s city planners, which take orders frommunicipal authorities, are still drawing up plans based upon the assumption that China’s urban areas will grow indefinitely, the South China Morning Post reports.

Growth of mobile payments lead to decline inthe number of ATMs

The rapid growth of mobile payments in China has brought about a decline in bank self-service terminals including automatic, video and smart teller machines, initiating industry transformation. As of the end of 2018, the number of ATMs at banks nationwide dropped by 17,800 quarter-on-quarter to 1.11 million. The average number of ATMs per 10,000 people also fell 1.6% from the previous quarter to 7.99, said the latest report on the overall operation of payment systems by the People’s Bank of China (PBOC), the central bank. The decrease in ATM numbers triggered a decline in the performance of several companies principally engaged in the manufacturing, distribution and operation of such devices.

Beijing ATMVI Technology Co, a designer and manufacturer of kiosks, enclosures and housing for ATMs, disclosed preliminary earnings estimates on February 28, announcing that it posted a 32.52% decrease in operating income year-on-year in 2018 and a CNY6.99 million net loss attributable to shareholders. “During the reporting period, the deployment of bank self-service terminals, including ATMs, kept slowing down due to the rapid development of mobile payments. It caused a slump in demand for related products and services of the company and a large decline in our business income,” the company said. Guangzhou Kingteller Technology Co, another major ATM manufacturer and operator in China, also posted a

NEWSLETTER 26 MARCH 2019 9

32.77% drop in operating income year-on-year in 2018 and a CNY96.22 million net loss. ATM supplier GRGBanking also stepped up efforts for transformation and upgrading, focussing on biometrics, smart video, smart voice and big data.

Contrary to waning demand for ATMs, mobile payments have been growing fast. Last year, banking institutions handled 60.53 billion mobile payment transactions in China with a total volume of CNY277.39 trillion, increasing by 61% and 37% year-on-year respectively. According to a survey by the Payment and Clearing Association of China last year, 80% of mobile payment users used the service every day. For 43% of the users, theaverage amount for a single payment was below CNY100. About 96% of the users chose mobile payments because ofits convenience, and more than 80% favored the service asthey no longer need to carry cash or bank cards. Nearly 46% of users said mobile payments will eventually replace cash, the China Daily reports.

Chinese government takes concrete measuresto reduce VAT on April 1

China will implement measures to cut the value-added tax (VAT) rates, making sure that tax burdens on all industries will only go down, not up, the Chinese government decided at an executive meeting presided overby Premier Li Keqiang. This year’s government work report set out the plan for larger-scale tax cuts, including lowering the VAT rate in manufacturing and other industries from 16% to 13%, and the VAT rate in transportation, construction and other industries from 10% to 9%. A host ofconcrete measures were decided upon at the meeting to achieve such targets, which will be enacted from April 1.

“The planned VAT cuts must be delivered in no time. Its implementation must be closely monitored to ensure that tax burdens are meaningfully reduced in the major industries and lowered to various extents in some industries. All industries will see their taxes go down, not up,” Premier Li Keqiang said. “In case of increased tax burden due to inadequate deductions in certain individual industries, the government will work out targeted solutions,”he added. In the government work report, Li said the government’s moves to cut tax on this occasion aim to strengthen the basis for sustained growth while also considering the need to ensure fiscal sustainability. It is alsoa major measure to lighten the burden on businesses and boost market dynamism.

In 2018, taxes and fees levied on enterprises and individuals were reduced by around CNY1.3 trillion as a result of multiple preferential tax policies introduced by the government. The meeting also decided on adjustments to the export tax rebate rates of certain goods and services and to the tax deduction rate of purchases of farm produce.It was also decided to increase transfer payments to local governments, focusing on supporting the central and western regions and counties and prefectures in difficulty. “The share that goes to enterprises in the national income distribution needs to be increased to boost market vitality. This will help keep employment stable, expand tax sources and make public finance sustainable,” Li said, as reported by the Shanghai Daily.

Five premium automotive brands have cut the prices of their models sold in China after the announced of a reduction of 3 percentage points in VAT in the manufacturing sector. Mercedes-Benz cut prices by CNY7,000 for a smart-branded car to CNY64,000 for a Mercedes-AMG. Its move was followed by BMW and Volvo,which offered similar cuts. Jaguar Land Rover slashed the prices of selected Range Rover models by CNY85,000. Ford’s premium arm Lincoln cut the prices of its models by up to CNY20,000. Car sales in China, the world’s largest vehicle market, stood at 1.48 million in February, down 13.8% year-on-year, the eighth month of decline in a row.

ING to have majority in joint venture bank withBank of Beijing

Bank of Beijing (BOB) has received the necessary board approvals for the establishment of a joint venture bank with Netherlands-based ING Bank, in which the latter will be the majority partner. With a total investment of CNY3 billion, the forthcoming joint-venture bank, which is still awaiting regulatory approval, may become China’s first commercial lender in which a foreign shareholder has a controlling interest. ING Bank will hold a 51% stake, and Bank of Beijing 49%. Drawing on the experience of ING Bank in the successful development of direct banking services, the joint venture will build a brand in the area of digital banking with the help of financial technologies and try to become a benchmark to further open up China’s financial sector to foreign investors.

Different from the traditional counter-based model, the direct banking model uses e-channels to provide financial products and therefore has no restriction of time,regions or geographic branches. “The decision to set up a joint-venture bank is a sensible commercial choice for both

NEWSLETTER 26 MARCH 2019 9

32.77% drop in operating income year-on-year in 2018 and a CNY96.22 million net loss. ATM supplier GRGBanking also stepped up efforts for transformation and upgrading, focussing on biometrics, smart video, smart voice and big data.

Contrary to waning demand for ATMs, mobile payments have been growing fast. Last year, banking institutions handled 60.53 billion mobile payment transactions in China with a total volume of CNY277.39 trillion, increasing by 61% and 37% year-on-year respectively. According to a survey by the Payment and Clearing Association of China last year, 80% of mobile payment users used the service every day. For 43% of the users, theaverage amount for a single payment was below CNY100. About 96% of the users chose mobile payments because ofits convenience, and more than 80% favored the service asthey no longer need to carry cash or bank cards. Nearly 46% of users said mobile payments will eventually replace cash, the China Daily reports.

Chinese government takes concrete measuresto reduce VAT on April 1

China will implement measures to cut the value-added tax (VAT) rates, making sure that tax burdens on all industries will only go down, not up, the Chinese government decided at an executive meeting presided overby Premier Li Keqiang. This year’s government work report set out the plan for larger-scale tax cuts, including lowering the VAT rate in manufacturing and other industries from 16% to 13%, and the VAT rate in transportation, construction and other industries from 10% to 9%. A host ofconcrete measures were decided upon at the meeting to achieve such targets, which will be enacted from April 1.

“The planned VAT cuts must be delivered in no time. Its implementation must be closely monitored to ensure that tax burdens are meaningfully reduced in the major industries and lowered to various extents in some industries. All industries will see their taxes go down, not up,” Premier Li Keqiang said. “In case of increased tax burden due to inadequate deductions in certain individual industries, the government will work out targeted solutions,”he added. In the government work report, Li said the government’s moves to cut tax on this occasion aim to strengthen the basis for sustained growth while also considering the need to ensure fiscal sustainability. It is alsoa major measure to lighten the burden on businesses and boost market dynamism.

In 2018, taxes and fees levied on enterprises and individuals were reduced by around CNY1.3 trillion as a result of multiple preferential tax policies introduced by the government. The meeting also decided on adjustments to the export tax rebate rates of certain goods and services and to the tax deduction rate of purchases of farm produce.It was also decided to increase transfer payments to local governments, focusing on supporting the central and western regions and counties and prefectures in difficulty. “The share that goes to enterprises in the national income distribution needs to be increased to boost market vitality. This will help keep employment stable, expand tax sources and make public finance sustainable,” Li said, as reported by the Shanghai Daily.

Five premium automotive brands have cut the prices of their models sold in China after the announced of a reduction of 3 percentage points in VAT in the manufacturing sector. Mercedes-Benz cut prices by CNY7,000 for a smart-branded car to CNY64,000 for a Mercedes-AMG. Its move was followed by BMW and Volvo,which offered similar cuts. Jaguar Land Rover slashed the prices of selected Range Rover models by CNY85,000. Ford’s premium arm Lincoln cut the prices of its models by up to CNY20,000. Car sales in China, the world’s largest vehicle market, stood at 1.48 million in February, down 13.8% year-on-year, the eighth month of decline in a row.

ING to have majority in joint venture bank withBank of Beijing

Bank of Beijing (BOB) has received the necessary board approvals for the establishment of a joint venture bank with Netherlands-based ING Bank, in which the latter will be the majority partner. With a total investment of CNY3 billion, the forthcoming joint-venture bank, which is still awaiting regulatory approval, may become China’s first commercial lender in which a foreign shareholder has a controlling interest. ING Bank will hold a 51% stake, and Bank of Beijing 49%. Drawing on the experience of ING Bank in the successful development of direct banking services, the joint venture will build a brand in the area of digital banking with the help of financial technologies and try to become a benchmark to further open up China’s financial sector to foreign investors.

Different from the traditional counter-based model, the direct banking model uses e-channels to provide financial products and therefore has no restriction of time,regions or geographic branches. “The decision to set up a joint-venture bank is a sensible commercial choice for both

NEWSLETTER 26 MARCH 2019 10

parties in the context of the further opening up of China’s financial sector,” said Xiong Qiyue, Research Fellow at the Institute of International Finance at the Bank of China (BOC).

ING Bank developed a strategic alliance with BOB in 2005 by acquiring a minority holding. ING Bank held a 13.03% stake in BOB as of September 30. For ING, the aim of establishing a digital banking joint venture with BOB is to gain a share of the online banking market in China, where the combination of technology and financing is creating new business opportunities. “The opportunity we see with Bank of Beijing is to set up a joint venture in the regulatory environment and excel in customer service through mobile phones,” said Ralph Hamers, CEO of ING Group, in an interview with China Daily last year.

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 SAVice-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 2019 (excl. VAT)

● SMEs: €405 (€490.05 incl. VAT)● Large enterprises: €1,025 (€1,240.25 incl. VAT)

Contact

Flanders-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

NEWSLETTER 26 MARCH 2019 10

parties in the context of the further opening up of China’s financial sector,” said Xiong Qiyue, Research Fellow at the Institute of International Finance at the Bank of China (BOC).

ING Bank developed a strategic alliance with BOB in 2005 by acquiring a minority holding. ING Bank held a 13.03% stake in BOB as of September 30. For ING, the aim of establishing a digital banking joint venture with BOB is to gain a share of the online banking market in China, where the combination of technology and financing is creating new business opportunities. “The opportunity we see with Bank of Beijing is to set up a joint venture in the regulatory environment and excel in customer service through mobile phones,” said Ralph Hamers, CEO of ING Group, in an interview with China Daily last year.

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 SAVice-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 2019 (excl. VAT)

● SMEs: €405 (€490.05 incl. VAT)● Large enterprises: €1,025 (€1,240.25 incl. VAT)

Contact

Flanders-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

NEWSLETTER 26 MARCH 2019 11

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 26 MARCH 2019 11

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.