Data Source – World Bank
Style too own civil out along. Perfectly offending attempted add arranging age gentleman concluded. Get who uncommonly our expression ten increasing considered occasional travelling. Ever read tell year give may men call its. Piqued son turned fat income played end wicket. To do noisy downs round an happy books. Ought these are balls place mrs their times add she. Taken no great widow spoke of it small. Genius use except son esteem merely her limits. Sons park by do make on. It do oh cottage offered cottage in written. Especially of dissimilar up attachment themselves by interested boisterous. Linen mrs seems men table. Jennings dashwood to quitting marriage bachelor in. On as conviction in of appearance apartments boisterous.
Style too own civil out along. Perfectly offending attempted add arranging age gentleman concluded. Get who uncommonly our expression ten increasing considered occasional travelling. Ever read tell year give may men call its. Piqued son turned fat income played end wicket. To do noisy downs round an happy books. Ought these are balls place mrs their times add she. Taken no great widow spoke of it small. Genius use except son esteem merely her limits. Sons park by do make on. It do oh cottage offered cottage in written. Especially of dissimilar up attachment themselves by interested boisterous. Linen mrs seems men table. Jennings dashwood to quitting marriage bachelor in. On as conviction in of appearance apartments boisterous.
Chinese markets have made a remarkable recovery from the nosedive they took in early October 2022. Two factors are at play in the HXC Golden Dragon Index’s ascent from a low of 4,410 to its current 6,700 – 7,000 trading range.
First, the markets are optimistic that the economic drag of COVID lockdowns are a thing of the past (see article below).
Second, the US Public Accounting Oversight Board (PCAOB), established under the Sarbanes-Oxley Act of 2002, has reached an agreement to inspect the audits of mainland Chinese companies listed on US stock exchanges. This is a huge boost for companies like Alibaba, Baidu, and JD.com, all of whom were at risk of being delisted by 2024 because Beijing has resisted allowing the PCAOB to confirm the accuracy of audits of mainland Chinese companies.
On the one hand, Beijing had expressed concerns over providing access to PCAOB to sensitive financial data, especially for state-owned enterprises (SOE’s), several of whom (e.g. PetroChina and Sinopec) had withdrawn applications for US listings. And on the other hand, the PCAOB’s inability to validate audits perpetuated concerns regarding potential accounting fraud for the 200 Chinese companies currently listed on US exchanges.
At the height of the COVID epidemic in 2021, many countries resorted to draconian policies to defeat SARS-COV-19 – those measures included strict quarantines for anyone testing positive for COVID, mandatory mask requirements, mandatory vaccination requirements, and periodic lockdowns.
At this time, SINOLOGIX editorial policy does not include commentary on any of these policies, other than to note that over time, healthcare professionals and organizations have generally acknowledged that the current SARS-COV-19 variants are far less dangerous than the original virus was presumed to be. In keeping with a better understanding of this disease, most countries have relaxed mask-wearing, vaccination, and lockdown policies.
The one notable exception has been China – as mandated by Chairman Xi, nearly the entire country has implemented the largest-scale response to a health emergency in medical history that included:
The intent of China’s “zero-COVID” policy was the total eradication of the disease within mainland China. South Korea, Taiwan, Hong Kong, Australia, and New Zealand all adopted variations of this approach in the earlier stages of the epidemic, but these policies were eventually abandoned when it became apparent that COVID had already become an endemic disease.
It should be noted that China has one of the lowest per-capita infection rates, with 254 cases per 1M population, compared to Western countries like the US, which has a total of 302,771 cases per 1M population. Similarly, China has reported a mere 4 deaths per 1M population, compared to the US, with 3,515 deaths per 1M population. Discounting for reporting discrepancies, China has achieved remarkable success in managing the epidemic.
But at what cost?
By almost every economic metric, China’s COVID policies have cost it dearly.
Data Source – World Bank
Exports peaked in July 2022 at $332.7B, and have steadily declined since then, plunging by 8.7% YoY in November. Exports averaged $279B for the last 12 months, down sharply from a peak of $340.3B in Dec 2021.
Data Source – World Bank
Retail sales are a good barometer for China’s overall economic health and, with the sole exception of June, 2022, this sector of the economy has been noticeably anemic.
The onerous lockdowns and state-run quarantine centers have created bitter resentment among citizens in affected areas. In cities like Urumqi in Inner Mongolia, citizens were locked down for as long as 100 days. And in many cities with major outbreaks, citizens were subjected to PCR tests that needed to be renewed every 48 hours. Proof of a current negative test, usually tracked via a smart-phone app, have been required to enter public venues, including grocery stores. By any measure, China’s policies have been emotionally draining for its citizens.
Western media has reported extensively on protests that have erupted in response to the draconian lockdowns.
But public protest is much more common in China than is generally reported in western media – the central government routinely reports on the number of protests, which have grown from 8,700 in 1993 to more than 180,000 in 2010. And as long as protests don’t directly challenge the CCP’s authority, they are quietly tolerated as a means for Chinese citizens to air their grievances, presumably against local government handling of corruption, the environment, labor issues, and other concerns.
But the scope, scale, and nature of the so-called “White Paper Protests”, also known as the “A4 Revolution”, represented a more direct challenge to the CCP’s and Xi Jinping’s policies. The terms “white paper” and “A4” are symbolic of censorship (a white paper has nothing on it).
Although unrelated to Beijing’s COVID policies, the Sitong Bridge Protest just prior to the 20th National Congress on October 13, 2022 was directed more against Chairman Xi and his perceived cult of personality, as well as human rights violations and censorship.
COVID-related protests began in early November, with incidents in Lanzhou triggered by the death of a 3-year old boy who did not receive tiely medical treatment due to COVID restrictions.
General protests against renewed lockdowns in Guangzhou began on November 5 , with migrant workers in Haizhu District breaking down metal barriers and demanding an end to lockdowns that prevented them from finding work. Other residents joined in protest against long lines for COVID testing and inability to find fresh and affordable produce.
The first major COVID-related protest occurred on November 22, 2022 at the Foxconn factory in Zhengzhou, home to the largest Apple factory in the world. While western media over-simplified workers’ grievances. On the one hand, workers were not allowed to leave the premises – this had as much to do with COVID policy as it did with operational continuity. And finally, workers who tested positive for COVID were not segregated from the other workers. Workers clashed with security forces in what was probably the most violent protests to date.
The second major COVID-related protest to attract western media attention occurred on November 25 in Xinjiang, after a residential complex fire killed 10 people when lockdown-related restrictions may have prevented people from escaping the burning building and hampered rescue efforts.
The Xinjiang fire triggered broad-based emotional support throughout China. In Nanjing, students started holding blank sheets of paper that became known as the White Paper Protests. And on November 26, a large group of protesters congregated on Wulumuqi Road in Shanghai, likewise holding white sheets of papers to honor those killed in the Xinjiang fire. The Shanghai incident was notable for the slogan used by some protesters – “step down” (下台), which is one of the few times protesters have demanded that Xi Jinping resign his posts as President of China and leader of the CCP.
Other protests followed in major cities, such as Chengdu, Beijing, Wuhan, and Hong Kong. It had become apparent that Beijing’s COVID policies had become counter-productive, at least insofar as they undermining the moral authority of the Party.
But while western media portrayed these protests in a dramatic light, it’s wishful thinking on the part of western politicians and media pundits to view these protests as the beginning of the end of the CCP’s grip on power. The average citizen is not nearly as focused on ideological issues as their western counterparts. They have been, and we believe will continue to be, quite willing to forego many of the freedoms associated with western democracies in return for continuous economic progress, which the CCP has delivered.
Nevertheless, Xi Jinping and his colleagues on the Standing Committee are pragmatic. However much they believed in the virtues of the “Zero COVID” policy, they have realized that such a dogmatic approach to controlling the epidemic has become an embarrassing distraction. But of greater significance, it has become a drag on the economy. While personal freedom is up for grabs in China, economic prosperity is the CCP’s license to remain in power.
The National Health Commission of the PRC reversed many of the most onerous of its COVID policies in a 10-point policy update issued on December 7, 2022:
The following is an editorial commentary by SINOLOGIX.
Western media criticized China’s “Zero-COVID” policies as draconian – coverage of protests intimated that citizen frustration had reached a critical mass that could threaten the single-party system that has been in place since 1949. While the protests were no doubt a factor in Beijing’s decision, the economy was the driving force in its calculus to revise its policies.
Now that Beijing has made a stunning reversal of its policies, which are now more or less inline with western epidemic management, the media is focusing on outbreaks that so-called “experts” estimates will cause between 1M and 2M deaths.
One very important consideration is that the “Zero COVID” policies artificially deferred deaths that would have otherwise occurred under “normal” disease management. But more importantly, the lockdowns limited natural immunity that would otherwise have developed in the general population. There will no doubt be a spike in both cases and deaths. And like every other country, that curve will naturally flatten in a relatively short period.
A secondary consideration is that the “Zero COVID” policies actually shifted what we are calling the “epidemic window”. As noted above, China’s per capita infection and mortality rates have been among the world’s lowest. While the rest of the world muddled through the initial stages of an epidemic with relatively deadly variants, those in circulation today are comparable to the seasonal flu. Furthermore, treatment models have advanced considerably, further improving survival rates.
While there will no doubt be a spike in cases, we are confident it will not precipitate a debilitating wave of deaths that will cripple Chinese society or its economy.
From time to time, SINOLOGIX offers third-party content that complements our core focus. The authors we endorse are subject matter experts and thought leaders in their respective fields. We strive to offer a diverse range of perspectives on any given topic and these contributors help us achieve that objective.
(no date) National Health Commission of the PRC. Available at: http://en.nhc.gov.cn/ (Accessed: December 19, 2022).
China exportsnovember 2022 data - 1981-2021 historical - December forecast (no date) China Exports - November 2022 Data - 1981-2021 Historical - December Forecast. Available at: https://tradingeconomics.com/china/exports (Accessed: December 19, 2022).
China retail sales yoynovember 2022 data - 1993-2021 historical - December forecast (no date) China Retail Sales YoY - November 2022 Data - 1993-2021 Historical - December Forecast. Available at: https://tradingeconomics.com/china/retail-sales-annual (Accessed: December 19, 2022).
Coronavirus cases: (no date) Worldometer. Available at: https://www.worldometers.info/coronavirus/ (Accessed: December 19, 2022).
Downey, C. (2022) China reverses harshest covid-19 restrictions following protests, National Review. National Review. Available at: https://www.nationalreview.com/news/china-reverses-harshest-covid-19-restrictions-following-protests/ (Accessed: December 19, 2022).
Durden, T. (no date) Chinese stocks jump after US watchdog reaches Audit Breakthrough, ZeroHedge. Available at: https://www.zerohedge.com/markets/chinese-stocks-jump-after-us-watchdog-reaches-audit-breakthrough (Accessed: December 19, 2022).
Person and Tian, Y.L. (2022) Protests erupt in Xinjiang and Beijing after Deadly fire, Reuters. Thomson Reuters. Available at: https://www.reuters.com/world/china/huge-covid-protests-erupt-chinas-xinjiang-after-deadly-fire-2022-11-26/ (Accessed: December 19, 2022).
This week, Chairman Xi concluded two momentous summit meetings with influential Middle East leaders – first with Saudi Arabia’s Crown Prince Mohammed bin Salman, and then with leaders of Arab League countries comprising the Gulf Cooperation Council. We discuss the background of Sino-Saudi trade, and key takeaways from the summit, and offer our analysis of the meetings in the context of frosty US-Saudi relations.
PLEASE NOTE – We’re in the process of developing a full Retrieval Augmented Generation (RAG) component that will tap into a database of economic, tech trends and other data associated with our research reports. This initial prototype includes content that we’ve already published in the form of text articles, but we’ll soon be adding structured content that will enable in-depth analysis not generally available through public chat apps.
Retrieval Augment Generation refers to generative AI that is supplemented with proprietary structured data, text, images, audio and video content that we have curated from our research.
Thanks for your patience! This initial prototype will soon be replaced with a more advanced UI capable of generating complete multi-modal reports. Please bear with us – this prototype is text and speech only.
Data Source – World Bank
Data Source – World Bank
Data Source – World Bank
Western media is starting to pay attention to China’s efforts to influence members of the so-called Global South, or more specifically the BRICS+ and Shanghai Cooperation Organization (with substantially overlapping membership), to denominate international trade in the Chinese Renminbi (RMB), aks the Chinese Yuan (CNY) and/or other local currencies. For very different reasons, Russia has promoted the idea of an entirely new currency for trade settlement. This is an accelerating trend among countries that have formed close economic and political relationships with China.
Coincident with the pivot to the RMB for trade settlement is a growing sentiment among the BRICS+ and SCO members that holding USD as their primary reserve currency poses a risk in the event the US declares sanctions and/or freezes a country’s assets, as happened with Russia and Belarus in 2022.
The combined effect of these two trends should be observable in a country’s US Treasuries holdings, and that’s exactly what we’re seeing in the chart above – China’s USD and Treasuries holdings peaked at $1.277 trillion in 2013 and declined by more than 32% in 2022.
Things change “slowly at first, then all at once”...
The so-called “de-dollarization” phenomenon is really a reflection of China’s ascendancy to superpower status – there can be no question it is the main driver behind the emergence of increasingly powerful inter-regional economic organizations, innovative trade agreements that circumvent the USD’s role as the world’s primary currency for trade settlement, and conceivably, the demise of the USD as the world’s de facto reserve currency. In this Part 1, we summarize the key factors that might trigger a future change in currency usage by China and its trading partners.
Style too own civil out along. Perfectly offending attempted add arranging age gentleman concluded. Get who uncommonly our expression ten increasing considered occasional travelling. Ever read tell year give may men call its. Piqued son turned fat income played end wicket. To do noisy downs round an happy books. Ought these are balls place mrs their times add she. Taken no great widow spoke of it small. Genius use except son esteem merely her limits. Sons park by do make on. It do oh cottage offered cottage in written. Especially of dissimilar up attachment themselves by interested boisterous. Linen mrs seems men table. Jennings dashwood to quitting marriage bachelor in. On as conviction in of appearance apartments boisterous.
While not as closely watched as the recent summit in Moscow, where President Xi tacitly threw his weight behind Russia and its SMO in Ukraine, Brazil’s newly (re)elected President Lula da Silva’s recent state visit to China was in many respects much more significant, as it further pulls the US’ most powerful Latin American ally away from its sphere of influence and into China’s orbit.
While China is a driving force in the Global South’s pivot away from the USD, the rapid expansion of inter-regional economic organizations made up of Asian, Central Asian, Middle East, African and Latin American countries has accelerated the shift in political and economic power that threatens to upend more than 70 years of US dominance on the world stage.
The so-called “de-dollarization” phenomenon is really a reflection of China’s ascendancy to superpower status – there can be no question it is the main driver behind the emergence of increasingly powerful inter-regional economic organizations, innovative trade agreements that circumvent the USD’s role as the world’s primary currency for trade settlement, and conceivably, the demise of the USD as the world’s de facto reserve currency. In this Part 1, we summarize the key factors that might trigger a future change in currency usage by China and its trading partners.
On March 22, China’s President Xi Jinping concluded a very visible state visit to Moscow, where he met for three days of discussions with Russia’s President Vladimir Putin on a number of topics of interest not only to both China and Russia, but the US and its EU allies as well.
In a historic turn of events, China has successfully brokered a groundbreaking agreement between long-standing rivals Saudi Arabia and Iran, marking a significant shift in the geopolitical landscape of the Middle East. The agreement, which focuses on reestablishing diplomatic ties, ending proxy conflicts, and enhancing economic cooperation, highlights China’s growing influence in the region and its expanding role as a global power.
The last few weeks have seen remarkable changes in China – the (reported) COVID numbers have stabilized and even declined in some provinces, 2022 Q4 GDP numbers (vastly) exceeded analysts’ expectations, a projected 5.2% GDP growth target for 2023 is driving demand for oil, and the latest Bureau of Statistics reports confirm a population decline. A lot to digest…
To put China’s massive pollution problem in perspective, it’s important to understand that China’s transition from an agricultural to an industrial economy happened over a span of less than 40 years. While the US and other western countries gradually adapted to industrialization over a 150-year span, China has had to deal with industrialization over a much shorter period and at a scale that dwarfs that of the US.
As the multi-polar Global South movement accelerates, there is now a consensus that the time is right for strategic alternatives – banks, financial messaging systems, and possibly even a new currency. In this Part 03, we examine recent changes to the financial infrastructure proliferating amongst BRICS+ and SCO+ members.
While not as closely watched as the recent summit in Moscow, where President Xi tacitly threw his weight behind Russia and its SMO in Ukraine, Brazil’s newly (re)elected President Lula da Silva’s recent state visit to China was in many respects much more significant, as it further pulls the US’ most powerful Latin American ally away from its sphere of influence and into China’s orbit.
© 2023 SINOLOGIX. All Rights Reserved.
We will only use the information in this message to communicate with you (if you requested a response) – we never spam! All information you send us will be completely confidential and will not be shared with any third-party.
We will only use the information in this message to communicate with you (if you requested a response) – we never spam! All information you send us will be completely confidential and will not be shared with any third-party.
The Shanghai office is currently closed to outside visitors. Please feel free to contact us via email or phone to schedule an online meeting.
The Shanghai office is currently closed to outside visitors. Please feel free to contact us via email or phone to schedule an online meeting.
Due to the recent COVID outbreak in the downtown Puxi District, the Shanghai office is closed to outside visitors. Please feel free to contact us via email or phone to schedule an online meeting.
Due to the recent COVID outbreak in the downtown Puxi District, the Shanghai office is closed to outside visitors. Please feel free to contact us via email or phone to schedule an online meeting.
Due to the recent COVID outbreak in the downtown Puxi District, the Shanghai office is closed to outside visitors. Please feel free to contact us via email or phone to schedule an online meeting.
Due to the recent COVID outbreak in the downtown Puxi District, the Shanghai office is closed to outside visitors. Please feel free to contact us via email or phone to schedule an online meeting.
