Facing Pressure From China, Can the US Recreate Silicon Valley?
Diplomat
23-05-17 16:04
The Biden administration has announced a $500m tech hub funding scheme as part of its $10bn CHIPS and Science Act. The Regional Technology and Innovation Hub Program has a goal of identifying about 20 US cities or regions as prospective tech hubs and eventually selecting 10 for funding. The scheme aims to bring together industry, universities, state and local governments, economic development organisations, and labour and workforce partners to supercharge ecosystems of innovation for technologies that are essential to economic and national security. Each region will focus on one of the 10 key tech areas identified in the scheme, including AI, robotics, biotechnology, data management, cybersecurity, and energy technology.
The US enjoys the advantage of having many outstanding teaching and research universities across the nation that can serve as anchors for tech hubs. Several recent examples showcase the viability and vibrancy of even the existing regional private-public-academic collaboration. Community colleges are increasingly being enlisted to train a broader base of skilled workers to supply tech enterprises with skilled manpower to fill the new jobs created. Each tech hub will foster US global tech competitiveness in its focus area, while also fostering more regional economic equity. US Commerce Secretary, Gina Raimondo, said: “You shouldn’t have to move to Silicon Valley if you’re a scientist with a great idea.”
China's National Development and Reform Commission (NDRC) and the National Administration of Energy (NEA) have called for an urgent expansion of charging infrastructure for electric vehicles (EVs) in rural areas in order to support the country’s “rural revitalisation” plan and increase the popularity of EVs outside major cities. The NDRC urged local governments to give financial incentives for the construction of EV charging stations and called on EV makers to diversify their products. The take-up of new energy vehicles (NEVs) remains relatively low in rural China, with lots of potential for growth.
A Chinese comedy group has been fined £1.7m ($2.13m) by authorities after one of its performers joked about the military. Li Haoshi, known as House, entertained an audience with a routine in which he described seeing two dogs he had adopted chase a squirrel, which he said had reminded him of a slogan used by President Xi Jinping to praise the People's Liberation Army (PLA) in 2013. The Beijing arm of the country’s Ministry of Culture and Tourism Bureau accused Shanghai Xiaoguo Culture Media of “harming society” by letting Li perform the piece. Li’s tale went viral on Chinese social media. The cultural bureau stated that Xiaoguo Culture would be banned from staging future shows in the capital. The company blamed “major loopholes in management” and claimed to have terminated Li’s contract.
China is now the world leader in initial public offerings (IPOs) after the number of IPOs in the US fell this year amid a regional bank crisis and a debt ceiling standoff. Over 100 deals totalling $25bn have been secured in mainland China so far this year. Beijing has made major reforms aimed at stimulating innovation, and it launched the Nasdaq-style STAR board in 2019 and earlier this year it rolled out the registration-based listing mechanism to all domestic stock exchanges. However, the fast influx of new IPOs is changing the country's stock market.
Boston-based Forrester Research is closing its office in mainland China and releasing most of its analysts there as China tightens its rules on foreign consultants and law firms. The move came as a surprise to its employees in China, according to an anonymous source familiar with the matter. China has already targeted global advisory firms operating in the country with investigations. Forrester said its restructure was announced earlier as part of a global overhaul and it would still cater for its global clients with operations in China. It added that the Chinese business was not globally significant.
Hong Kong's World Number 1 female fencer, Vivian Kong Man-wai, will lead Hong Kong's women’s epeeist team as they compete in the World Cup in United Arab Emirates. The women’s epeeist team have the chance to earn points towards their Olympic bid as a team, not just through the individual event. The Hong Kong squad will compete with South Korea and China, ranking first and fifth respectively for the chance to compete in the Paris Olympics in 2024. Kaylin Hsieh Sin-yan, Chan Wai-ling and Coco Lin Yik-hei also compete for Hong Kong in the women’s epeeist team.
"Special forces travel", aggressively seeking out sights and experiences while spending as little money as possible, is a symptom of the underlying weakness in household consumption in China, and could cast a shadow over the country's post-pandemic recovery in domestic tourism. Many Chinese travellers this year are seeking adventure on a budget, with domestic travel booming and tourists often choosing overnight trains and cheap hostel beds. So far in 2021, domestic consumption has consistently underwhelmed, held back by struggling property markets, high youth unemployment and broader concerns over job stability.
Police in Dalian, China have arrested a woman for posting "inappropriate" comments about the military on social media after she defended a comedian's joke about a military slogan used by the country's President, Xi Jinping. Comedian Li Haoshi was suspended and the company that represents him, Shanghai Xiaoguo Culture Media, was fined $1.9m for an inappropriate joke on his talk show that included an obscene adaptation of a well-known military slogan. China issued a law in 2021 criminalising insults against its military, resulting in a hard line for attacks on the People's Liberation Army (PLA). The backlash has also had an impact on China's performance industry: at least two comedy club operators have cancelled some shows.
Hong Kong stocks rose due to positive earnings reports from tech giants including Tencent and Baidu, which reported better-than-expected revenue. Alibaba is poised to reveal its latest report. The Hang Seng Index added 0.9%, but the Tech Index sank 0.8% and the Shanghai Composite Index slipped by 0.3%. Two new companies began trading in China, with defense technology manufacturer Aerospace Nanhu Electronic rising 18% and household appliance manufacturer Guangdong Deerma Technology falling 0.5%. Most Asian markets closed higher.
Swiss agrichemicals and seeds company Syngenta will apply for a listing on the Shanghai Stock Exchange's main board after withdrawing its application from the STAR Market. Tthe company initially filed for an IPO in March that was cancelled for reasons the exchange did not explain. Syngenta executives have said the new listing mechanism would give the company greater access to more diversified investors and enable it to better build long-term value. The decision came after the Chinese government expanded its registration-based IPO system to the main boards on the Shanghai and Shenzhen stock markets to improve vetting and registration procedures.
The risk of declining consumer and business investor confidence in China's recovered economy may lead to a downward spiral. China's uneven recovery so far has not lifted the domestic mood. Although the country's official growth target for this year is only 5%, the risk of a downward spiral arises as disappointment becomes apparent, compounded by rising jobless rates, weak links, and geopolitical tensions. Easing monetary policy more straightforwardly remains an option for China, although the government may not prioritize this immediately, as the official growth target is unambitious.
Syngenta Group has withdrawn its IPO application to Shanghai's Star board and will seek a listing on the exchange's main board. "Syngenta Group ... fits better on the main board of Shanghai stock exchange, under its latest registration-based IPO scheme," the company said in a statement. The switch comes after China implemented a registration-based system for listings on all exchanges earlier this year in a bid to speed up access to liquidity.
China's currency, the yuan, hit a multi-month low and fell through the critical seven per US dollar level, with pundits identifying the US Federal Reserves’ policy as the main contributor rather than domestic economic weakness. As doubts grow over China’s economic recovery, foreign investors have left markets and the currency has fallen by 4% since the end of January. Analysts from Nomura and Societe Generale have predicted that the yuan could drop to seven to the dollar soon. Additionally, the interest rate gap remains wide, causing some hedge funds to use yuan as a funding currency.
China has resumed imports of Australian timber after suspending them last year, according to China's ambassador to Canberra, Xiao Qian. The Australian government had raised concerns over a series of unofficial Chinese bans and tariffs in 2020. Talks about a visit to Beijing by Australian Prime Minister Anthony Albanese are under way, Xiao said.
Xi Jinping, China's supreme leader, has recently visited the site of Xiongan New Area, a satellite city 100km south of Beijing, praising the progress of what he sees as his pet project. The development, once completed, will cover an area three times the size of New York City, and Xi plans to move many non-essential government departments and state-owned enterprises from Beijing to the area. However, some experts question whether Xiongan will be comparable to Shenzhen, China's first special economic zone, or to Shanghai's glittering financial district, Pudong. Critics say that those areas were granted much more freedom to create a market-oriented environment that would attract foreign and domestic businesses. Xi has expressed the desire for Xiongan's aspirations to be similar to Shenzhen's, but he also sees it as part of his aim to create "common prosperity", which has spooked entrepreneurs and investors. Incentives such as tax breaks, bonuses, or guarantees of educational opportunities for the children of people who move from Beijing or Tianjin are being discussed to encourage people to relocate to Xiongan.
China is concerned about the potential impact the SpaceX-run Starlink could have on its geopolitical ambitions. Starlink, a mega-constellation of satellites, provides off-grid high-bandwidth internet access, and has been vital to Ukraine’s war effort, allowing soldiers to communicate, identify targets and upload videos. With the system hard to jam, China fears it could put Russia at a disadvantage and make a Chinese invasion of Taiwan more difficult. However, Beijing also has ambitions of becoming a space power and is working on its own satellite internet systems. Concerns over crowded crowded skies and satellite collision have also been raised. In 2021, two of Starlink’s satellites were on a collision course with a Chinese space station, forcing it to move, while China fears the increasing number of satellites could place pressure on a limited low-Earth orbit space.
Arthur Miller's 1983 visit to China, in which he directed his own play "Death of a Salesman" to a Chinese audience, provided a unique point of cultural connection between China and America, says The Economist. The play was performed in Chinese by a Chinese cast and was based around the human issues of family, relationships and morality, areas overlooked by China's previous dramas, which had concentrated on politics and history. At the time, China was emerging from Mao Zedong's Cultural Revolution, a period which had already seen a brief spell of artistic freedom subsiding under the "spiritual pollution" campaign. Miller's play was, however, given an enthusiastic reaction from audiences. Its themes have remained poignant and relevant in China, where middle-class audiences appreciate the relevance of the playwright's depictions of struggle and failure. Recently, experimental theatre has emerged with social commentary and dystopian themes, reflecting China's evolving society and vibrant theatre scene. Miller's play is still praised in China, as being remarkably relevant today.
The price war in China's auto industry appears to be declining, as Chinese carmakers reduced price cuts. According to reports from Citic Securities, major carmakers in China have stopped reducing prices to fight each other, as it resulted in a 46% increase in deliveries for the first week of May. These levelled prices could bring hope for price recovery. However, economists say that it is unlikely that a car market turnaround will happen soon.
China has seen an increase in the number of "patient companions," people who go to medical appointments with patients. In the aftermath of the COVID-19 pandemic and China's strict zero COVID rules which prohibit travel from province to province, friends could no longer chaperone ill family members to hospital visits. As a result, patient companions became increasingly popular, taking the place of adult children who live too far away or cannot take time off work. Hundreds of videos of companions advertising their services can be found on Little Red Book, a lifestyle platform, or Douyin, the Chinese version of TikTok. These videos detail the difficulties of finding a hospital appointment and, once an appointment has been made, the long waiting times. However, there is some reticence related to this emerging industry; doctors are not always comfortable with the idea of paid companions and, in some cases, the children of the patients who hire companions do not want their parents to know that someone is being paid to accompany them to the hospital.
The bank and China SCE Group Holdings Ltd. and Central China Real Estate Ltd. are among those at risk of default despite China's stabilised economy and reopened housing market. KWG Group Holdings Ltd. failed to make its redemption payment and triggered defaults on all of its dollar bonds. Municipalities are tightening up on consumer protection, meaning there may be less scrutiny on pre-sale process from developers. However, local authorities have imposed stricter scrutiny on these cash escrow accounts, causing non-payments from property developers. The struggles for these developers are not over as they rely on support from the government.
