CX Daily: China’s Effort to Move Mountain of ‘Hidden Debt’ Faces Uphill Climb
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Debt?/
As China's economic growth gets back on track after three years of pandemic, efforts to tackle the mountain of so-called “hidden debt” accumulated by local governments have?reemerged as a priority?on the agendas of top policymakers.
Fresh concerns have mounted that weakening income growth and rising spending over the past few years may force local authorities to resort to new off-the-books borrowing while limiting their ability to pay down the debt.?These liabilities are estimated by some to be almost $10 trillion, roughly double the GDP of Japan, the world’s third-largest economy.
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G7?/
China?strongly opposed?the Group of Seven (G7) communique issued in Japan this weekend and lodged official complaints with the summit’s host nation and other parties over comments that have?“brazenly interfered in China’s internal affairs,”?the Ministry of Foreign Affairs said.
The G7 should refrain from “ganging up to form exclusive blocs and stop containing and bludgeoning other countries,” according to a spokesperson’s remarks published Saturday,?adding that “China will never accept the so-called rules imposed by the few.”
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Covid-19?/
A prominent infectious disease expert said China’s post-reopening second Covid wave that’s currently sweeping the country?could peak in June,?with around 65 million cases detected every week by the end of next month,?official media reported.
Zhong Nanshan, director of the National Clinical Research Center for Respiratory Disease, said at a forum Monday that he made the prediction based on a predictive modeling analysis.
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Pilot?/
China?is upgrading a pilot program?that facilitates cross-border use of funds for multinationals, testing greater freedom for?eligible companies based in Beijing, Shenzhen and Guangdong province,?according to a regulatory announcement Friday.
The pilot program,?launched?in March 2021 by the People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE), allows certain multinationals to combine their cross-border multiple-currency funds and yuan into a single cash pool and to buy foreign currencies at will within certain limits for making overseas payments.
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Commissions?/
As part of an overhaul announced in March, two more financial supervisory bodies?are being set up?that will report directly to the ruling Communist Party’s Central Committee —?a central financial commission (CFC) and a central financial work commission (CFWC).?
But so far, little has been officially announced about these two organizations other than a broad outline issued when the reform plan was published in March.
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Corruption?/
Zhou Qingyu, a former vice president of China Development Bank,?came under investigation?on suspicion of serious violation of law in his position, China’s top graft buster said Friday.
Zhou was detained by authorities after he was summoned by inspectors from the Central Commission for Discipline Inspection earlier last week, Caixin learned from exclusive sources.?The former executive joined a long parade of China Development Bank officials who have been investigated for corruption.
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Quick hits?/
Trains?/
The number of freight trains travelling between China and Russia has surged since the start of the Ukraine war,?hauling 90% of the total volume of goods traded between China and Europe by May this year,?according to logistics insiders?interviewed by Caixin.
This compares to 2021, when China-Russia freight carried by rail accounted for less than half of the European route, before dramatically increasing to 80% in 2022, a Shanghai-based logistics providers told Caixin.?
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AI?/
Artificial intelligence can complete higher-quality work in less time with more efficient information-capturing ability, and?repetitive manual labor will be largely replaced in the era of AI 2.0.,?AI pioneer investor?Kai-Fu Lee said Friday.
Lee, the former president of Google China who is now the CEO of venture capital firm Sinovation Ventures,?urged people to be prepared in their career choices and to maintain positive expectations.?He made the remarks Friday before a Caixin forum.
Meituan?/
Meituan?launched a food delivery app?Monday in Hong Kong, pushing into a market dominated by foreign rivals Deliveroo Plc and Foodpanda GmbH as it?faces heightened competition?on the mainland from new entrants including TikTok sibling Douyin.?
The Beijing-based platform company expects its new service, called?KeeTa, to complete full coverage of the Asian financial hub by the end of this year, following its initial launch in the densely populated urban districts Mong Kok and Tai Kok Tsui, according to a?company statement.
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Quick hit?/
Long Read?/
A team of researchers discovered two ancient shipwrecks some 1,500 meters below the surface of the South China Sea, the National Cultural Heritage Administration announced Sunday. The wrecks, one filled with porcelain items, are believed to date back to the Ming dynasty (1368-1644). An investigation into the two sites began Saturday and is expected to last through June. Researchers hope the undertaking will produce new insights into China’s sea trade of the time
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