What Xi Said | Edition 14
October 25, 2021
What Xi Said is a weekly rundown of the top ten China political trends shaping global commerce and culture.
What Xi Said is designed for global investors, business strategists, and C-Suite executives.
1. Can COP26 succeed if Xi Jinping stays at home? Xi Jinping will be in Beijing for the COP26 summit.
The last major UN climate conference in Paris in 2015 succeeded because China and America agreed with targets in advance. The previous big failure in Copenhagen in 2009 is still blamed on China's hesitation to reach a deal.
China is the world's biggest producer of greenhouse gas, accounting for 28 percent of global emissions, compared with about 15 percent for the US.
2. Have we reached peak China? Bejing's growing influence on the global stage masks an overlooked insecurity.
Maximilian Mayer and Emilian Kavalski write the narrative that the world is facing a new Cold War between China and the West needs a reality check.
A Cold War needs two powerful protagonists able to act on the global stage. And while China may be growing into an economic, military, and technological giant, the "hegemon in the making" is much more vulnerable and isolated than it likes to pretend.
3. If China tested a new orbital weapon, it's not much of a surprise: Experts report that similar technologies were developed by Russia and the United States starting more than a half-century ago.
David Wright, a physicist at the Massachusetts Institute of Technology who has long studied space developments, said that some descriptions of the test launch have been alarmist.
"Any country that can put something into space could do this," he said. "And we certainly should not be surprised that China could do this given the sophistication of its space program."
4. China's space ambition: The Chinese have held 38 launches this year.
"What is truly impressive about China's space program is how rapidly it has advanced, on all major fronts, from a pretty low base as recently as the 1990s," David Burbach, associate professor of national security affairs at the US Naval War College.
According to Euroconsult, a space and satellite consultancy, China's space budget in 2020 reached $8.9 billion, representing 11% of the global total, second to America's $47.7 billion.
5. Chinese firms rush to dominate the global lithium supply chain: The world's largest battery manufacturer, CATL, hopes to take over Millennial Lithium Corp after spending $317 million to outbid rival Ganfeng Lithium in August. Meanwhile, Zijin Mining has just announced an agreement to buy Neo Lithium for $770 million.
Both target companies have Argentine assets but are Canadian-owned as well as listed on the Toronto Stock Exchange. As such, the deals will require the Canadian government's approval before they can close.
6. Rolls-Royce owners in China are getting younger. The average age in 2020 was 39, down from about 47 in 2015, TMT Post reports.
7. Microsoft's LinkedIn is leaving China, sort of.
Blaming a "significantly more challenging operating environment and greater compliance requirements," the company said it would switch to a new site developed specifically for the local market where it will be a jobs board.
Despite more than 50 million LinkedIn users, the country only contributes about 2% to Microsoft's revenues.
8. Walmart just opened the world's biggest Sam's Club in Shanghai.
The new China flagship' store is a 70,000 square meter space that houses a restaurant, a health club, and a VR hub.
Walmart opened its first Sam's Club in Shenzhen back in 1996 and now boasts 28 across China as a whole, including two smaller outlets in Shanghai. The following two will open in Hangzhou and Wuhan, with a plan for a national network of 45 stores by the end of 2022.
9. McDonald's as a pioneer for China's digital currency: Chinese regulators have been pushing the fast-food chain to accept payment in the central bank's digital yuan. The plan is to get the currency circulating more widely ahead of the Beijing Winter Olympics next year.
McDonald's already allows customers to use a digital renminbi wallet in 270 restaurants in Shanghai, but the government wants more diners to pay with digital yuan around the country.
10. Swire Coca-Cola, the fifth largest of Coca-Cola's bottling partners by global volume, announced the expansion of its Zhengzhou factory in Henan province, with a new investment of about Rmb900 million ($140 million), the single largest investment in Swire Coca-Cola's history in China.
China is a bright spot for Coke's sales. In the second quarter of this year, global revenue was up 42% compared with a year ago, with China outperforming in the Asia-Pacific region.
