Thailand Privilege Introduces New Era of Luxury With New Privilege Visa

new thai elite visa

Thailand Privilege Card Co. Ltd. recently hosted a momentous event that unveiled an exhilarating new direction for the company. As you immersed yourself in the sleek interior of the Conrad Bangkok Hotel, the energy was palpable. Something special was in the air.

In this iconic setting, Thailand Privilege proudly introduced four meticulously designed Elite packages to replace their current offerings. These packages will take effect on October 1, spearheading a new era of luxury and privilege.

Humble Beginnings to Globally Renowned

It’s incredible to reflect on Thailand Privilege’s journey from welcoming 1,056 members between 2003-2005 to an astounding 31,500 members in 2023. Their tremendous growth shows no signs of slowing down.

Initially catering predominantly to affluent investors, the newly transformed Thailand Privilege aims to attract an even more diverse group of elites. From digital nomads and workcation enthusiasts to retirees and expats calling Thailand home, all will find a package tailored to their lifestyle.

Unlocking a World of Exclusive Benefits

As Thailand Privilege enters this new chapter, they are enhancing experiences for members through exclusive lifestyle privileges and signature touches. Allow yourself to be transported into the lap of luxury:

  • Personal assistants adorned in elegant gold uniforms assist with your every need
  • Let world-class Thai chefs tantalize your taste buds with customizable private dinners
  • Luxury car airport transfers ensure maximum comfort and exclusivity
  • Concierge services grant privileged access to government amenities
  • Wealth management advisory provides insider perspectives into lucrative investments
  • Premium healthcare package takes care of your wellbeing
  • Complimentary stays at 5-star hotels let you experience Thailand in style

This is just a small taste of what’s to come. Thailand Privilege is leaving no stone unturned in curating once-in-a-lifetime privilege experiences.

thai privilege visa cards compared

Four Elite Tiers Offer Bespoke Benefits

While these four tiers – Gold, Platinum, Diamond and Reserve – have their own personality, all providing pampering worthy of royalty.

As the presenter unveiled the specifics of each bespoke package, you could visualize the elevated lifestyle that would soon be within reach. Just imagine appreciating picturesque Thai sunsets as your private yacht cut through gentle turquoise waters. Bliss.

While every tier had its own flair, the Elite Reserve Membership’s air of prestige and exclusivity was unmatched. With only 100 spots available annually and a $142,000 price tag, this top-tier package grants insider access to the Reserve Club and other jaw-dropping benefits tailored specially for you.

Read more on these new Thailand Privilege cards available:

Privilege Takes on a Whole New Meaning

The grandeur of these new offerings shows that Thailand Privilege is entering an unprecedented golden era. By introducing privilege points and opportunities to redeem perks, they are enhancing membership flexibility like never before.

As the event drew to an inspiring close, the energy was electric. Attendees mingled with fervor, abuzz with visions of the privileged possibilities now laid before them in this new chapter for Thailand Privilege.

You glanced around, a smile creeping onto your face. This was just the beginning, both for Thailand Privilege and yourself.

Bridging the Divide: China and the U.S. Seek Economic Reconciliation

china us relationship

In the wake of a Chinese spy balloon incident over American skies, the tenuous dialogue between Beijing and Washington was shattered. However, throughout the summer, these two global superpowers have engaged in a series of high-level meetings, striving to maintain a connection despite numerous points of contention. Gina Raimondo, the U.S. Secretary of Commerce, arrived in Beijing on Sunday, embarking on a series of critical discussions. She met with her Chinese counterpart, Wang Wentao, as well as Hu Heping, the Minister of Tourism, He Lifeng, the economic czar, and Premier Li Qiang.

Remarkably, Gina Raimondo is the fourth senior American official to visit China in just three months. Prior to her, U.S. Treasury Secretary Janet Yellen, and Special Presidential Envoy for Climate John Kerry, visited Beijing in July, following the visit of U.S. Secretary of State Antony Blinken. While none of these visits has resulted in major breakthroughs, President Xi Jinping and President Joe Biden agreed last autumn in Bali to enhance communication between their administrations, especially in the realms of economics and defense.

A New Bilateral Forum

During her stay in China, Gina Raimondo announced that both countries have agreed to establish new channels of communication on economic and trade issues. Notably, they are setting up a new bilateral forum to discuss the export controls imposed by the United States. Termed the “Export Control Application Information Exchange,” Washington emphasized that this forum is not a negotiation platform.

Matthew Axelrod, the Deputy Assistant Secretary for Export Enforcement, presided over its inaugural meeting, which took place on Tuesday in Beijing.

Consistent with the approach of former President Donald Trump, the Biden administration has taken various measures against China and Chinese companies. Tensions escalated last October when Washington decided to restrict the export of semiconductors and advanced equipment to China in the interest of national security. More recently, President Biden issued an executive order banning certain U.S. investments in Chinese sectors such as quantum computing, advanced chips, and artificial intelligence to prevent the Chinese military from accessing American technology and capital.

No Compromises on National Security

Addressing the press from the Great Hall of the People in Beijing, Gina Raimondo reassured, “We will never seek to decouple or hinder the Chinese economy.” She added firmly, “We do not compromise or negotiate on matters of national security. Period.”

Beijing has decried the U.S. for adopting a Cold War mentality. Wang Wentao, the Minister of Commerce, voiced “serious concerns” about trade restrictions imposed on Chinese companies, stating, “Excessive generalization of national security is not conducive to normal trade and economic exchanges.”

In the complex landscape of international relations, China and the United States continue their dance of diplomacy, navigating a challenging path that requires both cooperation and strategic assertiveness.


Q: What prompted Gina Raimondo’s visit to China? A: Gina Raimondo, the U.S. Secretary of Commerce, visited China to engage in high-level discussions on economic and trade matters between the two countries.

Q: What is the significance of the “Export Control Application Information Exchange” forum? A: The forum serves as a platform for discussing U.S. export controls. It aims to facilitate communication between China and the United States on this issue.

Q: How has the Biden administration’s approach to China been different from the Trump administration’s? A: While both administrations have taken measures against China, the Biden administration has continued to implement restrictions and policies on various Chinese sectors and investments, particularly

China Strengthens Control Over Artificial Intelligence

china and AI

China is intensifying its efforts to oversee artificial intelligence (AI) as it strives to become a global leader in the sector within the next decade. In a recent meeting of top Chinese officials, including President Xi Jinping, there was a unanimous agreement on the necessity of enhancing control over AI.

State media reported that they have committed to “improve data network surveillance and artificial intelligence.” Following the meeting, officials emphasized the need to be prepared for various challenges, emphasizing their determination to withstand adverse circumstances.

President Xi Jinping underscored the exponential growth in the complexity and gravity of national security issues facing China. In April, Chinese authorities had already announced plans for a “security inspection” of AI tools developed in China, including systems like ChatGPT.

Striving for AI Leadership by 2030

China has set ambitious goals, aiming to become a global AI leader by 2030. To this end, regulatory initiatives have been introduced to ensure the healthy development and standardized implementation of generative AI technology such as the one presented on Inteligencia AI website.

The Chinese Cyberspace Administration has solicited public feedback on these regulations, which, given China’s centralized political system, are likely to become law.

These developments coincide with numerous Chinese tech companies, including Baidu, Alibaba,, Netease, and ByteDance (TikTok’s parent company), announcing their work on conversational AI models, hoping to capitalize on the success of the American pioneer, ChatGPT.

According to McKinsey, the AI sector could contribute approximately $600 billion annually to China’s GDP by 2030.

As China advances its AI aspirations, it is also vigilant about addressing potential risks and ensuring that the technology aligns with its national objectives.


Q: Why is China increasing its control over artificial intelligence? A: China aims to become a global leader in AI within the next decade and believes that enhanced control is necessary to achieve this goal and manage potential risks.

Q: What measures has China taken to regulate AI development? A: China has introduced regulatory initiatives to ensure the healthy development and standardized implementation of generative AI technology. These initiatives include security inspections and public feedback solicitation on regulations.

Q: How much could the AI sector contribute to China’s GDP by 2030? A: McKinsey estimates that the AI sector could contribute approximately $600 billion annually to China’s GDP by 2030, as China strives to lead in AI innovation.

The UN’s Inaction in Xinjiang Draws Criticism from All Quarters

The UN's Inaction in Xinjiang Draws Criticism from All Quarters

The UN remains steadfast in its commitment to ensuring that human rights violations in China’s Xinjiang province do not go unpunished, despite facing criticism from NGOs for its perceived inaction. A recent on-site visit by the International Labour Organization has sparked debate.

Ongoing Concerns

The economic world’s indices may fluctuate, but concerns about human rights persist. In late August, a delegation from the International Labour Organization (ILO), a UN-affiliated body, quietly journeyed to China’s Xinjiang province. This region has faced allegations of severe repression against the Uighur minority by the Chinese government. According to “Nikkei Asia,” this marked the first known visit by the ILO since allegations of widespread labor rights violations surfaced, with millions of Muslim Uighurs reportedly subjected to arbitrary detention and forced labor.

An ILO spokesperson stated that the visit aimed to engage in “technical discussions on the implementation of international conventions against workplace discrimination and forced labor within China’s laws and practices.” These conventions, ratified by Beijing in 2006, came into effect in early August.

Controversial Visit

The UN agency declined to divulge further details about the visit, which was viewed with skepticism by advocates for the Uighur cause, who lamented not being informed beforehand. Dolkun Isa, President of the World Uighur Congress, told “Nikkei Asia” that even if the intentions were good, such missions provided the Chinese Communist Party with opportunities to whitewash its crimes and promote propaganda.

Ma Xingrui, the Xinjiang party secretary, used the occasion to denounce “reckless accusations” of human rights violations by “certain anti-Chinese forces” in the local newspaper “Xinjiang Daily.” He also expressed hope that the ILO delegation would maintain a “fair and objective attitude.”

Xi Jinping’s Visit

Coincidentally, Xi Jinping himself paid a brief visit to Xinjiang, where he celebrated the “hard-won social stability” in the region. In 2014, the government launched a campaign to regain control, citing attacks attributed to Uighur separatist militants. However, it consistently denies the existence of repression against this Muslim minority or the existence of labor camps where nearly a million people are said to have been held. Beijing refers to these facilities as “vocational training centers” designed to combat extremism.

Dolkun Isa argues, “Visits like the one by the ILO won’t eliminate forced labor programs. What’s needed are creative and tangible measures from the international community, including the ILO, to end this system of oppression and exploitation.”

Criticism from Amnesty International and Human Rights Watch

Criticism isn’t limited to the ILO visit. Amnesty International and Human Rights Watch (HRW) have also censured the United Nations for its perceived inaction. Just a year ago, former UN High Commissioner for Human Rights Michelle Bachelet published a report, against Beijing’s objections, suggesting possible crimes against humanity. Her successor, Volker Türk, pledged to follow up, but both NGOs accuse him of not doing enough. His office responded, affirming that the High Commissioner “engaged in a longer-term process with Chinese authorities,” including implementing the report’s recommendations.

Amnesty and HRW continue to call for an international on-site investigation and appeal to the member states of the Human Rights Council, which will convene from September 11 to October 13 in Geneva. However, this mechanism seems unlikely given Beijing’s political influence within the UN body. In October 2022, China secured a victory at the UN when a slim majority of the 47 Human Rights Council member states rejected a proposal by several Western countries to hold a debate on Xinjiang.

In the realm of human rights, the path ahead remains fraught with challenges, while international organizations grapple with their roles and responses in the face of ongoing global concerns.


Q: Why is the UN criticized for its inaction in Xinjiang? A: The UN has faced criticism for its perceived inaction in addressing human rights violations in China’s Xinjiang province, particularly concerning the Uighur minority.

Q: What was the purpose of the recent visit by the International Labour Organization (ILO) to Xinjiang? A: The ILO’s visit aimed to engage in technical discussions regarding the implementation of international conventions against workplace discrimination and forced labor within China’s laws and practices.

Q: What are the main concerns regarding human rights violations in Xinjiang? A: Allegations include arbitrary detention, forced labor, and widespread human rights abuses against the Uighur minority in Xinjiang. These allegations have drawn international scrutiny and condemnation.

China’s Foreign Trade Takes Another Hit in August

China's Foreign Trade Takes Another Hit in August

In a challenging economic landscape, China’s external trade has faced yet another setback in August. The latest figures, driven primarily by sluggish foreign and domestic demand, mark the latest in a series of worrying indicators pointing to a concerning slowdown in the country’s economic activity.

Export Woes

Historically, China’s exports have been a pivotal driver of its growth, but the trend is taking a worrisome turn. Year-on-year, exports have dropped by 8.8% in August, following a contraction of 14.5% in July.

Aside from a brief uptick in March and April, China’s overseas sales have been consistently declining since October 2022.

The international demand for Chinese products remains lackluster, coupled with a sluggish economic recovery within the country. The looming threat of recession in Europe, combined with soaring inflation, contributes to the dampened international appetite for Chinese goods.

Geopolitical tensions with the United States and Western countries’ efforts to reduce their reliance on China and diversify their supply chains also play roles in the decline of Chinese exports.

Import Conundrum

On the flip side, China’s imports have faced their tenth consecutive month of decline in August, down by 7.3% year-on-year. This reflects weak domestic demand, though it’s a milder contraction compared to the 12.4% drop in July. Consequently, the trade surplus for the world’s second-largest economy narrowed to $68.3 billion (€63.6 billion) last month, down from $80.6 billion a month earlier.

The Broader Picture

The dip in external trade adds to a slew of negative figures reported over the summer. Besides the plunge in exports, Beijing has announced a slowdown in production, negative territory in the price index, and a spike in youth unemployment, reaching a record level of over 20% in June, according to official data that has been suspended since.

China’s economic growth is further hampered by its troubled real estate sector, with an increase of only 0.8% between the first and second quarters of 2023. In July, Chinese authorities introduced stimulus measures, yet investors have remained disappointed. There’s a desire to see Beijing take more substantial actions, a move the government hesitates to make to avoid worsening debt levels.

In summary, China’s external trade continues to grapple with challenges, reflecting broader concerns about its economic performance. With a subdued international demand and domestic recovery, coupled with global uncertainties and geopolitical dynamics, the road to economic stability remains uncertain for the world’s second-largest economy.


Q: What’s the reason behind China’s declining exports? A: China’s exports have been declining due to sluggish foreign demand, a slow domestic economic recovery, European recession threats, high inflation, geopolitical tensions, and efforts by Western countries to reduce dependence on Chinese goods.

Q: Why are China’s imports also falling? A: China’s imports have been declining primarily due to weak domestic demand, though the rate of contraction in August was less severe compared to July.

Q: How is China’s economic growth affected by these trade issues? A: China’s economic growth is challenged by a range of issues, including declining exports, a troubled real estate sector, and reluctance to increase stimulus measures to avoid exacerbating debt levels.

How to Make Business in China

How to make business in China

There are many important factors to consider when starting a business in China. For instance, you need a marketable idea and access to the local talent pool. You also need a good location with easy access to materials, transportation, and business partners. China is a dynamic and developing country. Although some areas of China may have less established business ecosystems than others, there are many developed cities that are attractive for investors. Many of them feature cosmopolitan cultures and ample industrial and office space.

YK Law

For those considering establishing a business in China, YK Law offers comprehensive services in the legal and business aspects of cross-border transactions. Their attorneys specialize in business development, risk management, mergers and acquisitions, government relations, and quality assurance. The firm also offers investment advisors who can help you bolster existing investments in China. Their comprehensive legal services and guidance will help you minimize risks and ensure a profitable future in China.

China offers numerous advantages for foreign companies, including cheap labor compared to the United States, advanced infrastructure, and attractive tax incentives. There are several ways to do business in China, and YK Law outlines eight steps to take.

Minimum registered capital

In order to operate a business in China, you must have a certain minimum amount of registered capital. Listed capital is an important tool for credit in China, and a lower amount will make doing business difficult. The government will monitor your accounts to make sure you’re meeting your minimum requirements.

The minimum registered capital to make business in China depends on the nature of your business. Whether it is a small or large business, it is important to comply with China’s laws and regulations. A registered capital of at least RMB 10 million is required for most types of businesses in China.

Scope of business

It is very important to have a clear idea of your business scope when doing business in China. This is because a license is required for certain types of business. It is important to check the scope of business of a company on the public registration record before engaging in any activities. The administration bureau of industrial and commercial, or AIC, in each area of China keeps the records of companies registered in the region, and makes them available online for the public to view.

China offers many benefits to foreign investors, but you need to be aware of the regulations surrounding foreign investment. You will need to follow the Foreign Investment Catalogue, which is updated every four years. This document spells out the areas that require special permission, as well as the circumstances surrounding these restrictions.

Human resource management

In order to be successful in China, a company must understand how to effectively manage human resources. There are many aspects to consider when managing Human resources. For example, how big your company is and what type of business you’re in can impact how you manage human resources in China. The following are some of the key things to keep in mind when deciding how to manage your Human resources in China.

First, understand the differences between the Chinese government’s policies and practices. The government’s role in China is different from that of the Western or Asian governments. Therefore, foreign companies must be flexible and understand the Chinese culture in order to succeed in the Chinese market.

Mobile accessibility

If you want to expand your business in China, you should make sure that your website and mobile applications are fully accessible to people with disabilities. In order to make your website and mobile applications accessible, you should follow the accessibility standards set by W3C. This organization develops resources for the implementation of web accessibility standards, including authoring tools, evaluation tools, and training materials.

Online reviews

To understand how Chinese consumers use online reviews to make purchasing decisions, researchers need to know how reviews are written and interpreted. The quality of the review has a significant impact on a consumer’s purchase decision. Therefore, vendors on OGB platforms should provide incentives and rewards to encourage high quality reviews. They also need to improve their own service, such as listing reviews by quality instead of date or making a fixed format for high quality reviews.

Although Amazon has banned incentivized reviews in 2016, they still exist in a variety of forms. The companies responsible for creating these fake accounts often use a scheme where they pay the reviewer a percentage of the purchase price to encourage them to leave positive reviews. Amazon has taken steps to stop the practice, however, by blocking new reviews if a seller experiences an influx of suspiciously positive reviews. The next malicious tactic used by Chinese sellers to boost their rankings is the sale of counterfeit products.

Best Business Cards to Travel to China

Best business cards to travel to China

When planning your business trip to China, it is essential to have the right credit and debit cards. You can use ATMs in China that accept Visa, Mastercard and Discover cards, and you can use Prepaid GSM SIM cards to use a local phone with a new number. Chinese business cards should be presented in Mandarin, with two hands. It is also important to present the cards in a business card holder. In China, your business cards are considered extensions of you and should be treated as such.

Credit cards and debit cards are the best business cards to travel to China

Besides a credit card, you should also consider using a debit card. A debit card will save you the hassle of carrying cash when you travel to China. It can also be used as a money belt to keep your funds out of sight. It’s also a good idea to combine a debit card and credit card to make purchases and withdraw cash at ATMs. However, you should keep in mind that not all establishments in China accept plastic.

ATMs in China accept Visa, Mastercard and Discover cards

If you’re traveling to China, you should have a little extra cash in your wallet. It’s recommended to exchange 20,000 CNY or about 5,000 USD before you arrive. Also, you should make sure you know how to write your personal information in Chinese before you visit a bank in the country. You can also use an ATM to withdraw cash, but you should remember to keep your receipts.

Credit cards are accepted at most places, but you should consult your home bank or credit card company before you use your card in China. Some banks will flag your transaction as “unusual” and block your card. Make sure you are aware of any fees that may apply before using your card in China.

If you plan on using a credit card, keep in mind that most ATMs in China accept Visa, Mastercard, and Discover cards. If you don’t plan on using a credit card in China, you can always use your debit card to make withdrawals. Many big cities will have 24-hour ATMs, but they won’t be available in rural areas. Most ATMs will have English interfaces, but not all cards are supported.

If you’re traveling with a credit card, make sure to know the language of the machines. Chinese ATMs will require your PIN number before they will give you cash. You can also research the language of the machine to make sure it’s not in English.

Prepaid GSM SIM card allows you to use a local phone with a new number

While you’re in China, don’t let a lack of connectivity keep you from staying in touch. You can use a prepaid GSM SIM card to make and receive calls using a local phone. These cards also come with local phone numbers. If you don’t want to switch your current phone number, you can port it to a local number before you go.

If you’re going to use a GSM phone in China, make sure it’s unlocked before you leave the country. Most US and Canadian phones are locked to a specific network. You should contact your local GSM provider at least seven days before your trip. In addition, make sure your phone’s GSM frequency is 900 and 1800 Mhz or quad band. Also, make sure your number is still working after you get to China.

You can buy a local SIM card from a local store or online. However, you should avoid roaming outside your primary coverage area. Roaming charges can run as high as $20 per megabyte for data usage. To avoid paying excessive roaming charges, make sure you have the proper carrier settings on your phone before traveling. A customer service representative can help you enter these settings when installing your SIM card.

Unlike prepaid land line phone cards, prepaid GSM SIM cards allow you to use a local phone with cellular data while in China. Besides saving on cellular voice and data connections, these cards allow you to use a local phone number and make local calls for local rates. In addition, you can use your local SIM card as a hotspot while traveling.

China Real Estate Crisis Explained

china real estate crisis

China’s real estate crisis can be explained in several ways. First of all, cash-flow problems plagued many developers. As a result, banks in the country lowered interest rates to make mortgage payments more affordable. Second, the government has not abandoned developers. Third, the Evergrande case was only a symptom of a larger problem.

Chinese developers are facing cash-flow problems

Several Chinese developers are facing cash-flow problems due to rising debt levels and falling property prices. The latest developer to experience trouble is Evergrande. The Chinese developer is having difficulty covering short-term debts, despite selling equity shares. As a result, local governments have bought $4.6 billion of its equity, but it may not be enough to resolve the deeper issues underlying the developer’s ballooning debt.

The problem has spread to dozens of cities, with wildcat boycotts affecting more than 300 housing projects. Some homebuyers have even halted mortgage payments to protest construction delays. Banks already have a difficult time meeting repayments due to developer defaults, and unfinished collateral could make their loans even more difficult to service. A full-blown crisis could leave millions of homebuyers stranded.

The problem is so severe that the People’s Bank of China has cut interest rates for Chinese developers. The bank hopes the lower rates will ease the burden on homebuyers and help developers obtain loans. However, the problem is not limited to funding and developers need to find ways to raise cash so that they can continue building.

Chinese banks have lowered interest rates to make mortgage payments more affordable

China’s central bank has compiled data from banks and lowered the key interest rate by 10 basis points in a bid to boost the economy. In the meantime, the government is also working to rein in the soaring price of real estate. With property prices continuing to rise, the government is under pressure to curb prices and maintain social stability. This has caused many banks to tighten their lending standards. The PBOC also announced that it would cut the amount of reserves that lenders must set aside. Whether these measures will curb prices in the near future remains to be seen.

The move is aimed at helping some home buyers afford mortgage payments. However, it will not stabilize the housing market, and will only drive the mortgage rates lower. This move could actually make property prices worse as households are hesitant to buy property for fear the projects will not be completed on time and prices will fall in the future. Furthermore, it could cost up to 6% of China’s GDP to shore up the balance sheets of property developers.

Chinese government isn’t abandoning developers

Although many developers are facing financial crisis, the Chinese government has proven to be more willing to bail out these companies than in the past. The three-red-line policy restricts developers from taking additional loans, which has cut into their cash. These new regulations also have made access to foreign markets much more difficult for developers.

The Chinese government is trying to contain the current crisis while at the same time keeping the property market on track. The government initially wanted to reduce debt in the property sector, but the current crisis has forced it to step in. Developers have also been facing difficulties in buying land. A slowdown in the construction sector is likely to worsen the problem.

The property boom in China has been a major driver of the country’s economy, accounting for nearly one-quarter of the country’s GDP. However, the Chinese government is now trying to rein in the real estate industry due to its stringent “zero-covid” policy. This has forced developers to sell off parts of their empire. At the same time, China’s real estate market is cooling off, with less demand for new apartments.

Evergrande case is a symptom of a bigger problem

The Evergrande case in China has put global investors on edge. The second largest property developer in China is deeply indebted. Its failure to meet its debt obligations could spark a credit crunch and threaten to undermine the confidence of investors in Chinese investments. The company’s failure could also affect the Chinese economy in general, affecting markets across the globe.

The company’s problems are closely linked to a structural problem that is affecting the real estate industry in China. The real estate sector is undergoing a slowdown and overinvestment. This could cause Evergrande to incur higher liabilities during its restructuring process.

While the Chinese government is concerned, the case is unlikely to spark a systemic financial crisis. Evergrande is not a bank, and it is unlikely that it will be rescued by the Chinese government. But the Chinese government is trying to help. It has told its major lenders to extend the interest payments on Evergrande’s loans. However, some analysts believe a direct government bailout is unlikely.

War between China and the USA for the electronic chip market

War between China and the USA for the electronic chip market

The tariff war raging between the United States and China was the main focus of the meeting between Xi Jinping and Donal Trump at the G20 in Buenos Aires.

This trade war affects traditional economic markets such as automobiles and steel. It also concerns a much more sensitive and vital sector for the future: technology (computer networks, artificial intelligence) and semiconductors.

Supremacy and dependence

Silicon Valley takes its name from Silicon, one of the most important chemical elements that make up electronic chips. The Pentagon strongly supported the California region because one of the first applications of electronic chips emerging from Silicon Valley was the guidance systems for nuclear missiles. These chips are now the foundation of the digital economy and national security. Cars have become rolling computers.

Banks are computers that manage the flow of money. American companies dominate the most advanced sectors of the industry. China, on the other hand, remains dependent on the outside world for its supply of quality electronic chips. And China intends to do the right thing.

The tariff war

Long before Donald Trump started his tariff war, China announced its intention to catch up. In 2014, Beijing announced the creation of an investment fund of one billion yuan (126 billion euros) to improve its national industry. China’s ambitions to create a high-tech industry worried Barack Obama and his administration, a wave of Chinese tenders for semiconductor companies confronted his administration during his last mandate. In particular, Barack Obama prevented Intel from selling some of its most potent chips to China in 2015. Other countries are also concerned, including Taiwan and South Korea, which have regulations in place to stop Chinese purchases of semiconductor companies and to stop the looting of intellectual property.

The limits of the Chinese offensive

Today, America has the advantage over China in the design and manufacture of high-end chips. With this war, the US can probably slow China down, but progress will be difficult to stop.

The attacks will even make China even more determined. Just as the emergence of Silicon Valley was based on the support of the American government, China combines the resources of the state and companies in the pursuit of its objectives. It has set up support and incentive programs to attract engineers from other countries, including Taiwan.

Companies like Huawei have proven their ability to innovate; the blocking of Intel chips in 2015 only encouraged China to develop its domestic supercomputer industry, such as the “Taihu-Light,” which is Chinese made. Also, China’s ambition to become a world power in the semiconductor field comes at the right time.

Automobile: China ready to conquer the world

While the Chinese automobile market has entered a phase of slowdown, the government wants to liberalize its highly-regulated market by a persnickety bureaucracy. It believes that the local brands have acquired enough maturity to conquer the world. For foreign brands, this liberalization is a real relief, but they could nevertheless continue their activity under the format of joint ventures.

It’s a big bang waiting for the Chinese car industry! Xi Jinping announced his intention to liberalize the sector, one of the most regulated in the world. The Chinese President made this announcement in response to the protectionist bidding of US President Donald Trump. In reality, it would seem that China is mainly preparing to change its industrial strategy in the automotive sector.

Strong slowdown

The world’s largest automobile market, with 27 million registrations in 2017, is experiencing a sharp slowdown in its market. In 2017, sales increased by only 2.1%, according to PwC. This slowdown is very brutal since, in 2016, growth was still at double digits (+14%).

Except that production capacity has not stopped increasing. New outlets must, therefore, be found to avoid the crisis of overproduction. All the more so as the Chinese are turning more and more to the second-hand market, an emerging market but one that will divert a large proportion of consumers away from the new market.

The end of the bureaucracy stage?

Until now, there were only two ways to sell cars in China: either by importing them, for 25% customs duties or by obligatorily building them on the spot through a joint venture with a local manufacturer. This last option is authorized after a careful and sometimes long study (up to one year) of the file by the Chinese administration which will issue a license. This license can be as restrictive as it is binding.

The license obtained by Renault prevented it, for example, from selling cars that were too small, such as its big success, the Captur, or too large. The diamond brand has thus launched itself on the Chinese market with the Kadjar and the new generation Koleos. Another constraint, the French manufacturer had the obligation to launch a specific local brand, as well as 100% electric cars. These are all very costly and complex constraints from an operational point of view.

Also, Renault is in charge of all operations, although it is a 50-50 joint venture with the Chinese group DongFeng. Here again, there is a source of difficulty since Renault is forced to form alliances with a group that has more than ten joint ventures, including with directly competing groups such as PSA or Honda. Not to mention technology transfers, and the impossibility of consolidating accounts.

Tesla, first beneficiary?

All these regulatory constraints could therefore soon disappear, including a sharp reduction in customs duties. Except Xi Jinping didn’t say anything more. According to the Wall Street Journal, regulation on electric car joint ventures could disappear this year, which could be a real boon for Tesla.

But according to experts, these measures may not lead to the expected big bang. Firstly, because what is true at central government level will not necessarily be true at a local government level, which would continue to be a lock on the deployment of concessions or car quotas for large conurbations.

“The real opportunity will lie on the margins, i.e. on the building rules, which will be relaxed. Foreign manufacturers will certainly benefit,” confirms Guy Burney of Deloitte.

General Motors wants to keep its 10 JVs

In addition, foreign car manufacturers have been working in China for too long in this format, some since the 1990s. And the largest have constituted real constellations of joint ventures (JV). General Motors is thus at the head of 10 JVs which enable it to hold 14% of the Chinese market (more than 4 million cars sold). According to the Wall Street Journal, the first American automotive group would have no intention of changing anything of this configuration even if the regulatory constraints are lifted. According to the American economic daily, the manufacturers fear to start a war without mercy with their former partners if they did not have any more common interests.

Because if Xi Jinping takes such an initiative, it is not only because its domestic market has reached maturity, it is also because local players have themselves acquired an industrial and technological maturity, as Guy Burney explains :

“China has not only been making cars for 30 years, but it has also learned a lot. And beyond that, it now can reproduce the convergence between Detroit and Silicon Valley, in other words between car manufacturing and new technologies. China has not only large and mature manufacturers, but also an ecosystem of digital and technological players with global reach.

Xi Jinping, therefore, wants to push its brands to advance their pawns towards foreign markets. In the first half of 2017, barely 3% of national production was destined for export, but this figure was up by 26%.


Donald Trump, Debt, Real Estate: What Could Slow Down the Chinese Economy in 2017

As the Chinese economy continues its structural slowdown, it will face significant challenges in 2017.

China’s economic slowdown

For the past 3 years, China has been experiencing a gradual drop of its GDP growth rate. According to experts, the economic slowdown is the result of the gradual slowdown in labor force growth (reinforced by the impact of the one-child policy) and the inevitable decline in productivity gains, as the economy is becoming more mature.

The credit boom and its consequences

While credit has steadily increased in recent years, much faster than the economic growth, corporate debt already reached 168% of the GDP in the third quarter of 2016, or nearly $ 18.5 trillion. With such a strong and rapid increase in credit, many unprofitable firms may find it difficult to finance in the event of tighter monetary policy in China. Credit is already getting stricter as the government decided in December to focus on risk reduction and financial stability, to the detriment of economic growth, implying measures to curb the credit. As a result, the amount of doubtful loans (loans with little chance of being repaid) may prove to be higher than what the official figures suggest. A phenomenon that could cause trouble…

The appreciation of the dollar against the yuan

Yuan weakened against US Dollar
Chinese Yuan Keeps Depreciating Against US Dollar

While the yuan (or renminbi, “currency of the people”) has already lost nearly 6% against the dollar in 2016, the upward trajectory of the US currency is a major challenge for Beijing. As China massively bought yuan currency to support its exchange rate, its foreign exchange reserves have melted by nearly $ 1 trillion, to $ 3 trillion in just two years. Beijing could also defend the yuan by implementing monetary tightening policy, but the room for maneuver of the PBOC (the country’s central bank) is limited, because of the size of the credit. The situation could be very worrying for the PBOC if the Federal Reserve (the US central bank) keep raising its exchange rate in 2017 as it has already been initiated by new Donald Trump government.

The real estate industry could slow down

One of the major pillar of China’s economic growth has been the development of the real estate sector over the past 10 years. In 2016, Chinese real estate grew strong, both in terms of construction and price increases. To cool down the overheated property market, local authorities have increased the share of minimum input required to purchase a property in order to lighten the use of mortgages. Consequently, the growth of the housing sector should slow down in the coming year.

Donald Trump threaten Chinese exports

donald trumpDonald Trump claimed during the election campaign that he would declare China a country manipulating his currency once he has become president and would impose heavy duties (up to 45%!) on US imports of Chinese goods.

In the end, China’s growth should continue to slow down in 2017 and the country will likely go through hard times in the coming months.