China Reform Monitor: No. 1182

August 30:

In July, China’s imports from Africa fell 40 percent year-on-year reflecting the slowing Chinese economy. Falling Chinese demand has depressed African commodity prices, and Chinese investors are now seeking greater profitability before investing in Africa. Chinese flights to Africa have been curtailed along with the number of state business delegations. Abebe Aemro Selassie, deputy director of the African Department at the International Monetary Fund told the Financial Times that for years China “has depressed prices for capital goods, consumer goods, and services throughout Africa.” Now many African economies will suffer if China-Africa investment and trade continue to fall along with commodity prices, while the price of China’s cheap consumer goods rises.

September 8:

The People's Bank of China had been defending the yuan resulting in a record fall in China's foreign currency reserves last month, the South China Morning Post reports. Reserves declined $93.9 billion, or 2.6 percent, to $3.56 trillion from July. “The pickup in outflows and the PBOC's response raises questions about the outlook for the currency and monetary policy. We suspect that the PBOC is hoping to stem the strong speculative downward pressure. The most likely reason for the central bank's defending was the large pile of dollar-denominated debts held by mainland companies,” said one China economist at Capital Economics. A more flexible exchange-rate-fixing mechanism adopted on August 11 triggered a knee-jerk reaction in the market to sell yuan holdings. In response, over the past two weeks the PBOC has intervened to defend the yuan and imposed a 20 percent deposit requirement on currency transactions.

September 9:

European businesses are increasingly concerned that Beijing is backtracking on its promises and "closing up" the Chinese economy, according to the European Union Chamber of Commerce in China. Beijing’s reforms have primarily benefited domestic companies, while foreign players are facing discriminatory treatment due to Beijing’s concerns about national security, SCMP reports. The new national security law and a series of related laws has created uncertainty for foreign companies and hurt investment. "This vagueness leaves the Chinese government with the option of undermining foreign market access based on unclear and broad national security considerations," the chamber said. “The country is even closing off altogether in some areas of its economy. Never before has the European Chamber seen such a contradictory government agenda of reform and closing up. I am very concerned that reform momentum has been lost," said Chamber president Joerg Wuttke.

September 13:

Tension has escalated between China and India along the Line of Actual Control at about 16,000 feet above sea level in Ladakh. Chinese and Indian troops are “eyeball-to-eyeball” with at least 90 Chinese soldiers camping about 500 meters beyond where India perceives the Line of Actual Control to be, refusing to leave. The Daily Excelsior reports that in the wee hours of the morning the Indian army dismantled a Chinese watchtower built on disputed territory, prevented its reconstruction, and called for a flag meeting to discuss the standoff, to which the PLA did not respond. Chinese troops made attempts to push the Indian troops back but were thwarted, the Press Trust of India reports.

September 21:

Chinese courts have declared 1,603 criminal defendants innocent between the beginning of 2013 and the end of 2014, said Sun Qian, vice president of the Supreme People’s Protectorate. In 2013 alone China put 1.16 million people on trial and all but 825 were found guilty, a conviction rate of 99.93%, the Washington Post reports. In one case last December, a court in Inner Mongolia posthumously exonerated a young man who was executed in 1996 for rape and murder, the official PLA Daily reports. “The fundamental reason for miscarriages of justice lies in the lack of faith in human rights protection. Illegally obtaining evidence, extracting confessions by torture and other violations have been seen when judicial officials handled criminal cases,” Sun said.