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Tuesday, January 24, 2023
Compiled by Chris Devonshire-Ellis
China has been busy laying out 2023 development plans prior to the current New Year festivities. This week, we discuss China’s mini consumer boom based on pent-up demand measured against Covid, and analyze the points raised by the Chinese Vice-Premier at the World Economic Forum. China’s gold imports from Russia are significantly up, while the Muslim world has been busy re-establishing post-Covid relations and new trade and investment plans involving China and Russia. Meanwhile, more Asian countries are looking at US Dollar alternatives to trade settlements – both in mutual currencies and crypto. Meanwhile, other BRI nations are also now getting involved in financing what would once have been fully Chinese projects in the BRI sphere, while Russian traders look for a monopoly on Cuban cigars.
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CHINA
Chinese New Year 2023 – Travel, Consumption, and Post-Covid Consumer Recovery
Chinese New Year 2023 is the first since China lifted its longstanding COVID-19 restrictions, meaning that travel and consumption can finally return to somewhat normal levels. At the same time, the possible rebound in travel may increase transmission of COVID-19, which may dissuade some from leaving home. We look at the possible travel and consumption trends over the Chinese New Year period and discuss the impact they may have on the economy and businesses.
China Records Steady FDI Growth in 2022
Foreign direct investment into China slowed in 2022 compared to the previous year, but growth nonetheless remained steady. Manufacturing and high-tech industries continued to attract high levels of foreign investment despite the overall economic slowdown, and some regions, such as the EU, increased investment in China significantly. We break down the latest data for FDI in China and discuss what may be in store for 2023 as the country sets its sights on growth.
The Chinese Vice-Premiers Speech at Davos 2023: A Comprehensive Investment Analysis
Davos 2023 is taking place amongst an increasingly insecure world with recessions imminent or expected. China’s geopolitical position, as the world’s largest trading nation, the second largest global economy and with the world’s second largest population will have a huge impact on how the year will be shaped. At Davos, China’s Vice-Premier, Liu He, had plenty to say as concerns Beijing’s perspective of Chinese and global development during the coming year. This article will be of great interest to academics, geopoliticians and China investors alike.
China’s Gold Imports from Russia Up 67.3% in 2022
China stepped up imports of gold from Russia in 2022, according to data released by the Chinese Ministry of Customs last week. Last year, China bought a total of 6.6 tons of Russian gold, worth a record US$386.9 million, including shipments in both unprocessed (3.7 tons) and semi-processed form (2.9 tons). In December alone, gold shipments from Russia to China totaled 220.2 kilograms, worth US$14.85 million. Much of that demand would have been used in Chinese New Year related consumer artifacts and the electronics industry.
CENTRAL ASIA
Kazakhstan Eyes UAE as Agricultural Export Market
Kazakhstan is interested in exporting agriculture production to the United Arab Emirates, Kassym-Jomart Tokayev, President of Kazakhstan has stated. The UAE has invested around US$3 billion in Kazakhstan, while Kazakhstan’s contribution to the UAE economy is estimated to be around US$1 billion. Trade turnover between the nations reached US$600 million by the end of 2022.
PAKISTAN
Pakistan Invites Russia to Develop National Railway Projects with INSTC Connectivity
Pakistan has invited Russia to participate in it railway projects, according to Yevgeny Fidchuk, assistant to the Russian Transport Minister. “We have discussed possible ways to develop regional railway lines with the Pakistani side, including the North-South corridor, and ways to improve these.” Such projects will improve connectivity with Iran.
MIDDLE EAST
World Muslim Communities Council Creates Western Uproar by Visiting China’s Xinjiang Province
The World Muslim Communities Council has been in the center of a Western media backlash for accepting an invitation from the Chinese government to visit Xinjiang Province, home to millions of Chinese Uyghur Muslims. The group’s Chairman, Ali Rashid Al Nuaimi stated that they were ‘impressed’ by their Chinese visit and that it is ‘‘important for the Muslim world to understand Xinjiang’.
Cryptocurrency to Play ‘Major Role’ in UAE Global Trade – Minister of Foreign Trade
Thani Al-Zeyoudi, the UAE’s Minister of State for Foreign Trade declared that crypto would have a crucial role in UAE’s global trade, speaking at the World Economic Forum’s (WEF) annual summit at Davos. Notably, Al-Zeyoudi said that the UAE seeks to have significant regulations on crypto to promote further growth in the already flourishing crypto industry.
Saudi Arabia to Trade in Currencies Other than the US Dollar
Saudi Arabia is discussing trade in currencies other than the US dollar, according to the Kingdom’s finance minister Mohammed Al-Jadaan, meaning a partial move away from using the US dollar could be imminent. Al-Jadaan’s comments come a month after China’s President Xi Jinping said that Beijing is ready to make energy purchases in yuan instead of the US dollar in trade exchanges with members of the Gulf Cooperation Council (GCC).
CAUCASUS & TURKIYE
Georgia 2022 Exports Up 31.8% from Strong China and Russia Demand
Georgia exported locally produced goods worth US$5.59 billion in 2022, a 31.8% increase year-on-year, according to preliminary data from the Georgian National Statistics Office. Georgian exports received a boost due to handling parallel imports from Europe into Russia, as well as improved trade connectivity with China via overland routes via Azerbaijan and Kazakhstan. Bulgaria was a major export route into the EU markets.
Turkiye’s Picking Up of China’s Uganda Rail Project Ushers in a New Era of Substitute BRI Financing
Three main issues can be deduced from this situation: China is placing increasing project viability scrutiny on its BRI lending for the time being, in line with prudent fiscal management; the EU’s ‘Global Gateway’ isn’t actually in the running for billion-dollar projects; and other regional lenders are now prepared to step in to take up what were previously to be BRI funded projects.
RUSSIA
Moscow Proposes a Russian Trading House in Cuba
Moscow has proposed opening a Russian trading house in Havana with the participation of the Cuban state corporation CIMEX and is waiting for a response from the Cuban authorities in the next few days.
Russia, Africa, to Drop US Dollar and Euro in Trade Settlements
There are a variety of trade bloc developments that would link a variety of African countries more closely to Russian trade and investment. Algeria, Egypt, Nigeria and Senegal have all made official representations to join the BRICS grouping; South Africa is already a member. The Eurasian Economic Union signed off an agricultural agreement with the AfCFTA in 2019, while Egypt is pursuing an EAEU Free Trade Agreement. Both Russia and African nations have set a trade target to reach US$40 billion by 2024. Mutual use of currencies will encourage this.
About Us
Dezan Shira & Associates provide business intelligence, market research, legal, tax and compliance issues for foreign investors throughout Asia, and have 28 offices across the region. We are members of the Leading Edge Alliance, a network of related firms with offices throughout the world. For assistance with Belt & Road Initiative research, please contact us at [email protected] or visit us at www.dezshira.com. To subscribe to our Belt & Road Initiative portal, please click here.
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