Germany, China to sign pacts during finance minister's Beijing visit

BEIJING (Reuters) – Germany welcomes progress in cooperation with China, especially in the financial sector, and aims to spur further development, its finance minister, Olaf Scholz, said in Beijing on Friday.

Trade between the two nations has softened amid uncertainty caused by the U.S. tariff dispute with China, but both have shown willingness to demonstrate that the world remains multilateral.

Germany is expected to sign pacts with Chinese financial regulators during Scholz’s visit, and its Bundesbank may also conclude an agreement with China on trading yuan-denominated financial products in Europe.

“It is important that, contrary to recent trends that we can observe elsewhere, we are seeing progress in our cooperation,” Scholz said.

Market access for banks and insurance companies on a level playing field and in the context of reciprocity is important, added Scholz, who is set to hold talks with Chinese Vice Premier Liu He.

“As the world economy slows, market volatility rises, creating greater risks,” Liu told reporters before the talks at the Diaoyutai State Guest House in the Chinese capital, welcoming the results of the two nations’ cooperation.

Berlin stresses its “close and advantageous” trade ties with China, whose rise has displaced Germany from its ranking as the world’s third-biggest economy to the fourth.

At the same time, it increasingly seeks to better protect and strengthen sensitive German and European business sectors from China’s state-backed acquisitions overseas in strategic industries.

“If you work closely together, you learn to appreciate similarities, but also to know differences,” Scholz said.

“And we have a lot of common interests in financial matters, and then we need to bring different perspectives together. I believe that is the very important task of this financial dialogue.”

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North Korea Obscures Leaders’ Visits to Missile Development Sites, Report Says

Over the years, outside analysts have closely followed visits by North Korean leaders to factories, farms and military units to discern the regime’s policy priorities.

The sleuthing is challenging: The North Korean state news media often withhold the locations of these sites and their purposes, identifying them only by the names of their managers.

Now, two analysts based in the United States have located six such factories believed to be linked to North Korea’s missile program, visits to which by the country’s leaders were deliberately obscured by the state news media to thwart Washington’s intelligence-gathering or cyberattacks. The factories and their operations were discovered through a painstaking digital examination of open-source data.

“North Korea may be reluctant to share those locations precisely to make them harder to target,” Jeffrey Lewis, an expert on North Korea at the Middlebury Institute of International Studies in Monterey, Calif., said in a report to be published. “In other cases, however, the visits may have been related to the development of new missile-related systems that North Korea was not yet prepared to reveal.”

The report about the sites comes as Secretary of State Mike Pompeo prepares to meet North Korea’s nuclear negotiator, Kim Yong-chol, to discuss steps toward denuclearization in the North that could lay the groundwork for a second meeting between President Trump and Kim Jong-un, the North Korean leader.

Dr. Lewis worked with his colleague, David Schmerler, often matching videos and photographs released by the North Korean state news media with commercial satellite imagery and details from visits by North Korean leaders to known missile development sites. Their report included map coordinates for the six plants, three of which turned out to be next to sites of important missile tests overseen by Mr. Kim.

Since he took power in 2011, Mr. Kim has rapidly accelerated his country’s missile program, which culminated in a series of test flights of its Hwasong-14 and Hwasong-15 long-range missiles in 2017, some of them believed to be capable of reaching North America. Mr. Kim did so while frequently visiting weapons-related facilities, inspecting tests and feting officials and engineers involved in weapons development with parades, gala parties and heroes’ titles.

Following its last test of the Hwasong-15 intercontinental ballistic missile, conducted in November 2017, Mr. Kim announced a moratorium on nuclear and long-range missile tests, saying North Korea no longer needed them because it had completed its nuclear deterrent.

At his meeting with Mr. Trump last June in Singapore, Mr. Kim vowed to work toward the complete denuclearization of the Korean Peninsula if Washington met his conditions, such as lifting sanctions and providing security guarantees for North Korea. In a New Year’s Day speech this year, Mr. Kim indicated that his country was no longer making nuclear weapons.

But while he is engaged in diplomacy, Mr. Kim has yet to announce a timetable for dismantling his nuclear arsenal. Instead, his country is still operating its missile bases and is suspected of continuing to improve its missile capabilities, despite Mr. Trump’s claims of progress in efforts to denuclearize the North.

The work by Dr. Lewis and Mr. Schmerler helps unveil the secretive nature of the North Korean missile program. United States intelligence officials believed some of the plants produced armored vehicles, light aircraft, machine tools or textiles. But until now, their probable links to the North’s missile program had not been publicized.

From 2012 to 2016, Mr. Kim made five publicized visits to what the North Korean state news media identified as a machine plant “managed by Ho Chol-yong” in northwest North Korea that was undergoing a significant expansion, Dr. Lewis and Mr. Schmerler said.

According to their research, North Korea actually used this location to launch its Pukguksong-2 missile in February 2017. The test marked a major leap forward for the North because the medium-range ballistic missile used solid fuel, which makes it easier to hide, transport and launch and harder for the United States to target in a pre-emptive strike.

The test was dramatic enough at the time that aides to Mr. Trump and Prime Minister Shinzo Abe of Japan interrupted their dinner at the Mar-a-Lago resort in Florida to bring them early reports of the launch.

North Korea also used the location to flight-test its Hwasong-12 intermediate-range ballistic missile in May 2017, another major stride for the North’s missile program. The plant is now believed to be involved in the development of tracked launch vehicles for missiles, Dr. Lewis and Mr. Schmerler said.

Mr. Kim visited another machine plant, supposedly “managed by Jon Tong-ryol,” in Panghyon in northwest North Korea in 2014 and 2015. When he visited the area again in July 2017, the North Korean leader watched the launch of the Hwasong-14, the country’s first major test of an intercontinental ballistic missile, which Mr. Kim at the time mockingly called his Fourth of July “gift” for Mr. Trump.

In their report, Dr. Lewis and Mr. Schmerler also located a machine plant said to be managed by Ri Chol-ho in Pyongyang, the North Korean capital, that makes integrated circuits. Mr. Kim visited there three times from 2013 to 2016 and the North Korean state news media has described it as “a nice plant in a park.”

North Korea may well have chosen to obscure the location because of fears that a factory producing integrated circuits, crucial for space and missile applications, would be a target for American cyberattacks, the researchers said.

The Pentagon did not immediately respond to a request for comment on the report’s findings.

North Korea keeps many of its weapons-related facilities underground to protect them from outside monitoring or attacks in case of war.

One factory Dr. Lewis and Mr. Schmerler located was believed to have two campuses, with the underground portion hidden near a textile plant. They learned that the North Korean state news media used different names when Mr. Kim visited the aboveground and underground facilities there, Dr. Lewis said by email.

“In some cases, Kim was visiting factories that are largely located underground and the effort was likely an effort to keep the location of the underground plant a secret,” he said.

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Sex trainer 'with evidence on Trump' deported by Thailand

A Belarusian model, who claimed last year that she had evidence of Russian involvement in helping to elect Donald Trump as US president, has been deported from Thailand, police said.

Anastasia Vashukevich, along with seven co-defendants, pleaded guilty this week in a case related to holding a sex training seminar in Thailand.

They were arrested almost a year ago in the seaside resort town of Pattaya, which is especially popular with Russian tourists.

Thailand’s immigration police chief Surachate Hakparn said flights had left Thailand heading for Russia and Belarus. Ms Vashukevich and at least one of the other deportees hold passports from Belarus.

While in custody, Ms Vashukevich claimed to have recordings of Russian oligarch Oleg Deripaska talking about interference in the 2016 US election, but never released them.

Mr Deripaska is close to Russian President Vladimir Putin, and also had a working relationship with Paul Manafort, Mr Trump’s former campaign manager who was investigated by special counsel Robert Mueller and convicted last year of tax and bank fraud.

Ms Vashukevich – also known on social media as Nastya Rybka – and her co-defendants were convicted of soliciting and conspiracy and given suspended 18-month prison terms. The group had said that they were conducting a class on sexual relationships.

In the early stages of their detention, the sex training group sent a note to the US embassy via an intermediary seeking help and political asylum. Ms Vashukevich indicated she would turn over the recordings she claimed to have if the US could help secure her release, but later withdrew the offer, suggesting that she and Mr Deripaska had reached an agreement.

A public scandal erupted in early February last year when Russian opposition leader Alexei Navalny published an investigation drawing on Ms Vashukevich’s social media posts suggesting corrupt links between Mr Deripaska and a top Kremlin official, Deputy Prime Minister Sergei Prikhodko.

The investigative report featured video from Mr Deripaska’s yacht in 2016, when Ms Vashukevich, who has also worked as an escort, was aboard.

On Wednesday in Washington, the US Senate narrowly upheld a Treasury Department decision to lift sanctions from three companies connected to Mr Deripaska. The sanctions hit Limerick refinery Aughinish Alumina because they were imposed on its parent company – Russian business Rusal, which has links to Mr Deripaska.

The Treasury Department said the Russian companies have committed to separating from Mr Deripaska, who will remain blacklisted. He was one of 24 Russian officials and tycoons hit with sanctions imposed by the US last year as Washington stepped up its condemnation of Russia’s actions in recent years, including its 2014 annexation of Crimea, support for Syrian President Bashar Assad, hacking attacks and meddling in Western elections.

The metals tycoon controls a business empire with assets in aluminium, energy and construction and is worth $5.3bn (€4.6bn), according to ‘Forbes’ magazine.

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China trims 2017 GDP growth rate just before 2018 pace unveiled

BEIJING (Reuters) – China’s statistics bureau on Friday revised down its final 2017 gross domestic product (GDP) growth to 6.8 percent from 6.9 percent, after scaling back initial estimates of the industrial and services sector.

The National Bureau of Statistics revised the final 2017 GDP to 82.08 trillion yuan ($12.11 trillion), down 636.7 billion yuan from the preliminary number.

The revision came ahead of Monday’s release of preliminary GDP growth figures for the latest quarter and full-year 2018.

Julian Evans-Pritchard, senior China economist at Capital Economics, said of the 2017 revision “it’s only because GDP figures are so stable (in China) that it actually seems like a big deal. But I don’t think it really changes anything.”

Evans-Pritchard said the trim suggests” greater tolerance to publish lower growth figures”, which indicates China is “probably willing to not loosen policy quite aggressively, as they are willing to tolerate slower growth.”

Analysts expect Beijing to roll out more stimulus measures to shore up sliding growth but Chinese authorities have repeatedly said the government won’t resort to massive stimulus.

Sources have told Reuters that China plans to set a lower economic growth target of 6-6.5 percent in 2019.

Final 2017 data shows the secondary sector – manufacturing and construction that account for 40 percent of GDP – grew 5.9 percent in 2017 to 33.3 trillion yuan. That compared with the bureau’s initial estimate of a 6.1 percent increase.

Growth in information technology services, the fastest growing sector in 2017, was revised down 4.2 percentage points to 21.8 percent, with output totaling 2.64 trillion yuan.

Growth estimates for construction, financial and leasing sectors were all revised lower.

The latest Reuters poll has forecast full-year growth of 6.6 percent for 2018 and 6.3 percent this year.

($1 = 6.7762 Chinese yuan)

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Divers find India mine worker body

Indian navy divers have found the body of a worker who was trapped with 14 others inside a flooded coal mine in the north-eastern state of Meghalaya.

The men had entered the illegal pit, known as a “rat hole”, on 13 December, and were trapped when floodwater from a nearby river poured in.

An underwater vehicle first detected the body at a depth of 160ft (48 m), the navy said.

The fate of the other trapped miners is unclear.

The navy added that the body would be brought out from the mine under the supervision of doctors.

The Indian Navy gave some details of the operation in a series of tweets early on Thursday.

#MeghalayaMineTragedy #Flash One body detected by Indian Navy Divers using Underwater ROV at a depth of approx 60 feet and 210 feet inside a rat-hole mine @SpokespersonMoD @DefenceMinIndia @nsitharaman @PMOIndia pic.twitter.com/sP1sv6ikRn

End of Twitter post by @indiannavy

#MeghalayaMineTragedy The depth is 160 feet (and not 60 feet) and the body has been pulled upto the mouth of Rat-hole mine and shall be extracted out of the mine under the supervision of Doctors

End of Twitter post 2 by @indiannavy

Some 200 rescuers have been deployed to the site, where they have been trying to drain the mine.

It is not clear whether the other miners are still alive – only three helmets had been recovered prior to the discovery of the body.

Earlier rescue efforts by India’s National Disaster Response Force (NDRF) and State Disaster Response Force (SDRF) were hampered by a lack of equipment. Initially, only two low-power pumps were on hand to drain the water.

The 370ft (112m)-deep coal mine where the workers are trapped lies in the remote East Jaintia Hills district.

Rat-hole mining involves digging pits into the ground to create a narrow hole to find coal, and is dangerous for those involved. Workers, including children, descend into the mines using bamboo ladders and accidents are common.

The practice was banned in 2014, but mine owners have challenged the ruling in India’s Supreme Court.

Most of Meghalaya’s illegal miners are migrant labourers who come from neighbouring states to earn money.

India is the world’s third largest coal-producing nation and coal provides 60% of the country’s energy needs, but the industry is poorly regulated.

Workers, who are often faced with life-threatening situations, have little protection from health hazards.

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First Indonesian presidential debate between Jokowi and Prabowo kicks off

JAKARTA – Indonesian President Joko Widodo and his challenger Prabowo Subianto on Thursday (Jan 17) faced off in a live debate ahead of the April 17 presidential election, watched by tens of millions of people on television, radio and through livestreams on the Internet.

They attacked each other’s record in the first of five live debates, with both men keen to capture the big pool of swing voters. The debate was broadcast live by 18 television and radio stations.

The topics covered were on the hot-button issues of corruption, terrorism, human rights and the law.

Mr Prabowo, 67, a retired army general, is running with businessman-turned-politician Sandiaga Uno, 49, who last year left his post as Jakarta deputy governor after serving less than a year.

They are the only rivals in a two-way race in the April presidential poll against Mr Joko, 57, and running mate Ma’ruf Amin, 75, a former leader of the 80 million-strong Nahdlatul Ulama (NU) Islamic organisation.

Both Dr Ma’ruf and Mr Sandiaga, standing beside the presidential candidates, chipped in with some of the answers.

Thursday’s debate was held as the latest surveys by six pollsters, conducted between November and January, revealed that should the polls be held during those periods, the Joko-Ma’ruf pair would garner between 47.7 per cent and 54.9 per cent of the votes.

On the other hand, the Prabowo-Sandiaga pair would get between 30.6 per cent and 35.5 per cent.

But there is also a big chunk of undecided voters – between 10.6 per cent and 16.8 per cent – that is targeted by both sides.

The live debates allow the candidates to deliver their message to the nearly 193 million voters in the world’s largest archipelago of 17,000 islands.

Mr Joko is backed by the ruling Indonesian Democratic Party – Struggle (PDI-P) and eight other parties.

These include the country’s oldest Golkar party and two Islam-leaning factions, United Development Party (PPP) and National Awakening Party (PKB).

Mr Prabowo is running on the ticket of his party Gerindra and two Islam-leaning parties, the Prosperous Justice Party (PKS) and National Mandate Party (PAN), along with former-president Susilo Bambang Yudhoyono’s nationalist Democratic Party.

Some of the issues debated cut deep into what a section of Indonesians feel.

Mr Prabowo attacked Mr Joko for what he claimed was a discriminatory approach in enforcing the law, which is biased against the poor.

“You have ruled more than four years. People have experienced being discriminated against. You are the chief law enforcement officer. You must not discriminate based on religion, ethnics, or anything,” Mr Prabowo said.

He also argued that Indonesia needs to ensure state apparatus with enormous legal authority like judges and policemen must be well paid so they have a good quality of life and could resist bribes.

Mr Joko replied that the accusations about the law was baseless as the country operates on standard legal procedure and follows due process.

“Don’t make baseless accusations. If anyone has evidence, they can report to the law enforcement officers,” Mr Joko said.

The two candidates also spoke on the issue of corruption in politics and the civil service.

However, the police probe into the 2017 attack on anti-graft investigator Novel Baswedan did not feature in the debate even though Mr Joko had said on Wednesday that he would give an update on it.

Failure to solve the case remains a blemish on the President’s record against corruption, and many had hoped he would elaborate on the police investigations during the debate last night.

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Japan satellite blasts into space to deliver artificial meteors

TOKYO (AFP) – A rocket carrying a satellite on a mission to deliver the world’s first artificial meteor shower blasted into space on Friday (Jan 18), Japanese scientists said.

A start-up based in Tokyo developed the micro-satellite for the celestial show over Hiroshima early next year as the initial experiment for what it calls a “shooting stars on demand” service.

The satellite is to release tiny balls that glow brightly as they hurtle through the atmosphere, simulating a meteor shower.

It hitched a ride on the small-size Epsilon-4 rocket that was launched from the Uchinoura space centre by the Japan Aerospace Exploration Agency (JAXA) on Friday morning.

The rocket is carrying a total of seven ultra-small satellites that will demonstrate various “innovative” technologies, JAXA spokesman Nobuyoshi Fujimoto told AFP.

By around noon on Friday, the first of the seven satellites had been successfully sent into orbit, he added, with JAXA officials waiting for signals to confirm the fate of the other six.

The company behind the artificial meteor shower plan, ALE, plans to deliver its first out-of-this-world show over Hiroshima in the spring of 2020.

The satellite launched on Friday carries 400 tiny balls whose chemical formula is a closely-guarded secret.

That should be enough for 20-30 events, as one shower will involve up to 20 stars, according to the company.

ALE’s satellite, released 500km above the Earth, will gradually descend to 400km over the coming year as it orbits the Earth.

The company plans to launch a second satellite on a private-sector rocket in mid-2019.

ALE says it is targeting “the whole world” with its products and plans to build a stockpile of shooting stars in space that can be delivered across the world.

When its two satellites are in orbit, they can be used separately or in tandem, and will be programmed to eject the balls at the right location, speed and direction to put on a show for viewers on the ground.

Tinkering with the ingredients in the balls should mean that it is possible to change the colours they glow, offering the possibility of a multi-coloured flotilla of shooting stars.

Each star is expected to shine for several seconds before being completely burned up – well before they fall low enough to pose any danger to anything on Earth.

They would glow brightly enough to be seen even over the light-polluted metropolis of Tokyo, ALE says.

If all goes well, and the skies are clear, the 2020 event could be visible to millions of people, it says.

ALE chief executive Lena Okajima has said her company chose Hiroshima for its first display because of its good weather, landscape and cultural assets.

The western Japan city rose from the ashes after the 1945 US atomic bombing and faces the Seto Inland sea where the floating gate of Itsukushima Shrine is.

ALE is working in collaboration with scientists and engineers at Japanese universities as well as local government officials and corporate sponsors.

It has not disclosed the price for an artificial meteor shower.

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China alarm over public death sentences

Chinese social media users are debating the practice in one city of publicly sentencing death row inmates and parading them in the lead-up to their deaths.

Lufeng, a city in southern Guangdong province, is increasingly publicising criminal verdicts, in what appears to be a bid to stamp out its reputation as a hotbed for synthetic drug production.

This week, a court in the city invited members of the public to watch 12 convicts be sentenced at a local sports stadium. It was attended by thousands.

Popular news website The Paper says that following their verdicts and with the approval of the court, the 10 who were given death sentences for drug offences “were escorted immediately to the place of execution and terminated”.

Lufeng’s reputation

Public sentencing is rare in contemporary China, but appears to have been gaining momentum in the coastal region of southern Guangdong.

The city of Lufeng made international headlines in June when two courts in the region publicly announced the sentences of 18 people, including eight people it said were executed immediately after their trial.

Specifically in the last couple of months, the Guangdong government has been looking to give more online visibility to its no-nonsense stance on drugs.

In November, Guangzhou Daily shared pictures of a public sentencing in the nearby city of Jieyang, which it said over 1,000 members of the public attended.

And the most recent 16 December hearing was further advertised via the popular mobile messenger WeChat. Footage of the verdict was widely circulated via influential media on the popular social network Sina Weibo and YouTube-like video site Miaopai.

Publicly paraded

The Beijing News’ footage of the hearing has been viewed more than three million times since it was posted on Saturday.

It shows convicts being surrounded by armed guards and led onto raised platforms to individually receive their sentences. Thousands of people can be seen in the background watching the spectacle.

After they have been sentenced, they are then led onto another platform on the back of a police car surrounded by armed guards and are driven away. For some of them, the journey is directly to the firing range.

Verdicts on murder, robbery and drug-related offences are read out at the hearing, but the paper only highlights that it is those found guilty of drug offences that were “immediately” executed.

‘The Cultural Revolution has come back’

The video has been criticised by human rights activists and online users alike.

Amnesty International’s William Nee said on Twitter: “The Chinese authorities have once again displayed a blatant disregard for human life and dignity”.

Many on Sina Weibo say that the video makes them think of a bygone era, saying that the method of public shaming makes them think that “the Cultural Revolution has come back”.

Some Chinese online users also voice their concerns about the apparent ease at which capital punishment rulings are seemingly handed out.

There have been a number of notorious instances where the police have forced confessions out of innocent people, who have then been subsequently executed, such as the case of Nie Shubin.

China carries out more executions than any other country in the world. There are no official statistics on how many are carried out, but it is widely believed that the number extends into the thousands.

The ‘Breaking Bad village’

Some online spectators argue that the method, although ugly, is necessary, given the city’s reputation.

Lufeng has been keen to stamp out its reputation as a hot bed for the production of ketamine and crystal methamphetamine, many of which is trafficked into areas of East Asia and Asia Pacific.

Since 2014, Lufeng has been known as “the city of ice” owing to the notorious large-scale production of synthetic drugs in the region. One of its villages, Boshe, has also been dubbed “the Breaking Bad village” by the international press.

And it has done little to shake this reputation. In March, the China National Narcotics Control Commission told media that China’s seizure of synthetic drugs including methamphetamine and ketamine has “surged by 106 per cent year on year in 2016”.

The official Xinhua News Agency said in November this year that the region is “plagued with rampant drug production and trafficking”.

“Over a third of meth consumed in China originates from Boshe and neighbouring villages”, it says, and adds that a startling “one in five families is directly involved in drug production”.

It notes that the police had solved over 13,000 drugs cases and seized 10 tonnes of drugs between January and October of this year in the region alone.

BBC Monitoring reports and analyses news from TV, radio, web and print media around the world. You can follow BBC Monitoring on Twitterand Facebook.

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Job jitters mount amid trade war as China's factories sputter ahead of Chinese New Year

DONGGUAN/HONG KONG (REUTERS) – Wang Zhishen was thrilled when Danish shipper A.P. Moller-Maersk gave him two months’ paid leave, relishing the chance to spend time with his wife and daughters in China’s remote north-western Gansu province.

But his euphoria over what he thought was an unexpected bonus quickly turned to despair when Maersk fired Wang on Jan 3, less than a month after he packed his bags in the southern Chinese manufacturing centre of Dongguan.

Wang said he was one of 2,000 workers laid off at the company’s Dongguan transport container factory which has been idle since early December, as the impact of a trade war between Washington and Beijing ripples through industries from logistics to autos and technology.

“I was sure it was a holiday,” said Wang, 35, who said he worked as a painter at Maersk for nearly six years until he was sacked two weeks ago via China’s WeChat messaging service.

Maersk, the world’s biggest container shipper, confirmed in an email to Reuters it had laid off 2,000 workers through “one-on-one” phone calls and WeChat messages.

In November, the company warned the trade war between China and the United States would hit demand for container shipping as the volume of goods shipped slides.

Two subsidiaries of China’s COSCO Shipping, in a direct response to the trade war, have reduced the number of vessels in Guangdong, causing a plunge in regional shipping freight turnover, according to Guangdong’s statistics bureau.

“I heard most container factories started letting people go on leave early this year, so I felt it was normal for us to have a few more days off as well,” said Wang, who earned a base salary of 3,900 yuan (S$780) per month.

Around the Chinese New Year holiday, this year scheduled for early February, millions of Chinese, including tens of thousands of migrant workers, travel back home for family reunions in what is the world’s largest annual human migration.

While many factories traditionally close ahead of China’s most important holiday, Reuters interviews with more than a dozen workers, business owners, labour activists and trade lawyers revealed businesses are shutting earlier than usual this year as the prolonged trade war curtails orders.

A recent Reuters visit to three once-thriving towns in Dongguan in Guangdong province showed clear signs of a slowdown. Scores of shops and restaurants were shuttered, some factories idled and many up for rent.

Danny Lau, a Hong Kong factory owner in Dongguan, said some businesses had closed around 40 days ahead of Chinese New Year.

“Dongguan used to be bursting with factory workers but now with factories gone, people are gone as well,” one taxi driver told Reuters.

“This complex used to be full of workers, eating and chatting when they got off work. Now look at this,” he said, pointing to empty dark alleys in an open air dining place one recent weekday evening.

EXPORTS FALL

The slowdown comes as data on Monday showed China’s exports unexpectedly fell the most in two years in December and imports also contracted, pointing to further weakness in the world’s second-largest economy in 2019.

Policy sources told Reuters last week China plans to set a lower economic growth target of 6-6.5 per cent this year compared with last year’s target of “around” 6.5 per cent.

A recent UBS China survey of 200 manufacturing companies with significant export business or supply to exporters revealed the trade war has had a negative impact on 63 per cent of those businesses.

A quarter of those affected have cut jobs, 37 per cent have moved production out of China in the past 12 months, while 33 per cent plan to move in the next 6-12 months.

China’s gaint manufacturing sector was already under pressure from rising labour costs, tighter regulations and a shift towards higher-end production and domestic consumption. But the risk of more and higher US tariffs on Chinese goods has seen the trend rapidly accelerate as more companies look to move supply chains away from China.

US President Donald Trump has vowed to increase tariffs on US$200 billion worth of Chinese imports on March 2 if Beijing fails to take steps to protect US intellectual property and allow more market access for US businesses, among other steps.

The two sides held face-to-face talks last week, with Trump hailing “tremendous success” and Chinese officials noting”progress”, but few details have been made public.

SLOWDOWN BUILDING

Guangdong, home to more than 100 million people, is China’s biggest provincial economy, with its US$1.3 trillion GDP comparable to that of Australia or Spain. A slowdown in Guangdong bodes ill for other export-oriented provinces along the Chinese coast, and would also drag on national growth should the trade war persist.

“As a major export province, Guangdong’s economy has been greatly affected by the trade war,” said Shenzhen-based independent economist Song Qinghui. “Many enterprises have suffered from bleak business, orders have fallen sharply, and the number of factories deciding to shut down their business is not in minority.”

Determining the scale of the slowdown through data is difficult, however, given Guangdong province recently stopped publishing a monthly economic indicator that gauges manufacturing growth momentum.

Other data shows Guangdong’s manufacturing workforce dropped more than 6 per cent in the third quarter of last year to 12.71 million from a year earlier.

In a further bearish sign, the value of export orders to the United States signed in November at China’s largest trade fair in Guangdong dropped 30.3 per cent on the year.

“If you are servicing a US brand, US market, then of course the company will be in very deep trouble,” said Sunny Tan, deputy chairman of the Federation of Hong Kong Industries, which represents more than 30,000 Hong Kong-owned factories in China’s Pearl River Delta.

While some may not be hurting badly financially right now,”they know it’s going south,” he added.

RUNAWAY BOSSES

As orders trickle in and some production lines grind to a halt, many businesses have cut hours and done away with overtime.

“Without overtime, we don’t have much salary left if you deduct social security and food. All we care about is the tangible money that we can see,” said Ye Minghua, 25, a worker at Kam Pin Industrial Ltd, which has a metal-coating factory in Dongguan.

Around a fifth of the factory’s 200 employees have already left for the holidays, while some production lines have been suspended, said King Lau, assistant to the managing director at Kam Pin.

New orders were expected to fall by 30 per cent if tariffs are increased to 25 per cent in March, he added.

More factories are likely to shutter their gates for good over the next few weeks, with industry watchers forecasting some owners, unable to bear the hefty cost of bankruptcy, will simply disappear.

“It’s tough to close down a manufacturing factory in China these days … it’s easier to bail,” said trade lawyer Sally Peng of Sandler, Travis & Rosenberg.

“After Chinese New Year, when all the workers go, they may not come back.”

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Canadian PM Justin Trudeau calls PM Lee Hsien Loong to discuss Canada-China dispute, CPTPP

Prime Minister Lee Hsien Loong was briefed by Canadian Prime Minister Justin Trudeau on the ongoing dispute between Canada and China during a phone call from Mr Trudeau on Thursday (Jan 17).

“Prime Minister Lee noted the importance of all countries following due process of the law, and being seen to be doing so, when dealing with cases involving foreign nationals,” the Prime Minister’s Office (PMO) in Singapore said in a statement released early Friday (Jan 18) morning.

“He expressed the hope that the matter would be resolved calmly and amicably, without further escalation,” the PMO added.

Mr Trudeau has been making phone calls to various leaders across the world to discuss the Canada-China dispute. In the past 10 days he has spoken with the leaders of Finland, Argentina, New Zealand, the European Council and US President Donald Trump, according to his office’s official website.

Canada and China have been locked in a diplomatic row since Huawei chief financial officer Meng Wenzhou was arrested on Dec 1 at Vancouver International Airport for extradition to the US at the request of American prosecutors.

She was charged with fraud and is out on bail, but her arrest was met with a strong response from Beijing, which called the charges baseless and summoned the Canadian and American ambassadors in protest over the incident.

The diplomatic rift deepened when China detained two Canadians – former diplomat Michael Kovrig and consultant Michael Spavor – just over a week after Ms Meng’s arrest, in what was viewed as a retaliatory move.

Tensions further escalated when Canadian national Robert Schellenberg was sentenced to death on Monday in a retrial of his drug smuggling case, a move which the US and Canada called politically motivated.

In a separate statement on Thursday’s call with Mr Lee, Mr Trudeau’s office said both leaders “discussed the detention of two Canadians in China, the application of the death penalty to a third Canadian in China, and the importance of safeguarding international norms, including diplomatic immunity, judicial independence and respect for the rule of law.”

The two leaders also discussed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the 11-nation Pacific Rim trade deal which both countries are part of and which entered into force on Dec 30.

Both Canada and Singapore are among the first to ratify the agreement, deepening trade and investment ties, and bringing economic benefits and good jobs to both countries, said the Canadian statement.

The leaders also talked about cooperation between Singapore and Canada, following Prime Minister Trudeau’s working visit to Singapore for the Asean Summit and related meetings in November last year, said Singapore’s PMO.

“Both leaders welcomed the momentum in bilateral cooperation between the two countries, including in the commercial relationship,” added Mr Trudeau’s office.

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