The Week in Asia – January 2021

The Week in Asia – January 2021

Published On: 1 January 2021

Asia House Advisory takes a look at the top developments in Asia this week affecting trade, investment and public policy.

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FRIDAY 29 JANUARY 2021

Biden administration postpones Chinese military investment ban

The US Treasury has delayed the implementation of a ban which would prevent Americans from investing in companies with suspected ties to the Chinese military. The ban had been imposed by former President Donald Trump in the final months of his presidency, in the form of an executive order that stopped US citizens from investing in Chinese companies on a Pentagon blacklist. The ban was expected to take effect on 28 January, but has been pushed to 27 May as the Biden administration continues to review the previous administration’s China-related policies.

Former Assistant US Trade Representative for China Affairs, Timothy Stratford, will brief Asia House Corporate Members on President Biden’s likely approach to China on Tuesday 9 February. Find out more

Asia and COVID-19 key themes in online WEF meetings

In lieu of its annual meeting in Davos this week, the World Economic Forum (WEF) held online meetings ahead of an in-person ‘Davos in Asia’ summit in Singapore in May. Chinese President Xi Jinping and Indian Prime Minister Narendra Modi were among the big names from Asia to speak around a theme of rebuilding trust and setting a course of recovery from COVID-19. Xi called for countries to reject ‘Cold War thinking’ and embrace strategic communication to build trust, arguing that upholding multilateralism is the way forward. He listed four key priorities for global growth: stepping up macroeconomic policy coordination, abandoning ideological prejudice to pursue win-win cooperation, closing the gap between developed and developing countries, and coming together to tackle global challenges.

Vietnam National Party Congress set to confirm third term for President Nguyen

Vietnam’s National Party Congress, held every five years, met this week to discuss the country’s future policy direction and determine the party’s leadership for the period ahead. The congress comes amid Vietnam’s successful containment of COVID-19 outbreaks and a booming economy, which has averaged 5.9 per cent growth annually. Current Party General Secretary and President Nguyen Phu Trong is expected to remain in the top job and serve a rare third term. The congress will prioritise economic growth, with a focus on technology and innovation, and will see appointments to the top four jobs within the party announced on 2 February.

Major corporations continue to diversify Asian supply chains

Several corporations announced new investments in Asia this week, furthering supply chain diversification in the region. Intel has announced the investment of an additional US$475 million in Vietnam to improve technologies and boost production of its 5G products and core processors, bringing the company’s total investment in Vietnam to around US$1.5 billion. Apple has ramped up the production of its products outside of China, with a focus on moving production capacity to Vietnam and India. Google has similarly pledged to expand its research and development team in Taiwan, making it the company’s biggest hardware engineering hub outside the US. The moves suggest that, while a new US administration may bring more stability to US-China ties, companies are continuing with diversification strategies, and that technology suppliers in particular will look at other countries in the region for future production facilities.

India permanently bans TikTok and other Chinese apps

India’s Ministry of Electronics and Information Technology has issued a permanent ban on popular video app TikTok and 58 other Chinese apps, including WeChat and Alibaba’s UC Browser, to take effect in June. The listed companies were asked to explain their compliance on privacy and security requirements when the temporary ban was put in place last year but, according to sources, the government was not satisfied with the explanations given, prompting the permanent ban. The move comes as tensions between India and China continue to rise, with recent skirmishes between Chinese and Indian troops at a disputed Himalayan border site.

NEXT WEEK IN ASIA

Indian budget introduced next week: The government will introduce its Union Budget for the next fiscal year. The plan is likely to use public spending to spur economic activity, boost consumption, and ease rules to attract greater foreign investment.

COVID-19: ASIA ROUND UP

CHINA: A World Health Organization-led team of experts investigating the origins of the COVID-19 pandemic began meetings in Wuhan this week. China has administered nearly 23 million COVID-19 vaccines.

JAPAN: Japan will produce 90 million AstraZeneca COVID-19 vaccines.

AUSTRALIA: Australia has eased border restrictions among the country’s three most populous states as the country recorded 11 straight days of zero COVID-19 cases.

SOUTH KOREA: South Korea will begin vaccinations for the general public in Q3 this year, with the aim of reaching herd immunity by November.

PHILIPPINES: The government has extended its partial social distancing restrictions in Manila until the end of February. The country has approved the AstraZeneca COVID-19 vaccine for emergency use. National GDP shrank 9.5 per cent last year, in the first annual contraction since 1998.

VIETNAM: Vietnam reports nine new cases of COVID-19, as the outbreak spread to capital city Hanoi, where the ruling Communist Party is holding its five-yearly national congress.

MYANMAR: Myanmar launched its COVID-19 vaccination programme on Wednesday. It received 1.5 million doses of vaccines from India.

These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.

FRIDAY 22 JANUARY 2021

China reacts to new US administration

China reacted to US President Biden’s inauguration this week by seeking a reversal of recent measures imposed by the outgoing Trump administration and targeting a raft of officials who served in it. Three of China’s largest telecoms operators – China Mobile, China Telecom, and China Unicorn – asked the New York Stock Exchange to reverse the recent decision to have them delisted. Meanwhile, Beijing imposed sanctions on 28 former Trump administration officials, including ex-US Secretary of State Mike Pompeo, and former US national security advisors Robert O’Brien and John Bolton. Beijing has accused them of having “seriously violated” China’s sovereignty. These moves will test President Biden’s stance on China, and could offer an early indication of how closely the new US administration will hold to Trump’s China policy.

Thailand invokes lèse majesté law to charge opposition

Thailand is set to charge leading opposition figure Thanathorn Juangroongruangkit under its lèse majesté law. The move follows his questioning of a company owned by King Maha Vajiralongkorn in relation to the sale of the AstraZeneca COVID-19 vaccine. The government has invoked this law to sentence Anchan Preelert, another pro-democracy protestor, for sharing social media posts deemed insulting to the Thai royal family. Anchan was originally sentenced to 87 years in prison, which was halved because she pleaded guilty. Analysts have argued that the invocation of the kingdom’s harsh lèse majesté laws is a signal that criticism of the monarchy will not be tolerated, and will be prosecuted to the highest degree possible.

Indian stock exchange clears Reliance-Future deal

Indian stock exchanges this week cleared Future Group’s US$3.4 billion deal to sell its retail assets to Reliance. The clearance comes five months after the deal was originally struck, with the delay due to allegations by Amazon that the deal breached some of its pre-existing contracts with Future Group. As the battle for India’s e-commerce market heats up, the deal is a potential setback for Amazon, which has repeatedly requested the stock exchanges suspend the deal’s review. The deal could have a significant impact on India’s e-commerce and retail market, which is predicted to be worth US$740 billion a year by 2024.

Saudi Arabia to ramp up domestic investment

Saudi Arabia’s sovereign wealth fund has committed to spending at least US$40 billion annually in the domestic economy for the next five years. This comes as the country faces the dual shock of low oil prices and the COVID-19 pandemic. Yasir al-Rumayyan, the Public Investment Fund’s (PIF) governor, has said the investment vehicle could be the engine of economic growth in the country. The PIF has just launched its most ambitious project to date – a 100 mile stretch of carbon-free communities called ‘The Line’, to be incorporated into Crown Prince Mohammed bin Salman’s flagship NEOM development.

British lawyer steps down from Hong Kong trials

David Perry, a British lawyer hired by the Hong Kong government to prosecute pro-democracy activists, has stepped down following criticism from the UK. Perry was hired to prosecute a group of activists arrested over the last 12 months, including media mogul Jimmy Lai, and Martin Lee, one of the authors of the territory’s mini constitution governing its handover to Chinese rule in 1997. British Foreign Secretary Dominic Raab was among the critics of Perry, labelling him a ‘mercenary’. Beijing imposed a national security law last year in Hong Kong, which has increased prosecution of pro-democracy activists in the Special Administrative Region. Hong Kong authorities said that Perry indicated that the trial should proceed without him, and that the Hong Kong Department of Justice has instructed another counsel to prosecute the trial as scheduled.

Andrew Heyn, the outgoing British Consul General to Hong Kong and Macau, will update Asia House Corporate Members on the latest situation in Hong Kong on Thursday 28 January. Find out more.

NEXT WEEK IN ASIA

World Economic Forum virtual meeting: The World Economic Forum will hold a virtual event next week ahead of its Annual Meeting in May, which this year takes place in Singapore. Key Asian leaders are set to join, with Chinese President Xi Jinping to give a speech on Monday.

Hong Kong, South Korea, Taiwan, and Philippines to release Q4 GDP: Countries across Asia are set to release their Q4 GDP figures next week. Taiwan is likely to buck the region-wide negative GDP growth trend.

COVID-19: ASIA ROUND UP

CHINA: Beijing launched mass COVID-19 testing in the city, and Shanghai is testing all its hospital staffers as the country battles its worst outbreak since March. China’s National Health Commission said that, as of Wednesday, a total of 15 million people have been inoculated with COVID-19 vaccines.

HONG KONG: Hong Kong leader Carrie Lam extended social distancing measures in the city as daily infections climbed back into triple digits.

INDIA: India has so far vaccinated over a million people since launching its vaccination drive on 16 January. India will provide domestically made COVID-19 vaccines free of charge to six nations from Wednesday, including the Maldives, Bangladesh, Nepal, and Myanmar.

JAPAN: Japan’s cabinet has approved bills to penalise people who do not comply with social distancing measures. A government spokesman said there is no truth to a report about the possible cancellation of the Tokyo Olympics this summer due to COVID-19. The government has created a new position of ‘minister for COVID vaccination’, to which Taro Kono has been appointed.

AUSTRALIA: Australia’s unemployment rate fell to 6.6 per cent from a July peak of 7.5 per cent.

INDONESIA: The government plans to start vaccinating the general public in April or May, after vaccinating 1.4 million health workers before the end of February.

THAILAND: Thailand’s cabinet approved US$7 billion in cash handouts to boost consumption and to help alleviate the impact of the COVID-19 pandemic.

FRIDAY 15 JANUARY 2021

Alibaba, Tencent, Baidu kept from US investor blacklist

Alibaba, Tencent, and Baidu have been spared from being placed on a US blacklist of companies thought to have links with the Chinese military. The Pentagon and US State Department have in recent weeks pushed to have the three companies added to a list of Chinese firms that are blocked from US investment. However, the move has been countered by the Treasury, who argued keeping them on the list would have caused huge problems for US investors. President Trump signed an executive order in November that barred Americans from investing in Chinese companies with links to the military; the order was amended on Wednesday to clarify that investors must divest any securities of named companies on the list within a year of the company being added to the list. The push to add these three companies was part of a larger effort to take a tougher security stance on China, ahead of the change of administration next week. With just days left before President-elect Joe Biden takes office, the US Department of Commerce has finalised new rules making it easier to block Americans from importing technology from China and other countries that could threaten national security.

Singaporean sovereign wealth fund GIC most active state investor in 2020

Singaporean sovereign wealth fund GIC was the most active state-owned investor in 2020, for the second consecutive year. GIC deployed US$17.7 billion last year, down from US$24 billion in 2019. Investments focused heavily on assets in information technology and biotechnology. Singapore’s other state investor, Temasek Holdings, emerged as the biggest global technology investor, with US$2.3 billion in investments in sectors including e-commerce, healthcare, and biotechnology. This volume of investments comes against a backdrop of unprecedented disruption to global economic activity, with the value of global investments made by sovereign wealth funds and public pension funds down by 19 per cent from the year before.

China introduces new online services legislation

For the first time in 20 years, China’s internet watchdog has unveiled draft amendments to regulate online services. The proposals are the first major revision since directives were implemented in 2000, doubling the number of articles from 27 to 54 to accommodate advances in technology and its use in the economy. The new amendments expand the scope of activities that are subject to regulation, including the use of a fine of up to US$154,000 for disseminating information that is deemed false or disturbing to social order. The new rules also ban services that delete social media posts for a fee and outlaw improper trading of online accounts. The decrees are expected to take effect later this year and are part of a broader push for stronger enforcement of online regulation.

Indian Supreme Court suspends controversial farm laws

India’s Supreme Court has suspended a series of agriculture reforms that have sparked widespread mass protests in Delhi in recent weeks. The court put the laws on hold on Tuesday, saying it was disappointed with how the government had introduced the laws and how negotiations were conducted with farmers. Since the introduction of the laws late last year, thousands of farmers have made their way to the capital to protest. The government has argued that the new reforms will help modernise the country’s agricultural sector, by allowing private trade outside of state-regulated market yards and opening up contract farming. The government has held eight rounds of talks to date, but has failed to resolve the stalemate with the protestors.

Chinese Foreign Minister embarks on ASEAN tour

Chinese Foreign Minister Wang Yi began a four-nation tour of Southeast Asia this week – his second such visit to the region since October. He will cover Myanmar, Indonesia, Brunei, and the Philippines on this trip, with infrastructure development and the COVID-19 response the top two priorities for talks. Following his October tour that covered Cambodia, Malaysia, Laos, Singapore, and Thailand, the only ASEAN state left to visit is Vietnam. These travels come just ahead of the change of administration in the US and an expected adjustment in US foreign policy towards Asia.

NEXT WEEK IN ASIA

US presidential inauguration: President-elect Joe Biden will take office next week, signalling a shift in the US’s foreign policy stance towards Asia. Biden has confirmed that Kurt Campbell will be his senior official for Asia policy, taking on the role of coordinator for the Indo-Pacific at the National Security Council.

China Q4 GDP figures: China will release its GDP figures for Q4 next week. Analysts expect a pick up in economic growth.

COVID-19: ASIA ROUND UP

CHINA: The World Health Organization’s team created to investigate the origins of COVID-19 has arrived in Wuhan. The team will undergo a mandatory 14-day quarantine before beginning work.

JAPAN: The government has restricted the entry of all non-resident foreign nationals, halting business travel agreements reached with 11 countries, in an effort to stop the transmission of COVID-19.

INDONESIA: President Joko Widodo received the country’s first COVID-19 vaccine, as the government launched its vaccine rollout programme this week.

MALAYSIA: King Al-Sultan Abdullah declared a state of emergency across the country to curb the spread of COVID-19. The emergency will give Prime Minister Muhyiddin Yassin and his cabinet extraordinary powers.

PHILIPPINES: The Philippines approved the Pfizer-BioNTech vaccine for emergency use, becoming the first COVID-19 vaccine the country has approved.

SINGAPORE: Singapore opened its first two COVID-19 vaccination centres, including one inside a temporarily suspended terminal at the airport.

FRIDAY 8 JANUARY 2021

US-China tensions increasing

US President Donald Trump has moved to ban transactions with Chinese payment applications such as Alipay, WeChat Pay, and Tencent’s QQ, in the latest escalation of tensions between the two countries. A recent report that revealed the Trump administration could prevent US investment into Chinese tech groups such as Alibaba and Tencent has caused further concerns, with shares in both companies dropping around four per cent after the news officials were considering measures against China’s largest companies. President Trump has justified the move by saying the ‘pace and pervasiveness’ of the spread of Chinese software apps continues to threaten national security, foreign policy, and the economy. These companies have already been targeted in previous executive orders, which have yet to take effect due to court challenges. The latest moves this week by the US administration threaten to severely escalate tensions between the two countries just weeks before President elect Joe Biden will take office.

Saudi Arabia and allies restore ties with Qatar

Saudi Arabia and other Gulf countries have agreed to restore ties with Qatar, coming over three years after diplomatic ties were cut in 2017. Gulf leaders signed a declaration at a summit held in Saudi Arabia just after the Saudi government announced it was lifting its land, sea, and air embargo on Qatar. Others in the Gulf are following suit. The issue came to the forefront in 2017 when Saudi Arabia and the UAE led a regional embargo on Qatar, severing diplomatic and transport links due to accusations Qatar was sponsoring Islamist groups and working too closely with Iran. Qatar has since signalled that it will not alter its relations with Iran and Turkey, in a sign that it has not made many concessions after securing the deal earlier this week. Doha has agreed to cooperate on counterterrorism and transnational security.

EU-China investment treaty signed

After seven years of talks, the EU has signed an investment agreement – the Comprehensive Agreement on Investment (CAI) – with China. The move comes as Chinese foreign direct investment into China has increased exponentially over the last few years, particularly in infrastructure and technology, and as EU investment into China grows, especially in manufacturing. Bilateral trade between the two was worth around US$650 billion last year. The CAI aims to enhance protection of investments on both sides, provide improved legal certainty, and reduce barriers to trade and investment. Though the deal has been a long-term ambition for the EU to make foreign investment fairer for European companies operating in China, concerns have risen over the lack of enforcement on human rights in China within the agreement and the impact it may have on EU-US relations.

Boris Johnson delays India visit

UK Prime Minister Boris Johnson has cancelled his visit to India, originally planned for later this month, due to the UK’s COVID-19 crisis and new national lockdown. Johnson was expected to be the guest of honour at India’s Republic Day celebrations on 26 January. The visit was part of the UK’s new shift towards the Indo-Pacific as it leaves the EU. Johnson has promised to make the trip to India in the first half of 2021. The visit was aimed at facilitating further cooperation on defence and other joint ventures, and on enhancing the trade partnership. India remains a key market for the UK’s new ‘Global Britain’ strategy, and as a signal of this, the UK has invited India, South Korea, and Australia as ‘guest nations’ to the G7 summit chaired by the UK this summer.

Gojek in talks with Tokopedia on merger

Two of Indonesia’s largest technology companies, Tokopedia and Gojek, are in talks over a merger with the aim of an eventual IPO. The talks come as Gojek’s merger negotiations with rival Singaporean tech start up Grab stall. The two companies have agreed to conduct due diligence on their respective businesses, and if the deal goes through, to gear up to take on the region’s biggest tech company – Singapore-based Sea. If the merger goes through, the two companies will cover e-commerce, ride hailing, food delivery, and payments. Gojek is currently valued at US$10 billion, and Tokopedia at US$7 billion. The two companies are discussing a dual listing in Indonesia and the US.

NEXT WEEK IN ASIA

US envoy to the UN to visit Taiwan: The US ambassador to the United Nations, Kelly Craft, will visit Taiwan from 13 to 15 January for meetings with senior Taiwanese officials. Beijing has said it is firmly opposed to the visit.

COVID-19: ASIA ROUND UP

CHINA: An outbreak of COVID-19 cases has been detected in Hebei province, which has entered ‘wartime mode’ this week to prevent the spread of cases. Shijiazhuang, Hebei’s capital, has banned people from leaving the city. China has reportedly ‘delayed’ the authorisation of a planned visit by the World Health Organization to investigate the origins of COVID-19.

HONG KONG: Hong Kong will keep schools closed until mid-February and has extended social distancing measures.

INDIA: India is expected to begin rolling out COVID-19 vaccinations from next week, after giving emergency approval to the Oxford-AstraZeneca vaccine and a homegrown vaccine developed by Bharat Biotech.

JAPAN: Prime Minister Yoshihide Suga has declared a month-long state of emergency for Tokyo and surrounding prefectures, and the Osaka, Kyoto, and Hyogo prefectures are gearing up to also declare a state of emergency as the number of COVID-19 cases rises.

AUSTRALIA: Brisbane entered a three-day lockdown today in a bid to prevent the spread of a more contagious variant of COVID-19. Australia will bring forward its COVID-19 vaccine roll-out plans by two weeks to early March.

INDONESIA: Indonesia’s highest Muslim clerical council aims to rule on whether COVID-19 vaccines are halal, just days before Indonesia’s planned vaccine roll out on 13 January. Indonesia has imposed two weeks of greater social distancing measures as case numbers continue to rise.

VIETNAM: Vietnam has halted flights from countries that have detected new COVID-19 variants, starting with the UK and South Africa, coming ahead of its Communist Party Congress, the country’s most important political event.

The Week in Asia – December 2020

01 December 2020
The Week in Asia – November 2020

27 November 2020