Beijing’s new weapon in economic war: Chinese tourists

Tourists take photos at the Chiang Kai-skek Memorial Hall in Taipei on May 18, 2017. Visitor numbers to Taiwan fell in the first quarter, dragged down by a 42 percent plunge in arrivals from China as relations worsen across the strait. (AFP / SAM YEH)
Updated 21 May 2017

Beijing’s new weapon in economic war: Chinese tourists

BEIJING: Slapping import bans on products like mangoes, coal and salmon has long been China’s way of punishing countries that refuse to toe its political line.
But Beijing has shown that it can also hurt others by cutting a lucrative Chinese export: tourists who normally flock to South Korea or Taiwan.
China’s recent boycott of South Korea over a US anti-missile shield on the Korean peninsula signals a growing aggression in the way it flexes its economic muscles, analysts say.
Beijing has banned Chinese tour groups from going to the South, hammering its tourist market and the duty-free shops of retail giant Lotte Group, which has been targeted for providing land for the controversial defense system.
Dozens of Lotte stores were closed in China and protests held across the country as Beijing ramped up pressure on Seoul to abandon the Terminal High-Altitude Area Defense (THAAD) system, which it sees as a threat to its own military capability.
Lotte also suffered setbacks in several of its Chinese ventures — from the government-ordered halt of a $2.6 billion theme park project to apparent cyberattacks on company websites.
“If you don’t do what Beijing’s political leaders want they will punish you economically,” said Shaun Rein, founder of Shanghai-based China Market Research Group.
“They put the economic vise on politicians around the world. They have been doing it for years and it works.”
Seoul-based tour operator Korea-China International Tourism has reported an 85 percent drop in tourists in recent months, which its founder attributes to China’s anger over THAAD.
The company usually receives 4,000 mostly Chinese visitors a month, but that has fallen to around 500 after Beijing warned tourists about the risks of traveling to the South, and ordered Chinese tour operators to stop sending groups there.

Economic embargo

As the world’s second-largest economy and biggest trader, China can also inflict pain by blocking certain imports.
Norway learned that lesson the hard way. After the Oslo-based Nobel Committee awarded the 2010 Peace Prize to jailed Chinese activist Liu Xiaobo, China halted Norwegian salmon exports.
Relations only returned to normal in April after Oslo pledged its commitment to the one-China policy and respect for China’s territorial integrity.
Mongolia also incurred Beijing’s wrath in November when it allowed the Tibetan spiritual leader the Dalai Lama, who China views as a devious separatist, to visit the impoverished landlocked country.
Following the exiled Buddhist monk’s visit, China reportedly took punitive measures against Mongolia, including stopping trucks carrying coal from crossing the Chinese border — a move with heavy repercussions for Mongolian mining concerns.
Tourism to Taiwan has also fallen sharply as relations across the strait worsen.
The Taipei Hotel Association reported decreases of up to 50 percent in Chinese visitors in recent months and warned “the situation could get worse.”
“I’ve been told by friends not to visit Taiwan since the cross-strait situation is tense but I am just a regular citizen so I am not too worried about that,” a 58-year-old Chinese man surnamed Liu said in a Taipei duty free shop.
Countries that submit to China’s demands, however, can find themselves rewarded.
A ban on 27 Philippine tropical fruit export companies was lifted after President Rodrigo Duterte declared his “separation” from the United States during a visit to Beijing in October, confirming his tilt toward China.
The sanctions had been intended to punish Manila for its South China Sea stance.
South Korea will be hoping for a similar outcome after its new President Moon Jae-In dispatched his envoy Lee Hae-Chan to China after his election victory last week, in an apparent effort to mend fences with Beijing.
“It’s a kind of carrot and stick policy. They (China) are doing it to show they have more leverage now and send a signal,” said Jean-Pierre Cabestan, a professor in political science at Hong Kong Baptist University.
“The irony is that China has criticized that way of doing things but now China is less hesitant to do the same thing because she’s stronger and feels she can do it.”
Analysts expect China to become even more assertive as it seeks to fill the vacuum created by the US retreat into “America First” policies promoted by President Donald Trump.
“Smaller nations (in Asia) don’t feel that Trump is going to support them,” said Rein.
But in the case of South Korea, Asia’s fourth-largest economy, Beijing has been careful to target specific sectors to avoid disruption that could backfire on Chinese companies.
“It has become a well-developed tool of diplomatic pressure,” said Andrew Gilholm, director of analysis of Greater China and North Asia at Control Risks.


OPEC sees small 2020 oil deficit even before latest supply cut

Updated 12 December 2019

OPEC sees small 2020 oil deficit even before latest supply cut

  • OPEC keeps its 2020 economic and oil demand growth forecasts steady and is more upbeat about the outlook

LONDON: OPEC on Wednesday pointed to a small deficit in the oil market next year due to restraint by Saudi Arabia even before the latest supply pact with other producers takes effect, suggesting a tighter market than previously thought.

In a monthly report, OPEC said demand for its crude will average 29.58 million barrels per day (bpd) next year. OPEC pumped less oil in November than the average 2020 requirement, having in previous months supplied more.

The report retreats further from OPEC’s initial projection of a 2020 supply glut as output from rival producers such as US shale has grown more slowly than expected. This will give a tailwind to efforts by OPEC and partners led by Russia to support the market next year.

OPEC kept its 2020 economic and oil demand growth forecasts steady and was more upbeat about the outlook.

“On the positive side, the global trade slowdown has likely bottomed out, and now the negative trend in industrial production seen in 2019 is expected to reverse in 2020,” the report said.

Oil prices were steady after the report’s release, trading near $64 a barrel, below the level some OPEC officials have said
they favor.

The Organization of the Petroleum Exporting Countries, Russia and other producers, a group known as OPEC+, have since Jan. 1 implemented a deal to cut output by 1.2 million bpd to support the market. At meetings last week, OPEC+ agreed to a further cut of 500,000 bpd from Jan. 1 2020.

The report showed OPEC production falling even before the new deal takes effect.

In November, OPEC output fell by 193,000 bpd to 29.55 million bpd, according to figures the group collects from secondary sources, as Saudi Arabia cut supply.

Saudi Arabia told OPEC it made an even bigger cut in supply of over 400,000 bpd last month. The Kingdom had boosted production in October after attacks on its oil facilities in September briefly more than halved output.

The November production rate suggests there would be a 2020 deficit of 30,000 bpd if OPEC kept pumping the same amount and other factors remained equal, less than the 70,000 bpd surplus implied in November’s report and an excess of over 500,000 bpd seen in July. OPEC and its partners have been limiting supply since 2017, helping to revive prices by clearing a glut that built up in 2014 to 2016. But higher prices have also boosted US shale and other rival supplies.

In the report, OPEC said non-OPEC supply will grow by 2.17 million bpd in 2020, unchanged from the previous forecast but 270,000 less than initially thought in July as shale has not grown as quickly as first thought.

“In 2020, non-OPEC supply is expected to see a continued slowdown in growth on the back of decreased investment and lower drilling activities in US tight oil,” OPEC said, using another term for shale.