OCTOBER 2015

2015

While the U.S. and China are important trade partners to each other, they also are diligently developing their trade relations with other countries such as the China-led Belt and Road Initiative and the U.S.-led Trans-Pacific Partnership.

Royal Roots Global Inc. has prepared a White Paper, described in this issue of China Call Report, which lays out the scope and opportunities of the Initiative. Another article notes efforts to bring knowledge of Asian culture to the U.S. through f ilm programs.

Other articles detail Americans' views on China and challenges being met by American companies doing business there, as well as provide a synopsis of a book, “Dealing With Ch i na ,” by a for mer A mer ican Secretary of Treasury.

Anita Tang, Managing Director

Dr. Yao Yang, Dean and Professor, National School of Development, Peking University, delivered the Scholl Foundation Lecture on US-China Relations at the Chicago Club October 8 to an audience of members and guests of the Chicago Council on Global Affairs.

Speaking on “China’s Economy: a New Equilibrium?”, Dr. Yao pointed out that there were several shifts going on in China, from relying on external demands to internal demands, a shift to an aging economy and from a state-driven economy to a market economy, as well as a shift of population from country to city, and this is coupled with a downturn in the world’s economy, in which China is integrated; and these factors have contributed to the slowdown in China’s economy, which officially is growing at seven percent. Dr. Yao said reading of other factors indicate the economy has slowed to four percent.

“China’s expansive economic development is dynamic and complex,” he said. “To strengthen US-China relations, we must understand and engage with each other.”

Dr. Yao holds a BS and MS from Peking University and a PhD from the University of Wisconsin-Madison. His research includes economic transition and development in China.

Mainland China is one of Chicago area’s largest global trade partners, with trade between them amounting to US$34.1 billion in 2014 along with the highest total single-year investment by Chinese companies. More than 160 Chicago-area companies have subsidiaries in China.

Lecture guests included students f rom University of Chicago Lab School, Loyola University, Illinois Institute of Technology, and Medill School of Journalism.

Photograph by: Chicago Council on Global Affairs.

U.S. And ChinaSeek New Partners

Economist Yao Yang Of Peking UniversityScholl Fellow At Chicago Council On Global Affairs

Entrepreneur From Hong KongBrings Asian Films To Chicago Venues

China CinemaSetting Records

S o p h i a Wo n g B o c c i o , a n ent repreneur and ar ts execut ive with deep roots in Hong Kong film industry, has launched showings of Chinese and other Asian f ilms in famed Chicago venues – an Asian Pop-Up Cinema underway this Fall through December 4, with an Asian Film Festival planned for 2017.

Bo c c io i s t he Hong Kong-born daughter of Wong Tao-she, the Motion Picture and General Investment Company/Cathy Studio’s awa rd-wi n n i ng ed i tor a nd Si l -Metropole Organization Ltd. actress Yu Wan-fei, and grew up on studio sets. Her interest in film caused her to launch “Sophia’s Choice” movie series in Beijing and, later, to become the managing director of the Chicago International Film Festival from 2000 to 2007.

China’s film box office revenues topped 30 billion yuan (US$4.71 billion) during the first eight months of 2015, over taking the whole of 2014 as the country’s cinema market continues its rapid climb, a major lure for Hollywood studios and investors, reports Reuters news service.

The allure of China’s box office has become increasingly difficult to resist for global film-makers from Sony Cor p. to Walt Disney Co., despite challenges of navigating the country’s censors as well as getting one of the coveted 34 spots allowed for foreign films each year.

China’s box office lure has also led some studios to remove scenes from their films and add characters to help get past censors and appeal more to a Chinese market, stoking concerns of self-censorship, reported Reuters.

Boccio re-founded “Sophia’s Choice” in Chicago this year to “cultivate the general public’s interest in Asian culture via diverse offerings of Asian films, connect the Asian film industry with local industry for both professional and educational exchanges, and promote Chicago as a dest inat ion for Asian f i lm production."

Asian Pop-Up Cinema opened for bi-weekly presentations at the Wilmette Theater, a leading venue for movie goers in a Chicago suburb and at the AMC-River East 21, a favorite theater for film buffs.

Bo c c io t old op e n i ng n ig h t audiences that “We see global fusion everywhere, in our food, our music, and even more so in our schools which are now teaching Chinese language. In order to be a culturally pro-active citizen in the new world we are living in, and for Chicago to be perceived as an international city, I believe it is time for Chicago to embrace an Asian Film festival.

“The movie industry in Asia has grown and changed substantially during the last decade. For example, in 2015, cinema box office revenue in

the China market alone has surpassed that of the U.S. Movies from Hong Kong, China, Taiwan, Korea and Japan are enjoying robust growth with interesting content that allows us to better understand traditional and contemporary Asian culture and the issues, challenges, hopes and aspirations in their countries.”

Chicago critics have responded favorably to Boccio’s efforts, with headlines reading, “Asian Pop-Up Cinema Screens Some of Asia’s Best Films.”

Royal Roots Managing Director, Ms. Anita Tang, is a member of the Asian Pop-Up Cinema advisor y board.

Photographs by: Asian Pop-Up Cinema.

Michael Kwan, Deputy Director of HKETO New York, Sophia Wong Boccio, and Rich Moskal, Director of Chicago Film Office

Catch Up On China Call Report. Visit Our Web Page www.rroots.net

prospects in China are the same or better than in other emerging markets – despite a policy environment that 80 percent say is the same or worse than other markets.

Nearly half say there has been no benefit so far from China’s ambitious economic reforms, but an equal number have seen some impact. US companies generally are seeing it in one of the areas commonly h i g h l i g h t e d b y t h e C h i n e s e government: streamlined licensing and red tape reductions – 77 percent of companies have seen no impact of reforms in these area.

The top source of competition for American companies in China: other foreign companies, private Chinese companies, and Chinese state-owned enterprises (SOEs) in that order – a consistent finding of the US-China Business Council’s annual survey.

N i n e t y - s e v e n p e r c e n t o f companies know or think that their SOE competitors get benefits they do not, such as preferential financing, access to government contracts, and preferential licensing – but nearly 80 percent think their non-SOE Chinese compet i tor s a l so receive t hese benefits.

White PaperOn Belt And Road

US-China Business Council ReportsChallenges Of Doing Business In China

Royal Roots Global Inc. has prepared a White Paper on the Belt and Road Init iat ive that may be obtained by emailing to info@rroots.net, with subject line: Belt and Road white paper.

The Belt and Road Initiative is a development strategy and framework init iated by China. It focuses on connectivity and cooperation among countries of Asian, European and African continents, and their adjacent seas. The In it ia t ive u nderl i nes China’s push to take a bigger role in global affairs, and its need to export China’s excess production capacity.

The Initiative is a key part of China’s development strategy. It was introduced by President Xi Jinping in the fall of 2013. It is expected to feature prominently in China’s 13th Five-Year Plan (2016-2020) and guide national investment strategy throughout that period.

The “Belt” is a planned network of overland road and rail routes, oil and natural gas pipelines and will stretch from Xi’an through Central Asia, and ultimately as far as Venice. The “Road” is a network of planned port projects to East Africa and the northern Mediterranean Sea.

China remains a pr ior ity for American companies despite the slowing economy and challenging business environment, but the growth slowdown and policy uncertainty are undermining confidence.

This is the summary of the 2015 survey of its members by the US-China Business Council (USCBC) released in October.

Growth in China is slowing for American companies, but 41 percent st ill repor t double-digit revenue growth in the past year. While two-thirds project revenue growth in 2015, 20 percent expect a revenue decline, up from 11 percent in 2014.

T h e nu mb e r of c o m p a n ie s repor t ing that China operat ions are prof itable remains high and unchanged from previous surveys – 85 percent. However, cost increases and r ising compet it ion squeeze margins.

American executives’ confidence i n t h e i r p r o s p e c t s i n C h i n a continues to moderate, ref lecting uncertainty about the direction of Chinese policies, limited progress on economic reforms, increased competition, and slowing growth.

Ninety percent say their growth

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P a u l s o n d r a w s o n h i s unprecedented access to China’s political and business elite, including its three most recent heads of state, to answer key questions:

How d id C h i n a b e come a n economic superpower so quickly?

How does business really get done there?

W hat a re t he bes t ways for Western businesses and political leaders to work with, compete with, and benefit from China?

How can the U.S. negot iate with and inf luence China given its authoritarian rule, its massive environmental concerns, and its huge population’s unrelenting demands for economic goods and security?

“D e a l i n g W i t h C h i n a” i s available at many bookstores and through Hachette Book Group, Inc. and Amazon.com.

Insider DiscussesDealing With China

Americans’Views On China

Henry M. Paulson, Jr., former CEO at Goldman Sachs, and former Secretary of the U.S. Treasury who now leads the Paulson Institute at the University of Chicago, has drawn on decades of experience in a book published this year, “Dealing With China.”

As head of Goldman Sachs, Paulson had a pivotal role in opening up China to private enterprise. Then, as Treasury secretary, he created the Strategic Economic Dialogue with what is now the world’s second-largest economy. He negotiated with China on needed economic reforms, while safeguarding the U.S. financial systems. Over his career, Paulson has worked with scores of top Chinese leaders, including Xi Jinping, China’s president.

The Chicago Council on Global Affairs has released a 2015 survey of Democrats, Independents, and Republicans on “possible threats to the vital interests of the United States in the next 10 years.” The development of China’s military power led responses, with an overall response of 41 percent finding it a threat.

Thir ty-one percent found the development of China’s economic power a threat, 23 percent mentioned a confrontation between China and Japan, and 22 percent found a threat in territories disputes between China and its neighbors.