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On September 8, the Academy of National Development and Strategy at Renmin University of China (RUC), RUC’s School of Economics, and China Chengxin Credit Ratings, jointly issued a special report on China’s macro economy. The report states that the gap between economic development in the north and in the south of China continues to widen and has “reached a point that cannot be ignored.”

The report mentions three areas of imbalance: manufacturing, investment, and R&D and innovation.

The secondary (manufacturing) industry in the North has been stagnant over the past decade. The years between 2012 and 2020 saw zero nominal growth of that sector in northern China.

Although southern China’s consumption, investment and import and export growth are all higher than in Northern China, the main issue is investment. By 2017, investments in the North had plateaued. The gap in exports between the two regions is alarming. At present, 80 percent of the country’s exports come from the South, and the North accounts for only 20 percent.

The North also lags behind in R&D and innovation. A decade ago, the R&D funding, manpower and number of projects in the South was about twice as much as in the North. Now the gap has enlarged so it is about 3 or 4 times as much.

Over the past 10 years, southern China has registered a speedier industrial development. Twenty years ago, the number of large size industrial enterprises in the South was 1.56 times as much as the number in the northern region. Now the difference has widened to 2.65 times as much.

Source: Central News Agency, September 10, 2021
https://www.cna.com.tw/news/acn/202109100255.aspx

According to the internationally accepted standard, a region in which the percentage of the population aged 65 and over has reached 7 percent is called an aging society. When the population that is age 65 and over reaches 14 percent, It is called an “aged” society.  When those over 65 exceeds 20 percent, it is called a “hyper-aged” society.

According to China’s 7th National Census data, in 2020, 149 cities had a population in which those over 65 years of age exceeded 14 percent, thus becoming “aged” cities. In terms of regional distribution, 41 of them are from the eastern coastal region, 36 are from the northeast region, and 72 are from the central and western regions. Overall, the “aged” cities are concentrated in the northeast and the central region, the Yangtze River Delta, the middle and lower reaches of the Yellow River, and the Chengdu-Chongqing city clusters.

A major reason is the exodus of young adults and the low percentage of working age population. The eastern cities of Shandong, Jiangsu and Zhejiang have many “aged” cities. In these more economically developed regions, the fertility rates tend to stay low.

Source: www.yicai.com, September 5, 2021
https://www.yicai.com/news/101164016.html

After recent moves to crack down on private education companies that engage in off-campus training, Beijing further issued regulations on fees to be collected for these services.

The central government recently issued a directive on “reducing the burden of homework and off-campus training” for elementary and junior middle school students, which had a significant impact on out-of-school training courses in China’s compulsory education system. In addition to limiting the amount of time students have to spend after class, the authorities have also regulated the off-campus training fees.

According to the National Development and Reform Commission, a government commission on macroeconomic management, China will implement government-guided price management of the training fees. The government will set the benchmark fees and fluctuation ranges and incorporate them into the price management of local authorities.

The benchmark fees and fluctuation range for off-line out-of-school training will be set by the provincial government. The fees and range for on-line training are set by the local authorities where the training institutions are licensed to operate. Local governments are allowed to set the range of fluctuations to be no more than 10 percent above the benchmark, and without a lower limit.

The regulation emphasizes the need to “implement government-guided price management,” and “adhere to the public welfare attribute of out-of-school training,” with the goal of “reducing the burden of education expenses on students’ families.”

Source: National Development and Reform Commission, September 6, 2021
https://www.ndrc.gov.cn/xwdt/xwfb/202109/t20210906_1296115.html

According to Chinese media, as of September 5, the year 2021 has seen bankruptcy applications from a total of 274 real estate companies. That’s an average of one bankruptcy per day.

The Chinese government recently made it clear that “houses are for living, not for speculation.” Since the second half of last year, the regulatory authorities implemented strict standards to limit real estate companies’ ability to borrow. As a result, the housing market has lost its steam.

On August 31, Sun Hongbin, chairman of the board of directors of Sunac China, a major property developer headquartered in Tianjin, expressed concerns about the pressure on sales in the second half of this year. The concerns are partly due to the “resolute government policy.” As the impact of the sluggish economy on people’s purchasing power continues, he expected that the market would be “more miserable” in the coming months.

Data from the China Index Academy, an influential property research institute, the real estate sector is facing a peak in debt repayment, with a total of 83.85 billion yuan (US $13 billion) in bonds to mature in September. The next peak will occur in March and April of 2022, with a monthly bond payment of 103.94 billion yuan (US $16 billion) and 94.06 billion yuan (US $14.5 billion) respectively.

Source: Central News Agency, September 7, 2021
https://www.cna.com.tw/news/acn/202109070378.aspx