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Demand for office space in Beijing has fallen a;s China’s economy weakens and companies are becoming more conservative about expansion. According to Caixin.com, the vacancy rate for Beijing office space has hit a 13-year high of 20.4%. This is the first time in recent years that the rate has topped 20%.

The shrinking technology industry in Beijing, coupled with conservative growth strategies and cost-cutting measures adopted by companies facing stiff economic headwinds, have combined to dampen office rental demand. According to the Caixin report, the high office vacancy rate in Beijing is mainly attributable to the following factors:

• companies relocating their headquarters out of Beijing over the past year,
• downsizing and taking less rental space, and
• an overall lack of new demand to replace surrendered office space.

The market will likely face further challenges until broader economic growth rebounds. Not only are vacancy rates high, but rents have also fallen. Beijing’s office real estate market is highly dependent on state-owned enterprises, whose long-term tenancy have played an important role in stabilizing the local office rental market.

Source: Radio Free Asia, January 26, 2024
https://www.rfa.org/mandarin/Xinwen/5-01262024134758.html

Amid a slowing economy in 2023, China saw a net outflow of funds from transactions with foreign countries for the first time in five years. Net outflows totaled 68.7 billion yuan. The outflows were driven by shrinking investments by foreign businesses into China as well as by affluent Chinese households’ increased travel and investment overseas.

China saw a net direct investment outflow of 118.5 billion yuan in 2023, the highest figure since 2010. It is unclear whether a bigger portion of this investment outflow resulted from transfers by Chinese firms or by foreign firms operating in China. On the one hand, Chinese companies’ expansion abroad has led to outflows; on the other hand, foreign companies’ downsizing and capital withdrawal from China has certainly contributed. A late-2023 survey of Japanese companies operating in China found that nearly 50% of respondents either reduced or did not expand 2023 investments in China compared with 2022. The number of foreign manufacturing and foreign industrial companies in China fell in November 2023 to its lowest level since November of 2004, dropping 0.4 percent compared with the same period in 2022.

China’s stock market hit new lows in late January 2024, down nearly 20% from the 2023 market highs. Meanwhile, feverish trading in foreign exchange-traded funds (ETFs) linked to the Nikkei and U.S. indices has led to a temporary suspension of those ETFs’ trading within China.

Following the end of Beijing’s zero-COVID policy in January 2023, affluent Chinese households increased their investment and travel overseas. This contributed to 2023’s capital outflows. The trend of capital flight from China persists in 2024.

China’s ability to attract foreign capital has weakened as the economy has slowed. The government faces challenges in restoring confidence and financial inflows. Ebbing confidence in China’s economic progress is reflected in the country’s investment outflows, foreign corporate downsizing, Chinese travel and investment abroad, and ongoing capital flight.

Source: Nikkei, January 25, 2024
https://zh.cn.nikkei.com/china/ceconomy/54665-2024-01-25-09-53-18.html

China is leading the world in terms of research on genetic modification and cloning monkeys, aiming to improve scientific understanding of human evolution and disease. In 2023, Chinese researchers published studies on monkeys whose genomes had been modified by adding human brain genes; these monkeys demonstrated better memory abilities compared to unmodified monkeys. The research could help explain millions of years of human evolution and the separation of humans from other primates. The experiments have raised some ethical concerns in the West.

In recent years, China has invested heavily in primate research at both the national and local levels, to the tune of 600 million euros. The country aims to establish monkey models of human diseases. The number of genetically modified monkeys remains small, however, as creating transgenic animals is a costly procedure. According to Pierre Savatier, a researcher at the French National Institute of Health and Medical Research, such a procedure costs around 1 million euros per animal. Although cloning can save some time, it is still a very expensive procedure with low success rates.

Some Western experts argue that, despite China’s demonstrated technological advances in genetic modification and cloning of primates, the scientific results of such experiments have been limited. Roger Le Grand, who leads the principal non-human primate lab at the French Atomic Energy Commission, noted that initial stages of transgenic mouse research were quote laborious before the associated techniques eventually became routine. Pierre Savatier commented that establishing stable lineages of genetically modified monkeys would take at least a decade.

Realizing pharmaceutical profits resulting from primate models would likely take 20-30 years. Currently, China is the only country devoting infrastructure and resources to support such long-term research. Public opinion in the U.S. and Europe generally opposes animal testing; China’s bets in this area, made “at the highest political levels,” are not being matched in Western countries.

Source: Radio France International, January 24, 2024
https://rfi.my/AHaD

Taiwan’s Central News Agency recently reported that China is experiencing overlapping epidemics of influenza A and influenza B.

The current influenza season in China began with the H3N2 influenza A strain in October 2023. Over the past 1-3 weeks, influenza B detection rates in some regions of China have exceeded influenza A rates. According to China’s National Health Commission, influenza A cases have been slowing and influenza B cases are on the rise. Multiple provinces are now seeing more influenza B than influenza A infections, with some hospitals now finding influenza B as the cause of more than 50% of positive flu tests.

China’s current influenza B epidemic largely affects young adults in their 20s-50s rather than the elderly. The symptoms also tend to be milder compared to influenza A.

With the ongoing dual influenza outbreaks, there has been a sharp rise in demand and sales of influenza medications in China. Experts have emphasized that previous infection with influenza A does not provide full immune protection against influenza B — people remain susceptible to influenza B even if they have already had influenza A this season. High-risk groups in China have been advised to take vaccines against both the influenza A and B viruses. Authorities continue monitoring the situation as the country remains in the midst of back-to-back flu epidemics.

Source: Central News Agency (Taiwan), January 15, 2024
https://www.cna.com.tw/news/acn/202401150085.aspx

China used to have a thriving piano industry, but piano sales have plummeted in recent years as the number of piano learners shrinks. After a decade of expansion, China’s piano sector now faces huge changes. Piano seller Mr. Fan says sales have declined precipitously since 2019, with 2023 sales between 10% and 30% of previous levels. Many dealers and companies face closure. The music education market is also declining, with teachers struggling financially.

Mr. Fan cites two main reasons for the decrease in demand. First, middle-class incomes and expectations have fallen in recent times. Second, parents feel that practicing piano is fruitless in the face of extreme competition, preferring to spend money on vacations. Some also believe that the decline may reflect parents diversifying interests as children age.

Piano consumption used to concentrate among middle-class families in top-tier mainland Chinese cities. A 2008 policy enabled “piano fever,” allowing extra exam points to art students who had high grades in piano classes. This grade-boosting policy, which incentivized piano lessons and piano practice, ended in 2018. Along with falling birth rates across China and relatively poorer financial prospects for Chinese parents, the piano industry has toughened.

During the pandemic, piano companies like Hailun and Pearl River Piano reported weak sales. They blamed factors including suspension of school and of in-person piano lessons. In 2023, major piano makers announced plunging revenues, which they ascribed primarily to weak demand.

Industry statistics indicate that at the beginning of 2022, China had 650,000 music instruction centers and 25,000 piano stores, and that about 30% of these closed by the end of 2022. The sector faces declining consumer demand, loss of disposable income, and waning confidence in the value of musical training.

Source: Central News Agency (Taiwan), January 16, 2024
https://www.cna.com.tw/news/acn/202401160288.aspx

Given the large number of withdrawals of papers published by Chinese scholars in international journals, China’s Ministry of Education has recently required universities to launch self-checks of retracted papers.  Education departments in several provinces followed suit, also mandating self-checks of retracted papers. Numerous Chinese schools have made announcements on the topic, saying that publishers’ retractions of Chinese papers in 2023 has negatively impacted China’s academic reputation.

Wuhan University has reviewed papers from the past three years. Shandong University requested that all faculty and graduate students comprehensively identify retracted papers. The Henan Education Department received a ministry list of retracted papers from China’s Ministry of Education and has asked schools to investigate papers on the list, verifying each paper’s research process and data acquisition. Verified academic transgressions will be “dealt with” by Henan’s Education Department.

Around 30 Chinese universities conducted similar reviews in mid-2023, citing a ministry notice issued in April 2023 calling for the clean up academic misconduct dating back to 2018.

China publishes the second most papers in the Science Citation Index (SCI), following only the United States. The rate of paper retractions by Chinese scholars is very high, accounting for 52% of all SCI retractions in 2022 out of 5,488 worldwide. The main reasons for retraction are that papers come from “research paper mills,” contain plagiarism, contain unreliable data, or that peer review fraud occurred.

Source: Central News Agency (Taiwan), January 4, 2023
https://www.cna.com.tw/news/acn/202401040296.aspx