Briefings - 141. page

In China, more and more businesses are finding it increasingly difficulty to survive and have had to close their doors. The reason is the COVID-19 epidemic coupled with the government’s tough “Zero-COVID” policy. On July 21, China’s Guyu Data reported that the vacancy rate of shops in Shanghai and Guangzhou reached 9.8 percent and 14.1 percent, respectively, (data for most cities are not yet available). In 2019, the vacancy rates in China’s first- and second-tier cities were around 6.1 percent. That rate increased to 11.0 percent and 9.0 percent in 2020 and 2021. Generally speaking, a store vacancy rate of 6 percent is cause for alarm.

From January to April, the total daily shopping mall traffic in China decreased by 19 percent compared to the same period last year. According to China’s National Bureau of Statistics, the total retail sales of consumer goods in April was down by 11.1 percent year-over-year.

In the first quarter of 2022 in Beijing, Shanghai and Guangzhou, the store opening/closing ratios were 0.85, 0.88 and 0.76, respectively, showing more store closures than store openings.

In the second quarter of 2022, the People’s Bank of China conducted a questionnaire survey of 20,000 urban depositors in 50 cities nationwide. The results showed that 23.8 percent of residents tended to “consume more,” while 58.3 percent of residents tended to “save more.” This is 3.6 percentage points higher than the previous quarter.

Source: Creaders.net, July 21, 2022.                                                                                                                                                             https://news.creaders.net/china/2022/07/21/2507106.html percent

Following the protests of thousands of depositors in Henan Province as they could not withdraw their money from a local bank, people in China have discovered that the difficulty in withdrawing money has also occurred in other provinces and cities.

According to China Times, a newspaper based in Beijing, one depositor from Shaanxi province, who opened an account at a Hainan branch of the Industrial and Commercial Bank of China (ICBC), recently found he was unable to withdraw, transfer or spend money from his account. Another depositor from Hunan province also said that he had his bank card frozen after taking out a loan from a bank.

Another mainland Chinese newspaper, Securities Daily, reported that similar cases also took place in Beijing and in Shandong province. In response to media inquiries, the bank involved said the operation was a risk control measure taken by officials to prevent accounts from being used for money laundering.

Source: Radio France International, July 20, 2022
https://rfi.my/8b0E

At a press conference on July 15, China’s National Bureau of Statistics announced that the Consumer Price Index (CPI), the key measure of inflation, was 2.3 percent in the second quarter. It was 2.1 percent for both April and May, and 2.5 percent for June. In the U.S., the CPI in June was 9.1 percent, reaching a 40-year high.

The South China Morning Post (SCMP) has reported on why China’s inflation rate has been relatively lower than that of the West. A major reason for China’s lower inflation rate is that the weight of products included in the CPI calculation is very different.

CPI tracks the prices people pay for a “basket” of goods and services. The list of goods is weighted, with those more often bought for daily consumption getting a higher weight.

While China puts more weight on food and clothing, the U.S. values housing and transportation more, the latter being more susceptible to global energy prices.

According to Huang Wentao, an analyst at the China Securities Finance Corporation (CSF), in China’s CPI calculation, the weight of food is about 18.4 percent, while that weight in the U.S. CPI is 7.8 percent; China’s weight for clothing and apparel is about 6.2 percent, while in the U.S. it is 2.8 percent. The rent for housing accounts for 16.2 percent in China’s CPI, and 32 percent in the U.S. calculation. Transportation accounts for 10.1 percent in China, which is much lower than the 15.1 percent in the U.S. counterpart.

Source: Central News Agency (Taiwan), July 15, 2022
https://www.cna.com.tw/news/acn/202207150277.aspx