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China Eyes Exporting High-end Medical Equipment Overseas

China held its 90th China International Medical Equipment Fair (CMEF) at Shenzhen City, Guangdong Province recently. Nearly 4,000 companies from China and abroad showcased tens of thousands of medical device products.

People’s Daily reported that China has made significant strides in the high-end medical equipment area, such as ventilators, sleep apnea machines, AI-based medical imaging processing, and surgical robots. In recent years, Chinese medical device companies have been advancing steadily into the global markets. According to data from China’s General Administration of Customs, China’s total exports of medical devices reached 484 billion yuan (US$ 68 billion) in 2023, among which, medical equipment exports grew 5.4 percent year-over-year and were up 54.8 percent compared to 2019.

The CMEF event organizer, Reed Sinopharm Exhibitions, signed a cooperation agreement with the Association of Private Hospitals of Malaysia (APHM). Next year, the two parties will jointly host an exhibition in Malaysia, aiming to bring more Chinese medical device products to the international markets.

Source: People’s Daily, October 22, 2024
http://health.people.com.cn/n1/2024/1022/c14739-40344083.html

Briefings | | |   Economy/Resources

Xinhua Commentary: US Trade Restrictions Have Ruined ASML and the Global Industrial Chain

Xinhua News Agency published a commentary on ASML’s recent drop in stock price. Below are some key excerpts from the article.

Due to lower-than-expected orders and a downgraded performance outlook, Dutch semiconductor equipment maker ASML recently experienced a sharp decline in its stock price, losing its title as Europe’s most valuable tech company. Many market analysts believe that U.S. restrictions are key drivers behind ASML’s drop in orders, asserting that U.S. hegemonic actions are detrimental to global industrial development and free trade.

It is a common tactic for the U.S. to use “national security” as a pretext to suppress foreign companies and “sanctions” to maintain its competitiveness. The U.S. presents itself as a “defender of free trade,” but it follows “market rules” at will. When leading in technology and holding a strong market position, it champions “free competition.” When other nations make significant technological advances that could challenge its economic and technological dominance, it disregards “market rules,” instead resorting to extreme measures and forming alliances to relentlessly suppress foreign enterprises, including those of its allies.

In the 1980s, when Japan’s high-tech sector posed a challenge to the U.S., the U.S. imposed anti-dumping tariffs and sanctioned companies like Toshiba. The U.S. “long-arm jurisdiction” tactics dismantled prominent French manufacturer Alstom. Targeting India’s steel, Canada’s lumber, and Brazilian agricultural products, the U.S. has employed a range of non-market strategies. It also adds more foreign companies to export control lists and enacts the CHIPS and Science Act and the Inflation Reduction Act, to attract more semiconductor and renewable energy firms to invest and build facilities in the U.S., and block other countries’ products from entering the U.S. market. The U.S. has also targeted electric vehicles (EVs), imposing a 100 percent tariff on Chinese EVs and threatening to ban Chinese software and hardware in networked and autonomous vehicles on American roads. Recently, the U.S. government is even considering restricting sales of advanced AI chips to specific countries, particularly in the Gulf region. These policies severely disrupt business operations, hinder market expectations, and obstruct normal industry growth.

The U.S.’s “freedom” of arbitrarily wielding power comes at the cost of the “unfreedom” faced by ASML and other international companies.

Source: Xinhua, October 19, 2024
http://www.news.cn/20241019/1c9f5f13984e4e63bfbbad7171992f3c/c.html

Briefings | | |   Economy/Resources US-China Relations

European Airlines Suspend China Flights Amid Rising Competition from Chinese Carriers

In mid-October, Lufthansa, Scandinavian Airlines, and LOT Polish Airlines successively announced the suspension of their flight operations to Beijing and Shanghai. This news comes after earlier suspension of flights to and from China by British Airways and Virgin Atlantic.

The reported reason was that Chinese airlines have a unique advantage due to the Russia-Ukraine War. Since the start of the war, Russia has closed its airspace to 36 countries and regions, including Europe, forcing European airlines to take longer detours when flying to China. However, China has a special relationship with Russia and thus Chinese airlines can continue flying over Russian airspace as usual. This allows Chinese airlines to have shorter flight times, less fuel consumption, and potentially lower ticket prices. Chinese airlines are expanding while the European airlines are retreating. Air China, China Eastern Airlines, China Southern Airlines, and Hainan Airlines have all added new routes from China to Europe. (Note: this situation didn’t happen between the U.S. and China, since the U.S. insisted on the reciprocal rule: that Chinese airlines need to match the U.S. airlines’ operations.)

Some European airlines are dissatisfied with the situation and are asking their governments to take “non-market” special measures to curb Chinese competitors. In July of this year, Austria rejected China Eastern Airlines’ proposal to launch a Shanghai-Vienna route, saying that “Russia’s current airspace restrictions and China Eastern’s competitive advantage over the local Austrian Airlines would be against the overall economic interests.” Air France-KLM and Lufthansa are actively lobbying their governments to take action to address the imbalance in competition on China-Europe routes.

Source: Creaders.net, October 19, 2024
https://finance.creaders.net/2024/10/19/2786525.html

Briefings | | |   Economy/Resources Geo-Strategic Trend

China’s Income Distribution as Derived From State Taxation Administration’s Numbers

The State Taxation Administration released the 2023 Individual Income Tax Settlement and Payment Report. An individual analyzed the data to derive the Chinese people’s income level breakdown.

According to the official data:

  • After raising the minimum income level for taxation from 3,500 yuan to 5,000 yuan per month, the number of people filing income tax dropped from 157 million to 65 million in 2022.
  • Among the income tax-filing people, less than 30 percent paid tax.
  • Among those who paid income tax, 60 percent were in the 3 percent tax rate bracket (5,000 – 8,000 yuan/month).
  • 1 percent of the income tax-filing people have income above 1 million yuan.
  • People with annual income less than 100,000 yuan usually do not need to pay income tax (due to various deductibles).

The author thus deduced:

  • Income between 3,500 yuan and 5,000 yuan per month: Near 100 million people (between 65 million and 157 million).
  • Income above 5,000 yuan per month: 65 million people.
  • Income between 5,000 and 10,000 yuan per month: 45 million people (only 30 percent of the 65 million paid taxes).
  • Income above 100,000 yuan per year: 20 million people (only 30 percent of 65 million paid taxes).
  • Income between 100,000 and 150,000 yuan per year: 12 million people (60 percent paying at the 3 percent tax rate).
  • Income between 150,000 and 1 million yuan per year: 7.3 million people (8 million minus 700,000 whose income is above 1 million yuan).
  • Income above 1 million yuan per year: 700,000 (around 650,000) people.

Source: Aboluo, October 16, 2024
https://www.aboluowang.com/2024/1016/2116093.html

Briefings | | |   Economy/Resources

China’s Top 500 Enterprises Cut 314,600 Jobs in 2023

On October 15, the Hong Kong-based South China Morning Post reported that All-China Federation of Industry and Commerce, a semi-official institution, released a report stating that China’s top 500 enterprises generally have strong risk resilience. However, by end of 2023, these companies employed 10.66 million people, cutting 314,600 jobs from the previous year.

The job cutting trended continued in this year. In May, several leading companies announced layoffs. Alibaba’s mid-May financial report revealed a reduction of over 14,000 employees. JD.com laid off 12,000 employees on May 21. Lenovo Group’s financial report indicated a reduction of 7,500 employees. Li Auto reduced its workforce by 18%, amounting to at least 5,600 employees.

Source: Sound of Hope, October 15, 2024
https://www.soundofhope.org/post/845372

Briefings | | |   Economy/Resources

Hikvision Cuts R&D Operations Amid Declining Profits and Government Spending

Hikvision, China’s leading surveillance camera manufacturer, is reportedly undergoing major organizational restructuring, including significant cuts to regional R&D departments that could affect over 1,000 employees. The company is reducing its R&D regions from 32 to 12, maintaining only core areas.

According to employee reports on recruitment website Maimai, R&D departments are heavily impacted, with some regions, like Hunan, being completely eliminated, though headquarters areas like Hangzhou haven’t yet been affected. The company is offering N+2 compensation packages to laid-off employees.

Following public discussion of these layoffs, Hikvision responded by denying any large-scale layoffs, stating that this is merely a strategic adjustment to optimize R&D resources in headquarters and key sales cities.

The company’s financial performance has been declining for three consecutive years, with its H1 2023 financial report showing total revenue of 41.21 billion yuan (up 9.68% YoY), profit of 5.064 billion yuan (down 5.13% YoY), and public service sector revenue of 5.693 billion yuan (down 9.25% YoY).

The decline is primarily attributed to poor local government finances, resulting in reduced spending from public security and traffic police sectors. Senior VP Huang Fanghong acknowledged that industries dependent on local government funding are struggling, noting that both government and enterprise customers are now favoring cost-effective products over innovative, high-performance options.

Hikvision, known for its surveillance technology and crucial role in China’s “Skynet” monitoring system, has grown to become a global security industry leader over the past 20 years.

Source: Central News Agency (Taiwan), October 11, 2024
https://www.cna.com.tw/news/acn/202410110414.aspx

Briefings | | |   Economy/Resources

Lianhe Zaobao: Movie Market Very Weak During China’s National Day Holidays

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that, during China’s National Day holiday period right after the Chinese stock market recently soared, movie consumption (an important part of the holiday economy) was particularly weak.

According to latest statistics, this year’s China National Day period (October 1st to 7th) box office totals reached RMB 1.82 billion yuan (around US$258 million), including pre-sold tickets. This year’s “Golden Week” number was not only dramatically lower than the RMB 2.734 billion yuan (around US$397 million) for the same period last year, but also less than half of the RMB 5.049 billion yuan (around US$715 million) seen in 2019. Moreover, this year’s box office results were achieved with the help of heavy official subsidies.

In order to attract people to watch movies, many local governments launched programs such as movie-viewing-coupon initiatives. For example, the Beijing Film Bureau issued RMB 10 million yuan (around US$1.42 million) in movie viewing subsidies to more than 250 theaters in the city, while the Shanghai government issued 30 million yuan (around US$4.25 million) in movie consumption vouchers.

In recent years, China’s consumer spending as a share of GDP has declined, rather than increasing. Analysts expressed the belief that the government will have a hard time effectively stimulating consumption unless the financial pressure on ordinary people from the “three big mountains” (housing, education and medical care) is removed.

Source: Lianhe Zaobao, October 6, 2024
https://www.zaobao.com.sg/finance/china/story20241006-4954583

Briefings | | |   Economy/Resources

Chinese Foreign Ministry Spokesperson Reverses Position to Acknowledge “Israel’s Reasonable Security Concerns” for First Time

In a first since the start of the Israel-Hamas war, spokesperson Mao Ning of the Chinese Foreign Affairs Ministry acknowledged “Israel’s security concerns” at a press conference on October 8. The following is an excerpt from a transcript published by the Foreign Affairs Ministry (emphasis added by ChinaScope):

China News Service Reporter: Yesterday, October 7, 2024, marked the one-year anniversary of the outbreak of the Gaza conflict. The conflict is still ongoing. What is China’s comment on this situation? How will China further promote a ceasefire and an end to the fighting?

Mao Ning: The Gaza conflict has dragged on for a year, resulting in the loss of many innocent lives and causing an unprecedented humanitarian disaster. Its spillover effects have impacted the region, and tensions continue to escalate. China is deeply concerned about the ongoing violence and the continued absence of peace.

The brutal reality clearly demonstrates that military force and violence are not solutions to the problem; they only add new grievances to old ones, making peace and stability even more elusive. Recently, China proposed a “three-step” initiative to break out of the current Gaza conflict: a ceasefire and humanitarian aid are the top priorities, “Palestinians governing Palestine” is the fundamental principle for post-conflict Gaza reconstruction, and the “two-state solution” is the ultimate path forward. The legitimate national rights of the Palestinian people should be realized, and Israel’s reasonable security concerns should also be addressed. The international community should work to de-escalate the situation, convene a larger, more authoritative, and more effective international conference, and set a timetable and roadmap for implementing the “two-state solution,” ultimately achieving peaceful coexistence between Palestine and Israel, and harmonious coexistence between the Arab and Jewish peoples.

Bloomberg Reporter: I would like to clarify your earlier comment. When you mentioned the one-year anniversary of the Gaza conflict on October 7, did you say that “Israel’s reasonable security concerns should also be addressed”? Could you elaborate on this point? Has the Foreign Ministry previously made similar statements? I’m interested in the background of this stance.

Mao Ning: You heard correctly. I did indeed say that the legitimate national rights of the Palestinian people should be realized, and Israel’s reasonable security concerns should also be addressed. This has always been China’s consistent position. Only by doing so can we ultimately achieve peaceful coexistence between Palestine and Israel and harmonious coexistence between the Arab and Jewish peoples.

Source: Website of China’s Embassy at the United States, October 8, 2024
http://us.china-embassy.gov.cn/chn/lcbt/wjbfyrbt/202410/t20241008_11503801.htm

Briefings | | |   Economy/Resources Government/Politics