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Beijing News: Beijing Announced Grain and Oil Market Stabilization Plan

Beijing News recently reported that the City of Beijing just announced and deployed an emergency response plan to balance the city’s grain and oil market. This is another emergency market control plan for life’s necessities, after the pork market and the vegetable market. As a “mega consumer city,” Beijing’s goal for the new emergency plan is to ensure that the market prices of grain and oil related products are controlled to be within certain ranges. The plan aims to control the price adjustments in the wholesale market. Based on past statistics, Beijing’s wholesale price fluctuations are typically more severe than those of the retail prices. The plan is to reflect the concerns related to the mid-to-long term impact under the complex domestic and international market pressure. Starting in 2013, Beijing established price control emergency funds within the government budget.

Source: Beijing News, May 13, 2019

VOA: As the US-China Trade War Escalates, China’s Employment Situation Is Getting Grim

As the US-China trade tensions intensify, China expects a record 8.34 million college graduates to enter the job market this summer. It is believed that the recent increase in tariffs that the U.S. has imposed has made China’s export-dependent economy more vulnerable. China’s employment situation will become more and more severe for all job seekers, including college graduates. A recent survey showed that the actual employment rate this year was only 52 percent due to the fact that college graduates have not been able to find matching professions after their graduations. The survey found that this means that at least 4 million graduates will soon become unemployed, although many of them may choose to continue their studies. A report that Renmin University of China and the Career Platform Recruitment Network completed jointly found that, in the first quarter of this year, the number of job seekers in China increased by 31 percent compared to the same period last year. It was the highest increase since 2011. The report concluded that the China Job Market Prosperity Index has fallen to its lowest level since 2014. However, the latest official statistics describe a slightly different situation. According to official data, the unemployment rate in China’s urban areas remained at 5.2 percent in March, down 0.1 percentage points from February.

Source: Voice of America, May 17, 2019

Li Keqiang on the Bottom Line of No Large-Scale Unemployment

On May 13, 2019, Chinese Premier Li Keqiang chaired and spoke at a recent national conference on entrepreneurship and jobs where he demanded that cadres at all levels make job creation their top priority.

Li said that, “the situation is complicated and grim” in the job market and that priority should be given to fresh graduates, demobilized military personnel and migrant workers.

To address this “complicated and grim situation,” Li said it’s the responsibility of regional governments, for they “must not break the bottom line of no large-scale unemployment.”

For migrant workers, Li asked regional authorities to take charge of their own unemployment issues. For provinces where large numbers of migrant workers tend to come to work, Li said that local authorities must do all they can to keep unemployed people in their region and to prevent migrant workers from returning to their hometowns en masse.

Meanwhile, Li said, authorities in provinces where most people leave to find work elsewhere, usually poor provinces where residents leave for work in the big cities, must assist those who have returned to their hometowns in securing jobs or starting their own businesses locally,

Source: Xinhua, May 13, 2019

In 2017 China’s Resident Debt Burden Exceeded 53 Percent of GDP

According to Chinese media, in the first half of 2017, mainland China’s resident debt burden exceeded 53 percent of China’s GDP. This figure includes residential mortgages and loans from Peer to peer (P2P) lending.

Without residential mortgages and P2P lending, the resident debt was 3 percent of GDP in 1996, 18 percent in 2008 and it hit 47.5 percent in 2017. From 2008 to 2017, it increased by 30 percentage points. It is noteworthy that it took the United States 60 years to increase from 20 percent to 50 percent while China took fewer than 10 years.

Further, based on data from banks, the debt-to-income ratio is much higher than 78.1 percent. From 2006 to 2017, the debt-to-disposable income ratio for mainland China’s residents surged from 18.3 percent to 78.1 percent. If other types of borrowing were included, the figure would be even more alarming. That is to say, it is much higher than 78.1 percent.

Source: Sohu, May 12, 2019

Beijing City: New Grain and Oil Price Control Has Nothing To Do With U.S.-China Trade Friction  

On May 13, 2019, the official Beijing Municipal Development and Reform Commission (BMDRC) website released the “Beijing Grain and Oil Market Supply and Price Volatility Emergency Control Plan.”

On May 14, 2019, China Business News reported that the BMDRC stated that the grain and oil fluctuation emergency plan announced on May 13, 2019 has nothing to do with U.S.-China trade friction.

The Control Plan “is a work that has been promoted before and it is part of the long-term price control. The time of the release just happens to be at this time. [The Control Plan] has nothing to do with Sino-US trade friction,” said the person in charge at the BMDRC

The BMDRC stated that the price of grain can affect the price of hundreds of items. Food security is an important foundation for national security. Food prices such as grain can play a critical role in balancing the entire price level. China’s edible oil market is highly dependent on foreign countries.  Domestic and international market prices are closely linked. It is equally important to stabilize the supplies in the edible oil market and to [secure] price stability.

The Control Plan sets three warnings: green, yellow (year-on-year price increase of 5 to10 percent for grain and 10 to 20 percent for edible oil) and red (year-on-year price increase of over 10 percent for grain and over 20 percent for edible oil). The three warning area indicators trigger three levels of government intervention respectively. The intervention may be through organized sourcing, increasing supply, speeding up distribution, cracking down on illegal activities such as hoarding and raising prices, price emergency measures, temporary price interventions, subsidies, and other emergency assistance.

Source: China Business News, May 14, 2019


China Times: Top Ten Mainland Export Categories Impacted by the New Tariffs

Major Taiwanese newspaper China Times recently published an article with an analysis of the Mainland China export categories that would be most impacted by the newly raised tariff rate (from 10 percent to 25 percent). The estimates were based on the ITC (United States International Trade Commission) 2018 statistics. The top ten categories (in terms of export value) are: electronic communications equipment (US$19.1 billion), computer circuit boards (US$12.5 billion), processing components (US$5.6 billion), metal furniture (except chairs, US$4.1 billion), computer parts (US$3.1 billion), wooden furniture (US$2.9 billion), static converters (US$2.7 billion), plastic flooring (US$2.5 billion), wooden framed seats (US$2.5 billion), and auto parts (US$2.3 billion). In the meantime, undisclosed sources expressed the belief that the Chinese counter-tariffs will most likely include US exports in the following categories: chemical products, agricultural products, whisky, and soybeans. The Trump administration has already started the preparations for the additional tariffs against the rest of all Chinese goods.

Source: China Times, May 10, 2019