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DW Chinese: Russia Became China’s largest Crude Oil Supplier

Deutsche Welle Chinese Edition recently reported that, in May of this year, China’s crude oil imports from Russia hit a new high, an increase of 55 percent over the same period last year. So far, Russia has replaced Saudi Arabia as China’s largest crude oil supplier. Chinese customs data showed that, despite sanctions from the West, Russia has been able to find Chinese buyers for its crude, but has had to cut prices. Though China’s demand for crude oil has fallen due to Covid, yet companies such as PetroChina and Zhenhua Oil have increased imports of cheap Russian crude. Saudi Arabia is China’s second-largest oil supplier. Its daily supply to China fell to 1.84 million barrels in May from 2.17 million barrels in April. Chinese customs data also showed that China imported 260,000 tons of crude oil from Iran in May of this year, which is the third batch of Iranian crude oil China has imported since December of last year. Despite U.S. sanctions on Iran, China typically imports Iranian oil through third countries, with Iranian crude accounting for 7 percent of China’s total imports. Chinese customs data also showed that China imported 400,000 tons of Russian LNG (Liquid Natural Gas) in May of this year, a 56 percent increase from May of last year. In the first five months of this year, China’s LNG imports from Russia increased by 22 percent year-over-year to 1.84 million tons.

Source: DW Chinese, June 20, 2022

Lianhe Zaobao: Tencent Plans More Layoffs

Singapore’s primary Chinese language newspaper, Lianhe Zaobao, recently reported that, in the second half of this year, Chinese Internet giant Tencent will continue to lay off staff. All business groups will reduce their staff by at least 10 percent and will start laying off more staff from the management levels. In the first half of this year, Tencent “optimized” the personnel of each business group. In the second half of the year, the whole company will continue to lay off employees on the same basis as in the first half of the year. The proportion of layoffs in the different sub-divisions of the Platform and Content Business Group will even reach 40 to 50 percent. A few business groups will face discontinuation. Tencent’s core business groups, including the WeChat Group and the Gaming Group were not touched much in the first half. However, in this upcoming new round, 10 percent or more will also see layoffs. Tencent is currently at a low point in its performance. According to Tencent’s financial report for the first quarter of this year, Tencent’s adjusted net profit fell by 23 percent year-over-year and its net profit has declined for three consecutive quarters.

Source: Lianhe Zaobao, June 23, 2022   already

China Again Fell to the Third Largest Trading Partner Position of the U.S.

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that, in the first four months of this year, the largest trading partner of the United States was Canada, with a bilateral trade volume of US$258.5 billion. Mexico also surpassed China to become the second largest trading partner of the United States, with a bilateral trade volume of $249.8 billion. China fell to the third position, with the total bilateral trade volume of US$241.1 billion. The primary reason for the US-China trade decline is that, in April, U.S. exports to China fell by $1.6 billion, and imports from China fell by $10.1 billion. An important reason for the continued rise in total U.S. trade is that inflation is going global, driving up the prices of imported goods. As we all know, inflation in the United States is very serious at the moment.The inflation rate has reached its highest level in 40 years. Consumer prices have continued to rise, especially gas prices. Thus the U.S. government has been heavily criticized. The U.S. Federal Reserve has already acted and raised interest rates. At present, the U.S. dollar is relatively strong and the currencies of many countries have depreciated, which will help promote U.S. imports. As the world’s factory, China has been the world’s largest trading country for many years. Last year’s total import and export trade volume exceeded US$6 trillion. The United States is China’s largest trading partner.

Source: NetEase, June 9, 2022

The CCP’s Solution to College Graduates’ Unemployment: Send Them to a Remote Farmland

Chinese college graduates have faced a severe job shortage for years. The National Bureau of Statistics reported in May that the nationwide unemployment rate in April was 6.1 percent. It was 18.2 percent for people whose ages were between 16 and 24. Things will be even worse when 10.76 million students graduate from college in the upcoming two months.

The Chinese Communist Party’s solution is to send the college graduates to farmlands. Recently, the Ministry of Civil Affairs, the Ministry of Education, the Ministry of Finance, and the Ministry of Human Resources and Social Security jointly issued a notice to guide college graduates to work or establish their own business in remote towns or rural communities and ask villages to “actively absorb college graduates to serve as village workers.”

The government will provide incentives to small businesses that employ college graduates in villages, home services, and elderly care. However, Chinese college graduates prefer to work for high-paying companies in large cities, and there is a wide income gap between rural and urban areas.

People compare this government initiative to the “Up to the Mountains and Down to the Countryside (上山下乡)” movement that Mao Zedong initiated for the city teenagers during the Cultural Revolution. During that campaign, Mao sent several millions of teenagers from the cities to live in remote farmland for ten years, separating them from their families and ruining their lives.

Source: Epoch Times, June 13, 2022

Beijing Asked Foreign Investment Banks To Cut Pay to Their Executives in China

Bloomberg recently reported that China’s regulatory authorities summoned foreign investment banks, including Credit Suisse, Goldman Sachs, and UBS.  Beijing asked them to lower the total compensation to their executives in China and defer their bonus payments for over three years. The Chinese authorities said their substantial compensation is opposed to the “common prosperity” policy that the Chinese Communist Party (CCP) promoted last year.

These foreign investment banks often hire top CCP officials’ children or grandchildren so that they can use their parents’ or grandparents’ power and influence to bring big business to the firm. In return these financial firms pay them decently and feel that pay is well worth it.

Source: Liberty Times, June 14, 2022

Xi Jinping Criticizes Chinese Universities for Faking Employment Data

China has a record 10.76 million fresh college graduates this year, but the economy is under huge downward pressure due to Beijing’s draconian COVID-19 epidemic control. According to the government statistics, the national urban unemployment rate reached 6.1 percent in April, indicating there is tremendous unemployment pressure. Xi Jinping recently visited a college in Sichuan Province and expressed concern over employment issues.

The official Xinhua News Agency reported that Xi said that the employment data should reflect the real situation. “Some schools, while in pursuit of a high employment rate, falsify the data by coercing the graduates to sign an employment contract regardless of their will.” Xi

stressed, “We cannot fool the higher authorities, let alone the students.”

Source: Central News Agency (Taiwan), June 14, 2022

China’s Shenzhen and Many Other Wealthy Cities and Provinces Will Cut Salaries While Foreclosures on Houses Soar

According to several mainland media reports in May, Shenzhen, the richest city of China, is facing a second wave of significant salary cuts for civil servants. The annual salaries will be reduced to less than 160,000 yuan a 36 percent drop (6.65 Chinese yuan = 1.0 US $). Last year, (2021) the salary was down to 250.000 yuan from the original amount of 300,000 yuan. Many foreclosed house will instantly appear in the Shenzhen property market.

On May 26, a netizen who is a first-level Chinese teacher in Shenzhen Middle School posted,  “Our company asked each of us to fill out a form this morning that we would, in principle, voluntarily reduce our wages.”

Not only Shenzhen, but many other of China’s wealthiest cities and Provinces in China also had already implemented a salary cut plan for civil service positions in 2021. The hearts of government officials have begun to fluctuate. Especially since last December, civil servants in Jiangsu, Zhejiang, Guangdong, Fujian, Shanghai and other provinces and cities have successively received notices of salary reductions, with a drop of about 20 to 30 percent.

The current wave of salary cuts is not only for civil servants, but also for teachers and other positions within the system. In addition, Shenzhen, Hangzhou, Suzhou, Qingdao and other coastal cities within the system have also reduced salaries. This wave of pay cuts are universal, and the higher the income, the greater the reduction.

Due to the extreme COVID-19 epidemic prevention and control measures, China’s economy has suffered a sharp downturn and the finances are tight. The epidemic prevention has lasted for several years and most enterprises have stopped production. Therefore, they will report the loss of production, and they will not pay taxes. Real estate is also all but dead.

The COVID-19 epidemic has caused sluggish consumption, disrupted supply chains, and has had a huge impact on both production and demand, which has been reflected in finances. In April 2022, the national fiscal revenue was about 1.2 trillion yuan, a sharp drop of 41.3 percent from the same period last year. Among them, tax revenue fell sharply by 47.3 percent year-on-year.

The fiscal revenue has decreased by a large amount, and the epidemic prevention funds have increased by a large amount, so the government must reduce expenditures. The massive pay cuts have not only caused turmoil in the hearts of the people, but also highlighted the sluggishness of China’s economy. The closely related effect of salary reductions suggests a wave of mortgage breaks is coming! At the beginning of 2022, 200,000 homeowners abandoned their houses and stopped paying their mortgages.

There were 9,000 foreclosed homes in 2017. By the end of 2021, the total number of foreclosed homes has soared to 1.68 million.

Real estate is deeply tied to the economy and household wealth, and the resulting financial risks are growing. A downturn in the economy, lower personal incomes or job losses make it a desperate choice for those who have a mortgage. Should they abandon a home and cut off mortgage payments?

The massive wave of salary cuts in Shenzhen and Shanghai, the regions with the highest fiscal revenues in China, as well as in the Pearl River Delta and Yangtze River Delta has made it possible for the outside world to conclude that both the central and local finances of the CCP regime are in serious trouble, with revenues falling short of expenditures, (i.e., People are running out of money).

From the published fiscal revenue in April this year, only 6 out of 21 provinces and municipalities had increased revenue year-on-year. Most of them are mineral resource-rich areas. 14 provinces and municipalities, mostly economically developed manufacturing and service industries, had decreased revenue; and only one province Fujian had remained flat.

The precipitous economic decline caused by the CCP’s harsh COVID-19 control has resulted in the finances of both the central and local governments of the CCP to fall short of their budgets, which has forced them to introduce salary cuts, although that may likely to spark public anger.

The authorities and institutions that have been increasing their salaries and benefits for more than two decades and have had years of living a good life are now preparing for hard times. The first step is to reduce salaries and benefits and compress the administrative expenses. If they still can’t break even, the second step will be to lay off employees just like many enterprises have done in recent years.

Source: Aboluowang, June 4, 2022.

Chinese Property Developer Fantasia Owes US$149 million In debt and May Face Liquidation

Fantasia Holdings Group, the Chinese developer founded by the niece of a former Chinese vice-president Zeng Qinghong, might face liquidation after it received a wind-up petition from creditors for failing to repay an outstanding loan of US$149 million.

A winding-up petition is the legal mechanism by which a business creditor can apply to the court to wind-up a company for non payment of debts. It can result in compulsory liquidation.

On May 26, Shenzhen-based Fantasia received a wind-up petition that Flower SPV 4 Limited had filed. The filing had been submitted to the Hong Kong stock exchange on Monday. The petition was filed by the creditor on May 24 in the Grand Court of the Cayman Islands, where Fantasia is registered.

Trading in shares was suspended on April 1 following Fantasia’s previous financial difficulties. The company said that its stock trading will remain suspended until further notice.

Zeng Qinghong was the right-hand man of China’s former president Jiang Zemin. The story of Fantasia’s financial difficulties was widely reported by mainland Chinese media.

Source: Central News Agency (Taiwan), May 30, 2022