Economy/Resources - 109. page

In the June 2018 issue of China’s Human Resources and Social Security magazine, Zhou Tianyong, a government scholar at The Institute for International Strategic Studies of the Chinese Communist Party’s Central Party School, published an article titled, “It is Imperative to remove birth control requirements completely.” The magazine is a publication of the Ministry of Human Resources and Social Security.

“As data that the National Bureau of Statistics released demonstrates, China’s population is facing an increasingly serious situation. The trend can be summarized by three declines, one rise, and one contraction.” As it continued, the article stated, “The first decline is the drop in the birth rate. In 2017 the national birth rate was 12.43 (births per year per 1,000 of population). The number was 12.95 in 2016. The second decline is the decline in the population of newly born babies. The number in 2017 was 630,000 less than in 2016. This is the equivalent of 4 percent fewer newborn babies. The third decline is the decline in fertility. In 2016, China’s fertility rate was only 1.24; the fertility rate in 2017 may be around 1.2.”

According to the article, “One rise refers to an increase in the aging population. In 2017, the population of the country’s population aged 60 and above was 240.9 million, accounting for 17.3 percent of the total population. Of those, 158.31 million were 65 and older, or 11.4 of the population. The population of both 60-plus and 65-plus years-of-age increased by 0.6 percentage points over the previous year.”

“One contraction means that the economically active population continues to shrink. China’s working-age population has continued to decline in proportion of the total population. The working-age population of people in 2017 who were aged between 16 and 59 was 901.99 million, accounting for 64.9 percent of the total population. In 2016, the number was 907.47 million, accounting for 65.6 percent of the total population.”

“Because of the combined effects of the above factors, the current population of China has formed a pattern of an accelerated decline of the birthrate, an increase in the population of the aging, and a shrinkage in the economically active population. The prospects are not optimistic.” “The reasons for this include difficulty in getting a job, the high cost of education, medical care, and housing, as well as the low supply of nurseries and kindergartens. They are important reasons for couples of childbearing age not to consider a second child.”

“In the next five years, with the youth population being reduced by about 30 million, China is likely to show a fast trend of an aging population, even faster than countries such as Japan, South Korea, and Taiwan. The aging of the economy will further put pressure on economic growth, and add to the burden that pensions create on the fiscal and financial systems.”

“It is Imperative to stop birth control completely.”

Source: The Paper, July 21, 2018
https://www.thepaper.cn/newsDetail_forward_2282278

The Central News Agency reported that, at the end of last year, China announced that it would carry out a “Peer to Peer Lending” platform regulation starting in June of 2018 (P2P occurs when online services match lenders with borrowers). From July 2 to 16, 131 of the P2P platforms were shut down leaving investors unable to withdraw cash while the owners went missing. The South China Morning Post reported that, in Shenzhen City alone, 22 P2P platforms were closed. One example is Heshidai (合時代), which has been running for 5 years since 2013 with accumulated financing activity of over 18 billion yuan (US$2.68 billion) and over 100,000 investors.

According to Sina, in China, P2P grew 200 percent from 2013 to 2017 because proper channels are lacking for Chinese citizens and small businesses to get loans from the bank. In 2014, only 9.6 percent of Chinese residents were able to get personal loans. At the same time, although small businesses contribute toward 60 percent of GDP and supply 80 percent of job opportunities, only 25 percent of them were able to get business loans. However, regulations for P2P lending are lacking. One of the scandals that turned into a Ponzi scheme was Ezubao lending. It was set up in 2014 and involved a $7.3 billion fund and 900,000 victims. It was shut down in February 2016 and 21 people were arrested.

It is expected that the regulatory activity will continue for a period of time and more P2P platforms will be impacted.

Sources:

1. Central News Agency, July 22, 2018
http://www.cna.com.tw/news/acn/201807220026-1.aspx
2. Sina.com, May 17, 2018
http://finance.sina.com.cn/stock/usstock/c/2018-05-17/doc-iharvfhu3237018.shtml

Xinhua reported that, on July 16, the spokesperson for the National Development and Reform Commission spoke at a press conference. He stated that the latest economic index for the first six months of 2018 suggests that China’s economy has been generally stable and the economic structure continues to be optimized and is improving. China’s fiscal deficit rate and government debt ratio are low, commercial banks’ capital adequacy ratios and provision coverage ratios are relatively high, and the corporate debt ratio is tending to decline. There is plenty of room for macroeconomic regulations and policies to be applied. He claimed that China will continue to adhere to the general tone of steady progress, maintain strategic strength, enhance the flexibility of macroeconomic policies, and strengthen coordination between policies to ensure the stability of macroeconomic fundamentals. As to the economic outlook for the second half of the year, the spokesperson stated that China needs to shift its development, structure, and economic transformation from over relying on foreign investments and exports to increasing its domestic spending and services. According to the spokesperson, “With the great resilience of the Chinese economy and the certainty of sustained and healthy development, we have the confidence, conditions, and sufficient ability to be effective in responding to the uncertainties of the world economy and to ensure the achievement of the goals and tasks that were set forth at the beginning of the year.”

Source: Xinhua, July 17, 2018
http://www.xinhuanet.com/fortune/2018-07/17/c_1123140349.htm

An article that Duowei News published disclosed that the Central Administration is extremely dissatisfied with the slow reform progress that local governments are making. The article quoted a former Deputy Director from the Finance Office who spoke at the recent Lujiazui Forum in Shanghai (http://chinascope.org/wp-admin/edit.phpai). He claimed that in the past two years, the Central Administration has shifted its focus and made progress on financial crisis prevention. However, the efforts that the local governments and State Owned Enterprises (SOEs) are making are sorely lacking. Examples he listed included some municipal entities that resist the deleveraging measures that the Central Administration has launched; some can’t even pay back the interest on their debt, where the total debt at the municipal level is 40 trillion yuan (US$6 trillion). Meanwhile the SOEs are slow in reducing their excess capacity.

Source: Duowei News, July 10, 2018
http://news.dwnews.com/china/news/2018-07-10/60069825.html

Well-known Chinese news site Netease recently republished a report from Xiamen Daily News that the State Administration of Foreign Exchange, Xiamen Branch, issued a public risk warning on illegal foreign exchange activities. The warning said that, without approval and authorization from the Administration, no organization is allowed to conduct the business of exchanging Chinese currency for any foreign currencies. Any organization without a permit will have to face law enforcement. The warning listed the authorized local commercial banks as well as companies that have a permit. Some companies may require a prior appointment for doing an exchange transaction. {Editor’s note: before the great Reform that Deng Xiaoping started, China used to have a large foreign exchange black market. In the past few decades, since the government authorized organizations have had an ample supply of foreign currency, especially the U.S. dollar, the black market nearly disappeared from everyday life. However, recently, the Chinese government has been tightening up the supply of U.S. dollars.}

Source: Netease, July 2, 2018
http://xiamen.news.163.com/18/0702/16/DLNKIL2504418D23.html