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People’s Daily on Recent Financial Cooperation Between China and Arabic Countries

CCP newspaper People’s Daily has published a list of ways that China has been cooperating with Arabic countries recently.

  • Starting on January 1, 2024, Saudi Arabia, Egypt, the United Arab Emirates (UAE), Iran, and Ethiopia officially became members of the BRICS countries, increasing the total number of BRICS member countries from 5 to 10. Abdullah, the Minister of Economy of the UAE, stated that there would be additional capital injection into the BRICS Development Bank.
  • On November 28, 2023, China People’s Bank and the UAE Central Bank renewed their Renminbi/Dirham Bilateral Currency Swap Agreement, valid for 5 years, with a swap scale of 35 billion RMB/18 billion UAE Dirhams.
  • In November 2023, the People’s Bank of China signed a bilateral currency swap agreement with the Saudi Central Bank, with a swap scale of 50 billion RMB/26 billion Saudi Riyals. The agreement is valid for 3 years and can be extended with mutual consent.
  • In October 2023, the China Export-Import Bank signed a cooperation agreement with the African Bank of Morocco. Both parties will “actively promote economic and trade exchanges and financial cooperation through project financing, parallel financing, and trade financing.”
  • The Chinese Ambassador to Saudi Arabia, Chen Weiqing, said that as of 2023 the China’s Export-Import Bank and the National Bank of Saudi Arabia have successfully implemented the first RMB loan project [to Saudi Arabia]. The Bank of China and the Industrial and Commercial Bank of China have also opened branches in Saudi Arabia.
  • The 2023 International Maritime Awards ceremony was held in Shanghai, where the COSCO Shipping Ports’ Abu Dhabi Terminal won the “Port Terminal Innovation Award.” The terminal was jointly constructed by COSCO Shipping Ports and the Abu Dhabi Ports Authority, with support from China’s Silk Road Fund. Since opening in 2018, the terminal has established direct connections with 65 ports worldwide. Its container throughput exceeded 1 million standard containers in 2022.
  • On October 30, 2023, the China Development Bank completed the full disbursement of a 7 billion RMB loan agreement with the Central Bank of Egypt.
  • On October 9, 2023, the China Export Credit Insurance Corporation issued the first medium-to-long-term insurance policy for a “new energy power” financing project, providing medium-to-long-term export buyer credit insurance support for the “Manna 2” 500 MW photovoltaic power (solar power) station project in Oman. In the same month, the performance test for Unit 4 of the Hassyan Power Station project in Dubai was successfully completed, marking the commercial operation of all 4 units at that power station. The power station was jointly financed and constructed by China’s Silk Road Fund, the Harbin Electric Group, and UAE investment institutions, representing the first investment of the Silk Road Fund in the Middle East.
  • The Industrial and Commercial Bank of China recently held a bond listing ceremony at the Nasdaq Dubai Exchange. The “green bonds” issued by the bank were simultaneously listed on stock exchanges in Hong Kong, Dubai (UAE), Singapore, and Luxembourg, with a total issuance size of approximately USD 2 billion.
  • In November 2023, Shanghai Stock Exchange signed a “memorandum of understanding for cooperation” with Dubai Financial Market. Both parties “plan to jointly explore and develop financial products related to ESG (environmental, social, and corporate governance) and sustainable development, as well as cross-border indices, exchange-traded funds (ETFs), and other financial products.”

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Briefings | | |   Economy/Resources Geo-Strategic Trend

Huang Qifan Pitches Government Buyup of Residential Housing Following Further Fall in Real Estate Prices

A video of Huang Qifan has been circulating in China, generating some heated discussion. Huang expressed his view that the Chinese government should buy up residential housing following a potential drop in real estate prices. Huang is the former mayor of Chongqing and former Vice Chairman of the Financial and Economic Committee of China’s National People’s Congress.

Recently, the Chinese government suggested splitting residential housing into two categories: Commercial Housing, which people would be allowed to buy and sell, and Government Subsidized Housing, which would be owned by the government. This latter category, ineligible for purchase or sale by the public, would be leased out by the government to people in financial need.

In the video of Huang, he stated that housing prices in China have already fallen 10 to 20 percent over the past couple of years. If prices were to fall another 30 percent this year then the total drop in price would be 40 to 50 percent down from the peak. When this happens, he said, the government could “take the opportunity” to buy up these apartments. Cities could use 5 trillion yuan (US$ 700 billion) to buy up such apartments and then lease them out as the Government Subsidized Housing. He said that housing prices would then rise back up over the subsequent five to ten years, and this would be an excellent way for the government to “save the housing market.” He argued that the government would not lose any money (it would actually make money), and it would avoid needing to spend money on building out Government Subsidized Housing.

Huang went on to argue that there is no moral problem with his proposed plan of action. In his analysis, the proposed approach has many benefits: it “solves the supply of the Government Subsidized Housing,” saves the real estate market, resolves extra housing capacity (i.e. reduces oversupply of housing), saves real estate companies and banks, and “balances social debts.”

Huang also proposed an approach for bringing down housing prices in China: by tightening the money supply and loan activity, the government could cause many house foreclosures. When the share of foreclosed housing reaches a certain proportion, housing prices in the market more broadly would fall.

An article on the Aboluo  website criticized Huang’s argument. The article reasoned that the “base housing price” from five years ago was 50 percent of recent peak in housing prices, and that the general public had benefited greatly from this rise in real estate asset prices. If the government were to let housing prices fall by 50 percent, the public (which is heavily invested in real estate) would take a big monetary loss. Following Huang’s plan, the government would then buy the housing at the base price (a 50 percent discount from peak prices) and would reap financial gains after waiting for another five years to pass, seeing their investment double in value. The Aboluo article argued that those investment gains should belong to the general public, not to the government — by following Huang’s plan, the government would not be “expanding the pie” of the housing market, but would rather be cutting the pie in half and taking half for itself.

Source: Aboluo, January 8, 2024
https://www.aboluowang.com/2024/0108/2001131.html#google_vignette

Briefings | | |   Economy/Resources Government/Politics

CNA: China Faces Overlapping Influenza A and B Epidemics

Taiwan’s Central News Agency recently reported that China is experiencing overlapping epidemics of influenza A and influenza B.

The current influenza season in China began with the H3N2 influenza A strain in October 2023. Over the past 1-3 weeks, influenza B detection rates in some regions of China have exceeded influenza A rates. According to China’s National Health Commission, influenza A cases have been slowing and influenza B cases are on the rise. Multiple provinces are now seeing more influenza B than influenza A infections, with some hospitals now finding influenza B as the cause of more than 50% of positive flu tests.

China’s current influenza B epidemic largely affects young adults in their 20s-50s rather than the elderly. The symptoms also tend to be milder compared to influenza A.

With the ongoing dual influenza outbreaks, there has been a sharp rise in demand and sales of influenza medications in China. Experts have emphasized that previous infection with influenza A does not provide full immune protection against influenza B — people remain susceptible to influenza B even if they have already had influenza A this season. High-risk groups in China have been advised to take vaccines against both the influenza A and B viruses. Authorities continue monitoring the situation as the country remains in the midst of back-to-back flu epidemics.

Source: Central News Agency (Taiwan), January 15, 2024
https://www.cna.com.tw/news/acn/202401150085.aspx

Briefings | | |   Economy/Resources

China’s Once-Booming Piano Industry Hits Sour Note as Market Shrinks

China used to have a thriving piano industry, but piano sales have plummeted in recent years as the number of piano learners shrinks. After a decade of expansion, China’s piano sector now faces huge changes. Piano seller Mr. Fan says sales have declined precipitously since 2019, with 2023 sales between 10% and 30% of previous levels. Many dealers and companies face closure. The music education market is also declining, with teachers struggling financially.

Mr. Fan cites two main reasons for the decrease in demand. First, middle-class incomes and expectations have fallen in recent times. Second, parents feel that practicing piano is fruitless in the face of extreme competition, preferring to spend money on vacations. Some also believe that the decline may reflect parents diversifying interests as children age.

Piano consumption used to concentrate among middle-class families in top-tier mainland Chinese cities. A 2008 policy enabled “piano fever,” allowing extra exam points to art students who had high grades in piano classes. This grade-boosting policy, which incentivized piano lessons and piano practice, ended in 2018. Along with falling birth rates across China and relatively poorer financial prospects for Chinese parents, the piano industry has toughened.

During the pandemic, piano companies like Hailun and Pearl River Piano reported weak sales. They blamed factors including suspension of school and of in-person piano lessons. In 2023, major piano makers announced plunging revenues, which they ascribed primarily to weak demand.

Industry statistics indicate that at the beginning of 2022, China had 650,000 music instruction centers and 25,000 piano stores, and that about 30% of these closed by the end of 2022. The sector faces declining consumer demand, loss of disposable income, and waning confidence in the value of musical training.

Source: Central News Agency (Taiwan), January 16, 2024
https://www.cna.com.tw/news/acn/202401160288.aspx

Briefings | | |   Economy/Resources

UDN: China’s Exports Fell 4.6 Percent Last Year

United Daily News (UDN), one of the primary Taiwanese news groups, recently ran a report on official 2023 data published by the China’s General Customs Administration. According the data, which are denominated in U.S. dollars, 2023 exports fell by 4.6 percent year-over-year, imports fell by 5.5 percent year over year, and aggregate imports and exports decreased by 5.0 percent year-over-year. China’s annual trade surplus was US$823.22 billion.

The last time that China experienced a decline in USD-denominated exports was seven years ago, in 2016, when exports fell by 7.7 percent.

At the “2023 Imports and Exports Press Conference” held by China’s State Council Information Office, official RMB-denominated data were released. Priced in RMB, China’s 2023 exports increased by 0.6 percent year-over-year, imports decreased by 0.3 percent year-over-year, and aggregate imports and exports increased by 0.2 percent year-over-year.

 

Chinese YoY Trade Growth, 2023
in USD in RMB
Exports -4.6% +0.6%
Imports -5.5% -0.3%
Aggregate -5.0% +0.2%

 

Wang Lingjun, deputy director of China’s General Customs Administration, said “the complexity, severity, and uncertainty of the external environment have increased. To further promote the stable growth of international trade, China needs to overcome some difficulties and make more efforts.”

Source: UDN, January 12, 2024
https://udn.com/news/story/7333/7703838

Briefings | | |   Economy/Resources Geo-Strategic Trend

China’s “Cultural Enterprises” Expanding Overseas

People’s Daily reported that many Chinese culture enterprises — companies providing culture-related services and entertainment or selling products related to China’s culture heritage — have been expanding to the global market in recent years.

The People’s Daily report gave the following examples of cultural enterprises: Chinese TV series with Chinese culture elements, such as silk embroidery, qipao (traditional Chinese dress), jade carving, etc, have become popular online; commercial virtual reality videos to show undersea world near the coast of China; and companies hosting online livestreams of the Peking Opera performance.

At China’s 2023 Cultural, Trade, Investment and Financing Expo in Hefei City, Anhui Province, approximately 1,000 companies from both domestic and international origins participated. The expo showcased over ten thousand cultural products and various distinctive artistic skills.

Source: People’s Daily, January 3, 2024
http://world.people.com.cn/n1/2024/0103/c1002-40151847.html

Briefings | | |   Economy/Resources

China Launches Nationwide University Probe into Retracted Research Papers to Address Academic Integrity Crisis

Given the large number of withdrawals of papers published by Chinese scholars in international journals, China’s Ministry of Education has recently required universities to launch self-checks of retracted papers.  Education departments in several provinces followed suit, also mandating self-checks of retracted papers. Numerous Chinese schools have made announcements on the topic, saying that publishers’ retractions of Chinese papers in 2023 has negatively impacted China’s academic reputation.

Wuhan University has reviewed papers from the past three years. Shandong University requested that all faculty and graduate students comprehensively identify retracted papers. The Henan Education Department received a ministry list of retracted papers from China’s Ministry of Education and has asked schools to investigate papers on the list, verifying each paper’s research process and data acquisition. Verified academic transgressions will be “dealt with” by Henan’s Education Department.

Around 30 Chinese universities conducted similar reviews in mid-2023, citing a ministry notice issued in April 2023 calling for the clean up academic misconduct dating back to 2018.

China publishes the second most papers in the Science Citation Index (SCI), following only the United States. The rate of paper retractions by Chinese scholars is very high, accounting for 52% of all SCI retractions in 2022 out of 5,488 worldwide. The main reasons for retraction are that papers come from “research paper mills,” contain plagiarism, contain unreliable data, or that peer review fraud occurred.

Source: Central News Agency (Taiwan), January 4, 2023
https://www.cna.com.tw/news/acn/202401040296.aspx

Briefings | | |   Economy/Resources

DW Chinese: China’s December Manufacturing PMI Hit Six-Month Low

Deutsche Welle Chinese Edition recently reported that, according to official data released by the Chinese National Bureau of Statistics, China’s manufacturing Purchasing Managers Index (PMI) in December was 49.0 percent, a decrease of 0.4 percentage points from the previous month. China’s PMI has been declining for three consecutive months and has now hit a new six-month low. The PMI was also below the Reuter’s estimated median forecast of 49.5 percent.

China’s National Bureau of Statistics said that the decline in manufacturing PMI was affected by factors such as the low production rates of some raw materials during the off-season. Some economists expressed the belief that China must take government action to increase support for the economy, lest the trend of slow growth should continue. Analysts expect the central bank to lower interest rates and the bank reserve requirement ratio (RRR) during the coming weeks.

The data from the Bureau of Statistics also showed that, in December, the new orders sub-index of the PMI was 48.7 percent, a decrease of 0.7 percentage from the previous month. This indicates that demand in the manufacturing market has declined. The employment sub-index was 47.9 percent, a decrease of 0.2 percentage from the previous month, indicating that employment in manufacturing has declined. The Bureau’s senior statistician said that the external environment (referring to China’s relationship with other countries) is “increasingly complex, severe, and uncertain.” He added that the reduction of overseas orders and insufficient effective domestic demand are the main difficulties facing Chinese companies.

Source: DW Chinese, December 31, 2023
http://tinyurl.com/2ccpp5mr

Briefings | | |   Economy/Resources