Economy/Resources - 12. page

On May 17th, the Hong Kong Monetary Authority (HKMA) announced a collaboration with the People’s Bank of China to expand the use of the digital renminbi wallet in Hong Kong, allowing all Hong Kong residents to open an account.

According to the announcement, Hong Kong residents can register and open a digital renminbi wallet on their mobile phones. After registration, they can use the popular local mobile payment app “Faster Payment System (FPS)” to top up their wallet and exchange for renminbi.

The HKMA stated that the digital renminbi wallet balance is capped at 10,000 yuan. Each payment cannot exceed 2,000 yuan, the cumulative daily payment amount cannot exceed 5,000 yuan, and the annual limit is 50,000 yuan. The wallet also has a function to exchange the digital yuan back into Hong Kong dollars.

In addition to using the digital renminbi wallet in various cities in the Greater Bay Area of Guangdong, Hong Kong residents can also use it in other pilot cities across mainland China.

Eddie Yue, Chief Executive of the HKMA, said Hong Kong is the first place outside mainland China to launch the digital renminbi wallet. The authorities will continue to work closely with the People’s Bank of China to gradually expand the application scope of the digital renminbi and promote acceptance by more retail merchants, facilitating cross-border retail payments for residents in both mainland China and Hong Kong.

The digital renminbi is a digital form of legal tender issued by the People’s Bank of China, exchangeable 1:1 with physical renminbi. It has been piloted in multiple major mainland Chinese cities since 2019.

Source: Central News Agency (Taiwan), May 17, 2024
https://www.cna.com.tw/news/acn/202405170225.aspx

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported a summary of the results from the 2023 annual report disclosure published by 58 listed Chinese banks.

In 2023, while China’s economy was broadly under pressure, the banking sector faced operation and development challenges of its own. Banks’ net interest income suffered a year-over-year decline for the first time since 2017. Also, the average net interest margin of listed banks was 1.69 percent, declining for the fourth consecutive year. Net fee and commission income decreased by 8.05 percent year-over-year, declining for two consecutive years. Listed banks achieved a total revenue of RMB 5.87 trillion yuan (around US$827.8 billion) in 2023, a year-over-year decrease of 0.98 percent.

Digital intelligence capabilities have become the core competitiveness of listed banks. It is worth noting that, in 2023, the banking industry paid a lot of attention to large data models, with more and more listed banks deploying large model technology. For example, in 2023, ICBC (Chinascope Editor’s Note: ICBC, the Industrial and Commercial Bank of China, is the largest bank in the world by total assets) established the industry’s first fully-independently-developed large-scale AI model, with hundreds of billions of parameters, deploying innovative applications to multiple financial business scenarios.

For some small and medium-sized banks, it may be difficult to find the resources required for digital transformation. This could lead to further intensified differentiation within the industry.

Source: Sina, May 15, 2024
https://cj.sina.com.cn/articles/view/2660807713/9e98b421001018rda

On April 10th, the China Association of Automobile Manufacturers released automobile production and sales data from January to March 2024. China’s production and sales reached 6.606 million and 6.72 million units, respectively, with year-on-year increases of 6.4 percent and 10.6 percent, respectively. These were the highest quarterly production and sales figures seen since 2019.

Automobile exports for Q1 totaled 1.324 million units, up 33.2 percent year-on-year. In terms of new energy vehicles (electric cars), production and sales during this period were 2.115 million and 2.09 million, respectively, representing year-on-year increases of 28.2 percent and 31.8 percent, respectively.

In the month of March alone, automobile production and sales reached 2.687 million and 2.694 million units, respectively, up 78.4 percent and 70.2 percent month-on-month, and up 4 percent and 9.9 percent year-on-year, respectively. Among these, new energy vehicle production and sales reached 863,000 and 883,000 units, respectively, up 28.1 percent and 35.3 percent year-on-year.

Source: People’s Daily, April 10, 2024
http://finance.people.com.cn/n1/2024/0410/c1004-40213186.html

To create economic growth, Beijing has been carrying out a “Trade-in (以旧换新)” plan to encourage industries and consumers to replace their equipment and durable goods, even including cars. Two articles on the People’s Daily website on May 14 showed some examples.

Industry

In one example, the Tianjin Power Company plans to invest over 700 million yuan (around US$100 million) this year to replace its old equipment, aiming to enhance the power grid’s digital and smart-tech capabilities.

Chuan Cheng Pharmaceutical Co., Ltd., located in Liaocheng, Shandong Province, is currently updating its exhaust gas treatment equipment. The new equipment will reduce carbon emissions by 410.4 tons and is expected to increase the company’s revenue by 1.3 million yuan.

The Liaocheng Development Zone has established a special team to promote large-scale equipment updates as well as trade-ins of consumer goods. The team is focused on 54 project areas, including industrial equipment and recycling. The team has identified an investment demand of 22.47 billion yuan and an update demand of 9.09 billion yuan.

Consumer Goods

Companies are offering subsidies for home-appliance trade-ins and for services to dismantle and take away existing home appliances. Applicable large household appliances include refrigerators, TVs, and air conditioners. Local governments are offering automobile trade-in initiatives, issuing policies to create and regulate a market for used cars and to promote services for dismantling scrapped cars and reuse of old car parts.

Sources:
1. People’s Daily, May 14, 2024
http://finance.people.com.cn/n1/2024/0514/c1004-40235482.html
2. People’s Daily, May 14, 2024
http://env.people.com.cn/n1/2024/0514/c1010-40235221.html

Recent data show that Chinese buyers were the largest foreign buyers of property in Thailand last year. Analysts suggest that Thailand’s visa-free policy for Chinese tourists and the lack of anti-Chinese sentiment in the country attracted China’s middle class to invest in Thai property. The phenomenon also reflects public pessimism about China’s economic prospects.

Eric, a resident of Fujian, spent around $276,000 to buy two Bangkok apartments for personal use and investment, seeing the Thai properties as a potential stopover for overseas migration if China’s economy worsens.

Statistics show that Chinese buyers purchased 6,614 Thai apartments worth $927 million last year, nearly 46% of total sales, boosting local demand above pre-pandemic levels. Property managers confirm the influx of Chinese buyers.

While foreign ownership in Thailand is capped at 49% and buying doesn’t lead to citizenship, the visa-free policy and lack of anti-Chinese sentiment are positives for Chinese buyers, according to real estate professionals.

Analysts suggest that the present Chinese capital inflow could boost Thailand’s economy and that it reflects public pessimism about China’s prospects. Some cite the competitive “inner circularity” [of China’s economy] and economic gloom as reasons for the exodus of middle class capital.

Hangzhou and Xi’an recently announced the complete removal of housing purchase restrictions, allowing purchases without eligibility checks. Some view this as a “desperate move” by China to prop up the real estate industry. Despite 29 cities lifting purchase restrictions since early last year, the recovery in China’s property market still seems slow, with current inventory potentially taking 5 years to digest if the present pace of sales continues.

Source: Voice of America, May 13, 2024
https://www.voachinese.com/a/chinese-buyers-flock-to-thailand-to-hedge-domestic-property-slump/7608611.html

The 135th Canton Fair (2024 Spring Canton Fair) was held in Guangzhou, Guangdong Province, from April 15th to May 5th. The onsite (i.e. non-online) export transactions amounted to $24.7 billion, while online export transactions reached $3.03 billion, totaling $27.7 billion. A total of 246,000 overseas buyers from 215 countries and regions visited the site.

The total export transactions in 2023, including online and on-site, were $25.11 billion. In 2019 (before the COVID pandemic) the total reached $29.73 billion.

Sources:
1. Xinhua, May 5, 2024
http://www.xinhuanet.com/fortune/20240505/5ccabf0fa93840109af17873b9a75eb8/c.html
2. Radio Free Asia, May 8, 2023
https://www.rfa.org/mandarin/yataibaodao/jingmao/hcm-05082023090035.html

There are at least 66 million low-income people living in China. Concerned about social stability, China’s Ministry of Civil Affairs recently ordered local governments to strengthen the identification and monitoring of low-income populations. The order’s aim is to better play the role of social assistance in “ensuring basics, preventing risks, and promoting development”, weaving a tighter safety net for people’s livelihoods and helping them out of poverty.

Chinese authorities are calling for poverty alleviation to stabilize society. In October 2023, the Ministry of Civil Affairs stated that the national dynamic monitoring information platform for low-income populations had collected basic information on over 66 million low-income people, about 4.7% of the total population. This includes nearly 40 million people receiving minimum living allowances, over 4.6 million living in extreme poverty, and over 6 million members of households that are just above the poverty line.

According to Chinese media reports, the Ministry of Civil Affairs recently issued a notice identifying low-income groups. Households with per capita incomes below 1.5 times the local minimum living standard and assets meeting local regulations are classified as being at the minimum living standard boundary. Households with per capita incomes below the previous year’s local disposable income level, assets meeting regulations, and necessary expenditures like medical and education exceeding a certain proportion of total income are classified as having difficulty with rigid expenditures.

The new order from the Ministry of Civil Affairs requires localities to comprehensively identify minimum living standard boundary households and rigid expenditure difficulty households, in addition to identifying recipients of minimum living allowances and those living in extremely poverty.

On strengthening the monitoring of low-income populations, the goal of “risk prevention” requires gradually expanding the scope of monitoring efforts to include other “difficult people” identified by local governments and other potential low-income groups, incorporating them, too, into the dynamic monitoring platform with stratified management.

The government stressed the importance of making the public aware of how monitoring helps prevent risks and alleviate difficulties. “It aims to leverage grassroots party organizations to guide employable low-income people towards self-reliance, employment assistance, and industrial aid to escape poverty.”

Source: Central News Agency (Taiwan), May 5, 2024
https://www.cna.com.tw/news/acn/202405050193.aspx