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In 2015, Chinese Tourists Spend 0.2 trillion Dollars Overseas

According to a Xinhua report on the statistics that the Ministry of Commerce recently published on Chinese’ overseas purchase of luxury goods, in 2015, Chinese tourists spent about 1.2 trillion yuan (US$0.2 trillion) overseas, thus becoming the leader among the world traveler consumer groups. 
Fortune Character Institute, a Shanghai based management consulting firm, estimated that, in 2015, Chinese consumers’ expenditures on luxury goods worldwide amounted to US$116.8 billion, about 46 percent of the world’s total expenditures on global luxury goods. Of Chinese consumers’ expenditures, US$91 billion or 78 percent, took place outside of China.
The price difference is still the most attractive reason for making purchases overseas. The average price spread for alcoholic beverages is around 64 percent; for wrist watches it is around 33 percent.
Overseas shoppers are mostly between 25 and 40 years old. Those between 25 to 30 years old prefer clothing and cosmetics; 30-to-35-year-old shoppers like luggage, bags, and digital products, 35-to-40-year-old shoppers are more interested in luxury jewelry, in addition to nutrition and health products.
Source: Xinhua, February 13, 2016
http://news.xinhuanet.com/fortune/2016-02/13/c_1118026740.htm
Briefings | | |   Economy/Resources

92 Chinese Cities Suffered from Heavy Air Pollution on Lunar New Year’s Eve

Reports from the Ministry of Environmental Protection (MEP) have indicated that fireworks and adverse weather conditions intensified the air pollution in China during the Lunar New Year’s Eve. An official from the Ministry said that from the 2016 Lunar New Year’s Eve until New Year’s day, among the 338 cities that implemented the new air quality standards, 67 cities had good air quality. The remaining 271 cities were below par. Of these, 92 were reported to be heavily polluted.
Heavy air pollution is distributed mainly along the Yangtze River, in Beijing and the surrounding areas, the Northeast region, the Sichuan Basin, and the North China Plain. The primary pollutants, except for PM10 in a few cities, are PM2.5. The number of heavily polluted cities increased by 54 in comparison with last year. The average concentrations of PM2.5 and PM10 were 148 and 210 micrograms/cubic meter respectively, an increase of 27.6 percent and 23.5 percent each from last year. [Editors note: PM2.5 is particulate matter with a diameter of 2.5 micrometers or less.] 
Source: Xinhua News, February 8, 2016
http://news.xinhuanet.com/local/2016-02/08/c_1118015119.htm
Briefings | | |   Economy/Resources

Caixin: China’s January Manufacturing PMI Remains Low

Well-known Chinese financial site Caixin recently released its official Chinese Manufacturing PMI index number for January 2016, which remained below 50, at 48.2. Caixin PMI was formerly known as HSBC PMI, which was a well-respected economic indicator monitored globally by financial institutions. The Caixin manufacturing PMI has remained below 50 for eleven consecutive months. The index showed that the domestic market is a weakening. New orders shrunk, which caused the manufacturers to reduce production for the month. However, internationally, new orders have increased slightly. In January, employers in manufacturing continued to reduce headcounts. In the meantime, the Chinese manufacturing PMI number reported by the National Bureau of Statistics was also below 50, at 49.7, which was the lowest number from the Bureau in three years. PMI (Purchasing Managers Index) is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline. 

Source: Caixin, February 1, 2016
http://pmi.caixin.com/2016-02-01/100905659.html

Briefings | | |   Economy/Resources

China’s Negative Population Growth, Not Far Away

According to a recent report on the website of yicai.com, a Shanghai based online media, the impact of a comprehensive two-child policy on the size and structure of the Chinese population may be less than expected. Due to the diminished willingness of Chinese people to give birth, a negative growth in population may arrive as early as 2023.
The National Health and Family Planning Commission (NHFPC) is the government agency responsible for drafting laws and regulations on family planning policy. According to an NHFPC survey, Chinese couples are willing to have an average 1.93 children. NHFPC projects that, as a result of the implementation of the two-child policy that started on January 1, 2016, the annual birth rate will increase to 3 million. This will increase the active labor force by an additional 30 million people by the year 2050. NHFPC expects to see the negative population growth begin in 2030.
However, a few scholars estimate that the positive impact of the two-child policy will be lower than expected. Yao Meixiong, a statistician based in Fujian Province, believes that an addition of 30 million to the labor force by the year 2050 may be an overestimate. Due to the ever increasing annual death rate, China will see a negative population growth as early as 2023, when the annual death rate exceeds the birth rate. This is seven years earlier than the official estimate. 
Gu Baochang, a professor at Renmin University of China, looked at the characteristics of the women of childbearing age, more than half of whom are of age 40 and above. Considering the low willingness among the Chinese population to have more than two children, the new policy may not be as effective as expected.
Censuses have shown that the population of Chinese children who are below 14 years of age is trending downward in a surprisingly sharp decline. In 1964 the proportion of 14-year-olds among the total population was 40.7 percent; it was 33.6 percent in 1982; 27.7 percent in 1990; 22.9 percent in 2000, and only 16.6 percent in 2010. Alarmingly, the downward trend is continuing. According to statistics, 2015 was the fourth consecutive year of decline in China’s working-age population. It was the first time in the past 30 years to see a reduction in the population of migrant workers. Economists believe that China’s 2015 GDP growth rate, which saw a 25-year low, had a lot to do with the decline in migrant workers.
Source: yicai.com, February 1, 2016
http://www.yicai.com/news/2016/02/4746821.html
Briefings | | |   Economy/Resources

Goldman Sachs: China Has to Allow RMB to Depreciate

The Chinese government backed Hong Kong news platform Phoenix New Media recently reported that Goldman Sachs President and COO Gary Cohn spoke about China at the World Economic Forum (Davos). Cohn said that China may have to allow its currency to depreciate. Cohn expressed his belief that the depreciation is needed to solve the issue that the Chinese economy is slowing-down. He said China will “have to do something in the next six months.” Chinese Vice President Li Yuanchao also commented at the Davos Forum that China does not plan to depreciate the RMB and that, in addition, there is no policy currently in place for depreciation to occur. The Chinese currency has suffered a volatile new year so far. The Chinese central bank unexpectedly adjusted down the on-shore exchange rate and the RMB depreciated 1.5 percent in the first week of January. This raised a lot of doubts among the financial community about the Chinese government’s strategy.
Source: Phoenix New Media, January 23, 2016
http://finance.ifeng.com/a/20160123/14185278_0.shtml
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Half a Million Jobs in Steel Industry May Be Cut Due to Overcapacity

About 500,000 may see their jobs gone because of China’s effort to reduce steel overcapacity. 

On January 22, the State Council announced that China will cut its crude steel production capacity by 100 million to 150 million tons. To accomplish this goal, Chi Jingdong, deputy secretary-general of the China Iron and Steel Association (CISA), said that, based on the per worker output of 300 metric tons at China’s steel mills, it means that 500,000 steel workers will face job changes. 
To deal with the 500,000 job changes, the State Council has reviewed and approved the “Guidance on the Steel Industry Turnaround,” which is expected to be released officially after the Chinese New Year which is on February 8. According to the Guidance, the reduction in crude steel production will be accomplished within a three year period (2016 – 2018). Two approaches will be used: mandatory and guided closedowns. Those companies that do not meet the legal requirements of the environmental law and regulations must be completely shut down permanently. Government policies will guide the elimination process for those that have already exited the market, that need to be relocated, or that are involved in mergers and acquisitions. 
Source: The Economic Observer reprinted by Huanqiu, January 30, 2016 
http://china.huanqiu.com/article/2016-01/8478107.html
Briefings | | |   Economy/Resources

French Economy Minister: I Don’t Believe the Chinese Economic Data

A major Taiwanese newspaper, The Liberty Times, recently reported that Emmanuel Macron, the French Minister of the Economy, Finance, and Industry, stated that he did not believe the just released official Chinese economic data “for a second.” Macron made those comments at the World Economic Forum Annual Meeting held at Davos-Klosters, Switzerland. Beijing just announced that China enjoyed a GDP growth of 6.9 percent in 2015. Macron expressed his doubts and thought that the actual growth rate should be far lower than the official number. However, he also said that “we just have to get used to it.” 
Macron described his “real worry,” which was for the world economy and for the geopolitical environment, which has been getting more and more unstable. At the same time, well-known global investor George Soros also said that the Chinese economy is heading for a “hard landing.” Soros estimated that the Chinese GDP growth rate will stay at around 3.5 percent. Compared to other developed countries, a lack of transparency often covers over the true picture of China’s economy.
Source: The Liberty Times, January 23, 2016
http://news.ltn.com.tw/news/business/breakingnews/1582639
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AIIB: U.S. Dollar Will Be Used as Primary Settlement Currency

Well-known Chinese news site Sina recently reported that the Asian Infrastructure Investment Bank (AIIB) officially opened for business on January 16, 2016. In a media interview, the newly appointed AIIB President, Jin Liqun, commented on the Bank’s mission, organizational structure, and operational tasks. The interview touched a few sensitive topics such as the concern that the AIIB might become China’s “tool for foreign relations.” Jin suggested that there is “no need” to avoid acknowledging China’s significant role in the AIIB, which is just like the United States playing a special role in the IMF and the World Bank. Jin also said that the U.S. dollar will be used as the “primary currency” for loans and settlements. He explained that the U.S. dollar is still the “main currency in global trade” and it’s easy to exchange and to use when conducting banking business. However, he said other currencies from China, Japan, and Europe can “also play a role” upon “customers’ requests.”
Source: Sina, January 16, 2016
http://news.sina.com.cn/c/nd/2016-01-16/doc-ifxnqriy2985279.shtml
Briefings | | |   Economy/Resources