Economy/Resources

A recent survey by an education consultancy in China has sparked heated discussions among Chinese netizens. It claims that, in recent years, an increasing number of university graduates are choosing to work in small counties instead of in big cities, and that the job satisfaction of such graduates has risen. Two young Chinese people interviewed by Voice of America disagreed with the survey results, saying that jobs in smaller counties actually offer lower salaries and fewer career development opportunities, contrary to the survey’s findings.

Wei, a 21-year-old tourism management student, is anxious about his future job prospects (like many of his graduating peers). He feels torn between working in a big city, which would mean intense competition and high living costs, or working in a small county, which would offer fewer opportunities for career growth and have lower-skilled job opportunities, unmatched to his degree.

The survey suggested that, in small counties, employment for bachelor’s degree graduates rose from 20% in 2018 to 25% in 2022, with job satisfaction improving by 9%. The survey reported that 70% of graduates employed in county jobs were working in roles relevant to their degrees. Wei stated that there is a huge gap between the survey results and the reality in China – small counties offer few private sector jobs, have lower pay, have policy implementation issues, and offer only unstable temporary work unless one is in the government sector.

While the survey data show that, in small counties, the monthly income of people with bachelor’s degrees has risen from 4,640 yuan (US$ 640) in 2018 to 5,377 yuan (US$ 742) in 2022, Wei believes that the official numbers are “false rhetoric disconnected from the reality of a decade’s wage stagnation,” and that many graduates end up returning home unemployed.

Some experts suggest that youth are leaving big cities due to lack of opportunities amid China’s current economic downturn and industrial restructuring, and that small counties are seen as providing better work-life balance despite lower salaries.

Source: Voice of America, April 21, 2024
https://www.voachinese.com/a/surveys-found-china-s-college-graduates-seek-job-opportunities-in-smaller-cities-20240421/7578947.html

The downturn in China’s real estate market continues. In the first quarter of 2024, sales by the top 100 real estate companies plunged 47.5% year-on-year. Official data show the prices of new homes and second-hand homes (i.e. homes that are not newly constructed) continuing to decline for several consecutive months.

Though the market for non-new homes showed some positive changes, reports indicate that the real estate market’s overall downward trend is unlikely to reverse, with the winter far from over. Major developer Vanke, once considered a “model player” in the industry, saw its 2023 net profit plummet 46.4% and has implemented management pay cuts. Analysts warn that even “quality” developers face default risks while troubled firms like Evergrande remain in limbo, signaling that the market has not yet bottomed out.

Some expect 2024 to be the year that China’s property market rebounds. However, a greater proportion of experts view the downturn as symptomatic of structural issues, with a solution requiring new economic drivers to replace traditional industries like real estate. The “new productive forces” concept promoted by China’s central government places hope in new industrial areas as economic drivers to spur growth. Doubts remain, however, about whether such “new productive forces” can match the enormous impact of the real estate sector on employment and on the broader economy in the short-term.

The current transitional state of China’s real estate market poses major challenges to the economy, including labor mismatch and overcapacity risks. Real estate had been an economic pillar, contributing around 17% of China’s GDP and employing over 15 million. While strategic shifts towards green energy and digital economies are inevitable directions in the long-term, filling the void left by a struggling real estate sector will not be easy.

Source: BBC Chinese, April 15, 2024
https://www.bbc.com/zhongwen/simp/chinese-news-68786662

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that China’s three major stock exchanges (the Shanghai Exchange, Shenzhen Exchange and Hong Kong Exchange) will stop disclosing real-time trading volume data starting in mid-May so as to reduce market volatility. The announcement has triggered concerns about downgraded data transparency in the market.

As part of the Chinese State Council’s recent market guidelines, a key effort is the tightening of control over high-frequency trading in mainland Chinese markets. The Shenzhen exchange regulator said that the move to cut real-time market data disclosures was aimed at “unifying investor practices” so as to ensure “fair access to information”.

The newly-announced exchange rules may further reduce foreign investability in China’s equity markets and restrict Hong Kong’s role as a gateway for investment into China. Since 2014, foreign investors have been allowed to invest in A-shares through the Shenzhen-Hong Kong Stock Connection and the Shanghai-Hong Kong Stock Connection. Real-time data is critical for fund managers, especially hedge funds, to measure liquidity and execute their trades in a timely fashion.

The Shanghai and Shenzhen exchanges are China’s two primary mainland stock exchanges. As of Monday, the A-shares market value on these exchanges was 71.21 trillion RMB (about US$9.84 trillion). A-shares are RMB-denominated shares of mainland Chinese companies, generally only available to trade by domestic investors and certain qualified foreign institutional investors.

Source: Sina, April 19, 2024
https://portal.sina.com.hk/finance/marketdigest/2024/04/19/814828/

China is launching a large-scale initiative to promote equipment upgrades as well as the recycling of consumer goods. The government’s goal is that, by 2027, investment in 7 key industrial sectors should increase by over 25% compared with 2023 levels. The government milestones include doubling the recycling of scrapped vehicles as well as a 30% increase in recycling of used home appliances.

Officials say this push is about transitioning from foreign to domestic products.

The initiative, titled “Action Plan to Promote Large-Scale Equipment Renewal and Consumer Goods Replacement” (“推动大规模设备更新和消费品以旧换新行动方案”), was announced by the Information Office of China’s State Council on April 11th. The government will provide funding support for the initiative, but the exact amount is unclear.

China currently faces overcapacity issues, with exports accounting for much of the country’s economic growth. Shifting to domestic consumption through equipment upgrades and recycling is a potential path to addressing these issues.

The quality of Chinese-made products remains a challenge to adoption. Many Chinese companies prefer to use more expensive imported equipment; domestic products often require more maintenance and repairs, raising production costs. Some industries such as smart tech and precision machinery are still heavily reliant on foreign technology.

Currently, China has over 39 trillion RMB in fixed assets, with 28 trillion RMB comprising industrial equipment. The new action plan aims to spur economic growth through massive replacement of such fixed assets, promoting self-sufficiency and reducing reliance on foreign goods. Feasibility and efficacy of this approach remain to be seen.

Source: Radio Free Asia, April 12, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql2-04122024072046.html

Xinhua News Agency reported rapid growth in the “going global” trend of China’s e-commerce platforms. This includes the B2B model of Alibaba International or the B2C models of AliExpress, Temu, and TikTok Shop. According to data from China’s Ministry of Commerce, the imports and exports for China’s e-commerce platforms reached 2.38 trillion Yuan (US$ 330 billion) in 2023, an increase of 15.6 percent from the previous year. Exports, specifically, amounted to 1.83 trillion Yuan, an increase of 19.6 percent year-over-year.

Take Japan as an example. Since its launch [in Japan] in July of 2023, Temu has seen its number of users grow at a rate of 2.2 million per month. In January 2024, its number of users in Japan reached 15.5 million, 52 percent of the combined average of the three major e-commerce platforms in Japan — Amazon, Rakuten Market, and Yahoo! Shopping — which is 29.7 million. The number of users on the clothing e-commerce platform SHEIN has also surpassed that of the well-known Japanese clothing e-commerce platform ZOZOTOWN. TikTok, with its millions of users in Japan, may soon become a big player in the e-commerce field as well.

According to Yonhap News Agency, the latest data released by South Korea’s statistical department shows that, in 2023, imports from China’s e-commerce platforms surged by 121.2 percent year-over-year. For the first time, China surpassed the United States to become South Korea’s largest source of e-commerce imports.

Source: Xinhua, February 23, 2024
http://www.xinhuanet.com/20240223/d2eff099b86441ba8f7f6f45377ef0bd/c.html

To promote used car exports, China’s Ministry of Commerce and four other departments jointly issued a notice on February 5 regarding matters related to the export of used cars. On February 7, they released a “Notice on Further Improving the Practice of Used Car Exports” (the “Notice”), to implement used car export businesses in 10 pilot cities nationwide.

The Notice encourages localities to establish used car export bases, achieving efficient results by integrating functions such as showrooms, handling of transactions, maintenance, inspection and certification, customs clearance, support for exports, warehousing, logistics, and financial services. As after-sales service is the biggest challenge for the used car dealers, the Notice directed companies to establish overseas maintenance service systems through self-construction, resource sharing, or multi-channel cooperation. This means setting up additional after-sales service outlets overseas and ensuring a supply of spare parts through multiple channels. It supports automotive companies further expanding their international marketing networks and fully leveraging brand and channel advantages. It also encourages companies to establish public showroom and sales centers and overseas warehouses in key markets.

China’s customs data shows that the volume of China’s used car exports has repeatedly reached new highs since the used car export pilot launched in 2019. In 2021, China exported 15,000 used cars. This figure soared to 69,000 in 2022. As of 2023, used Chinese cars have been sold in more than 140 countries and regions worldwide. The main markets are the five Central Asian countries, Africa, and some Southeast Asian countries. Since 2022, Russia has also become an important market. Now, the Western and Eastern Europe markets are increasing significantly due to energy shortages; a considerable portion of the used cars exported from China are electric vehicles.

Source: Xinhua, February 27, 2024
http://www.xinhuanet.com/auto/20240227/bee6287a6d464b1faaf7b7cfd04fb1fa/c.html