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Beijing City: New Grain and Oil Price Control Has Nothing To Do With U.S.-China Trade Friction  

On May 13, 2019, the official Beijing Municipal Development and Reform Commission (BMDRC) website released the “Beijing Grain and Oil Market Supply and Price Volatility Emergency Control Plan.”

On May 14, 2019, China Business News reported that the BMDRC stated that the grain and oil fluctuation emergency plan announced on May 13, 2019 has nothing to do with U.S.-China trade friction.

The Control Plan “is a work that has been promoted before and it is part of the long-term price control. The time of the release just happens to be at this time. [The Control Plan] has nothing to do with Sino-US trade friction,” said the person in charge at the BMDRC

The BMDRC stated that the price of grain can affect the price of hundreds of items. Food security is an important foundation for national security. Food prices such as grain can play a critical role in balancing the entire price level. China’s edible oil market is highly dependent on foreign countries.  Domestic and international market prices are closely linked. It is equally important to stabilize the supplies in the edible oil market and to [secure] price stability.

The Control Plan sets three warnings: green, yellow (year-on-year price increase of 5 to10 percent for grain and 10 to 20 percent for edible oil) and red (year-on-year price increase of over 10 percent for grain and over 20 percent for edible oil). The three warning area indicators trigger three levels of government intervention respectively. The intervention may be through organized sourcing, increasing supply, speeding up distribution, cracking down on illegal activities such as hoarding and raising prices, price emergency measures, temporary price interventions, subsidies, and other emergency assistance.

Source: China Business News, May 14, 2019
http://www.cb.com.cn/index/show/zj_m/cv/cv13448901260

 

China Times: Top Ten Mainland Export Categories Impacted by the New Tariffs

Major Taiwanese newspaper China Times recently published an article with an analysis of the Mainland China export categories that would be most impacted by the newly raised tariff rate (from 10 percent to 25 percent). The estimates were based on the ITC (United States International Trade Commission) 2018 statistics. The top ten categories (in terms of export value) are: electronic communications equipment (US$19.1 billion), computer circuit boards (US$12.5 billion), processing components (US$5.6 billion), metal furniture (except chairs, US$4.1 billion), computer parts (US$3.1 billion), wooden furniture (US$2.9 billion), static converters (US$2.7 billion), plastic flooring (US$2.5 billion), wooden framed seats (US$2.5 billion), and auto parts (US$2.3 billion). In the meantime, undisclosed sources expressed the belief that the Chinese counter-tariffs will most likely include US exports in the following categories: chemical products, agricultural products, whisky, and soybeans. The Trump administration has already started the preparations for the additional tariffs against the rest of all Chinese goods.

Source: China Times, May 10, 2019
https://www.chinatimes.com/realtimenews/20190510002119-260410?chdtv

LTN: China’s Economic Rebound Questionable Due to High Unemployment Rate

Major Taiwanese news network Liberty Times Network (LTN) recently reported that Mainland media have given heavy coverage to the news of the first quarter GDP growth rate of 6.4 percent, which was better than expected. However, the unemployment rate for the same period of time was reported at a half-decade low. Thus the economic rebound appears to be an illusion. In the past years, after the Chinese New Year, China’s unemployment rate typically went down since many workers returned to work and a large number of college graduates joined the workforce. However, according to the latest study by the China Institute for Employment Research (CIER), the national unemployment situation is getting worse and the market is seeing a lot more job applicants (with a year-over-year increase of 31 percent) with substantially fewer job offerings (with a year-over-year decline of 11 percent. The gap is the widest since 2014, and it has been on the decline for six consecutive quarters. Even with a decent stock market rebound in the first quarter, the financial sector jobs still saw a year-over-year decline of 39.7 percent.

Source: LTN, April 22, 2019
https://ec.ltn.com.tw/article/breakingnews/2766439

VOA: Income of the Top Groups in China Grew Rapidly; Gap between Rich and Poor Continued to Widen

The latest research shows that the gap between the rich and the poor in Chinese society continues to widen. In the past few decades, the fiscal income of the top groups has grown at an alarming rate and their proportion of the national income has almost doubled, making them the biggest beneficiary of China’s income growth.

The London School of Economics and Political Science issued a report on April 12. According to the report, it studied China’s recent public and non-public statistics, analyzed the income of Chinese society from 1978 to 2015, and drew the above conclusions. The report said that the ordinary Chinese people benefited from economic development and their incomes have greatly improved, but the gap between the rich and the poor has expanded significantly. It is worth noting that the proportion of the top income group, that is, those whose incomes are in the top one percent in China, accounted for only six percent of the income of the the entire population in 1978, but rose to about 14 percent in 2015, higher than the 10 percent in France, and second only to the 20 percent in the U.S. The distribution growth rate of China’s top one percent income group is the highest in the world for the 35 years of this period, reaching an alarming 8.6 percent, much higher than the US’s four percent and France’s 1.4 percent. The report found that China’s private wealth is also growing rapidly. By 2015, the growth rate of China’s private income had increased from 115 percent in 1978 to 487 percent, which has pushed China’s overall wealth income growth rate from 350 percent in 1978 to 700 percent in 2015.

Source: Voice of America, April 12, 2019
https://www.voachinese.com/a/china-inequality-more-like-us-12042019/4873853.html

National Bureau of Statistics: First Quarter Profit Declined by 3.3 Percent

China’s National Bureau of Statistics recently released its official numbers for the first quarter. The national level profit of industrial Enterprises Above a Designated Size (EADS, that is, companies whose primary business income is above RMB 20 million or around US$2.97 million) recorded a year-over-year 3.3 percent decline. State-owned enterprises suffered a profit decline of 13.4 percent; joint-stock companies declined by one percent; and foreign investment companies saw a profit decline of 7.9 percent, while privately-owned companies had a profit increase of seven percent. In the first quarter profit category, the mining industry declined year-over-year by 3.4 percent and the manufacturing industry declined by 4.2 percent. At the same time, at the national level, corporate debts and inventory both increased.

Source: Official Site of the National Bureau of Statistics, April 27, 2019
http://www.stats.gov.cn/tjsj/zxfb/201904/t20190426_1661900.html

Xinhua: China’s March Car Sales Continued to Slide

Xinhua recently reported, based on newly released CAAM (China Association of Automobile Manufacturers) data, that China’s March domestic automobile sales suffered a year-over-year decline of 5.2 percent. Passenger car sales declined by 6.9 percent. The market has been sliding for nine consecutive months. It is estimated that the automobile market will not recover in the first half of the year. Commercial vehicles saw a mild growth due to increased government spending. One special market characteristic worth noting is that domestic brands are losing market share. In March, domestic sales dropped by 16.4 percent, reaching a market share of 41.3 percent, which represents a 4.7 percent decline. Domestic brand SUV sales declined the most. They suffered a year-over-year decline of 13 percent. Foreign brands demonstrated more flexibility in promotions.

Source: Xinhua, April 13, 2019
http://www.xinhuanet.com/fortune/2019-04/13/c_1124361340.htm