Skip to content

Economy/Resources - 2. page

CNA: BMW Quits Price War in China

Primary Taiwanese news agency Central News Agency (CNA) recently reported that China’s auto market has been in serious trouble, and German luxury car brand BMW has been actively cutting prices since last year to maintain its market share. It now seems that BMW China will withdraw from China’s price war and adopt a new strategy of “volume reduction for price protection.” This became the hottest topic on Chinese social media at one point a few days ago.

According to local media reports, BMW China has been actively cutting prices. The average discount rate on BMW sales in 2023 was 17.66 percent. BMW delivered 825,000 vehicles last year in China, an annual increase of four percent. These delivery numbers came at the cost of a sharp decline in BMW’s profits, which fell more than 30 percent year-over-year.

In the first half of this year, BMW sold 375,947 vehicles (including the Mini brand, which is owned by BMW), with sales down four percent year-over-year. Now, price cuts are hurting both profit and sales. A BMW China salesperson revealed that the prices of all models will be adjusted upwards starting from July 10, and there will be another price increase after July 15. All previous price-cut offers will be cancelled.

Another German luxury car brand, Mercedes-Benz, has also entered the price war. Mercedes sales in the first half of the year also fell by nearly six percent. Mercedes has not made any official remarks regarding its pricing strategy. Meanwhile, Porsche sales China in have been even worse. In the first half of the year, Porsche sales in China totaled only 29,551 units, a 33 percent decrease from the same period last year.

Source: CNA, July 12, 2024
https://www.cna.com.tw/news/acn/202407120327.aspx

Briefings | | |   Economy/Resources

China’s Photovoltaic Industry Faces Extensive Oversupply

Chinese companies have dominated the world’s photovoltaic industry (i.e. solar panel production). The sector represents one of the “new three products” (new energy vehicles (i.e. electric vehicles), lithium batteries, photovoltaic products) comprising Beijing’s current industrial strategy. In 2023, China’s exports of the “new three products” totaled 1.06 trillion yuan (US$ 150 billion), surpassing the trillion-yuan mark for the first time. Within just half a year, however, the entire Chinese photovoltaic industry has fallen into a loss territory.

As of July 9, among the listed companies that have disclosed their mid-year performance forecasts, most companies in the photovoltaic industry are forecasting significant losses. Among them, seven companies – LONGi Green Energy, Tongwei Co., Ltd., TCL Zhonghuan, Aiko Solar, Shuangliang Eco-Energy, Jingyuntong, and Hongyuan New Energy – are expected to have loss exceeding 1 billion yuan each. LONGi Green Energy, the world’s largest photovoltaic company, indicates a net loss of 4.8 billion to 5.5 billion yuan. Its market value has fallen from its peak of 550 billion yuan to below 100 billion yuan.

In the past, China provided heavy national subsidies to the photovoltaic industry that had attracted many manufacturers enter this field, producing homogeneous products. By the end of 2023, China’s annual production reached 861 gigawatts, more than twice the global installation volume of 390 gigawatts. It is predicted that the capacity will increase by another five to six hundred gigawatts this year. It is estimated that China’s silicon wafer, battery, and module production capacity to be put into operation in 2024 will be sufficient to cover the global annual demand till 2032 (nine years).

Critics point out, “(China’s) support for the photovoltaic industry is a result of government policy, rather than market guidance. (The current overcapacity) was inevitable. It is a result of a planned economy that has mismatched production and market (demand).”

Source: Epoch Times, July 14, 2024
https://www.epochtimes.com/gb/24/7/14/n14290396.htm

Briefings | | |   @CS Economy/Resources Government/Politics

China’s ‘Youth Retirement Homes’: A Growing Trend Amid Economic Pressures

“Youth Retirement Homes” have recently emerged across China, offering young people a space to relax and recharge from over competition in urban life. These facilities, which charge only a few hundred yuan per week, provide outdoor activities, social events, and opportunities for like-minded young people to interact.

The primary clientele includes freelancers, artists, photographers, and young people facing life challenges. The topic has gained significant attention on Chinese social media, with over 5 million views on Xiaohongshu.

While some view these homes negatively, labeling them as “lying flat” centers, supporters argue they provide necessary respite from the intense pressures of modern life in China, including high housing costs and demanding work schedules (996 culture).

Surprisingly, Chinese officials have shown a positive attitude towards these facilities, seeing them as potential drivers for rural revitalization.

David Xu, founder of IMC Talent in Hong Kong, attributes the popularity of youth retirement homes to increased competition for jobs, devalued university degrees, and economic downturn, leading to disappointment and a desire to escape among young people.

Wang Guochen, a researcher at Chung-Hua Institution for Economic Research, warns that prolonged absences from work could hinder human capital accumulation and potentially slow China’s long-term economic development.

Source: Central News Agency (Taiwan), July 8, 2024
https://www.cna.com.tw/news/acn/202407080157.aspx

Briefings | | |   Economy/Resources

China Expand EV Presence in Brazil

Chinese car manufacturers are increasing their presence in the Central and South American markets with electric vehicles (EVs) and plug-in hybrid vehicles (PHVs). From January to April 2024, sales of new Chinese cars reached 48,000 units, eight times the number from the same period last year. Data released by the Brazilian Electric Vehicle Association shows that in 2023, sales of electric vehicles (EVs, PHVs, and hybrid vehicles (HVs)) increased by 91 percent compared to 2022, reaching a record high of 94,000 units. The top five sellers include three Chinese companies – BYD, Chery Automobile, and Great Wall Motors. In April 2024, those three manufacturers accounted for 7 percent of new car sales in Brazil.

In March 2024, BYD announced that it would double its investment from the original plan to 5.5 billion reais in its Brazilian production base. This will be Brazil’s first pure EV factory, expected to start production as early as the end of 2024, gradually reaching full production capacity of 300,000 units per year. BYD also plans to double the number of its sales showrooms in Brazil to 200 by the end of 2024.

Source: Nikkei, May 24, 2024
https://zh.cn.nikkei.com/china/ccompany/55569-2024-05-24-05-00-57.html?start=1

Briefings | | |   Economy/Resources Geo-Strategic Trend

Socioeconomic Factors Behind the Decline in Marriage and Divorce Rates in China

An article circulated on Internet talked about how poor economic conditions in China have caused Chinese people to “freeze” (i.e. to not to make major life-style changes or life-changing decisions).

In the first quarter of this year, the number of marriage registrations nationwide was 1.969 million pairs, a decrease of 178,000 pairs from the same period in 2023. Meanwhile, the divorce registrations also decreased from 641,000 pairs in the same period last year to 573,000 pairs, a reduction of 68,000 pairs

What has caused the decline in both marriage and divorce rates? According to the article, the reason is the decline in people’s income and assets. In China, the most crucial hurdle preceding marriage is the purchase of an apartment. Usually, the three families (the young couple and both of their parents) pool their savings together to buy the “marriage” apartment. However, nowadays, despite government policies heavily incentivizing house sales (aiming to stimulate the stagnant Chinese housing market), people are not buying houses or apartment units (being afraid that the price will fall later).

As far as divorce is concerned, the issue of how to divide assets is pertinent. Here, too the sluggish housing market is at play; couples are unable to sell their houses at high prices, meaning that dividing up the couple’s assets for a divorce is difficult.

According to the article, the root cause of the “freeze” in social activity among Chinese people is the socioeconomic impact of a sluggish Chinese economy. This pertains to employees in various sectors of the economy:

  • Government Sector Employees: Central and state agencies are carrying out uniform 5 percent reductions in staffing.
  • Private Sector Employment: The Internet, semiconductor, and advanced manufacturing industries are all under pressure. Jobs at high-tech companies, which used to be good for job-hopping, are becoming less secure. The electric vehicle industry may seem promising, but in reality many EV companies face financial trouble; fierce competition makes EV companies lose money. Chinese industrial transformation, the impact of AI, and oversupply of talent will all have long-term impacts.
  • Finance Sector: the industry is experiencing widespread salary cuts.

Source: China News, June 29, 2024
https://news.creaders.net/china/2024/06/29/2747232.html

Briefings | | |   Economy/Resources Social Stability

Beijing International Book Fair: A Global Platform for Cultural Exchange and Publishing Cooperation

Guangming Daily reported that the five-day 30th Beijing International Book Fair (BIBF) recently concluded. The report said that, from “inviting in” to “going out” (i.e. inviting foreign publishers into China as well as publishing Chinese works abroad), this year’s BIBF achieved extensive cross-border and cross-field exchanges and integration in the publishing world. This year’s BIBF resulted in over 2,100 Sino-foreign copyright trade agreements or intentions, attracted 1,600 exhibitors from 71 countries and regions, showcased 220,000 types of Chinese and foreign books, held over 1,000 cultural events, and welcomed nearly 300,000 visitors. More Chinese stories are being widely disseminated around the world through the BIBF platform.

The continuously growing BIBF, together with renowned international book fairs such as the Frankfurt Book Fair in Germany, the New York Book Fair in the United States, and the Bologna Children’s Book Fair in Italy, is building a stage for the exchange and mutual learning of world civilizations. The BIBF, by simultaneously “inviting (foreign publishers) in” and “going out,” provides a platform and build bridges for the global “flow” of cultural achievements. Copyright transactions and international publishing cooperation between China and other countries have also become routine outside the BIBF.

Source: Guangming Daily, June 28, 2024
https://news.gmw.cn/2024-06/28/content_37406609.htm

Briefings | | |   Economy/Resources Geo-Strategic Trend Government/Politics

China Launches Access Permission and Road Drive Pilot for Intelligent Internet-Connected Vehicles

Xinhua reported that the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of Housing and Urban-Rural Development, and the Ministry of Transport recently released the “Basic Information on Access Permission and Road Drive Pilot for Intelligent Internet-Connected Vehicles.” They identified nine consortia composed of car manufacturers and users, including NIO and Chang‘an, which will conduct intelligent Internet-connected vehicle access and road drive pilots in seven cities, including Beijing, Shanghai, and Guangzhou. The pilot products cover three major categories: passenger cars, buses, and trucks. This signifies a crucial step forward for the large-scale application of high-level intelligent driving in China.

China’s standard on “Automated Driving Classification for Automobiles” divides autonomous driving into six levels from L0 to L5, corresponding to “emergency assistance, partial driving assistance, combined driving assistance, conditional automated driving, high-level automated driving, and fully automated driving.”

High-level intelligent driving has become the focus of competition among major car companies. Previously, multiple car brands, including Mercedes-Benz, BMW, IM Motors, Chang’an, Arcfox, Deep Blue, Avita, Seres, and BYD, announced they had obtained L3 autonomous driving test licenses. As of the end of April 2024, China has opened over 29,000 kilometers of intelligent connected vehicle test roads, issued more than 6,800 test and demonstration licenses, and the total road test mileage has exceeded 88 million kilometers.

The new pilot program is the next step, after the vehicle research and testing, to promote mass-produced intelligent models on road drive.

Source: Xinhua, June 25, 2024 http://www.news.cn/tech/20240625/d21252e6ec504019b5a65472192e578f/c.html

Briefings | | |   Economy/Resources

CCP Muted Li Qiang’s Statement That China’s Economy Cannot Take Strong Medicine

On June 25, Chinese Premier Li Qiang delivered a speech at the 2024 World Economic Forum regarding China’s economy. According to Singapore’s Lianhe Zaobao, Li Qiang emphasized the importance of addressing both immediate and fundamental issues in China’s economy, drawing an analogy from traditional Chinese medicine. He likened the Chinese economy to a patient recovering from a serious illness, stating that “according to Chinese medicine theory, this is not the time to apply strong medicine; instead, precise and gradual treatment is needed to slowly restore the foundation.”

Chinese state media, including Xinhua News Agency, only quoted Li’s phrase “restore the foundation” without mentioning the critical point about not “applying strong medicine.” The economic platform Gelonghui briefly published a report titled “Li Qiang: The Chinese Economy Cannot Apply Strong Medicine Now,” but it was quickly deleted.

Commentators noted that Li Qiang’s remarks indirectly acknowledged that the Chinese economy is in a severe and desperate condition and that Beijing may not have the ability to fix it.

Source: VOA, June 28, 2024
https://www.voachinese.com/a/china-s-censors-appear-to-delete-premier-s-strong-treatment-theory-20240628/7677019.html

Briefings | | |   Economy/Resources Government/Politics