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China’s New Energy Vehicles Suffered Significant Sales Decline in October

Well-known Chinese news site Tencent News recently reported, based on data released from the China Association of Automobile Manufacturers (CAAM), that China’s new energy vehicles’ domestic sales dropped by 45.6 percent year-over-year. This is the fourth consecutive monthly decline in the new energy vehicle market segment. Not long ago, that segment of the market was one of the rapidly growing sectors in the Chinese economy. According to CAAM, the automobile industry is facing challenges in the areas of weak consumer demand, higher national technical standards, and dramatically declining government subsidies. In the meantime, the total domestic passenger automobile market declined by 5.8 percent in October, year-over-year. Domestic brands suffered more than foreign brands, seeing an October decline of 9.6 percent, year-over-year. New Energy Vehicles include pure electric vehicles (EV), plug-in electric vehicles (PEV) and traditional hybrid vehicles. In October, motorcycle sales saw a 25.9 percent increase, year-over-year; however they suffered a 12 percent decrease, month-over-month.

Source: Tencent News, November 11, 2019
https://finance.qq.com/a/20191111/005700.htm

Malaysian Young Man Was Threatened for Complaining about Huawei’s Mobile Phone

A Tweeter’s story revealed that Huawei has tried to silence people when they talk about the problems Huawei phones are having.

Huawei launched its mobile phones Mate 30 and Mate 30 Pro in Malaysia on October 3, 2019. A host who has a YouTube channel to evaluate mobile phones bought a Huawei Mate 30 Pro and surprisingly found that all Google software, including YouTube, Google Maps, Gmail, and Play Store, did not work.

He posted a YouTube video to discuss the problem.

Then he posted another video on October 31, reporting that he received threats from Huawei. “Today I heard that (Huawei) was warning me. Huawei told me, ‘You’d better not talk about this. If you continue talking about it and continue ‘slandering’ Huawei, we can sue you.’”

He reported, “Maybe this YouTube (video) will be my last video.” The host warned the audience that Huawei might have the power to close his YouTube channel.

“I feel that Huawei is a villain. I didn’t do anything (against it). I just used the Huawei’s phone and found the issue. I asked for a solution. Why do you warn me like this? … I used to praise Huawei’s phones. …  When I received this warning, my heart sank. … That’s why many big media didn’t report about these problems from Huawei.”

The following are some reader’s comments on the posting:

Comments by “News Revelation”:

“To help people to recall: A Microblog celebrity (in China) questioned if the moon picture that Huawei claimed to be taken with its P30 Pro phone was edited in Photoshop. Then his company fired him because of pressure from Huawei. A few years ago, Huawei’s ad claimed its phone used a high-end memory card but a person reported on the Internet that his test found it was a low-end memory card; he was arrested.”

Comments by “The List of Guillotine”:

“A few months ago, a person posted on a Microblog that his Huawei phone exploded. Then his post was taken out and his account was deleted. You can only blame yourself and take the loss when you run into a problem (with Huawei’s phone).”

Comments by “Talk in Human’s Language”:

“Even people outside of China are warned. How mighty (Huawei is)! The patriots can boast about it now.”

Source: Twitter, October 31, 2019

China’s High-speed Rail: 12 Out of 18 Railway Bureaus in the Red

According to a November 4th report from mainland Chinese media China Business Network, China State Railway Group Company, Ltd. (China Railway, CR) for the first time announced the profitability of its subsidiaries. Out of its 18 railway bureaus, 12 are in the red.

The 18 bureaus are: Taiyuan, Wuhan, Zhengzhou, Shanghai, Xi’an, Nanchang, Jinan, Hohhot, Qinghai, Guangzhou, Nanning, Urumqi, Kunming, Lanzhou, Beijing, Shenyang, Harbin and Chengdu. The most serious loss makers are the Shenyang, Harbin, and Chengdu Railway Bureaus. The net loss of the three subsidiaries in 2018 was 11.4 billion yuan (US$1.63 billion), 12.9 billion yuan (US$1.85 billion) and 12.8 billion yuan (US$1.83 billion) separately. In the first half of 2019, their losses were 6.7 billion yuan (US$0.96 billion), 6.5 billion yuan (US$0.93 billion), and 5.1 billion yuan (US$0.73 billion). The data shows that, in 2018, only the Taiyuan, Wuhan, Zhengzhou, Shanghai, Xi’an, and Nanchang Railway Bureaus were profitable.

The financials of the railway bureaus are related to a number of factors, including regional economic development, railway freight traffic, passenger traffic, and high-speed rail construction investment. For example, in terms of the construction of high-speed rail, not only is the initial investment huge, but the operation and maintenance costs are high. The report predicts that the situation of the large-scale losses of high-speed rail will continue in the future. China’s high-speed rail is currently the world’s largest high-speed rail network. As of September of this year, the total mileage has exceeded 30,000 kilometers, of which over 10,000 kilometers can operate with a speed of 300 kilometers per hour.

Source: Central News Agency, November 7, 2019
https://www.cna.com.tw/news/acn/201911050298.aspx

Bank Runs and Concerns about the Financial Standing of China’s Small Banks

On November 6, the Yingkou Coastal Bank in Liaoning Province had a surge of a large number of depositors withdrawing funds. The police department of the Yingkou area, in an attempt to reassure the customers about the bank’s financial standing, issued a statement on the same day. The bank run was caused by concerns about poor management and liquidity problems in small regional banks. The police statement said, “Due to the Internet rumors that the Yingkou Coastal Bank was deeply mired in a financial crisis, a large number of depositors went to the bank to withdraw their funds.” The police took a leader who was suspected of disrupting the public order back to the station for investigation and said that it would severely crack down on actions of “spreading rumors” and “making trouble.”

This is now the second bank run in China recently. After an executive of the Yichuan Rural Commercial Bank in Henan Province was taken away last week for investigation, panic spread among depositors, who rushed to the bank to withdraw cash.

According to a Reuters’ report earlier this year, as China’s economic growth has slowed to its lowest point in nearly 30 years, the government made a rare move by taking over an almost unknown Inner Mongolian Merchant Bank. It also bailed out the Jinzhou Bank in Liaoning province and the Hengfeng Bank in Shandong province. It thus has raised concerns about the financial realities of hundreds of small regional banks in China.

Source: Voice of America, November 6, 2019
https://www.voachinese.com/a/fears-over-chinas-smaller-banks-trigger-bank-run-20191106/5155431.html

Xinhua: China’s October Manufacturing PMI Dropped to 49.3 Percent

Xinhua recently reported that the Chinese National Bureau of Statistics just released its official October manufacturing PMI (Purchasing Managers Index) number. The latest index number has suffered a month-over-month 0.5 percent decline since September, to 49.3 percent. This is now an eight-month low. According to the new report, in October, large scale companies manufacturing PMI declined 0.9 percent, to 49.9 percent. Mid-scale companies declined to 49.0 percent, which is a 0.4 percent increase from last month, and the manufacturing PMI small-scale companies dropped down to 47.9 percent, representing a 0.9 percent decline. Among all subcategories, the new orders index reached 49.6 percent (a 0.9 percent decline), the raw material inventory index reached 47.4 percent (a 0.2 percent decline), and the employment index reached 47.3 percent (a 0.3 percent increase). These are the three subcategories that kept the overall manufacturing PMI below 50 percent. PMI is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline.

Source: Xinhua, October 31, 2019
http://www.xinhuanet.com/fortune/2019-10/31/c_1210334911.htm

Non-productive Activities Add to the Burden of China’s Private Sector

In addition to a lack of corporate confidence, China’s private enterprises are often called upon to participate in “political studies.” They are forced to invest in non-productive activities, negatively impacting their operational efficiency.

One private enterprise employee told the Central News Agency that, because she was the only Communist Party member in the group and because she is honest and reliable, the entire company relied on her to handled different political activities such as taking photos, compiling reports, and organizing training. Although most of the events are for show, they still require a considerable amount of time.

An economist who did not want to be named told the reporter that China is facing the pressure of economic growth, but the current practices only make the situation worse. Under the banner of “the Party managing everything,” companies frequently hold political studies. Private enterprises also have Communist Party branches and are mandated to organize Party activities. All these practices increase spending and reduce production.

Xiang Songzuo, a professor at the Renmin University School of Finance, mentioned in an article in October that security inspections and non-productive activities are now everywhere. They are all fiscal expenditures. The fiscal revenue growth in the first three quarters of this year was only 3.3 percent, while the expenditure growth reached 9.4 percent. “On one hand, there is a serious shortage of economic vitality; on the other hand, non-productive fiscal expenditures are growing rapidly.”

Source: Central News Agency, November 3, 2019
https://www.cna.com.tw/news/acn/201911030013.aspx