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China Imports/Exports Continued Decline in September

Well-known Chinese news site Sina (NASDQ: SINA) recently reported that, according to data released by Chinese General Administration of Customs, China’s September exports totaled US$299.13 billion, down 6.2 percent year-over-year; imports were US$221.42 billion, down 6.2 percent year-over-year. Total import-export value in September was US$520.55 billion, a year-over-year decrease of 6.2 percent.

China’s September trade surplus was US$77.71 billion, down 6 percent year-over-year. Since August of last year, the year-over-year growth rate of China’s exports to the United States has been negative. This past September, China’s exports to the United States recorded a year-over-year decline of 9.3 percent. China’s exports to the EU recorded a year-over-year decrease of 11.6 percent. September exports to ASEAN countries fell by 15.8 percent year-over-year.

Meanwhile, China’s exports to Russia increased by 21 percent year-over-year, a significantly increase over the 16 percent year-over-year figure recorded for the previous month. China’s imports from Russia increased by 8 percent during the same period.

Affected by geopolitical factors, China’s imports of IC chips continued to decline, especially imports from South Korea, Japan, and Taiwan.

Taking into account the downward pressure on external demand for Chinese exports, Sina said to expect that it will take some time before absolute levels of exports are restored to previous levels.

Source: Sina, October 13, 2023
https://stock.finance.sina.com.cn/stock/go.php/vReport_Show/kind/lastest/rptid/750548175594/index.phtml

Briefings | | |   Economy/Resources

Photonmedia: Hong Kong Tourism From Mainland China 30 Percent Lower Than 2018

Hong Kong news site Photonmedia recently reported that post-COVID recovery in Hong Kong tourism has not been as expected. The Hong Kong government hoped to revive the island’s economy after Beijing lifted its Zero Covid policy, resuming fireworks displays and a series of night-time activities.

Recently China had an eight-day holiday starting from the beginning of October. Compared with 2018, the number of Mainland tourists and tour groups entering during this year’s October holiday is down nearly 30 percent. In addition, the way tourists travel in Hong Kong has also changed, and they no longer spend large amounts of money.

According to the daily immigration statistics of the HK Immigration Department, there were 514,000 arrivals on October 1, of which 178,000 were Mainland tourists; 20,000 were foreign visitors from outside China and Hong Kong. Compared with October 1, 2018, both figures fell by approximately 30 percent.

The number of tour groups visiting from the Mainland also continues to decline. On October 1, 2017, about 200 tour groups visited Hong Kong; in 2018, this number dropped by nearly half; as of this year, there are only 75 groups.

The Hong Kong government originally hoped to use the region’s well-known fireworks displays to stimulate tourism-related industries, especially hotel occupancy rates. However, many Mainland tourists have been visiting Hong Kong on a “one-day trip” basis. A popular online tour guide even suggested “If you bring food on this day, about 100 yuan (around US$14) should be enough. There is no other expense”.

Source: Photonmedia, October 2, 2023

疫後十一訪港中國旅客跌三成 百多元「窮遊」攻略近兩萬人收藏

Briefings | | |   Economy/Resources

First International Order for China’s C919 Airplane Comes From a Chinese Company

Chinese media reported that Brunei’s Gallop Air has signed a letter of intent to purchase 30 aircraft. The purchase wil l include fifteen C919 models and fifteen ARJ-21 models from the China Commercial Aircraft Co. This marks the first C919 order and the second ARJ-21 order from an overseas airline. The deal was valued at US$2 billion.

The C919 is China’s first domestically-developed jetliner, seating 158 to 192 passengers and having a range of 4,075 to 5,555 kilometers. The ARJ-21 is a Chinese-produced regional airplane seating 78 passengers.

It turns out that this international order actually originates from a Chinese company.

Chinese media reported that the Gallop Air (骐骥航空), though operated in Brunei, is a private company based in China. The company was established in August 2021, registered with 10 million Yuan capital. Its full name is “Qi Ji Aviation Industry Development (Shaanxi) Co.” (骐骥航空产业发展（陕西）有限公司).

The first international sales of the Chinese ARJ-21 model, sold to Indonesia’s TransNusa, was also backed by China’s state-owned funds.

Source:
1. Lianhe Zaobao, September 25, 2023
https://www.zaobao.com.sg/realtime/china/story20230925-1436527
2. NetEase, September 26, 2023
https://www.163.com/dy/article/IFJLG81D0552PFYH.html

Briefings | | |   Economy/Resources Geo-Strategic Trend

UDN: Vietnam to Restart Rare Earth Mine, Will be Largest in the World

Vietnam will restart its largest rare earth mine next year according to a recent report by United Daily News (UDN), one of the primary Taiwanese news groups. Two companies participating in the bid told Reuters that this Western-backed mining project will be the largest rare earth mine in the world. According to estimates from the U.S. Geological Survey, Vietnam ranks second in the world in rare earth reserves. A large part of these reserves remain untapped.

U.S. President Biden recently visited Hanoi with the aim of deepening relations between the United States and Vietnam. He signed an agreement enhancing Vietnam’s ability to attract U.S. investors for the purpose of developing rare earth mines.

Analysts and foreign officials say the purpose of the U.S. investing in Vietnam’s rare earth mines is to lighten dependence on China and reduce supply chain risks. Given China’s near-monopoly position as the world’s biggest rare earth metal producer, China has been able to set low prices so as to discourage other countries’ willingness to invest in their own rare earth mining operations. Refining rare earths metals is a very complex process, and China has mastered many related processing technologies.

Source: UDN, September 25, 2023
https://money.udn.com/money/story/5599/7463726

Briefings | | |   Economy/Resources Geo-Strategic Trend

CCTV: Former Deputy Director of the National Bureau of Statistics: China Has More Houses Than 1.4 Billion People Can Consume

Chinese Central Television (CCTV) reported that He Keng, Deputy Director of the Financial and Economic Committee of China’s 11th National People’s Congress and former Deputy Director of China’s National Bureau of Statistics, said “Currently, there is an oversupply in the real estate sector. The exact number of vacant houses varies significantly according to different experts, and with a population of 1.4 billion people, it’s unlikely that all of them can be occupied. It is not wise to aggressively promote real estate development in the face of so many vacant properties. Therefore, in this situation, real estate companies must transition early and do so proactively.” He Keng spoke on September 23 at the 2023 China Real Economy Development Conference.

Source: CCTV, September 24, 2023
https://news.cctv.com/2023/09/24/ARTIvq9vNjNa9MzGGtrgkPHo230924.shtml

Briefings | | |   Economy/Resources

China’s Local Bond Issuance at Record High

China’s Ministry of Finance released an update on local government bond issuance from January to August 2022. Total issuance reached RMB 6.3 trillion, up 4% annually, hitting a record high.

The issuance by Guangdong Province was the highest, with RMB 655 billion (US$ 89.7 billion) issued, followed by Shandong (RMB 480.3 billion or US$ 65.7 billion) and Sichuan (RMB 401.1 billion or US$ 54.9 billion). Other major issuers were Hebei, Jiangsu, Zhejiang (over RMB 300 billion or US$ 41 billion each), and Henan, Anhui, Hunan, Yunnan, Guangxi, Fujian (over RMB 200 billion or US$ 27.4 billion each).

The Ministry of Finance’s report categorized bonds as either new bonds for infrastructure projects or refinancing bonds to repay maturing debt. During the period January-August, new bonds totaled RMB 3.7 trillion (US$ 510 billion), down 12% annually, and refinancing bonds totaled RMB 2.6 trillion (US$ 360 billion), up 44%.

The rise in issuance of refinancing bonds reflects increased pressure facing local governments attempting to service mature debts. China’s weak economic conditions, real estate downturn, declining government revenue from land sales, and slow tax revenue growth have all made local governments more dependent on taking out new debt to repay old debt.

Source: Central News Agency (Taiwan), September 26, 2023
https://www.cna.com.tw/news/acn/202309260299.aspx

Briefings | | |   Economy/Resources

Mingpao: Hong Kong’s Container Throughput Fell 16 Percent, Far Behind Shenzhen

Mingpao, one of Hong Kong’s primary newspapers, recently reported that business has decreased at Hong Kong’s container terminals. This decrease contrasts with prior expectations that demand would increase following the easing of Covid-related commerce restrictions between Mainland China and Hong Kong. Hong Kong’s ports have taken a greater hit than the nearby Mainland Shenzhen Port in the Pearl River Delta.

Hong Kong’s container throughput during the first seven months of this year fell by 15.8 percent year-over-year, totaling 8.32 million TEU (standard containers). Container throughput for the month of July was 1.2 million TEU, down 17.9 percent compared with July of 2022. Meanwhile, the nearby Shenzhen port saw only a 4 percent decrease in year-over-year throughput during the first seven months (16.35 million TEU) and had a 7.6 percent increase in year-over-year throughput for the month of July (2.82 million TEU).

There has been basically no expansion of Hong Kong’s terminals in the past decade. Meanwhile, the layouts of the ports in Guangzhou and Shenzhen have become increasingly complete. Thus, some goods are no longer shipped through Hong Kong.

According to the Hong Kong Marine Department’s April 2023 ranking of the world’s top ten container ports, Hong Kong ranked ninth from 2020 to 2022, surpassed by Shanghai, Shenzhen, Guangzhou and other Greater Bay Area ports. Hong Kong was still ranked among the top three ports in the world between 2008 and 2012. It ranked fourth from 2013 to 2014 and fifth from 2015 to 2017.

Source: Mingpao, September 18, 2023
https://news.mingpao.com/pns/%E7%B6%93%E6%BF%9F/article/20230918/s00004/1694969700318/

Briefings | | |   Economy/Resources Geo-Strategic Trend

RFI: U.S. Companies’ Confidence in the Chinese Market Declines to Record Low

Optimism among U.S. companies operating in China has hit a “record low” according to a Radio France Internationale (RFI) Chinese Edition report on a survey conducted by the American Chamber of Commerce (AmCham) in Shanghai. More and more companies are seeking to withdraw investment from China even as the Chinese government is taking measures to boost the country’s sluggish economy.

The AmCham report stated that, after years of pandemic disruption and restrictions, 2023 was supposed to be a year of rebound in investor confidence and optimism. However, the Chamber’s 2023 survey of U.S. companies in China found that such a rebound has not materialized and business confidence has continued to deteriorate.

In addition to poor economic conditions, tensions between Beijing and Washington have also put heavy pressure on U.S. companies operating in China. The report indicated that respondents’ optimism about the next five years is the lowest on record: only 52 percent of companies, a decrease of three percentage points from the previous year, expressed optimism about their prospects for that time period. When asked about the top three challenges they face, 60 percent of the 325 surveyed companies mentioned that US-China relations were a significant challenge, and 60 percent of respondents mentioned economic slowdown as one of the top three headwinds. Around 40 percent of companies are planning to move or have already moved capital out of China, an increase of six percentage points over last year. Southeast Asia is the most popular alternative destination to which U.S. companies are moving their production and capital.

Source: RFI Chinese, September 19, 2023
https://tinyurl.com/2kkyuh26

Briefings | | |   Economy/Resources US-China Relations