Economy/Resources - 29. page

A recent report listed a series of “creative” charges in China, driven either by profit-seeking motives or the necessity to survive a sliding economy.

• High School Air Conditioning (AC) Service Charges: A high school opted to outsource its AC services to a company. To recoup equipment and installation costs, the company levied a fee of 9.9 Yuan per hour for each classroom and 3.9 Yuan per hour for each dorm room when students used the AC.
• Hotel Charging Cable Fees: Some hotels have introduced fees for using their charging cables to power mobile devices, a service that was previously complimentary.
• Massage Chairs in Public Spaces: A train station replaced its standard chairs with massage chairs, and numerous movie theaters have installed massage chairs in its premium seating areas, offering these seats at a higher price.
• Nap Fees at High Schools: Recognizing the post-lunch nap habit among Chinese people, a high school instituted varying fees for students who wishes to nap on a bed, mat, or desk (where students sit with their arms on the desk and rest their heads on their arms).
• College Library Study Rooms: Several colleges have transformed library rooms into “private study rooms” and imposed charges for their use, diverging from the traditional concept of libraries as free study spaces.

Source: QQ, September 5, 2023
https://new.qq.com/rain/a/20230905A04WZB00

Radio Free Asia (RFA) Chinese Edition recently reported that, according to the data jointly released by the National Bureau of Statistics of China and the China Federation of Logistics and Purchasing, the Chinese manufacturing PMI in August was 49.7, an increase of 0.4 points from the previous month. This is the fifth consecutive month that the Chinese manufacturing PMI has been below the critical threshold of 50 (the “line of prosperity”), indicating ongoing contraction in Chinese manufacturing.

Among the five sub-indices that make up the manufacturing PMI, the production index was 51.9, the new order index was 50.2, and the supplier delivery time index was 51.6, higher than the critical point of 50. The raw material inventory index was 48.4 and the employment index was 48.0, both below the critical point. The Purchasing Managers Index (PMI) is an internationally accepted macroeconomic monitoring indicator. The number 50 is usually used as the boundary for indicating growth or decline.

In an environment where new export orders continue to contract amid weak global demand, Chinese manufacturers will need to rely on domestic demand to make up for the shortfall. Currently, demand for Chinese real estate and exports continues to be sluggish, and insufficient demand in the economy overall constrain prospects for economic recovery.

In order to stimulate China’s real estate market, the Chinese government has recently introduced a number of measures. The central bank will now guide commercial banks to adjust the interest rates of existing personal housing loans “in an orderly manner” so as to reduce the pressure on residents who are faced with mortgage loan repayments.

Source: RFA Chinese, August 31, 2023
https://www.rfa.org/mandarin/yataibaodao/jingmao/hcm2-08312023103501.html

A number of Chinese airlines recently released their annual reports. The three leading airlines, Air China, China Eastern Airlines, and China Southern Airlines, posted a total combined loss of about 12.58 Billion Yuan (US$1.73 Billion) in the first half of 2023. Air China reported a net loss of 3.45 Billion Yuan, China Eastern Airlines lost 6.25 Billion Yuan, and China Southern Airlines lost 2.88 Billion Yuan.

The current number of foreigners traveling Beijing and Shanghai is only about 10% of what it was before the start of the COVID-19 pandemic. Some tour guides said that this has been the first time in their 30 years as tour guides that they don’t have foreigner tour groups to service.

Source: Radio Free Asia, August 31, 2023
https://www.rfa.org/mandarin/yataibaodao/gt1-08312023011737.html

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, in August 2023, several cities and regions in China have successively experienced steel trader debt default incidents. Provinces and cities affected include Sichuan, Nanjing, Hangzhou, Guizhou and others. Jiangsu, Henan, Wuhan and some others have issued risk notices to warn all companies to pay attention to risk prevention, not be greedy for low prices, avoid “blind transactions,” and work together to overcome the unfolding financial crisis.

In the meantime, according to information from China’s National Enterprise Bankruptcy and Reorganization Network, a large number of steel traders have entered the stage of bankruptcy and liquidation. In just the first two weeks of August, 21 sizable steel traders received court rulings for bankruptcy and liquidation. Officials from the China Iron and Steel Association said that, in the face of development difficulties, steel companies “should jointly strengthen self-discipline, pay close attention to the total demand and structural changes of the downstream steel consumption industry, and reasonably control the steel inventory level.” The steel companies should jointly “determine production by sales,” i.e. do not turn cash into inventory; “determine production by efficiency,” i.e. do not cause operational cost increase; and “determine sales by cash,” i.e. do not turn sales into collection obligations.

Source: Sina, August 14, 2023
https://finance.sina.com.cn/money/future/wemedia/2023-08-14/doc-imzhemwz4905118.shtml

Lao Man (老蛮) is a Chinese writer who publishes on economic topics. He recently published an article warning that Chinese insurance companies are another time bomb that may explode soon.

He gave the following data (in Billions of Yuan):

• Year                       Investment Income          Payout       Net
• 2018                               7,105                          12,298        -5,193
• 2019                               9,152                          12,984        -3,832
• 2020                               11,729                        13,907        -2,178
• 2021                               12,775                        15,609        -2,834
• 2022                               4,640                          15,485        -10,845
• 2023 (Jan – Jun)          3,194                          9,151          -5,957

He pointed out that many insurance companies have a cash pool for investment, and that they use their investment returns to cover part of their insurance payouts (with any gap between investment income and insurance payouts being made up by e.g. premiums charged to the insured).

It was a good sign that the gap between the investment income and insurance payouts was shrinking from 2018 to 2020. The gap held steady in 2021, but it shot up dramatically in 2022 and has remained high during the first half of 2023.

The reason is that insurance companies can no longer generate high returns on their investments due to China’s economic downslide. This will inevitably eat into the insurance companies’ cash pools. According to the article, insurers will be forced to take in more customers and use the new customers’ money to pay for the existing customers, essentially running a Ponzi scheme.

Source: China News, August 15, 2023
https://news.creaders.net/china/2023/08/15/2637675.html