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China’s Official PMI for February Recorded Three-Year Low

Well-known Chinese news site Sohu recently reported that China’s National Bureau of Statistics just released its official February numbers for the manufacturing industry sector. The manufacturing PMI dropped to 49.2, which is the lowest since March 2016. Some experts suggested that the February Chinese New Year was the cause. However, the PMI decline this year is worse than it was for the Chinese New Year months in the past three years. This is also the first time since February 2009 that the official manufacturing PMI has gone below 50. The latest numbers showed very low new orders on the import side. New export orders also reached the lowest since March 2009. Almost all analysts pointed out that the new PMI numbers do reflect a continued pressure on the Chinese economy. 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: Sohu, February 28, 2019
http://www.sohu.com/a/298199657_114986

Ford is Cutting Headcount in China

The Shanghai-based Chinese financial news site East Money recently reported that Ford is cutting its headcount in its joint venture Company in Xi’an, China. The total amount of workers being “quietly” laid off is in the thousands. There is no precise report on the actual count, but among the five factories Ford has in Xi’an, the shifts have been reduced from three per day to one. The three large assembly factories in Chongqing also lowered their output to one fifth of their capacity. The Chinese automobile market shrank in 2018, seeing the first decline in sales since 1990. With the increasing pressure from transportation infrastructure and tough emission standards, it is widely expected that China’s automobile market will continue to suffer over the next few years. Ford is not the only automobile manufacturer that is facing market pressure. Nearly all major players are seeing declines. Analysts expect that the Chinese automobile industry will have more challenges in 2019.

Source: East Money, February 28, 2019
http://finance.eastmoney.com/a/201902281056249338.html

Quality Award for Beijing’s Best Known Pharmacy of Chinese Medicine, Tong Ren Tang, Revoked Due to Repeated Product Fraud

On February 19, the State Administration of Markets (of China) issued a notice revoking the title of China Quality Award that the China Tong Ren Tang (Group) Company had previously received. The notice, that the General Administration of Market Supervision issued, revealed that the award was revoked because Tong Ren Tang’s subsidiary used expired honey for production and was suspected of changing the date of production.”

Tong Ren Tang is a household brand name in Chinese medicine in Beijing, with over a hundred years of history. The Tong Ren Tang (Group) has six secondary groups, three institutes, and five directly affiliated subsidiaries. It has won the China Quality Award and the Beijing Municipal Government Quality Management Award. By the end of 2017, it had more than 2,600 kinds of products in six major categories, such as medicine and health foods, 36 production bases, 105 modern production lines, and a national engineering center. The group system has a total of 2,121 retail terminals and 488 medical service terminals.

As the company expanded, it was also frequently found to have breached quality control. At the end of 2018, the State Food and Drug Administration issued a statement that 63 batches of licorice (licorice tablets) that Beijing Tong Ren Tang and other enterprises produced did not meet qualifications. In 2017 alone, due to a number of quality problems, Tong Ren Tang’s subsidiaries were “blacklisted” 10 times.

Source: 163.com, February 20, 2019
https://news.163.com/19/0220/00/E8DUGJOK00018AP1.html

China’s Securities Industry Had a Tough Time in 2018

The China Securities Industry Association recently published the data on how security companies performed in 2018. According to the report, the industry slid in both revenue received and in profits. The total income of 131 securities companies in 2018 was 266.3 billion yuan (US $42.3 billion), a downward slide of 14.47 percent from the 2017 level. The total profit was 66.6 billion yuan (US$10.6 billion), down 41 percent from the 2017 level. 106 companies were profitable in 2018, short by 14 from a year ago.

Some companies reduced employees’ salaries. Some even started layoffs.

GF Securities, one of the top ten securities companies, reduced employee’s salaries by a total of 189 million yuan (US $30 million) in 2018, an average cut of 18,000 yuan (US $2,900) per employee.

Huaxia Life Insurance plans to reduce its staff. According to its internal documents, each business unit is required to cut 5 percent of its staff by the end of February. If it doesn’t cut its staff, it has to cut total salaries by 5 percent.

Source: Sohu, January 25, 2019
http://www.sohu.com/a/291523447_465270

China to Levy Farmland Occupation Tax

Since 2006, the Chinese government has not collected the agricultural tax. However starting from the second half of 2019, it will resume imposing a levy of a farmland occupation tax on farmers. Chinese President Xi Jinping issued a presidential decree at the end of last year, announcing that on September 1, 2019, the Law of the People’s Republic of China on the Farmland Occupation Tax will become effective. As the official media is low-key about the bill, many farmers are still in the dark.

According to article 3 of the law, “the farmland occupation tax shall be calculated on the basis of the area of the farmland actually occupied by a taxpayer and shall be paid in a lump sum under the applicable tax rate as prescribed. The tax payable shall be the area of farmland (in square meters) actually occupied by the taxpayer multiplied by the applicable tax rate.”

In 2004, then Chinese Premier Wen Jiabao proposed that the agricultural tax rate be reduced gradually, at an average annual reduction of at least 1 percentage point, with a goal of completely abolishing the agriculture tax within the next five years. As of today, Wen’s policy has remained in place for 15 years.

Source: Radio Free Asia, February 19, 2019
https://www.rfa.org/mandarin/yataibaodao/shehui/ql1-02192019092253.html