Skip to content

Economy/Resources - 3. page

Sputnik: China Will Set Off an Upheaval in the World’s Meat Market

According to an article that Sputnik News published, U.S. Consumer News and Business Channel (CNBC) recently reported that, as China is unable to solve the African swine fever issue, African swine fever could drive up the global prices of protein since China consumes 40 percent of the pork in the world. China’s problem may also cause shortages in other countries’ food markets.

African swine fever is an acute viral infection in pigs that is not transmitted to other animals and humans. In August 2018, the African swine fever epidemic broke out in Liaoning Province for the first time and the virus spread rapidly to other provinces in China. Now Chinese officials have confirmed that more than 120 cases of African swine fever have been recorded in 30 provinces and autonomous regions. According to the UN Food and Agriculture Organization, nearly one million pigs have been slaughtered, but China has still failed to control the spread of the dangerous virus of African swine fever.

In an interview with Chinese media, Chinese agriculture minister Han Changfu reported that the African swine fever virus has been brought under control and the occurrence rate has decreased. From the beginning of 2019, only 23 new cases were recorded. However, the U.S. CNBC pointed out that the price of achieving this result was that healthy pigs were slaughtered. Many farms slaughtered all of their pigs because they were worried about the spread of African swine fever.

According to estimates from the Shanghai JCI Consulting Company, China’s pork production will be reduced by 16 percent in 2019, or 8.5 million metric tons, which will result in a pork shortage of around 7 million metric tons. Under the current conditions, a rise in pork prices will be inevitable. The issue of African swine fever has caused active discussions on Chinese blogs. One blogger whose name is “Tangshan Wangzi” wrote, “What happened to China’s pig industry? Take a look. People’s lives are ruined.” Another blogger named “Musalaisi” wrote, “African swine fever can be spread in a number of ways. Prevention is the key. Sterilization of tools is very important. Once this is over, the price of pork will definitely rise.” The blogger named “I am Lin Shu” wrote, “The production of Chinese pork has been cut back, but there is imported pork. Now the domestic pork prices are very bad.”

Washington hopes that China will once again increase imports of U.S. pork in light of the shortage of pork in China. According to Reuters’ data, 90 percent of U.S. exports of pork in 2017 were sold to China. After China imposed a 70 percent responsive tariff on US pork products in 2018, the US exports of pork products to China dropped by 55 percent.

Source: Sputnik News, April 12, 2019

China’s Industrial Profit Dropped Most Since 2011

According to the National Bureau of Statistics of China, the Chinese industrial profit in the first two months of this year shows a year-over-year reduction of 14 percent to 708 billion yuan (US$105 billion), the largest drop since 2011. The main reason is believed to be the weak demand both at home and abroad, resulting in a slowdown of the economy.

The world’s second-largest economy has been growing the slowest in nearly 30 years. The Chinese government has lowered its economic growth target this year from 6.6 percent to a range of 6.0 percent to 6.5 percent.

A National Bureau of Statistics official said in a statement that the profits of major industries such as automobile, petroleum processing, steel, and chemical industries have dropped significantly. These are the main contributors to the lower profit.

Source: Central News Agency, March 27, 2019

German Retail Giant Metro Started Exiting China

Well-known Chinese news site Sina recently reported that the German retailer Metro AG kicked off its process of exiting the Chinese market. Metro has issued invitations to buyers. The Chinese market portion of the retail chain has an estimated value of US$1.5 to US$2 billion. Sources said Metro planned to sell most of the shares of its Chinese operation. It currently has 95 retail locations in China and owns real estate in Beijing and Shanghai. The move is considered part of Metro’s global restructuring effort. Online commerce newcomers have been challenging China’s traditional retail and wholesale segments. A large portion of Metro China’s valuation is in real estate holdings. All potential buyers have declined to comment on this matter. Metro AG’s official position is that the company will be collaborating with its partners on future developments.

Source: Sina, March 20, 2019

Due to Rising Costs, One More Foreign Company Leaves China

After South Korea’s Samsung, Japan’s Olympus, and Ricoh, another Japanese multinational company is following suit and withdrawing from China. According to the Securities Times, a subsidiary of the official People’s Daily, Epson China confirmed that it will close its manufacturing company in Shenzhen in March 2021. The factories that Epson will close down belong to Epson Precision (Shenzhen) Ltd., a watch manufacturer, established in 2011.

Although Epson confirmed that the closure of the Shenzhen factory won’t take place until two years later, the layoffs have begun. One employee told Securities Times that the factory of Shenzhen in Baoan district  has stopped recruiting and plans to lay off 1,700 people. The other Nanshan factory is still recruiting.

Radio Free Asia interviewed some Chinese netizens, who said that the retreat of large foreign-funded enterprises has something to do with the increase in operating costs. One interviewee said, “Overall, it has a lot to do with the increase in the cost of labor and land, as well as environmental costs. The corporate cost is still the major reason. As a result, some businesses have turned to Southeast Asian or Latin American countries.”

Another interviewee believes it is also due to the fact that the Chinese government attaches more importance to state-owned enterprises than to foreign and private enterprises. He believes that if China does not carry out structural reforms, the pace of withdrawal of foreign-funded enterprises will not stop.

Source: Radio Free Asia, March 22, 2019

China’s Local Governments, Including Capital City of Beijing, Face Fiscal Challenges

For years, debt-ridden Chinese local governments have been facing lots of fiscal challenges. During the recent “Two Sessions,” Wu Sufang, the Beijing city government’s Finance Bureau Chief asked for the central government to step up its support. On March 7, Wu publicly stated that Beijing is facing a “slowdown in the growth of its fiscal revenue,” and 2019 is the “tightest year for a balanced budget.”

Wu added that the centrally-administered state-owned enterprises and their branches, the financial industry, and high-tech enterprises are relocating (outside of Beijing). This is having a major impact on Beijing’s industrial growth and fiscal revenue.

An article in the official media pointed out that the primary reason for the difficulty with Beijing’s finances is the “cleaning up of Beijing’s migrant population.” Starting in late 2017, Beijing launched campaigns to evict the migrant population. The decline in Beijing’s population has led to the relocation of industries such as manufacturing, retail, wholesale, transportation, and warehousing. The consequence was that the GDP and the tax revenue decreased.

The second reason is the housing market. The central government’s crackdown on real estate speculation affected Beijing’s official land sales revenue and real estate investments have declined. The third reason is China’s effort to cut taxes to keep the economy from further going south.

Source: Central News Agency, March 19, 2019

Nearly One-third of China’s Cities See Shrinking Population

The population of nearly one-third of China’s cities is shrinking. This is based on a study that the research team at Tsinghua University in Beijing conducted between 2013 and 2016. The South China Morning Post said in a report that, through satellite, researchers had monitored the light density of more than 3,300 Chinese cities and counties.

Long Ying, a city planning scholar at Tsinghua University, led this study. Long said that the population of 938 cities in China has shrunk. This was more than any other country in the world. One interpretation of the results could be that the economic engine of nearly one-third of China’s cities is slowing down. Official statistics show that China is facing huge economic and demographic challenges.

Source: Central News Agency, March 19, 2019