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China’s Granary Region Suffers Severe Flooding, Food Security at Risk

The remnants of Typhoon Doksuri caused severe flooding in China’s northeastern provinces of Heilongjiang and Jilin, known as the country’s “breadbasket.” The flooding has killed at least 14 people and displaced tens of thousands more. It has also damaged or destroyed millions of hectares of crops, raising concerns about food security for China’s 1.4 billion people.

The flooding is the latest in a series of natural disasters to hit China’s agricultural sector in recent months. In May, heavy rains in Henan province caused widespread damage to wheat crops. In June, a drought in northern China took a toll on corn and soybean plantings.

The Ministry of Agriculture and Rural Development has warned that the flooding in Heilongjiang and Jilin could have a “serious impact” on China’s agricultural production. The ministry said that the flooding has damaged or destroyed about 10 million hectares of crops, and that it could take several years for the region to recover.

The flooding is also a major blow to China’s efforts to achieve self-sufficiency in food production. China is the world’s largest producer of wheat, and it is among the largest producers of corn and soybeans, but the country still needs to imports significant amounts of these crops to meet domestic demand. This year’s flooding could lead to increased food imports, which would put a strain on China’s economy.

The Chinese government said that it is taking steps to mitigate the impact of the flooding, including providing relief to those affected and investing in infrastructure to help prevent future disasters. It remains to be seen how the flooding will impact China’s food security in the long term.

Source: Voice of America, August 7, 2023
https://www.voachinese.com/a/deadly-floods-hit-china-s-major-grain-producing-region-fueling-food-security-concerns-20230807/7214602.html

Nikkei Chinese: China’s July Manufacturing PMI Below 50 for Fourth Consecutive Month

Nikkei Chinese Edition recently reported that, according to data just released by the Chinese National Bureau of Statistics, China’s Manufacturing Purchasing Managers Index (PMI) for July is 49.3. The Chinese real estate market continued to slump, and the production growth of building materials was sluggish. Although the PMI was 0.3 percentage points higher than last month, it has been below the 50 threshold for four consecutive months. This is the first time since October 2019 that the PMI has seen such a stretch of low prints, when it was below 50 for six consecutive months.

The Chinese PMI is based on a survey of 3,200 manufacturing companies, aggregating data on items such as new orders, production and employees. A reading above 50 indicates expansion in manufacturing activity relative to the previous period, while a reading below 50 indicates contraction.

Looking at the composition of July’s PMI number, new orders as a primary indicator stood at 49.5. Production fell 0.1 percentage points to 50.2, exceeding 50 for 2 consecutive months. The employment index, which reflects employment trends, deteriorated. Numbers also showed smaller businesses are more pessimistic about the economy. Zhang Liqun, a researcher at the Development Research Center of the Chinese State Council, said that more than 60 percent of enterprises believe that current demand is insufficient. Many analysts said that policy makers may be hesitant to use aggressive stimulus to boost domestic consumption amid fears of rising debt risks, despite Beijing’s urgent desire to improve the economy.

Source: Nikkei Chinese, July 31, 2023
https://cn.nikkei.com/china/ceconomy/53092-2023-07-31-14-32-32.html

Shanghai to Stop Accepting New Ride-Hailing Cars

{Editor’s Note: In China’s current economic downturn, people are struggling to find jobs. Many have chosen to work for a ride-hailing service (similar to Uber) or do food delivery (similar to Uber Eats). The flood of people entering such jobs means these industries are becoming fully saturated with labor.}

On July 21, the Shanghai Municipal Transportation Management Bureau issued a notice stating that it will suspend the processing of ride-hailing transportation certificates. Starting from September 20, 2023, no new ride-hailing transportation certificates will be issued. Currently, there are about 76,000 licensed ride-hailing vehicles in Shanghai in addition to about 50,000 taxis.

The move by Shanghai’s government makes Shanghai the third city, after Sanya (Hainan Province) and Changsha (Hunan Province), to halt issuance of new ride-hailing certificates this year. Other cities have issued warnings regarding the risks of the ride-hailing industry, stating that local ride-hailing capacity has reached or nearly reached saturation. These include Jinan (Shandong Province), Suining (Sichuan Province), Wenzhou (Zhejiang Province), Dongguan (Guangdong Province), Linyi (Shandong Province), Kunming (Yunan Province), and Shenzhen (Guangdong Province).

Source: Net Ease, July 22, 2023
https://www.163.com/dy/article/IA6JQ4840547RFBR.html?f=post2020_dy_recommends

At Least 155 Hospital Heads in China Investigated for Corruption This Year

Corruption is common throughout China. The healthcare sector has recently become a major focus of Beijing’s anti-corruption efforts, with at least 155 hospital presidents and communist party secretaries investigated this year, more than double the total for the previous year.

In May, 14 Chinese government ministries jointly published the “2023 Essentials for Correcting Irregularities in Pharmaceutical Procurement and Distribution and in the Medical Services,” aiming to address unethical practices within the healthcare industry. These practices include leaking bid prices, illegal benefits disguised as academic activities, and providing kickbacks to healthcare practitioners.

Source: Central News Agency (Taiwan), July 30, 2023
https://www.cna.com.tw/news/acn/202307300120.aspx

STCN: Hong Kong Exports Fell for Six Straight Months

China Security Times (SecuTimes or STCN) recently reported that, due to economic slowdown and weak market demand, Hong Kong’s foreign trade continues to shrink. On July 25, the Census and Statistics Department of the Hong Kong Government released the external merchandise trade statistics for June: Hong Kong’s overall exports in June fell by 11.4 percent year-over-year.

This is the sixth consecutive month this year that Hong Kong’s exports have declined. In the first half of the year, exports fell by 15.5% year-over-year, resulting in a reported tangible trade deficit of RMB 231.6 billion yuan (around US$32.4 billion). A spokesman for the Hong Kong government said that, in light of weak external demand, the exports in June fell further year-over-year. Exports to mainland China, the United States and the European Union all decreased, while exports to most other major Asian markets saw record declines as well.

Looking ahead, the influence of slowing global economic growth means Hong Kong’s export performance will continue to face significant pressure in the short term. Hong Kong’s exports to all major Asian regions showed negative growth. The Asian regions to which exports fell most sharply include Japan (down 24 percent), Singapore (down 23.5 percent), Taiwan (down 19.2 percent), and Mainland China (down 19.2 percent), and India (down 17.3 percent).

Hong Kong’s major export products, especially electrical machinery, instruments, appliances and parts, office machines, automatic data processing instruments, as well as communication, recording and audio equipment and instruments, were dominated by declines. In addition to the affect of the global economy, the economic performance of the Mainland has also negatively impacted Hong Kong’s foreign trade.

Source: STCN, July 26, 2023
https://www.stcn.com/article/detail/930849.html

Internet Article: Sad to See Shanghai Economy Fall to This Level

A Chinese netizen posted an article describing store closures in the key areas of Shanghai. The article provides an angle on the run-down economy of Shanghai as well as throughout broader China.

The author gave examples of three sites, representing small, mid-sized, and large retail stores.

  • Shanghai Train Station: There used to be many small stores selling stationery, mobile phone covers, clothes, etc., along its underground tunnel. These stores are now closed.
  • Hongqiao Train Station: There used to be many mid-sized stores, but most of them are now closed. The train station was hot and the author wondered if the authority couldn’t even afford air conditioning there.
  • Nanjing Road Pedestrian Street: This is a premium shopping district in Shanghai with many large retail stores. Zhidi Square Plaza, a landmark retail plaza, was closed, with some stores at upper level of the plaza still open.

Sources:
1. Central News Agency (Taiwan), July 24, 2023
https://www.cna.com.tw/news/acn/202307240273.aspx
2. Have8.tv (copy of the original posting)
https://news.have8.tv/3244441.html

China Acknowledges That It Inflated 2022 Letin Auto Revenue

{Editor’s Note: The Chinese Communist Party (CCP) is known for reporting fake (inflated) Gross Domestic Production (GDP) numbers, to make itself look better. A recent case evidenced that practice.}

Letin Auto, also known as Levdeo, is an electric vehicle manufacturer in China. Its founder Li Guoxin posted an article under the company’s official account on January 14, accusing the county party chief Wang Xiao for forcing Letin to report an extra non-existing 4.7 billion Yuan (US$660 million) in revenue so that the county could have a better GDP number.

The government conducted an investigation and announced the result: Letin reported GDP 7.095 billion Yuan of revenue in 2022, but its actual revenue was only 2.552 billion Yuan, which means that 4.543 billion Yuan of revenue was fabricated. Following the investigation, the punishment was light. Nine people were said to be involved and were each given a warning within the party. There was no criminal or administrative punishment. The county party chief was also cleared from being guilty.

Letin filed for bankruptcy in May 2023.

Source: Net Ease, July 27, 2023
https://m.163.com/dy/article/IALU4IGA05560VPM.html

Chinese Scholar: Possible Underestimate of Youth Unemployment Rate

According to Zhang Dandan, a professor from Beijing University, the youth unemployment rate in China may be underestimated due to discouraged workers temporarily leaving the labor force during weak job markets,

According to an article published by Zhang in China Digital Times, structural and short-term factors both contribute to high youth unemployment. In the long run, three years of COVID-19 restrictions significantly impacted consumption, business, and economic vitality. In the short run, the 16.6% year-on-year increase in college graduates in 2022 and the 12% increase in graduate students flooded the job market. Rapid AI development has also begun replacing human roles in some white-collar professions like finance and sales, disproportionately impacting highly-educated youth. While vocational youth employment has rebounded slightly since March, unemployment remains high for 4-year college graduates. The number of civil service exam takers surged 80% during the period 2022-2023, reflecting graduates’ job insecurity. With 11.58 million total 2023 graduates, competition is fierce.

According to China’s Bureau of Statistics, urban youth in the 16-to-24-year old age range comprise 96 million individuals, of whom 64 million do not have jobs. Among this group of non-laboring urban youth, 16 million are non-students, many of whom choose to “lie flat” by relying on their parents rather than working. If these individuals were counted as unemployed, the youth unemployment rate could be as high as 46.5% rather than the reported 19.7%.

College graduates are increasingly choosing to not work immediately after graduation, comprising about 75% of the youth who choose to “lie flat. This situation may be helped as college graduates reduce their salary expectations and gradually enter the workforce. However, economic recovery is needed to fundamentally address the root cause of youth unemployment.

Source: China Digital Times, July 19, 2023
https://chinadigitaltimes.net/chinese/698406.html