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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

Briefings | | |   @CS Economy/Resources

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

Briefings | | |   Economy/Resources

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

Briefings | | |   Economy/Resources Geo-Strategic Trend

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

Briefings | | |   Economy/Resources

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

Briefings | | |   @CS Economy/Resources

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

Briefings | | |   Economy/Resources

Xi Jinping Calls for Strengthened Farmland Protection

Chinese President Xi Jinping recently stressed the importance of food security, calling for enhanced protection of China’s farmland, improved quality of the farmland, and full utilization of the potential of saline-alkali land to boost agricultural production.

On July 20, Xi chaired a meeting of the Chinese Communist Party’s (CCP) Central Financial and Economic Committee to study the issues of strengthening farmland protection and comprehensive improvement of saline-alkali land. The meeting notes say that China’s situation, with a large population and a small amount of land, has not changed, and that the country still faces prominent problems around use of farmland for non-agricultural purposes. The meeting stressed the need to “ensure that the red line of 1.8 billion mu (120 million hectacres) of farmland will never be broken.”

The meeting stated that the central government should motivate farmers and local governments to protect farmland and promote grain production, establish a mechanism to guarantee the income of grain farmers, and develop various forms of moderate-scale agricultural operations.

The meeting pointed out that the comprehensive improvement and utilization of saline-alkali land is an important aspect of farmland protection and improvement. China has a large amount of saline-alkali land, and the trend of saline-alkaliization of farmland in some areas is becoming more serious. The meeting notes said that it is of great significance that China launch a project of comprehensive improvement and utilization of saline-alkali land, fully tapping the potential of saline-alkali land, strengthening the improvement of existing saline-alkali farmland, and effectively curbing the trend of saline-alkaliization of farmland.

Source: Central News Agency (Taiwan), July 20, 2023
https://www.cna.com.tw/news/acn/202307200385.aspx

Briefings | | |   Economy/Resources

LTN: The Illusion of China’s GDP

Major Taiwanese news network Liberty Times Network (LTN) recently published a commentary on China’s Gross Domestic Product (GDP) authored by Yen Qingzhang (顏慶章), who served as Taiwan’s Minister of Finance and was the first ambassador of Taiwan to the World Trade Organization (WTO). Below are some key points made in the article.

GDP has become the main data point for measuring national output and economic activity across the world. China’s official records state that, in 1985, the country’s State Council gave approval for the National Bureau of Statistics to calculate China’s GDP using the System of National Accounts (SNA) methodology recommended by the United Nations. However, on March 18, 2022, China’s National Supervision Commission for Central Discipline Inspection (中央紀委國家監委) officially stated that “in recent years, the National Bureau of Statistics has resolutely investigated and dealt with statistical violations of disciplines and laws, but the problem of persistent statistical fraud is still relatively prominent.”

In 2019, a joint publication by University of Chicago Economist Xie Changtai and three scholars from the Chinese University of Hong Kong concluded that China’s economic data, including industrial exports and investment amounts, have been skewed for a long time. The paper indicated that China’s annual GDP growth from 2008 to 2016 was exaggerated by an average of two percentage points per year. Cumulatively, the official figures for 2016 are exaggerated by 16 percent, equivalent to more than US$1.5 trillion.

The tragic truth of China’s economic development, putting aside controversy around GDP exaggeration, is that the “achievements” of China’s economic growth have not resulted in accumulation of national wealth. To the contrary, the country’s wealth has been hollowed out. First, as far as residential construction and real estate are concerned, there are as many as 60 million empty housing units. What a waste of GDP! Second, investment by local governments in public facilities, originally an important factor driving local GDP, has been corrupted to the point of being unusable with the passage of time. Although future demolition of unnecessary construction projects will contribute to GDP, such demolition will not create any real wealth. Third, public investment by the central government in major projects such as China’s highspeed railway system have suffered from major losses. The highspeed railway’s income can only compensate for its electricity consumption, and by the end of 2022 the railway system’s liabilities totaled RMB 6 trillion (around US$0.834 trillion).

Source: LTN, July 23, 2023
https://ec.ltn.com.tw/article/breakingnews/4365526

Briefings | | |   Economy/Resources