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Departing World Bank President: China Refused to Restructure Debts for Developing Countries

David R. Malpass, the departing President of the World Bank, told Bloomberg that, though the World Bank provided super-low interest rate loans to the developing countries facing debt payment challenges, those countries’ debt problems have not been resolved since China refused to restructure their debts.

Over seventy low-income countries accumulated US$326 billion worth of debt in total. Half of these countries, including Zambia, Ethiopia, and Ghana, are already unable to pay their debts or are about to be in that state soon. Zambia’s debt must be restructured (as it could not pay it back following the current terms), Seventy-five percent were from Beijing.

Source: Epoch Times, May 9, 2023
https://www.epochtimes.com/gb/23/5/9/n13991783.htm

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Chinese with CCP Ties Are the Top Donors to New Zealand’s National Party

Two agents working for the Chinese Communist Party (CCP) are among the top donors to New Zealand’s National Party, a major opposition party, according to donation records in 2022 that were released by the New Zealand Electoral Commissions in late April.

Lu Xinyan (Vicky Lu), donated $18,750 to New Zealand  and ranked 31st among the top donors. Lu is the acting head of the Australian and New Zealand offices of People’s Daily Overseas Edition. People’s Daily is the CCP’s main mouthpiece. Lili Wang donated $17,110 to New Zealand  to the National Party. Wang is the head of the Chinese Language Herald newspaper in New Zealand, which has been run by a company owned by the CCP’s state-run China News Service.

Steven Wong also donated $16,161. He is the former President of the New Zealand branch of the China Council for the Promotion of Peaceful National Reunification (中國和平統一促進會), which targets Taiwan and runs under the CCP’s United Front Department.

Source: Radio Free Asia, May 8, 2023
https://www.rfa.org/cantonese/news/nz-donate-05082023105346.html

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Public Opinion: The Six Huge Costs of the Three-Year Zero-COVID Policy

Lao Man (老蛮), an individual commentator in China, known for his writing on China’s economy, posted an article to list six prices that China paid for adopting the “zero-COVID” policy for the past three years:

  1. The fiscal deficit increased by 60 percent in those three years.
  2. The collapse of municipal investment companies (these companies are set up by local governments as a vehicle to raise money to finance government spending, usually using land which the government owns as collateral).
  3. The collapse of the government’s credibility.
  4. The collapse of the birth rate.
  5. The withdrawal (departing from China) of foreign companies.
  6. The general public’s decision not to take out loans to finance their purchases after they lost hope in the future.

Source: China News Digest, May 8, 2023
http://hx.cnd.org/2023/05/08/老蛮：清零三年的六个巨大代价/

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Government Fined Companies for Lowering Housing Prices

Though many Chinese real estate developers are facing severe financial problems, the government does not allow them to lower housing prices to speed up the inflow of cash. The communist regime is afraid that if it lets housing prices float, a freefall in the prices will occur and wipe out the  tremendous savings that people have poured into their houses, and thus create social turmoil and shake up the Communist party’s rule.

On May 5, the Bureau of Housing and Urban-Rural Development of Kunshan City, Jiangsu Province, sent out an official notice to fine two companies for dropping the sales prices of their newly-built apartments by 20 to 30 percent. It said the two companies “had disturbed the regular order of the real estate market and created a social instability factor.”

On the other hand, the two  companies, after lowering their prices, were able to  sell their inventories quickly since the other companies stayed at the high price following the government’s request.

Source: Sina, May 7, 2023
https://news.sina.com.cn/minsheng/2023-05-07/doc-imysxqsz9123109.shtml#/

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Transaction Amount at Canton Fair Down 15 Percent from Pre-COVID Level

China held its China Import and Export Fair, also known as the Canton Fair, in Guangzhou (Canton) City, Guangdong Province from April 15 to May 5. Official numbers claimed two new records: over 35,000 companies set up exhibition booths and over 2.9 million people

attended the exhibition. However, some vendors complained that they had no visitors at their booths at all.

The total transaction amount, both online and at the fair, was US$25.1 billion, down 15 percent from 2019, which was US$29.3 billion.

Some media reported that foreigners accounted for only 18 percent of the total attendees. That means most of the people were from the manufacturers trying to sell their products. “Among the foreign clients, the majority were from developing countries, which meant that they were more interested in purchasing high-productivity equipment but not a large quantity of consumer goods; there was a significant drop in the number of U.S. and European customers compared to the previous fair.”

Source: Radio Free Asia, May 8, 2023
https://www.rfa.org/mandarin/yataibaodao/jingmao/hcm-05082023090035.html

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China’s April Manufacturing PMI Declined

According to the official numbers released by China’s National Bureau of Statistics, China’s April manufacturing Purchasing Managers’ Index (PMI) fell to 49.2 percent. In terms of the company sizes, the PMIs of large, medium, and small companies are 49.3 percent, 49.2 percent and 49.0percent, respectively – all lower than March. The new orders sub-index was 48.8 percent, a decrease of 4.8 percentage points from the previous month, indicating that the demand in the manufacturing market has dropped. The raw material inventory sub-index was 47.9 percent, a decrease of 0.4 percentage points from the previous month. This continued the decreasing trend. The employment sub-index was 48.8 percent, a decrease of 0.9 percentage points from the previous month.

In the meantime, Caixin just released its official Chinese Manufacturing PMI numbers for April. Caixin PMI is a well-respected economic indicator monitored globally by financial institutions. Caixin’s China Manufacturing PMI recorded 49.5 for April. With the release of the previous backlog of demand, China’s manufacturing industry returned to a contraction trend in April, reflecting that the recovery of the manufacturing industry is still not solid. Employment is also a prominent problem facing the Chinese economy, especially for young people.

Sources:
(1) National Bureau of Statistics, April 30, 2023
http://www.stats.gov.cn/sj/zxfb/202304/t20230429_1939136.html
(2) Caixin, May 4, 2023
https://pmi.caixin.com/2023-05-04/102042089.html

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CNA: China’s Foreign Investment Fell to A Five-year Low Last Year

Primary Taiwanese news agency Central News Agency (CNA) recently reported that, as China strengthens its pressure on foreign capital, foreign direct investment in China only reached US$180 billion in 2022, an annual decrease of 48 percent, a new low since 2017. Economists say new investment into China has slowed and will be hard to recover. The outlook for foreign investment in China has become murkier as China revises its anti-espionage law, broadening its scope to potentially cover day-to-day business activities of foreign investors, as well as targeting foreign consulting firms that provide services to multinational corporations. At the same time, growing tensions between China and the United States may also limit investment, and the U.S. government is also preparing to impose new restrictions on U.S. companies investing in China. This may put foreign capital, which can bring innovative ideas and cutting-edge technology to China, at particular risk. The entry of these companies into China is an important channel for China to learn to improve production efficiency and people’s living standards. China’s appeal as a destination for foreign direct investment had waned ahead of recent Chinese pressure on foreign capital, due to China’s clashes with the West over trade, technology, and national security. In the meantime, low-cost manufacturing destinations such as India and Vietnam are growing. Economists say the fragile political environment means foreign capital in China is likely to remain concentrated in only a few big companies willing to maintain or expand existing businesses, especially those eager to tap China’s consumer market, such as McDonald’s and Starbucks.

Source: CNA, May 5, 2023
https://www.cna.com.tw/news/acn/202305050174.aspx

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Local Government Called for the Central Governments to Take Over Their Debts

Some China’s local governments admitted that they could no longer handle their debts and called for central government’s help. The Research Center on Development, Guizhou Province said that Guizhou Province “is unable to effectively resolve the (local debt) problem on its own.” The center made the statement in a report “Study on the Resolution of Local Government Debt,” which pointed out that local debt is a significant and urgent problem, but it is extremely difficult for the local governments to resolve it due to their limited financial capability. The report is unavailable on the Internet now.

Some local governments in Yunnan Province also reported desperate debt situation. By end of 2022, Yongping County’s total debt reached 3.44 billion yuan (US$500 million). Its debt ratio reached 991 percent and fiscal self-sufficiency rate was only 15.66 percent. Tengchong City also claimed financial difficulty where its fiscal capability could just keep the government payroll going.

Source: China News Agency (Taiwan), April 28, 2023
https://www.cna.com.tw/news/acn/202304280110.aspx

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