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China’s Government Spending Deficit in the First Six Months of 2022 Was 5 Trillion Yuan

China’s Ministry of Finance published the amounts of the government’s spending and income for the first six months of the year. The income for the national government budget was 10.52 trillion yuan (US $1.56 trillion) and the spending was 12.89 trillion yuan (US $1.91 trillion). The income from the national governmental funds was 2.80 trillion yuan (US $420 billion) and the spending was 5.48 trillion yuan (US $810 billion). In total, the government spending deficit was 5 trillion yuan (US $740 billion) for the first six months of the year.

Source: China’s Ministry of Finance website, July 14, 2022

Chinese Government Organized Boycotts against Western Companies

Research by the Swedish National China Center found that, in the 13 years between 2008 and 2021, Chinese consumers initiated 90 boycott actions against foreign companies. Actually, the communist party is behind or is even directly organizing these boycotts. The foreign companies thus have become the victims of the communist party’s political game.

The “organized” consumer boycotts mainly target companies in North America, Europe, and Northeast Asia. American companies have been boycotted 27 times, Japanese and French companies each 11 times, German companies 8 times, and Korean companies 6 times.

For example, Beijing directly organized a boycott of Korean companies to punish South Korea for its plan to install the THAAD missile defense system. The communist regime also started the first shot, which Chinese consumers followed, on Marriott since Marriott did a survey listing Tibet, Taiwan, Hong Kong, and Macao as parallel options to China. Beijing also directly started a campaign against “foreign companies attempting to split China.” It first asked foreign airlines to mark Taiwan as belonging to China and later spread the boycott wave to international fashion brands such as Coach, Versace, and Givenchy. Chinese consumers were stirred up and stopped buying these companies’ products.

Source: Epoch Times, July 24, 2022

Shanghai’s New Talent Recruiting Plan

Shanghai is openly recruiting 5,157 Post Doctors, with a maximum annual salary off 700,000 yuan (US$ 103,000) and a living subsidy. The median salary is 300,000 Yuan (US $44,000). Shanghai is not alone. Many Chinese cities are in the competition for the talents that have Doctors and Post Doctors status.

The U.S., U.K, and Germany are the top three countries that are Shanghai’s recruiting targets. This caused people to wonder whether this recruiting effort is a continuation of the infamous “Thousand Talents” program. The “Thousand Talents” program included some cases of participants stealing Western technology and giving it to China.

Source: Radio Free Asia, July 29, 2022

JCCIC Demands Fair Treatment from Beijing’s Tightened Tech Control

he Japanese Chamber of Commerce and Industry in China (JCCIC),  Which Japanese companies stationed in China have formed, published a position paper on July 29, expressing the wish that the Chinese government improve its business environment. As China tightens control over high-tech products and data processing, the JCCIC asked Beijing not to exclude foreign companies, but to treat them as fairly as domestic companies.

The paper asks for the permission of foreign companies to participate in the stipulation of high-tech-related standards and to disclose product information. Takashima Ryusuke, vice president of JCCIC and director-general for the Beijing Office of the Japan External Trade Organization (JETRO), who also participated in putting together the paper, stressed at a press conference that “one cannot set standards that treat foreign companies in a discriminatory manner.”

Noting that Chinese government procurement is dominated by domestically produced goods, Takashima demanded that, “imports (from Japan) be able to participate on an equal footing.”

China’s Personal Information Protection Law prohibits the provision of domestically collected data to foreign countries, but has yet to offer detailed regulations. Takashima said Japanese companies are concerned about the application of the law, and called for rules to be established and made public as soon as possible.

Source: Kyodo News, July 29, 2022

Before 2025, China’s Population Will Shrink

China’s National Health Commission (NHC), the country’s top agency overseeing the public health, has revealed that the total population will show negative growth during the 14th Five-Year Plan (2021-2025). The statement was made in an article published in Qiushi magazine on August 1. Qiushi is the flagship publication of the Central Committee of Chinese Communist Party (CCP).

According to the NHC’s 2021 survey, women of childbearing age continue to show a low desire to have children. The average number of planned childbirths per woman is 1.64, down from 1.76 in 2017 and 1.73 in 2019. The measure is only 1.54 for Chinese women born in the 1990s, and 1.48 for those born in the 2000s.

As population growth has slowed down significantly, the fertility levels have fallen, with the total fertility rate, or the average number of children per woman, dropping to below 1.3 in recent years. It is estimated that the population will fall during the 14th Five-Year Plan period (2021-2025).

NHC observed that the population distribution will show three major characteristics. First is a seriously aging society. It is expected that around 2035, the proportion of people over 60 years old will exceed 30 percent of the total population. Second is the smaller household size. The average household size will show a drop to 2.62 persons in the figures for 2020, a decrease of 0.48 persons compared to 2010. Third, there will be an uneven regional development.

Source: Central News Agency (Taiwan), August 1, 2022

Lianhe Zaobao: China’s July Manufacturing PMI Showed Both a Production and a Demand Slowdown

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported on an  announcement that China’s National Bureau of Statistics made. China’s manufacturing purchasing managers’ index (PMI) in July declined by 1.2 percentage points from the previous month to 49 percent, falling below the growth line. The Bureau indicated that many factors influence the decline of the manufacturing PMI. For example, it is affected by traditional production off-season, insufficient market demand, and low prosperity of high-energy-consuming industries. Industries like textiles, petroleum, coal and other fuel processing, ferrous metal smelting and rolling processing have continued to be in the contraction range. This was one of the main factors for the decline of PMI. Both manufacturing activities and demand in the manufacturing sector have slowed down. Raw material procurement activities have also tightened accordingly. The purchasing volume index and the import index both decreased by more than two percentage points from the previous month. The international situation has become more complex and severe, and the market demand is under pressure. The new orders index and the index of new export orders both dropped significantly. The manufacturing PMI now is below 50, indicating that China’s economic recovery remains shaky. Challenges to China’s GDP growth in the third quarter may be bigger than earlier expected.

(1) Lianhe Zaobao, August 1, 2022

(2) China’s National Bureau of Statistics, July 31, 2022

China Opposes “Chip 4” Alliance

China has taken multiple actions to oppose the “Chip 4” alliance, an initiative that the U.S. is proposing for four major chip production countries, the U.S., Japan, South Korea, and Taiwan. Beijing is afraid that forming the “Chip 4” alliance will isolate China. Other consequences are implied.

Huanqiu (Global Times) published a commentary on July 20, stating, “(T)he South Korean government and related companies can judge by common sense alone that participating in this matter not only will not have any incremental gains, but will also face the risk of significant damage to their interests. Data shows that last year, South Korea’s semiconductor exports totaled $128 billion, of which 60 percent went to mainland China and Hong Kong. To cut ties with this large market is tantamount to business suicide. The U.S. has handed South Korea a knife and is forcing it to do so.”

On July 25, China’s Ambassador to South Korea Xing Haiming met with Yang Hyang-ja, a South Korean National Assembly member and Chairman of the Special Committee on Strengthening the Competitiveness of the Semiconductor Industry. Xing said, “China is willing to work with South Korea to adhere to the principle of a fair and just market, eliminate external interference, and to strengthen cooperation in semiconductors and other fields .…”

Xing met with South Korean Trade Minister Ahn Duk-geun on the same day.

Huanqiu (Global Times) also published an article on July 28 to suggest that Taiwan should not  join the “Chip 4.” It stated, “Currently, Taiwan’s chip exports to the mainland account for more than 40 percent of its total chip exports. Semiconductors and other electronic and communication products are large commodities. If the TSMC  (Taiwan Semiconductor Manufacturing Company) joins the ‘chip 4’ alliance to exclude the mainland China market, it will undoubtedly cause huge losses to the entire Taiwan economy.”

1. Huanqiu (Global Times), July 20, 2022
2. Global Times, July 25, 2022
3. Huanqiu (Global Times), July 28, 2022

Former Central Bank Official: China’s Real Estate Industry Will No Longer Drive Economic Growth

A former Chinese official, Sheng Songcheng, wrote an article titled, “China’s Real Estate Market Is Now at a Turning Point.” Sheng is the former Director of the Survey and Statistics Department of the People’s Bank of China and is now a Professor of Economics and Finance at the China Europe International Business School.

Sheng said that China’s real estate industry is a at a transition point. In the future, China is unlikely to rely on this industry to boost large economic growth. China’s per capita dwelling space is close to 2/3 of that of the United States, while its per capita GDP is only 1/6 of that of the U.S. This indicates that the development of China’s real estate industry has reached a new stage (a ceiling).

Sheng argued that, although real estate development may not help the economic growth much in the long run, it still can in the short term, especially during the downfall of the economy due to the COVID lockdown,. He suggested that the government should loosen policies and provide more money to help the struggling real estate companies to complete their projects.

Source: SINA, July 29, 2022