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RFI Chinese: Chinese Local Officials Flock Abroad to Seek Investments

Radio France Internationale (RFI) Chinese Edition recently reported that, since December, large delegations of officials from across China have already made hundreds of visits to Asia and Europe. Local governments have been scrambling to meet growth and employment targets. According to three sources, local officials, along with their municipal and provincial supervisors and local businesses, have been traveling abroad more than ever before. The Chinese economy has paid a huge price due to China’s strict Zero Covid policy. After three years behind closed borders, officials have traveled to Hong Kong, Paris and the like within days of the restrictions being lifted. Their urgency underscores the pressure on local governments to boost growth while saddled with a cumulative US$9 trillion in debt. A video that was posted online by the government of the eastern province of Jiangsu showed a 200-member Chinese delegation even chanting slogans like “grab new orders” as they boarded a private jet bound for Europe at 1 am. Just two days after China abruptly lifted the Zero Covid restrictions, that delegation alone was said to be scheduled to hold more than 230 business meetings in Europe. Wuxi, which is close to the commercial center of Shanghai, held 85 signing ceremonies during a 7-day trip to Hong Kong, Macau and Shenzhen, with a total transaction value of RMB 156 billion yuan (around US$22.7 billion). However, many foreign investors are still complaining about the unfair playing field, intellectual property theft and unpredictable rules for overseas companies.

Source: RFI Chinese, April 7, 2023
https://bit.ly/3KFecLp

Briefings | | |   Economy/Resources

Chinese Schools and Kindergartens Close Down as Birth Rate Drops

China’s Primary Schools Dropped by 80,000 in 10 Years. According to data recently released by China’s Ministry of Education, there were 149,100 primary schools in 2022, compared to 229,000 in 2012, a decline of 79,900 or 35 percent.

The chances of any improvement seem slim. In 2022, there were 289,200 kindergartens in China, a decrease of about 5,600 compared with the previous year.

Behind the decline in the number of kindergartens and primary schools in China is the sharp drop in the number of newborns.

According to data released by the CCP this year, there were 9.56 million newborns in China in 2022, with a birth rate of only 6.77‰ and a natural growth rate of -0.60 percent. This is the first time since 1950 that the annual birth population has fallen below 10 million. CCP data show that China had 10.62 million newborns in 2021, 12.02 million in 2020, and 14.65 million in 2019.

According to the “China Statistical Yearbook 2022,” 13 of the 31 provinces and municipalities directly under the Chinese central government had negative population growth, namely: Tianjin, Hebei, Shanxi, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Shanghai, Jiangsu, Hubei, Hunan, Chongqing, and Sichuan.

Analysts observed that China has a history of not releasing actual figures, but one can see a trend from the statistics it does release.

Source: Epoch Times, April 5, 2023
https://www.epochtimes.com/b5/23/4/5/n13965673.htm

Briefings | | |   Economy/Resources Social Stability

New Births in China’s Six Largest Provinces Fell in 2022

On March 31, The Paper, a Chinese media outlet, reported that the six major economic provinces in China, namely Guangdong, Jiangsu, Zhejiang, Shandong, Henan, and Sichuan, which are also major population provinces, experienced a decrease in the number of births last year. In fact, Shandong and Henan even reported negative population growth.

China’s National Bureau of Statistics reported in January that there were 9.56 million new births last year, which is 1.06 million fewer than in 2021. This marks the first negative growth in 61 years.

The six large provinces saw varying degrees of decreasing birth rates, with Guangdong, the most economically developed and most populous province, experiencing the largest decrease of 131,100 births.

These six provinces collectively have a population of about 562 million, accounting for nearly 40% of China’s total population. While Guangdong and Zhejiang registered a slight positive population growth rate of only 0.04 per thousand, the remaining four provinces showed negative population growth.

Source: The Paper, March 31, 2023
https://www.thepaper.cn/newsDetail_forward_22527853

Briefings | | |   Economy/Resources

HKET: 43 Percent of Chinese Companies Downsizing in the Next 12 Months

Hong Kong Economic Times (HKET), the leading financial daily in Hong Kong, recently reported that, according to a survey report released by the consulting firm AlixPartners, 17 percent of Chinese companies have already laid off employees and 43 percent plan to lay off employees or stop recruiting in the coming year. AlixPartners interviewed more than 600 CEOs and senior management staff of Chinese companies. The results show that, as the economic downturn and geopolitical crisis intensify, business leaders want to properly deal with these challenges. Around 72 percent of the respondents are very much concerned about the business environment continuously being disrupted. However, 87 percent said they do not know where to start. China’s overall supply chain, from logistics to production, is facing unprecedented disruption, covering a wide range of industries. About 38 percent of the business leaders said they are reinventing their business operation models. Almost 99 percent of them recognized that they will need to make changes in the next three years in response to numerous internal and external disruptions. In addition to the supply chain and energy issues, business leaders are most worried about the resistance to innovation and the speed of technological development. Inflation and supply chain pressures are making it difficult for companies to maintain and grow profit margins, and the challenges are increasing. Prioritization of operational superiority and collaboration across departments and business areas is key for businesses to succeed and emerge stronger in the age of disruption.

Source: HKET, March 27, 2023
https://china.hket.com/article/3492018/

Briefings | | |   Economy/Resources

Huawei’s Net Profit Dropped 68.7 Percent Last Year

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that Huawei released its 2022 annual report. The report shows that Huawei’s global sales revenue was RMB 642.3 billion yuan (around US$93.5 billion), a year-over-year increase of 0.9 percent, and its net profit was RMB 35.6 billion yuan (around US$518 million), a sharp decrease of 68.7 percent year-over-year. In 2022, Huawei’s sales in the high-end smartphone market fell sharply by 44 percent year-over-year, and its share in the high-end smartphone market further dropped from 5 percent in 2021 to 3 percent. Regarding Huawei’s return to the 5G smartphone market, Huawei’s rotating chairman responded that the mobile phone business has been most affected by the U.S. sanctions, from the second in the world to “others.” Currently Huawei can only make 4G phones. To buy a Huawei 5G mobile phone, one would have to wait for permission from the U.S. Department of Commerce. Huawei also confirmed its strategy of not building cars, but helping car companies build good cars. According to Huawei’s CFO, in 2022, Huawei’s operations faced greater pressure. Overall, the operating performance was in line with expectations. At the end of 2022, Huawei’s asset-liability ratio was 58.9 percent  and its net cash balance was RMB 176.3 billion yuan (around US$25.7 billion), showing a stable financial position.

Source: Sina, March 31, 2023
https://cj.sina.com.cn/articles/view/7501277582/1bf1c698e02001dxw4

Briefings | | |   Economy/Resources Information/Technology US-China Relations

Kindergartens Have Shut Down Due to a Drop in Population

The impact of the One-Child policy continues to surface in China. In 2022, 46.28 million children were in kindergarten, a decrease of 1.78 million in population from the previous year. This has also led to kindergarten closures. The number of kindergartens dropped from 2.94 million in 2021 to 2.89 million in 2022, a loss of 5,000. This is the first-time the number of kindergartens has decreased in the past 15 years.

Seeing that its One-Child policy has resulted in a big reduction in new-borns, the Chinese Communist Party (CCP) switched to a two-child policy, boosting the new baby population to 18.83 million in 2016 and over 17 million in 2017. But it didn’t last long and free fall came back quickly. The new-born population dropped to 15.23 million in 2018, 14.65 million in 2019, and 12.00 million in 2020.

Source: Sina, March 24, 2023
https://edu.sina.com.cn/l/2023-03-24/doc-imymyqqc8479107.shtml

Briefings | | |   Economy/Resources

Global Times: Taiwan’s Chip Exports to the Mainland and HK Fell for Four Consecutive Months

Global Times recently reported that, in February, under the influence of the international political and economic situation, Taiwan’s exports of integrated circuit chips to the Mainland and Hong Kong fell for the fourth consecutive month. According to data from Taiwan’s Ministry of Finance, the exports fell by 31.3 percent in February year-over-year. This was the most serious decline since 2009, surpassing the 27.1 percent drop in January this year. China’s market share of Taiwan’s chip exports fell to its lowest level since February 2019. Meanwhile, total semiconductor shipments from Taiwan to the world  fell 17.3 percent in February from a year ago.

In the meantime, Singapore’s primary Chinese newspaper Lianhe Zaobao also reported on this matter. However, Taiwan’s statistics also showed that, in February, its exports to the United States jumped 22.3 percent. Taiwan is the world’s largest producer of high-end chips, but Taiwan’s status as a geopolitical hotspot contributed to the decline of its global chip exports. Mainland China has been seeking to increase its self-sufficiency in semiconductor technology, countering U.S. sanctions. The Biden administration reached an agreement with the Netherlands and Japan in January to limit the export of some advanced chip-making machines to China.

Sources:
(1) Global Times, March 20, 2023
https://m.huanqiu.com/article/4CA2kkoaqS5

(2) Lianhe Zaobao, March 20, 2023
https://www.kzaobao.com/guping/20230320/135497.html

Briefings | | |   Economy/Resources Geo-Strategic Trend

Ecuador’s Former President Accused of Accepting the CCP’s Bribes

Lenin Moreno, who was the President of Ecuador until he was succeeded by the incumbent on May 24, 2021,  was sued by prosecutors on March 5 for accepting bribes amounting to US $76 million from China’s state-owned enterprise Sinohydro between 2009 and 2018. The government of Ecuador contracted Sinohydro to build the Coca Codo Sinclair Dam under China’s “Belt & Road Initiative.” Construction started in 2010 and the dam was put in use in 2016. However, by 2018, 7,648 large and small cracks had been identified on the dam’s wall.

Source: Aboluo, March 8, 2023
https://www.aboluowang.com/2023/0308/1875096.html

Briefings | | |   Economy/Resources Geo-Strategic Trend