Economy/Resources - 49. page

The state-owned telecom giant China Unicom has set up a new joint venture with private Internet giant Tencent, while China Mobile has joined hands with JD.com. China Telecom has also partnered with Alibaba. Scholars analyze that the joint venture program is continuing to expand, and that, next year, more large private companies will be included in the wave of creating joint ventures .

On October 27, the country’s State Administration of Market Regulation released a list of approved businesses, which include the new joint venture between China Unicom and Tencent.

Radio Free Asia quotes a Beijing-based political commentator Wu Qiang who states that the “public-private partnership” that people have been concerned about in the past five years has now entered a substantive stage of implementation. Also, the “strategic cooperation” between three large state-owned telecom companies and three private giants indicates the dawn of an era of full governmental control of the economy.

Source: Central News Agency (Taiwan), November 3, 2022
https://www.cna.com.tw/news/acn/202211030339.aspx

Following the cooperation between state-owned telecom companies and Chinese internet giants, state-owned media companies have recently taken stakes in two short video platforms, namely, Kuaishou and Douyin.

According to mainland China’s newspaper reports, on October 26th, Kuaishou, a short video-sharing mobile app with a worldwide user base of over 200 million, initiated strategic financing as the investor with the Beijing Radio & Television Station (BRTV), a subsidiary of Beijing municipal government. At present, the two largest shareholders of Kuaishou are Beijing Huayi Huilong Network Technology Co, holding 99 percent of the shares, and BRTV with 1 percent of the shares.

Another short video-sharing platform giant Douyin, the Chinese version of TikTok, also received an investment from Netinvest Chinese (Beijing) Technology Co. (网投中文北京科技有限公司). At present, Douyin is jointly owned by Douyin Ltd. (99 percent) and Netinvest (1percent).

Netinvest is jointly owned by China Net Investment (Beijing) Technology Co., Beijing Cultural Investment Development Group Co., and China Media Group Mobile. The latter two are both state owned companies, with China Media Group Mobile taking 30 percent of the shares.

There are rumors that the 1 percent of the shares held either by BRTV in Kuaishou or by Netinvest in Douyin is a special management stake with a veto right.

Source: Central News Agency (Taiwan), November 6, 2022
https://www.cna.com.tw/news/acn/202211060183.aspx

Xinhua recently reported that, according to official numbers released by the National Bureau of Statistics, China’s October manufacturing PMI fell to 49.2 percent. Affected by the frequent domestic spread of Covid, China’s purchasing manager index has declined and the foundation for the economic recovery and development needs to be further strengthened. Statistics show that both production and demand have slowed down. The production index and the new order index were 49.6 percent and 48.1 percent respectively, down 1.9 and 1.7 percentage points from the previous month. The prosperity of manufacturing production and of market demand both declined as well. Large corporations have kept expanding, while the pressure on small and medium-sized enterprises has increased.

At the same time, Caixin released its official Chinese Manufacturing PMI numbers for October. Caixin‘s PMI is a well-respected economic indicator monitored globally by financial institutions. Caixin’s China Manufacturing PMI recorded at 49.2 for October. It was thus in contraction territory for the third consecutive month, indicating that manufacturing figures continued to decline. The demand side of consumer goods and investment goods has been particularly insufficient. International demand also continued to decline. Some companies reported that foreign trade transportation has been encountering difficulties. Employment continues to shrink, and the purchasing price index of manufacturing companies has risen by more than three percent since September. Due to the sluggish market demand, companies have shown a strong willingness to reduce prices to promote better sales. Most companies reported that the government’s Covid control policies have caused transportation delays.

Sources:
(1) Xinhua, October 31, 2022
http://www.news.cn/fortune/2022-10/31/c_1129089205.htm
(2) Caixin, November 1, 2022
https://pmi.caixin.com/2022-11-01/101958657.html

As the 20th Chinese Communist Party (CCP) Congress came to an end on Sunday October 23, Xi Jinping, the Party’s general secretary, not only won his third term as expected, but installed his cronies and supporters in the Standing Committee of the Politburo, the CCP’s highest authority. The result has worried many executives of the foreign companies that operate in China.

In an interview with the Voice of America, Joerg Wuttke, president of the European Union Chamber of Commerce in China, was pessimistic about the future of the Chinese economy. Wuttke is considered to be one of the most knowledgeable Westerners about China. He went to China in 1982 and has lived there on and off for 33 years.

He stated, “It’s definitely a surprise. I had a completely different line-up in mind (of the new leadership). I had of course the Prime Minister Li Keqiang as the head of parliament. I thought about two candidates for Prime Minister. I know both candidates quite well. It was a surprise to see that basically all of them were rooted out. Also, of course, the visual realization that president Hu Jintao was sent out of the room has already painted a picture that an era is gone. We have a greater clarity now that it is obviously Xi Jinping who is calling the shots to an extent which we did not see before. He has aligned a group of people that are totally loyal to him. We have basically left this sphere of achievements and meritocracy. It’s all about loyalty. We have to see where this group of people are leading China.”

“My struggle is I am trying to be realistic in order to give it a taste of which direction this might go. Obviously, Monday (October 24) was a very pessimistic market reaction, and reflects what many of my colleagues are thinking. But again, we have not entered the space in which we know where we are heading.”

“I am a child of the 90’s. I have been here about 30 years. I grew up in the opening up mode of Deng Xiaoping. My first party Congress I witnessed personally was in 1982, where Deng Xiaoping was trying clearly to integrate China and open up. Maybe at the tail of my career in China, I have to witness China actually closing up again to some extent. So, in a way it’s a full circle, which is, of course, disappointing. But at the same time, its their country; it’s their choice.”

“So many of them (the business leaders) put their operation on auto pilot. We have not seen companies moving away, and I don’t expect this. But we have noticed this –  that new investment and new additional activities from those companies that normally would come up in China has been rerouted to other regions. So we see more interest in Thailand, Southeast Asia, India, but even close to home in Turkey and eastern Europe, for the simple fact that executives can fly there in and out easily.”

“They have also realized that the world bank has predicted China will grow this year at 2.8 percent, and rest of Asia 5.3 percent. These leaders follow the money. Hence there will not be an exodus of European business out of China, but we will definitely see an underachiever given the potential of this economy.

Source: Voice of America, October 28, 2022
https://www.voachinese.com/a/voa-interview-joerg-wuttke-china-party-congress-20221028/6810661.html

According to mainland Chinese media, the National Development and Reform Commission, the government’s macroeconomic management agency, held a meeting in September to ensure the supply of coal, pushing the newly added capacity of coal-fired electricity generating units to a total of 165 million for the coming two years. It is widely believed that the main problem is a serious power shortage that will come in the winter and summer of next year.

Coal-fired power generation dominates China’s thermal power generation. According to the official data, as of August this year, coal-fired power accounted for 85.4 percent of the country’s 1.3 billion kilowatts of installed capacity. Coal-fired power is also the most important supporting source in China’s current power system. By the end of 2021, 1.11 billion kilowatts of coal power provided 60 percent of the country’s electricity generation capacity and supported over 70 percent of the peak load of the power grid.

In April last year, to achieve the carbon peaking and carbon neutrality goals, the Chinese authorities proposed the strict control of coal power projects. Many places in China were experiencing power shortages during the winter of 2021. The government had to reverse its policy direction, and approve more coal power projects.

During the summer of this year, extreme high temperatures and dry weather reduced the amount of hydroelectric power generation, further highlighting the role of coal power. From January to August of this year, China approved 31.98 million kilowatts of new coal power projects, a significant increase of 413 percent in approved capacity over the same period last year.

Source: Central News Agency, October 14, 2022
https://www.cna.com.tw/news/acn/202210140241.aspx