Economy/Resources - 59. page

Chinese media reported that local governments have recently released their residential population data for 2021. According to China Business Network, Among the 23 provinces that have made their data available, nine provinces experienced a decline in population growth. Among these provinces, only four had more than 500,000 births in 2021, with Guangdong being the only province with over 1 million new births. In terms of birth rates, only Guizhou and Qinghai provinces had birth rates higher than one percent. Nine provinces showed negative population growth, including Hebei, Jiangsu, Hunan, Hubei, Shanxi, Chongqing, Inner Mongolia, Shanghai and Heilongjiang.

Source: Radio Free Asia, April 5, 2022
https://www.rfa.org/mandarin/Xinwen/1-04052022105230.html

Well-known Chinese financial site Caixin recently released its official Chinese Manufacturing PMI index number for the month of March, which was 48.1. The January Caixin PMI was the lowest for the manufacturing sector since March 2020. The manufacturing sector has been affected by the Covid-19 outbreaks in many parts of the country, It weakened significantly in March, while supply and demand contracted, external demand deteriorated, employment remained stable, inflation pressure continued to rise, and market optimism weakened. In the meantime, the Chinese National Bureau of Statistics also reported March that the manufacturing PMI fell below 50, at 49.5, as the government official number. The Bureau indicated that the manufacturing sector prosperity is heading down; market demand has weakened; the inventory of primary raw materials continues to decrease; the employment level has decreased; and raw material supplier delivery times continue to slow.

Caixin PMI is a well-respected economic indicator that financial institutions monitor globally. PMI (Purchasing Managers Index) is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline.
Sources:
(1) Caixin, April 1, 2022
https://pmi.caixin.com/2022-04-01/101864263.html
(2) National Bureau of Statistics, March 31, 2022
http://www.stats.gov.cn/tjsj/zxfb/202203/t20220331_1829202.html

After Lotte Supermarkets left China in recent years, Korean media reported that the Lotte Group will close its China headquarters in Shanghai and shift its focus to Southeast Asia.

The reports quoted sources from inside the Lotte Group that the company made the decision to disband its China headquarters late last year and expects to complete the process before June. Lotte will continue to operate its Department Store in Chengdu city.

Lotte Group is a South Korean multinational conglomerate corporation. It entered the Chinese market in 1994 and established its China headquarters in Shanghai in 2006. As of 2017, there were more than 100 Lotte Mart supermarkets across the country, with 70 percent of the group’s total sales revenue coming from China. In the same year, Lotte Group agreed to provide land to the U.S. military for the Terminal High Altitude Defense (THAAD) anti-missile system, triggering protests in China. Beginning in 2018, Lotte gradually withdrew its Lotte Mart, department stores, beverages and other businesses from the Chinese market.

Lotte Group is expanding into Southeast Asian markets. Recently, Lotte opened additional Lotte Mart supermarkets in Vietnam. The first trip  that the new head of Lotte Supermarket made after taking office was to Indonesia.

Source: Radio Free Asia, March 23, 2022
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql2-03232022072406.html

According to its 2021 financial results, Luckin Coffee, a Chinese coffee chain store, has overtaken Starbucks for the first time to become the top coffee chain in China.

In 2020, Luckin Coffee made its name for accounting fraud. It “intentionally and materially” inflated its 2019 revenue and understated a net loss, while it was listed on the American stock market. The scandal resulted in the stock price crashing and several executives being fired. Trading was suspended and the company was delisted from NASDAQ in June 2020. In February 2022, Luckin paid off its $180 million penalty levied by the U.S. Securities and Exchange Commission (SEC).

According to the recently released 2021 financial report, Luckin’s total net revenue was 7.9 billion yuan ($US 1.24 billion), a leap of 97.5 percent over 2020. By the end of 2021, Luckin, with 6,024 stores across China, beat Starbucks (5,557 stores) for the first time and became the country’s largest coffee chain brand.

Source: Central News Agency (Taiwan), March 27, 2022
https://www.cna.com.tw/news/acn/202203270111.aspx

With China’s natural population growth approaching zero last year, Cai Fang, the former vice president of the Chinese Academy of Social Sciences (CAAS) and a member of the Central Bank’s Monetary Policy Committee, believes it is entirely possible that China’s population will reach its peak in 2022.

According to the 2021 population data released by China’s National Bureau of Statistics, the country’s total population was 1.41 billion at the end of last year, with a natural growth rate of 0.34 per 1,000.

Cai said in a speech at a conference on March 18th that the most prominent factor affecting China’s long-term economic growth is population.

The demographic factors are now creating constraints on the demand side. Cai noted, “In the past we had negative growth in the working-age population, which was a supply-side constraint. Now we may be experiencing negative growth in the total population, which will create a new constraint on the demand side.”

Cai added that with the weakening of the comparative advantage of manufacturing and the slowdown of the growth in GDP, the export-and-investment-driven growth model is unsustainable. There is an urgent need to shift to a model that relies more on domestic consumption. As the population growth rate has declined, the growth rate of total consumption has also declined, and it is declining rapidly. He pointed out that the trend of population change is irreversible and cannot be reversed in the short term or in the foreseeable future. He said that the only thing that can change is the income distribution.

Source: Lianhe Zaobao (Singapore), March 21, 2022
https://www.zaobao.com.sg/realtime/china/story20220321-1254491

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that the Yango Group of Fujian Province has a market value of RMB hundreds of billions. Its domestic and overseas debts exploded at the same time. On March 16, China Construction Bank issued an announcement that Yango’s RMB 600 million medium-term notes “20 Yango MTN001” missed their due date of March 15. The issuer, Yango Group, failed to pay the interest or principal in full on schedule, which constituted a breach. On the same day, the company’s controlling shareholder, Sunshine Group, announced that the principal and interest of the existing overseas bonds “YANGOG 12.5 02/20/22” (US$106 million) and “YANGOG 12.5 01/04/24” (US$300 million) defaulted. More defaults are expected in the next one-year timeframe since there are payments due every month. In the past month, Yango Group has also suffered a number of holdings being judicially frozen. After the thunderstorm in Yango, the company’s senior executives were in turmoil and many of them departed. Yango is a publicly traded company with a real estate business in over 100 cities across China. It ranks among the top 20 real estate companies in China.

Source: NetEase, March 17, 2022
https://www.163.com/dy/article/H2LE9J030530NLC9.html

China finished its National “Lianghui” from March 4 to March 12 this year. “Lianghui,” or the “Two Conferences,” is a common Mandarin Chinese abbreviation for the National People’s Congress and the National Chinese People’s Political Consultative Conference. It is a rubber stamp process to show there is “democracy” in China: the representatives can review, approve, and comment on the work of the central government and propose policies to the governments, though that has no substantial effect.

A few representatives made proposals this year to encourage more births, indicating that China is facing a serious birth shortage problem.

A university vice president suggested to shorten the education of elementary, middle, and high schools from 12 years to 10 years, so that “people can graduate earlier, start work earlier, get married earlier, and then have babies earlier.”

Another representative suggested to completely lift the birth control policy in Northeastern China. China’s current policy is that a couple can have up to three children. According to Beijing’s 2020 Census, the population in Northeastern China dropped 11 million from 2010 to 2020.

Another proposal was to allow people to retire at the age of 45. The earlier retirement could free up more jobs to young people, so that they have less pressure to focus on their job and delay the time to have baby.

There are also proposals to allow single women to have one child and mandate men to take one month of paternity leave.

Source: Epoch Times, March 10, 2022
https://www.epochtimes.com/gb/22/3/10/n13635697.htm