Economy/Resources - 69. page

Because of a container shortage, the cost of ocean freight from China to the U.S. has soared tenfold since August and reached a record high.

The price of a 40-foot container from China to the U.S. used to cost between US$1,000 and US$2,000, but since August it has risen to a record US$20,000. COVID shutdowns in ports in certain cities in China and other countries as well as a shortage of drivers at the port are the main culprits. It has a domino effect on the downstream supply chain, particularly in September and October when most of the goods entering the North American and European markets are for the upcoming Christmas shopping season.

Even though Chinese container manufacturers have increased their capacity to build more containers, it will still take some time to ease the constraint. Therefore, the container shortage will last for a while.

Source: Epoch Times, September 28, 2021
https://www.epochtimes.com/gb/21/9/28/n13265311.htm

In recent years, the Chinese government has signaled that there are “too many liberal arts students.” Tsinghua University in Beijing has proposed to control the scale of liberal arts programs and reduce the number of liberal arts doctoral students.

According to Tsinghua University’s website, when Qiu Yong. the current president of Tsinghua University, attended a conference on liberal arts on September 17, he put forward a 10-point to-do list for the future liberal arts education. At the top of the list was to control the scale of discipline and to downsize doctoral programs.

According to China Youth Daily, an official newspaper targeting young people, starting in 2019, Chinese universities and colleges have kept a tight grip on enrollment and significantly scaled back humanities and social science programs.

In April of this year, the People’s Bank of China published a paper titled, “Understanding and Responding to China’s Demographic Transition.” The paper argued that one of the reasons that Southeast Asian countries fell into the middle-income trap was that “there were too many liberal arts students.” It suggested that China “should pay attention to science and technology education” when formulating population policy.

Source: Tsinghua University, September 20, 2021
https://www.tsinghua.edu.cn/info/1177/87151.htm

China Electrical Equipment Group Co., Ltd. (CEEG) was established in Shanghai on the 25th. CEEG is a state-owned company which the central government manages directly. It is based on the restructuring of a few electric equipment companies including China XD Group Co. Ltd, XJ Group Corp, Pinggao Group Co. Ltd and Shandong Electric Engineering & Equipment Group Co. Ltd.

China aims to move its electrical equipment manufacturing industry up to the high-end of the global value chain. It is viewed as being of strategic importance to the implementation of China’s energy security.

After the completion of the reorganization, CEEG’s business will produce equipment related to power generation (including new energy), power transmission, transformation, and distribution. It may also be involved in energy storage, rail transportation, industrial automation, and energy grid. It vows to be the most capable and comprehensive manufacturer of AC and DC electrical equipment.

Source: SASAC, September 25, 2021
http://www.sasac.gov.cn/n2588025/n2643314/c20909163/content.html

Shanghai Securities News recently reported that the Chinese government’s “dual energy consumption control” policy has been implemented across the country. In many provinces, the government has introduced intense restrictions on the consumption of electrical power and on manufacturing production; high energy consumption companies have received production restriction notices. These companies and related industrial chains have all been affected. On the upstream side, the prices of raw materials such as steel, cement, aluminum, and yellow phosphorus have risen due to limited production which stimulates short supply. The prices of some products have been setting record highs. On the downstream side, in addition to the ripple effects of price increases raising production costs, the supply cycle has begun to lengthen and the pressure on order delivery has increased. This round of electricity and production restrictions may force many high-energy small-and-medium-sized companies either to withdraw from the market or to transform and upgrade. The New Energy industry chain, including many photovoltaic industrial manufacturers as well as the vehicle battery industry, have also been affected by the power curtailment. Tens of the publicly traded companies issued announcements on the impact of the new government policies; some have had to pause production.

Source: Shanghai Securities News, September 24, 2021
https://paper.cnstock.com/html/2021-09/24/content_1522765.htm

Since Beijing introduced policies to curb the overheated housing market, land sale activities have also been slowing down. This is happening in Hangzhou, Shenyang, and Hefei where, last week, there was a significant drop in transactions involving the sale of land. According to statistics, in June and July of this year, nearly 500 parcels of land that were for sale in small to mid-sized cities, had no buyers. If this trend continues, local governments, which have been relying on land sales as part of their fiscal income, will face financial constraints.

Since the 1990s, China has embarked on large-scale construction in urban areas. Most of the land resources have come from rural areas. Local governments have benefited the most from it. In 2020, local governments received 8.4 trillion yuan (US$1.3 trillion) from selling land, up 16 percent from a year earlier. However, in June, all local governments were required to transfer the power for collecting land sales revenue to the tax authorities under the State Taxation Administration (STA). This has allowed the central government to take control over local finance.

Source: Radio Free Asia, September 20, 2021
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql1-09202021051803.html

Yi Gang, the Governor of China’s central bank, recently pointed out that the “winner-take-all” attribute of large fintech firms could lead to market monopoly. Yi noted that there are more than 4,000 small and medium-sized banks in China. He expressed concern about the banks increased reliance on large technology companies.

As China recently took a heavy-handed approach toward fintech giants such as Alibaba and Tencent, the website of the People’s Bank of China released Yi’s speech on September 14th at a Sino-German video conference on financial technology .

Yi noted that China’s rapid development in fintech has also highlighted a number of problems. These include the payment institutions entering into the financial sector and offering a variety of financial products such as insurance and microfinance. They thereby add to the chances of cross-product and cross-market contagion of financial risks.

Yi said Chinese regulatory authorities will bring all financial activities under financial supervision and make sure that financial businesses must be licensed. China also requires that payment methods be divorced from other financial products. In addition, Yi vowed to strengthen anti-monopoly efforts and promote large Internet companies to protect consumers’ choice of payment methods.

Yi also noted that the development of fintech will have an impact on the traditional banking industry. “Small and medium-sized banks are facing greater challenges. With limited resources of their own, small and medium-sized banks can only rely on the technology and platforms provided by large IT companies for customer maintenance, credit analysis and risk control.”

Source: People’s Bank of China, September 18, 2021
http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/4345544/index.html