Economy/Resources - 70. page

According to a Russian report, in 2020, China bought nearly a quarter of the total of all global exports of whole milk powder and in 2021, China has continued to expand its imports of whole milk powder. 

On September 14, 2021, the Agricultural Products Export Development Center of the Russian Ministry of Agriculture released a report. According to the report, the total exports of whole milk powder in 2020 was 2.745,900 metric tons. China bought 23 percent of those exports. 

From January to July 2021, China’s total whole milk powder imports increased by 34 percent from 455,000 metric tons compared to the same period last year. The total reached was 609,000 metric tons. New Zealand exported 561,000 metric tons to China during this period. 

In addition, the Russian report also mentioned that, in 2020, China bought 13 percent, 9 percent, and 4 percent of global exports of skimmed milk powder, butter, and cheese. The Russian government is currently negotiating with the Chinese government on the milk powder supply. Recently, on August 7, 2021, the two sides held talks on this issue.

Source:

Liberty Times, September 16, 2021
https://ec.ltn.com.tw/article/breakingnews/3673306

On September 8, the Academy of National Development and Strategy at Renmin University of China (RUC), RUC’s School of Economics, and China Chengxin Credit Ratings, jointly issued a special report on China’s macro economy. The report states that the gap between economic development in the north and in the south of China continues to widen and has “reached a point that cannot be ignored.”

The report mentions three areas of imbalance: manufacturing, investment, and R&D and innovation.

The secondary (manufacturing) industry in the North has been stagnant over the past decade. The years between 2012 and 2020 saw zero nominal growth of that sector in northern China.

Although southern China’s consumption, investment and import and export growth are all higher than in Northern China, the main issue is investment. By 2017, investments in the North had plateaued. The gap in exports between the two regions is alarming. At present, 80 percent of the country’s exports come from the South, and the North accounts for only 20 percent.

The North also lags behind in R&D and innovation. A decade ago, the R&D funding, manpower and number of projects in the South was about twice as much as in the North. Now the gap has enlarged so it is about 3 or 4 times as much.

Over the past 10 years, southern China has registered a speedier industrial development. Twenty years ago, the number of large size industrial enterprises in the South was 1.56 times as much as the number in the northern region. Now the difference has widened to 2.65 times as much.

Source: Central News Agency, September 10, 2021
https://www.cna.com.tw/news/acn/202109100255.aspx

According to the internationally accepted standard, a region in which the percentage of the population aged 65 and over has reached 7 percent is called an aging society. When the population that is age 65 and over reaches 14 percent, It is called an “aged” society.  When those over 65 exceeds 20 percent, it is called a “hyper-aged” society.

According to China’s 7th National Census data, in 2020, 149 cities had a population in which those over 65 years of age exceeded 14 percent, thus becoming “aged” cities. In terms of regional distribution, 41 of them are from the eastern coastal region, 36 are from the northeast region, and 72 are from the central and western regions. Overall, the “aged” cities are concentrated in the northeast and the central region, the Yangtze River Delta, the middle and lower reaches of the Yellow River, and the Chengdu-Chongqing city clusters.

A major reason is the exodus of young adults and the low percentage of working age population. The eastern cities of Shandong, Jiangsu and Zhejiang have many “aged” cities. In these more economically developed regions, the fertility rates tend to stay low.

Source: www.yicai.com, September 5, 2021
https://www.yicai.com/news/101164016.html

In August, 21 cities including Beijing, Chengdu, Shanghai, and Shenyang issued over 30 real estate policies to curb the overheated market. A report from the Shell Research Institute suggested that the new housing sales in August in 66 cities across the country continued to decline. According to the Shenzhen Municipal Bureau of Housing and Urban-rural Development, existing housing sales in July fell by more than 80 percent compared to July 2020. In August, it reached a 10-year low with only 2,043 existing home sales, a plunge of 77.28 percent year over year.

The National Daily Business News reported that land sales in 300 cities was 226.4 billion yuan (US$35 billion) in August, a decrease of 17 percent from July and a year over year decrease of 49 percent.

Real estate financing does not look rosy either. There were 62 foreign bonds issued in August, a decrease of 27 from the previous month. The total financing was 57.1 billion yuan (US$8.86 billion), a decrease of 39.8 percent from the previous month and a decrease of 54.2 percent from the same period last year.

Real estate developers are also facing mounting pressure on debt payment. According to the Shell Research Institute, debt maturity of domestic and foreign bonds in August was approximately 119.6 billion yuan (US$18.56 billion), an increase of 3.3 percent from the previous month and 21.2 percent year-on-year. There were 16 bond defaults in August. Seven of those were in real estate when companies failed to pay principal and interest on time.

Source: Epoch Times, September 11, 2021
https://www.epochtimes.com/gb/21/9/11/n13226905.htm

On September 9, the Ministry of Commerce published a report which stated that, in 2020, China signed US$255.54 billion in new foreign contracts with 184 countries and regions around the world. It made US$155.94 billion in contract revenue mainly in Asian and African markets.

The report also highlighted that 1) over 80 percent of the contracts were in Asia and Africa where new contracts accounted for 56 percent and 26.6 percent of the total revenue respectively. 2) Over half of the total contract revenue came from belt and road countries. In 2020, new contracts signed by Chinese companies in 61 countries along the “Belt and Road” amounted to US$141.46 billion which accounted for 55.4 percent of the total. The completed contract revenue was US$91.12 billion,  which was 58.4 percent of the total. 3) Over 75 percent of the foreign contracts are in infrastructure, architecture, electrical engineering and petrochemical. 4) The number of newly signed major foreign contracted projects increased. There were 904 major contracts worth over US$50 million, up by ten compared with 2019. Among those, 514 were contracts over US$100 million, an increase of eight compared with 2019.

Source: Central News Agency, September 9, 2021
https://www.cna.com.tw/news/acn/202109090393.aspx

Based on Chinese media, according to its Ministry of Human Resources and Social Security, China has a shortage of 20 million senior technicians.  Estimates are that the number will hit 30 million in five years.  “Senior technician” is now among the top 100 job categories that are in the shortest supply.

However, according to a  survey, only one percent of workers in China want to be a technician. As many as 90 percent believe that technicians have low social status and low wages because generally, they do not have the education credentials of college graduates.

In China, skilled workers primarily come from migrant workers. As of 2020, nearly 70 percent of the total migrant workers have an education level of junior high school or below. As a result, most technicians in China are low- and middle-level skilled workers.

Senior technicians account for only six percent in China, compared with Japan’s 40 percent and Germany’s 50 percent.

According to the International Labor Organization, of all skilled workers in developed countries, 35 percent are senior technicians, 50 percent are medium level, and 15 percent have a low level of skills.

Such a large gap creates a bottleneck in transforming and upgrading China’s manufacturing industry. Workers’ overall quality and skill level are limiting how scientific and technological developments translate into economic growth.

Sources:

1. Tencent, September 5, 2021
https://new.qq.com/omn/20210905/20210905A00F9000.html

2. China’s Ministry of Human Resources and Social Security, July 22, 2021
http://www.gov.cn/xinwen/2021-07/22/content_5626620.htm

3. Sina, June 30, 2021
https://finance.sina.com.cn/money/roll/2021-06-30/doc-ikqciyzk2770023.shtml

On September 2, at the Global Trade in Services Summit of the 2021 China International Fair for Trade in Services , Xi Jinping gave a video speech and announced that China would set up its third national stock exchange: The Beijing Stock Exchange.

The exchange was then registered on September 3, with registered capital of 1 billion yuan (US $150 million) and a location on the Financial Street in Beijing. The official position is that while the Shanghai Stock Exchange focuses on established companies and the Shenzhen Stock Exchange focuses on high-tech companies, the Beijing Stock Exchange will serve the small companies.

China started a National Small and Medium Enterprise Stock Transfer System (NSMESTS) in 2013, to let investors trade different small companies. The system enlisted over 7,000 companies in three classifications: basic, innovative, and selective. The selective class is the elite class, with 66 companies and 3.8 billion yuan in trading volume – 65 percent of the total NSMESTS trading volume. China’s Securities and Futures Commission stated that the selective class companies will serve as the foundation for the Beijing Stock Exchange.

An Epoch Times report stated that though the majority of companies on the NSMESTS are privately owned, many of the elite companies (those in the selective class) have state money. One report indicated that out of what was then 52 selective class companies, 33 had state-owned investments among their top ten shareholders. So it is yet to be seen whether the Beijing Stock Exchange is to help raise money for the privately owned small companies or the state-invested small companies.

The article also suggested that Beijing’s current policy is to squeeze money out of its already-too-dangerous real estate bubble and channel it into other capital investments. The Beijing Stock Exchange serves as one option. Beijing wants to make this capital move before the U.S. ends its quantitative easing policy. Afterward, if the Federal Reserve increases the interest rate, money may flow back to the U.S.

Sources:
1. SINA, September 5, 2021
https://finance.sina.com.cn/roll/2021-09-05/doc-iktzqtyt4241201.shtml
2. Epoch Times, September 7, 2021
https://www.epochtimes.com/gb/21/9/7/n13217782.htm