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China to Regulate Fees for Off-campus Training

After recent moves to crack down on private education companies that engage in off-campus training, Beijing further issued regulations on fees to be collected for these services.

The central government recently issued a directive on “reducing the burden of homework and off-campus training” for elementary and junior middle school students, which had a significant impact on out-of-school training courses in China’s compulsory education system. In addition to limiting the amount of time students have to spend after class, the authorities have also regulated the off-campus training fees.

According to the National Development and Reform Commission, a government commission on macroeconomic management, China will implement government-guided price management of the training fees. The government will set the benchmark fees and fluctuation ranges and incorporate them into the price management of local authorities.

The benchmark fees and fluctuation range for off-line out-of-school training will be set by the provincial government. The fees and range for on-line training are set by the local authorities where the training institutions are licensed to operate. Local governments are allowed to set the range of fluctuations to be no more than 10 percent above the benchmark, and without a lower limit.

The regulation emphasizes the need to “implement government-guided price management,” and “adhere to the public welfare attribute of out-of-school training,” with the goal of “reducing the burden of education expenses on students’ families.”

Source: National Development and Reform Commission, September 6, 2021
https://www.ndrc.gov.cn/xwdt/xwfb/202109/t20210906_1296115.html

One Chinese Real Estate Company Goes Belly-up Every Day

According to Chinese media, as of September 5, the year 2021 has seen bankruptcy applications from a total of 274 real estate companies. That’s an average of one bankruptcy per day.

The Chinese government recently made it clear that “houses are for living, not for speculation.” Since the second half of last year, the regulatory authorities implemented strict standards to limit real estate companies’ ability to borrow. As a result, the housing market has lost its steam.

On August 31, Sun Hongbin, chairman of the board of directors of Sunac China, a major property developer headquartered in Tianjin, expressed concerns about the pressure on sales in the second half of this year. The concerns are partly due to the “resolute government policy.” As the impact of the sluggish economy on people’s purchasing power continues, he expected that the market would be “more miserable” in the coming months.

Data from the China Index Academy, an influential property research institute, the real estate sector is facing a peak in debt repayment, with a total of 83.85 billion yuan (US $13 billion) in bonds to mature in September. The next peak will occur in March and April of 2022, with a monthly bond payment of 103.94 billion yuan (US $16 billion) and 94.06 billion yuan (US $14.5 billion) respectively.

Source: Central News Agency, September 7, 2021
https://www.cna.com.tw/news/acn/202109070378.aspx

China Expert: CCP’s Secret Agenda behind Its Crackdown on Chinese Companies

Recently, the Chinese Communist Party (CCP) has taken a large number of actions to crack down on Chinese companies in such businesses as tutoring, Internet, and food delivery. During an interview with the Epoch Times, Cheng Xiaonong, an expert on China issues, offered his views on Beijing’s secret agenda.

Cheng thinks Beijing is carrying out an agenda which he identifies as, “leaving the virtual business to return to real industry” (脱虚向实), without openly announcing it. The sectors that Beijing cracked down on are in the area of services, but not in the manufacturing industries which Beijing really wants to promote. China has a labor shortage for manufacturing jobs despite its having  increased salaries. The number of China’s peasants who took manufacturing jobs in 2020 was 78 million, a drop of 10 million from 2016. Cheng estimated that China will lose 20 million peasant workers by 2025. The tutoring business employs 10 million workers (many of whom have college degrees) and the food delivery business also employs 10 million. Beijing might want to cut those areas to drive more people toward manufacturing jobs. (Editor’s note: Beijing has also started a wave of converting universities to vocational schools to produce more high-skilled technicians).

Cheng also thinks that the CCP has a secret agenda to decouple itself from the U.S. It wants to reduce China’s dependency on U.S. technology, the U.S. market, and the U.S. dollar. Therefore, it dares to beat those Chinese companies listed on different U.S. stock markets and see their stock prices falling. It no longer cares what Wall Street and the American investors think of China anymore.

Source: Epoch Times, August 25, 2021
https://www.epochtimes.com/gb/21/8/25/n13185466.htm

Chip Shortage Will Impact China’s Production of 2 Million Cars

According to media based in China, the resurgence of the COVID-19 epidemic in Malaysia has led to the closure of several semiconductor factories and chip production has come to a halt. The industry estimates that up to 2 million units of vehicle production in China will be affected in August and September.

For example, Bosch, one of the world’s largest auto parts suppliers, has affected the production of nearly 900,000 vehicles in China in August because the company’s chip supply was cut off.

It is estimated that the impact on China’s GDP could be on a scale of trillions of Yuan, or hundreds of billions of U.S. dollars. Such a chip shortage may continue until next spring.

According to the China Association of Automobile Manufacturers (CAAM), China’s vehicle production in July was down by 1.863 million units, which is 15.5 percent below the same month last year. Chen Shihua, deputy secretary-general of CAAM said, “The shortage of chips has been affecting the domestic car market since June. As a result, domestic passenger car production and sales have fallen for three months in a row.”

Source: Central News Agency, August 20, 2021
https://www.cna.com.tw/news/firstnews/202108200292.aspx

Chinese Tech Giant Tencent to Pour an Additional 50 Billion Yuan into the “Get-Rich-Together Plan”

Following the launch of the “Sustainable Social Value Innovation” strategy with an investment of 50 billion yuan (US$7.5 billion) (in April), Chinese tech giant Tencent announced on August 18 that it would increase its capital by another 50 billion yuan to launch the “Common Prosperity Special Plan” (or “Get-Rich-Together Plan”). The funds will be used to provide continuous assistance in areas such as rural revitalization, increases in income  for low-income groups, improvements in the primary health care system, and balanced development of education.

The 10th Conference of the Central Finance Committee, held on August 17, made it clear that common prosperity should be promoted in stages, allowing some people to get rich first. Then the riches should help the poor to get rich.

Source: Techweb, August 19, 2021
http://www.techweb.com.cn/finance/2021-08-19/2854250.shtml

CNA: Port Zhoushan of Ningbo Temporarily Closed Due to COVID

Primary Taiwanese news agency Central News Agency (CNA) recently reported that China’s largest port, the Zhoushan Port of the Ningbo City in Zhejiang Province, suffered a COVID outbreak. Its Meishan Port Area is temporarily closed. Zhoushan Port has 19 port areas and the Meishan Port Area is the largest, shouldering 20 percent of Zhoushan’s total cargo capacity. It is currently in the peak season of ocean shipping. European and American companies have been stepping up their efforts to replenish their inventory. The Meishan Port Area closure triggered a fear that the freight rate may rise further and even disturb the peak Christmas consumption season near the end of the year. According to Chinese local media reports, affected by the soaring freight rates, Chinese foreign trade companies have been under great cost pressure and some companies have reduced shipments or even suspended orders. Ningbo Zhoushan Port is the world’s third largest container port. Its container throughput in 2020 was 28.72 million TEU (Twenty-foot Equivalent Units, a measurement of cargo capacity), second only to Shanghai and Singapore. Its Meishan Port Area is the newest port area which primarily serves U.S. and Europe routes.

Source: CNA, August 15, 2021
https://www.cna.com.tw/news/afe/202108150055.aspx

China Launches Campaign against Cyber Industry

On Monday July 26, China’s Ministry of Industry and Information Technology (MIIT) announced that it will launch a six-month special campaign against the country’s Internet industry. The campaign focuses on “threats to data security and violations of user rights.” MIIT’s action is seen as part of a larger purge of high-tech companies and a police action against so-called “misuse” of personal information. The MIIT had launched a similar campaign in November 2019, targeting applications (apps) that violate users’ rights. By June 11 of this year, a total of 117 apps had been put under examination. The Chinese government is intensifying enforcement actions against tech giants in the areas of anti-monopoly, data security, and financial compliance. Tech giants have almost total control of China’s entertainment, retail and other industries.

Source: Voice of America, July 26, 2021
https://www.voachinese.com/a/China-launches-6-month-campaign-to-clean-up-apps-20210726/5979646.html

Wuhan to Issue Housing Vouchers to Qualified Buyers

In a notice issued on July 28, the Wuhan Housing Management Bureau proposed to issue housing vouchers to curb the overheated housing market. The proposal suggested that people must present their housing voucher before they can buy a house and each voucher is valid for 60 days. People who got the housing voucher illegally will be ineligible to buy a house for one year. Their name will also be added to the dishonest housing buyer blacklist. According to real estate insiders, in the past, buyers could register to buy regardless of whether they were qualified. This has resulted in an overstated market demand and disturbed the market order.

Since 2021, there have been over 320 policies introduced to curb the overheated housing market. There were 46 new polices from the central administration, compared to 30 in the same period in 2020.

On July 23, China’s Ministry of Housing and Urban-Rural Development and another eight departments issued the “Notice on Continued Rectification and Standardization of the Real Estate Market Order.” This further increased the industry’s expectations for strict and tight regulation of the housing market in the second half of the year. Subsequently, many places including Shanghai, Shaoxing, Zhejiang and Hangzhou issued new measures on regulating the real estate market.

Source: Central News Agency, July 30, 2021
https://www.cna.com.tw/news/acn/202107300062.aspx