Economy/Resources - 73. page

The global shortage of semiconductors has increased the number of fake chips circulating in China. According to Chinese media, the illegal chips come from two channels. One source is electronic waste. The companies remove the evidence from the old chips. Then they clean and repackage them and sell the second-hand chips at a lower price. Others are defects directly from the manufacturers’ production line. Compared to the genuine product, the performance and reliability of the fake chips are usually inadequate.

These chips are mainly used in consumer electronic products. Unlike automobiles and other manufacturing industries, some OEMs (original equipment manufacturers) of consumer electronics do not conduct long-term verification and testing of chips and other supplies.

Counterfeit or refurbished components have always been in circulation, but the situation this year is serious. Originally, the price of a used chip was only 50 percent of the market price, but now the price is rising and is even close to the market price.

China’s electronic components trading hub is almost the world’s largest, with many companies dismantling tens of thousands of e-waste items every day. This provides opportunities for counterfeit chips, which have even found their way to overseas supply chains.

Source: Central News Agency, June 22, 2021
https://www.cna.com.tw/news/acn/202106220168.aspx

An online article that Sina published suggests that people’s lives in China may not look as glorious as what some of them are posting on wechat, including that they have luxury cars, lavish homes and a beach life.

According to data collected from Tianyancha, a data tech company in China, in the first quarter of 2020, 460,000 companies in China went bankrupt or had their business licenses suspended. Among them, 26,000 are companies in the export industry. According to statistics from a separate survey, there are 780 million people who are living in debt. Of those who have debt, 42 percent have payments that are overdue. That is, 300 million people are late in making the payments on their debts.

In 2020, 67.5 percent of China’s total population or 945 million people were active in the labor force. The reported average income in major cities was over 10,000 yuan (US$1,563) a month. In smaller cities, it was 6,000 yuan (US$938) a month. However, the numbers are deceiving because the number is an average with a small percentage of people being in a high-income bracket. The reality is that in 2020, the median salary in Shenzhen was 5199 yuan (US$813) per month. Shanghai was 6378 yuan (US$997), and Beijing was 6906 yuan (US$1,079). In other major cities, none of them had a median income over 5,000 (US$782) a month.

Here is another set of numbers.
1. For 11 million of those working in the body and foot massage business, their monthly income is 1500 yuan (US$234).
2. The most popular lipstick sold at pinduoduo.com costs 5 yuan (US$0.78). There are over 100,000 tubes of lipstick sold each month.
3. The official unemployment number is 6.2 percent. In other words, there are still 43.4 million people who are of working age who do not have a job. Hence, the officials have had to turn China into a street vendor economy and encourage people to become street vendors.

Source: Sina, May 31, 2021
https://k.sina.com.cn/article_1871596603_6f8e4c3b01901dkpm.html

On Tuesday May 11, China announced its latest census data showing that the country’s total population in 2020 is over 1.4 billion, with the population aged between 15 and 59 accounting for 63 percent of the total. That is 6.79 percentage points lower than the 2010 census. The population over 60 years old reached 18 percent of the total, 5.44 percentage points higher compared to 10 years ago. The figures indicate that China has a growing aging population. However, experts found inconsistencies in the official data and questioned its authenticity.

Yi Fuxian, a demographic expert at the University of Wisconsin-Madison, pointed to the abnormally high birth rate in 2020. Starting from 2016, the number of new births were decreasing year after year, with the only exception being 2020, when the new births increased by 26 million, nearly doubling the 14 million births in 2019. The birth rate in 2020 even broke the historic record established in 1991.

What is also puzzling is the sudden increase of 16.41 million for people over the age of 65. This means that in 2020 the number of people above 65 years old is 60 percent more than in 2019. All those who turned 65 last year were born in 1955. However, it was found out that the birth rate in that year did not increase but actually plunged from previous years, with only 20 million births.

A third anomaly was the high death toll in 2020. 14.6 million died in 2020, up from 9.45 million in 2019, an increase of nearly 5 million, or more than 50 percent. This was also a record high death number since the year 1980.

Source: Radio Free Asia, May 11, 2021
https://www.rfa.org/mandarin/yataibaodao/zhengzhi/ql1-05112021055641.html

In response to the epidemic, China’s issuance of debts has expanded. This has also led local governments to have a higher fiscal risk. Data shows that, by the end of 2020, local governments in China had a debt balance of 25.66 trillion yuan (US$3.99 trillion), with the debt ratio rising by nearly 4 percentage points over 2019.

Among the 31 provinces, Jiangsu, Shandong and Guangdong, the top 3 provinces in terms of gross domestic product (GDP), are also the regions with the largest amount of local debts. In 2020, between January and June, Jiangsu’s debt issuance reached 245.871 billion yuan (US $38.2 billion), almost the level of the entire year of 2019. Guangdong’s debt issuance in the first half of 2020 has already surpassed the total for the whole year of 2019. The speed of debt accumulation also significantly accelerated in the provinces that have a low economic ranking. For example, the size of Yunnan’s debt issuance reached 137.667 billion yuan (US$ 21.4 billion), more than double that of the same period in 2019.

The debt growth of local governments helps further promote investment but it also increases the risk of default. China stipulates that a local government’s debt ratio should not exceed 100 percent. That is, the maximum balance of local debt should not exceed the level of local fiscal capability. However, nine provinces have already exceeded the threshold of 100 percent.

Li Yang, the director of the government affiliated National Institute for Finance and Development, said that, if local governments cannot rely on their own revenues to balance their own expenditures, it is a dangerous fiscal phenomenon.

Source: Central News Agency, May 9, 2021
https://www.cna.com.tw/news/acn/202105090083.aspx

Xinhua reported that, on April 29, four financial regulatory agencies including the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the Administration of Foreign Exchange summoned 13 top online financing companies including Tencent and Meituan Finance.

Chinese economists and scholars told Radio Free Asia that these online financial companies bypassed China’s banking system to serve small to mid-size customers and self-employed individuals and have become a threat to traditional banking financing channels. The meeting was meant to warn these companies that Beijing has formed a plan to take over these private online financing companies. Other internet companies like Taobao, We Chat and QQ are not only a trading platform but they also draw large numbers of users. Therefore they would be the next target. One commentator told RFA, “Beijing will be very nervous and vigilant about such a platform and force that can connect with or and even unite the people. So, it needs to have a more a comprehensive and thorough control.”  These take-overs will not only benefit the state-owned banks but also control public opinion and limit the development of the private economy.

According to official statistics, WeChat users now exceed 1.2 billion, Taobao has over 800 million, and QQ has close to 600 million. After Beijing issued an antitrust fine of more than 18 billion (US$2.78 billion) against Alibaba not long ago, it immediately demanded that, within a specified time limit, 34 online companies including Tencent, JD.com, ByteDance, Baidu, and Meituan conduct an internal restructuring.

Source: Radio Free Asia, April 30, 2021
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql1-04302021044205.html