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China Bans Guatemalan Coffee and Macadamia Nuts in Retaliation for Pro-Taiwan Stance

In retaliation against Guatemala for the country’s pro-Taiwan stance, Beijing has banned the import of Guatemalan coffee and macadamia nuts. Last year, Guatemala exported $82 million worth of goods to mainland China, with the main products being coffee, nickel, iron, steel, and macadamia nuts.

After China’s ban, Guatemala has been seeking alternate destinations for its export. It has shipped 75 containers of coffee to Taiwan, Singapore, Japan, and South Korea, with Japan receiving most of them. Guatemala currently has eight containers of macadamia nuts stranded at Chinese ports. These containers were already in transit when the ban was issued. Guatemalan exporters are looking for other countries to reship them to.

Source: Epoch Times, July 16, 2024
https://www.epochtimes.com/gb/24/7/16/n14291776.htm

Briefings | | |   Economy/Resources Geo-Strategic Trend

Luxury Brands See Sales Plummet in China

As China’s economy remains sluggish and consumer spending weakens, more consumers are cautious about spending on luxury goods.

  • Swiss brand Richemont Group: In the three months up to June, the sales of its watch brands dropped by 27 percent in the Greater China Region.
  • Swiss brand Swatch Group: In the first half of this year, sales in China, without counting its entry-level brands Omega, Blancpain, and Breguet, plummeted by 30 percent.
  • American brand Marc Jacobs: Offer discounts of more than 50 percent on handbags, clothing, and footwear on Alibaba’s high-end e-commerce platform Tmall Luxury Pavilion.
  • Italian brand Bottega Veneta: Provide a 24-month interest-free loan service for purchasing handbags on Tmall.
  • Italian brand Versace: Provide discounts sometimes exceeds 50 percent in China.
  • British brand Burberry: Its sales in mainland China is down by 21 percent; also it provides discounts sometimes exceeds 50 percent in China.
  • French luxury brand Kering: Issued a profit warning, stating that demand for its high-fashion luxury brand Gucci was declining in China.

Source:
1. Epoch Times, July 16, 2024
https://www.epochtimes.com/gb/24/7/16/n14292022.htm
2. Epoch Times, July 17, 2024
https://www.epochtimes.com/gb/24/7/16/n14292139.htm

Briefings | | |   Economy/Resources

Chinese Electric Vehicles (EVs) Gain Market Share in the Middle East

Xinhua reported that Chinese EVs are popular in Middle Eastern countries since those countries are focused on developing the green transportation.

According to statistics from the China Association of Automobile Manufacturers, China exported 1.2 million new energy vehicles in 2023, an increase of 77.6 percent from 2022. China’s new energy vehicles now account for over 60 percent of the global market. To the Middle East market, China exported 578,100 automobiles in the first ten months of 2023, a year-on-year increase of 32.61 percent; among them, over 110,000 are new energy vehicles, a year-on-year increase of 66.44 percent.

China’s Yutong Bus provided Qatar with 1,002 electric buses for the 2022 Qatar World Cup. These were later integrated into Qatar’s public transportation system. Among the electric buses serving the 2023 United Nations Climate Change Conference (COP28) in Dubai, more than half were from Chinese manufacturers such as Yutong, BYD, and King Long. In October 2022, Hongqi electric cars successfully “joined” the Dubai police force, becoming the first electric vehicles in the Dubai police fleet. The Hongqi E-HS9 has now become a favorite among local sheikhs, royal family members, and government officials.

Geely vehicles are sold in the UAE, Saudi Arabia, Qatar, and Bahrain. BYD has entered the markets of the UAE, Saudi Arabia, Jordan, Qatar, and Israel, establishing a leading position for its electric vehicle brand in the Middle East. Other Chinese electric vehicle companies such as Great Wall Motors, BAIC, Changan, XPeng, and Skyworth are also expanding into the Middle East market.

In 2023, Chinese EVs accounted for about 61 percent of the EV market in Israel. This share increased to 68.31 percent in the first half of 2024. In countries such as Jordan and Egypt, sales of Chinese brand EVs are also continuously growing.

Source: Xinhua, July 18, 2024
https://app.xinhuanet.com/news/article.html?articleId=9c0096426aa5ed72eba9f6629fae2619

Briefings | | |   Economy/Resources Geo-Strategic Trend

CNA: BMW Quits Price War in China

Primary Taiwanese news agency Central News Agency (CNA) recently reported that China’s auto market has been in serious trouble, and German luxury car brand BMW has been actively cutting prices since last year to maintain its market share. It now seems that BMW China will withdraw from China’s price war and adopt a new strategy of “volume reduction for price protection.” This became the hottest topic on Chinese social media at one point a few days ago.

According to local media reports, BMW China has been actively cutting prices. The average discount rate on BMW sales in 2023 was 17.66 percent. BMW delivered 825,000 vehicles last year in China, an annual increase of four percent. These delivery numbers came at the cost of a sharp decline in BMW’s profits, which fell more than 30 percent year-over-year.

In the first half of this year, BMW sold 375,947 vehicles (including the Mini brand, which is owned by BMW), with sales down four percent year-over-year. Now, price cuts are hurting both profit and sales. A BMW China salesperson revealed that the prices of all models will be adjusted upwards starting from July 10, and there will be another price increase after July 15. All previous price-cut offers will be cancelled.

Another German luxury car brand, Mercedes-Benz, has also entered the price war. Mercedes sales in the first half of the year also fell by nearly six percent. Mercedes has not made any official remarks regarding its pricing strategy. Meanwhile, Porsche sales China in have been even worse. In the first half of the year, Porsche sales in China totaled only 29,551 units, a 33 percent decrease from the same period last year.

Source: CNA, July 12, 2024
https://www.cna.com.tw/news/acn/202407120327.aspx

Briefings | | |   Economy/Resources

China’s Photovoltaic Industry Faces Extensive Oversupply

Chinese companies have dominated the world’s photovoltaic industry (i.e. solar panel production). The sector represents one of the “new three products” (new energy vehicles (i.e. electric vehicles), lithium batteries, photovoltaic products) comprising Beijing’s current industrial strategy. In 2023, China’s exports of the “new three products” totaled 1.06 trillion yuan (US$ 150 billion), surpassing the trillion-yuan mark for the first time. Within just half a year, however, the entire Chinese photovoltaic industry has fallen into a loss territory.

As of July 9, among the listed companies that have disclosed their mid-year performance forecasts, most companies in the photovoltaic industry are forecasting significant losses. Among them, seven companies – LONGi Green Energy, Tongwei Co., Ltd., TCL Zhonghuan, Aiko Solar, Shuangliang Eco-Energy, Jingyuntong, and Hongyuan New Energy – are expected to have loss exceeding 1 billion yuan each. LONGi Green Energy, the world’s largest photovoltaic company, indicates a net loss of 4.8 billion to 5.5 billion yuan. Its market value has fallen from its peak of 550 billion yuan to below 100 billion yuan.

In the past, China provided heavy national subsidies to the photovoltaic industry that had attracted many manufacturers enter this field, producing homogeneous products. By the end of 2023, China’s annual production reached 861 gigawatts, more than twice the global installation volume of 390 gigawatts. It is predicted that the capacity will increase by another five to six hundred gigawatts this year. It is estimated that China’s silicon wafer, battery, and module production capacity to be put into operation in 2024 will be sufficient to cover the global annual demand till 2032 (nine years).

Critics point out, “(China’s) support for the photovoltaic industry is a result of government policy, rather than market guidance. (The current overcapacity) was inevitable. It is a result of a planned economy that has mismatched production and market (demand).”

Source: Epoch Times, July 14, 2024
https://www.epochtimes.com/gb/24/7/14/n14290396.htm

Briefings | | |   @CS Economy/Resources Government/Politics

China’s ‘Youth Retirement Homes’: A Growing Trend Amid Economic Pressures

“Youth Retirement Homes” have recently emerged across China, offering young people a space to relax and recharge from over competition in urban life. These facilities, which charge only a few hundred yuan per week, provide outdoor activities, social events, and opportunities for like-minded young people to interact.

The primary clientele includes freelancers, artists, photographers, and young people facing life challenges. The topic has gained significant attention on Chinese social media, with over 5 million views on Xiaohongshu.

While some view these homes negatively, labeling them as “lying flat” centers, supporters argue they provide necessary respite from the intense pressures of modern life in China, including high housing costs and demanding work schedules (996 culture).

Surprisingly, Chinese officials have shown a positive attitude towards these facilities, seeing them as potential drivers for rural revitalization.

David Xu, founder of IMC Talent in Hong Kong, attributes the popularity of youth retirement homes to increased competition for jobs, devalued university degrees, and economic downturn, leading to disappointment and a desire to escape among young people.

Wang Guochen, a researcher at Chung-Hua Institution for Economic Research, warns that prolonged absences from work could hinder human capital accumulation and potentially slow China’s long-term economic development.

Source: Central News Agency (Taiwan), July 8, 2024
https://www.cna.com.tw/news/acn/202407080157.aspx

Briefings | | |   Economy/Resources

China Expand EV Presence in Brazil

Chinese car manufacturers are increasing their presence in the Central and South American markets with electric vehicles (EVs) and plug-in hybrid vehicles (PHVs). From January to April 2024, sales of new Chinese cars reached 48,000 units, eight times the number from the same period last year. Data released by the Brazilian Electric Vehicle Association shows that in 2023, sales of electric vehicles (EVs, PHVs, and hybrid vehicles (HVs)) increased by 91 percent compared to 2022, reaching a record high of 94,000 units. The top five sellers include three Chinese companies – BYD, Chery Automobile, and Great Wall Motors. In April 2024, those three manufacturers accounted for 7 percent of new car sales in Brazil.

In March 2024, BYD announced that it would double its investment from the original plan to 5.5 billion reais in its Brazilian production base. This will be Brazil’s first pure EV factory, expected to start production as early as the end of 2024, gradually reaching full production capacity of 300,000 units per year. BYD also plans to double the number of its sales showrooms in Brazil to 200 by the end of 2024.

Source: Nikkei, May 24, 2024
https://zh.cn.nikkei.com/china/ccompany/55569-2024-05-24-05-00-57.html?start=1

Briefings | | |   Economy/Resources Geo-Strategic Trend

Socioeconomic Factors Behind the Decline in Marriage and Divorce Rates in China

An article circulated on Internet talked about how poor economic conditions in China have caused Chinese people to “freeze” (i.e. to not to make major life-style changes or life-changing decisions).

In the first quarter of this year, the number of marriage registrations nationwide was 1.969 million pairs, a decrease of 178,000 pairs from the same period in 2023. Meanwhile, the divorce registrations also decreased from 641,000 pairs in the same period last year to 573,000 pairs, a reduction of 68,000 pairs

What has caused the decline in both marriage and divorce rates? According to the article, the reason is the decline in people’s income and assets. In China, the most crucial hurdle preceding marriage is the purchase of an apartment. Usually, the three families (the young couple and both of their parents) pool their savings together to buy the “marriage” apartment. However, nowadays, despite government policies heavily incentivizing house sales (aiming to stimulate the stagnant Chinese housing market), people are not buying houses or apartment units (being afraid that the price will fall later).

As far as divorce is concerned, the issue of how to divide assets is pertinent. Here, too the sluggish housing market is at play; couples are unable to sell their houses at high prices, meaning that dividing up the couple’s assets for a divorce is difficult.

According to the article, the root cause of the “freeze” in social activity among Chinese people is the socioeconomic impact of a sluggish Chinese economy. This pertains to employees in various sectors of the economy:

  • Government Sector Employees: Central and state agencies are carrying out uniform 5 percent reductions in staffing.
  • Private Sector Employment: The Internet, semiconductor, and advanced manufacturing industries are all under pressure. Jobs at high-tech companies, which used to be good for job-hopping, are becoming less secure. The electric vehicle industry may seem promising, but in reality many EV companies face financial trouble; fierce competition makes EV companies lose money. Chinese industrial transformation, the impact of AI, and oversupply of talent will all have long-term impacts.
  • Finance Sector: the industry is experiencing widespread salary cuts.

Source: China News, June 29, 2024
https://news.creaders.net/china/2024/06/29/2747232.html

Briefings | | |   Economy/Resources Social Stability