Economy/Resources - 83. page

China Finance Online (NASDAQ: JRJC) recently reported that, with the destructive pandemic and a very weak reopening and economic come-back, average Chinese are seeing significantly reduced income. According to publicly released foreclosure data, in the first five months of this year, Chinese foreclosures rose to 1.15 million instances, compared to 9,000 in 2017, 20,000 in 2018 and 500,000 in 2019. Based on the numbers from one branch of one bank in Shenzhen, which was previously a heated housing market and a high-income city, just in May, over 13,000 accounts abandoned their payment plan and stopped their mortgage payments. Analysts said that most of the Chinese real estate is for investment and the typical investment cycle is five years. This means massive foreclosures have still not yet been triggered. The real economy in major Chinese cities like Shenzhen, Guangzhou, Wuhan, and Fuzhou is seeing a freefall, which will result in a wave of unemployment that only adds to a worrisome future outlook.

Source: China Finance Online, June 1, 2020
https://finance.jrj.com.cn/2020/06/01092529812946.shtml

In a visit to the city of Yantai in Shandong province on June 1 and 2, 2020, Premier Li Keqiang said street stalls and small shops “are important sources of jobs.”  “They are part of China’s vitality just like those high-end, great, and classy businesses,” said Li. This followed his previous remarks made at the press event after the May 28 adjournment of the Third Session of the Thirteenth People’s Congress, where he praised the street vendor policies back in the 1970s for effectively creating jobs. The encouragement of street vendors, backed by Premier Li Keqiang, as a way to create self-employed businesses to absorb newly unemployed, is viewed as a marked change for the government, which previously cracked down on street vendors as part of urban rejuvenation efforts.

Within days, key CCP media pushed back.

On June 6, 2020, Beijing Daily, published an article boycotting Li Keqiang’s “street vendor economy,” claiming that the “street vendor economy is not suitable for Beijing.”  It listed a series of various disadvantages to the community environment, including “dirty streets, fake and shoddy products, noise disturbing people, vendors roaming on the streets blocking traffic, etc.” Beijing Daily asserted that the resultant disadvantages damage Beijing’s image as China’s capital and China’s national image, and are “not conducive to a high-quality economy.”

On the same day, the CCP’s mouthpiece, People’s Daily, published a commentary on the street vendors. It expressed that the street vendor economy should not be overheated. “With street stalls all over the city, there are also people worried about whether it will hinder traffic. How can the quality of merchandise be guaranteed? How to solve the health problem associated with food and the environment? These worries are not superfluous.”

On June 7, CCP media, China Central TV, also published a commentary, reiterating that the “street vendor economy” is not suitable for Beijing, and said that Beijing’s urban management will strengthen law-enforcement inspection and handling of the street vendors. It further stated that the “street vendor economy” is not a panacea and “blindly following the trend will be counterproductive.”

Sources:
1.The Central People’s Government of the People’s Republic of China, June 4, 2020,
http://www.gov.cn/xinwen/2020-06/04/content_5517257.html
2.Beijing Daily, June 6, 2020
https://news.sina.com.cn/c/2020-06-06/doc-iirczymk5630045.shtml
3.People’s Daily, June 6, 2020
http://opinion.people.com.cn/n1/2020/0606/c1003-31737652.html
4.China Central TV, June 7, 2020
https://news.sina.cn/gn/2020-06-07/detail-iircuyvi7133828.d.html

China’s Premier Li Keqiang said at a press conference that China is a developing a country with a large population, with an average annual per capita disposable income of 30,000 yuan (US$4,213.30). There are 600 million people who have low and middle incomes, whose average monthly income is merely 1,000 yuan (US$ 140.40).

Li Keqiang added, “It may be difficult even to rent an apartment with income of 1,000 yuan in a medium-sized city.” Li promised to make people’s livelihood a high priority.

According to People’s Daily, the Chinese Communist Party’s mouthpiece, a Chinese and foreign press conferences was held on the afternoon of the 28th, after the closing of the 13th National People’s Congress of China. It was when the media questioned Li Keqiang that he made the above remarks.

Li Keqiang said that the task of poverty alleviation is a “sophisticated commitment” that the CCP General Secretary Xi Jinping made to the entire society and that it must be completed as scheduled this year. Originally, there were 5 million people living in poverty. Under the impact of this epidemic, some more people may have fallen back to poverty, and the task of poverty alleviation has become even tougher.

Source: Central News Agency, May 29, 2020
https://www.cna.com.tw/news/acn/202005290046.aspx

“As the U.S. opened the era of private spaceship economy (SpaceX program), China restarted its street vendor economy.” These are popular words on China’s Internet lately. Facing the economic pressure from COVID 19, China recently loosened up its control over street vendors. In March, the Chengdu City Management Committee issued new regulations to allow residents or local businesses to setup vendor booths on the street. By May 21, the city had 2,234 temporary street vendors which created over 100,000 jobs and enabled 98 percent of the restaurants to re-open their businesses. Since then, a number of cities and provinces, including Shanghai, Gansu, Zhejiang, Jiangxi and Hebei have followed their lead.

In 2005, China launched “civilized city” evaluation nationwide. In order to be recognized for their achievements while ensuring public stability, local municipal governments around China launched severe attacks on street vendors. There were numerous bloody incidents reported when urban administrators used violent force on street vendors. On May 27, 15 years later, the Office of the Central Guidance Commission on Building Spiritual Civilization issued a new guideline and stated that street vendors will not be part of the measures for the civilized city evaluation. Meanwhile a number of official media also published articles to praise the street vendor model.

There were heated discussions online about this policy change. Some people commented that Beijing is obviously concerned about social and political stability and economic recovery, so they have to give the public some leeway. Some people said, ”Now it’s time to encourage street vendors. Obviously, we are not doing that well financially.” In the recent government work report the State Council issued, “protect” and “stabilize” are two key words that were frequently mentioned. China’s Prime Minister Li Keqiang’s recent statement during the press conference at the People’s Congress was also shocking. Li said that there are 600 million people in China who only have a monthly income of 1,000 yuan (US$140) and can hardly afford rent in a mid-sized city. A recent report showed that due to COVID 19, 80 percent of the small and medium-sized factories in the Pearl River Delta region that used to rely on orders from overseas are facing order cancellation and most of them are staying idle.

Source:
Epoch Times, May 31, 2020
https://www.epochtimes.com/gb/20/5/31/n12150806.htm
Xinhua, June 1, 2020
http://www.xinhuanet.com/fortune/2020-06/01/c_1126057426.htm

According to a survey that the China Film Association released on May 27, 2020, the pandemic has had a severe adverse impact on the entire Chinese film industry. The survey was conducted in April, with questionnaires sent to select, mature, dynamic, and market-competitive cinemas. Four in ten cinemas may permanently close down. Since February, all cinemas have been in the red.

The survey showed that the national box office revenue for the first quarter dropped 88 percent year on year to 2.23 billion yuan (US$312 million). The cinemas with more than 2,000 seats saw the box office revenue decrease by 87.7 percent year-on-year. Those with 500-2000 seats by dropped 88 percent and smaller ones with less than 500 seats by 91.3 percent.

Over 90 percent of those surveyed were pessimistic about the short term prospects. Half believed that it will take at least 3 to 6 months to reach the same level as before the pandemic and 37 percent of the theaters believed that it will take more than half a year.

As many as 42 percent of the cinemas surveyed responded they are at risk of “closing the door.” Only 10 percent indicated that they may change hands and continue to operate. Finally, 28 percent said they are “waiting for the headquarters’ arrangements.”

The China Film Association estimated that if cinemas reopened in June and revenues gradually recovered to 90 percent of last year’s levels within six months, the box office revenue would be reduced by about 60 percent year-on-year for 2020.

In 2015, China surpassed the United States to become the country with the largest number of screens in the world, over 70,000 screens in 12,480 cinemas in 2019. Its annual box office revenue accounted for about a quarter of the world’s total. As of 2019, it was the second-largest film market in the world.  China has been the largest overseas box office for Hollywood and in 2019 contributed 5.4 percent to the growth of the global film industry.

Sources: Sina.com, May 29, 2020. 

https://ent.sina.com.cn/m/c/2020-05-29/doc-iircuyvi5682505.shtml?cre=tianyi&mod=pcent&loc=2&r=25&rfunc=100&tj=none&tr=25

On May 22, the third session of the 13th China’s National People’s Congress was held in Beijing. Chinese Premier Li Keqiang delivered a government work report, stating that China will not set a GDP growth target for 2020. For the first time since setting economic growth targets in 1994, China will not set a specific target for annual economic growth. Li Keqiang explained, “[M]ainly because of the great uncertainties of the global pandemic situation and the economic and trade situation, China’s development is facing some unpredictable factors. This will help guide all parties to focus on the “six stabilities” (stabilizing employment, finance, foreign trade, foreign investment, domestic investment, and expectations), and “six protections” (protecting the employment of residents, basic livelihood, market players, food and energy security, supply chains in the industrial chain, and basic-level operations)

The government work report announced that China will issue 1 trillion yuan in government bonds for COVID-19 control.

Source: BBC Chinese, May 22, 2020
https://www.bbc.com/zhongwen/simp/business-52766866

According to the statistics released by China’s Ministry of Finance on May 18, in the first four months of this year, Mainland China’s general public budget revenue fell by 14.5 percent year-on-year, indicating that the Chinese economy has been hit hard by the Wuhan virus and its fiscal revenue has also declined. The general public budget revenue is a tax-based revenue according to Article 6 of China’s Budget Law.

The statistics further show that the revenue of the central government and local governments decreased by 17.7 percent and 11.5 percent year-on-year, respectively.  The national government fund budget revenue decreased by 9.2 percent year-on-year.  According to Article 9 of China’s Budget Law, the government fund budget revenue is revenue collected, charged or raised from specific targets and exclusively used for the development of certain public undertakings.

Tax revenue from industry sectors affected by the Wuhan virus has been hit the hardest. From January to April, hospitality and restaurants, transportation, and sports and entertainment declined by 46.8 percent, 29.8 percent, and 28.2 percent, respectively.

On a monthly basis, the national fiscal revenue from January to April decreased by 3.9 percent, 21.4 percent, 26.1 percent, and 15 percent respectively. The national fiscal revenue includes both tax and nontax revenues.

Source: People.com, May 18, 2020
http://finance.people.com.cn/n1/2020/0518/c1004-31713705.html

Hong Kong Economic Times (HKET), the leading financial daily in Hong Kong, recently reported that a large number of Chinese mask manufacturers have filed for bankruptcy. With the spread of the coronavirus, the global demand for masks fueled a rush in China to manufacture more masks. However, most of the international customers have high quality requirements. This has led the Chinese government to enforce manufacturing standards that are much more strict in order to battle massive international returns. Tougher quality checks in China resulted in a sudden widespread bankruptcy of mask makers in China. An online video showed a huge pile of low-quality masks left in front of a factory in the city of Anqing, which is China’s primary manufacturing base for protective masks. Many mask companies in Anqing also stopped manufacturing because of the dramatic increase in the price of raw materials and manufacturing machinery. Now the masks produced there are very hard to export.

Source: HKET, May 6, 2020
https://bit.ly/2X3wqx5