Economy/Resources - 91. page

On November 6, the Yingkou Coastal Bank in Liaoning Province had a surge of a large number of depositors withdrawing funds. The police department of the Yingkou area, in an attempt to reassure the customers about the bank’s financial standing, issued a statement on the same day. The bank run was caused by concerns about poor management and liquidity problems in small regional banks. The police statement said, “Due to the Internet rumors that the Yingkou Coastal Bank was deeply mired in a financial crisis, a large number of depositors went to the bank to withdraw their funds.” The police took a leader who was suspected of disrupting the public order back to the station for investigation and said that it would severely crack down on actions of “spreading rumors” and “making trouble.”

This is now the second bank run in China recently. After an executive of the Yichuan Rural Commercial Bank in Henan Province was taken away last week for investigation, panic spread among depositors, who rushed to the bank to withdraw cash.

According to a Reuters’ report earlier this year, as China’s economic growth has slowed to its lowest point in nearly 30 years, the government made a rare move by taking over an almost unknown Inner Mongolian Merchant Bank. It also bailed out the Jinzhou Bank in Liaoning province and the Hengfeng Bank in Shandong province. It thus has raised concerns about the financial realities of hundreds of small regional banks in China.

Source: Voice of America, November 6, 2019
https://www.voachinese.com/a/fears-over-chinas-smaller-banks-trigger-bank-run-20191106/5155431.html

Xinhua recently reported that the Chinese National Bureau of Statistics just released its official October manufacturing PMI (Purchasing Managers Index) number. The latest index number has suffered a month-over-month 0.5 percent decline since September, to 49.3 percent. This is now an eight-month low. According to the new report, in October, large scale companies manufacturing PMI declined 0.9 percent, to 49.9 percent. Mid-scale companies declined to 49.0 percent, which is a 0.4 percent increase from last month, and the manufacturing PMI small-scale companies dropped down to 47.9 percent, representing a 0.9 percent decline. Among all subcategories, the new orders index reached 49.6 percent (a 0.9 percent decline), the raw material inventory index reached 47.4 percent (a 0.2 percent decline), and the employment index reached 47.3 percent (a 0.3 percent increase). These are the three subcategories that kept the overall manufacturing PMI below 50 percent. PMI is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline.

Source: Xinhua, October 31, 2019
http://www.xinhuanet.com/fortune/2019-10/31/c_1210334911.htm

In addition to a lack of corporate confidence, China’s private enterprises are often called upon to participate in “political studies.” They are forced to invest in non-productive activities, negatively impacting their operational efficiency.

One private enterprise employee told the Central News Agency that, because she was the only Communist Party member in the group and because she is honest and reliable, the entire company relied on her to handled different political activities such as taking photos, compiling reports, and organizing training. Although most of the events are for show, they still require a considerable amount of time.

An economist who did not want to be named told the reporter that China is facing the pressure of economic growth, but the current practices only make the situation worse. Under the banner of “the Party managing everything,” companies frequently hold political studies. Private enterprises also have Communist Party branches and are mandated to organize Party activities. All these practices increase spending and reduce production.

Xiang Songzuo, a professor at the Renmin University School of Finance, mentioned in an article in October that security inspections and non-productive activities are now everywhere. They are all fiscal expenditures. The fiscal revenue growth in the first three quarters of this year was only 3.3 percent, while the expenditure growth reached 9.4 percent. “On one hand, there is a serious shortage of economic vitality; on the other hand, non-productive fiscal expenditures are growing rapidly.”

Source: Central News Agency, November 3, 2019
https://www.cna.com.tw/news/acn/201911030013.aspx

The real estate industry has been the first to bear the brunt of the Chinese government’s actions to tighten corporate finance. A mainland Chinese paper The 21st Century Business Herald quoted from court data that at least 408 real estate firms have declared bankruptcy. Guangdong province is leading the number of bankruptcies, followed by Zhejiang and Jiangsu.

At the same time, a researcher at the Guangdong Real Estate Research Association, who observes China’s real estate dynamics, said that the information mainly comes from the court’s bulletin board, and that there is room for the discussion of some data. The researcher pointed out that most of the companies that entered into bankruptcy procedures were small and medium-sized firms that had been plagued by financing problems. He also said that firms that have difficulty do not necessarily choose bankruptcy. Some will “sell the project as well as the land to large companies.” Meanwhile the Chinese government and state banks maintain a high degree of vigilance over the industry and exert tight control over the scale of housing credit. A major shock to the market will bring about systemic risks.

September and October are traditionally the peak season for the Chinese housing market. However, according to the National Bureau of Statistics, the sales price of new commercial residential buildings in 70 large and medium-sized cities increased by 8.4 percent in September. That was 0.4 percentage points lower than the increase in August. It was the smallest climb in the past year, while the housing prices have been on the rise for 48 months in a row.

Source: Central News Agency, October 30, 2019
https://www.cna.com.tw/news/acn/201910300291.aspx

China just announced that the GDP growth rate in the third quarter was six percent, but Xiang Zuoxiu, a professor at Renmin University who is the deputy director of the International Monetary Research Institute, publicly questioned the number and stated that it was seriously overestimated.

On October 18th, the National Bureau of Statistics announced that GDP in the third quarter increased by six percent year over year, which was the lowest since 1992 and below the expected rate of 6.1 percent. In his Wechat account, Xiang Zuoxiu stated that the official GDP growth rate was “obviously overestimated.” He said that most of the fiscal revenue and corporate profits show negative growth. In the first three quarters the national tax revenue also showed negative growth, so how could the GDP growth rate be six percent? He analyzed that even if the tax cuts lead to a fiscal decline while GDP still maintains a growth rate of six percent, then either the corporate profits would grow rapidly or the income of the people would grow rapidly. However, neither of them happened. This indicates that the GDP growth is not so rapid.

Xiang spoke to the Executive Class of Renmin University in December last year. His speech was bold and blunt. It spread widely on the Internet but the officials also censored what he said. In his speech, Xiang pointed out that China’s economy is now in serious decline. The GDP growth rate was not 6.5 percent as the statistics bureau’s said. Instead, it was 1.67 percent, and might even be negative. He also pointed to many problems facing the current Chinese economy and society. The biggest obstacle that the companies have to deal with is that the government lacks credibility. Xiang proposed that only tax reform, political reform, and state governance system reform could solve the fundamental problems.

Source: Aboluowang, October 19, 2019
http://www.aboluowang.com/2019/1019/1357668.html

According to the China Association of Automobile Manufacturers, China’s auto sales in September were 2.271 million. This represents the continuation of a decline stream that has lasted 15 months in a row and is down 5.2 percent from the same period last year. The sales for the first nine months of the year were 18.371 million, down 10.3 percent year-over-year. In September, the national sales volume of passenger vehicles was 1.933 million, down 6.3 percent year-over-year. As the Chinese government scaled down its car subsidies, the electric vehicle sales for September was 80,000, down 34.2 percent from the same period last year, seeing a third consecutive month of decline.

In March of this year, China announced it would reform its subsidy system and limit the scope of subsidies to a few top brands. Back in 2017, the Chinese government provided a total subsidy of 22 billion yuan (US$3.1 billion) to electric vehicle manufacturers.

Contributing to the decline is the slowdown in the overall economy and the plummet in consumer confidence amid the US-China trade war. The market once expected that large cities would relax their traffic restrictions or the government would provide new subsidies to new car buyers. However, those expectations failed to materialize and the industry suffered a blow.

Source: Central News Agency, October 15, 2019
https://www.cna.com.tw/news/acn/201910150158.aspx

Statistics from the Taiwan’s Ministry of the Interior show that, since the opening of people-to-people exchanges in 1987 between mainland China and Taiwan, the number of intermarriages increased continuously until 2003, when it reached 34,109, accounting for 20 percent of the total number of marriages in Taiwan in that year. However, the trend reversed and declined, year by year, after that. By 2014, the number of newly cross-strait married couples fell below 10,000. In 2018, it was only 6,800. Over the past 15 years since 2003, the number of cross-strait marriages has shown a steady decrease.

According to the Taiwan based United Daily News (UDN), as a matter of fact, the cross-strait marriages already plummeted to 11,886 in 2004. The drop was probably due to the fact that, in 2003, the Taiwanese government Introduced a requirement for face-to-face interviews in order to prevent fake marriages.

The UDN report also mentioned that, among the cross-strait marriages, the percentage of Chinese women marrying Taiwanese men has gradually declined. In 2004, it was as high as 98.2 percent. In 2018 it fell to 87 percent. In contrast, the ratio of Chinese men marrying Taiwanese woman has gone up year by year.

Source: Voice of America, October 7, 2019
https://www.voachinese.com/a/number-of-cross-strait-marriage-declined-20191007/5113182.html