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China’s Automobile Market Saw a 9.6 Percent Decline in June

Well-known Chinese news site Sina recently reported that, according to the China Association of Automobile Manufacturers (CAAM), China’s domestic automobile market suffered a year-over-year decline of 9.6 percent. In the first half of 2019, the total automobile sales saw a year-over-year decline of 12.4 percent. CAAM expressed its belief that the full year outcome may turn out to show a negative growth. The Chinese automobile market has already suffered 12-consecutive-months of decline. The year 2018 was the first year in 28 years that the industry had a negative growth rate. The numbers showed that passenger cars had a better sales performance than commercial vehicles. The month of June showed that mid-duty commercial trucks had a year-over-year decline of 39 percent. CAAM called for a government intervention to stimulate consumer spending. Also in 2019, the government is expected to reduce the subsidy for new-energy vehicles by 70 percent. Even with the previous high subsidy, the new-energy vehicle profit margin remains very low, far less than for conventional vehicles.

Source: Sina, July 11, 2019
https://finance.sina.com.cn/stock/hyyj/2019-07-11/doc-ihytcitm1155583.shtml

Briefings | | |   Economy/Resources

Expert: How to Stop Chinese Communist Party’s (CCP’s) Organ Harvesting

The Independent People’s Tribunal in London pronounced its verdict on June 17, saying that the CCP is still conducting organ harvesting from dissidents, especially the Falun Gong practitioners and the Uyghurs. The Epoch Times interviewed Ethan Gutmann, founder of the International Coalition to End Transplant Abuse in China (ETAC) on how to stop the CCP’s organ harvesting.

Gutmann believes that there is ample evidence of the CCP’s organ harvesting. What the world needs now is action. “Will (the People’s Tribunal verdict) mean that more countries will prohibit their citizens from going to China for an organ transplant? “I hope so,” said Gutmann. Will this mean more countries will stand up to oppose the CCP’s actions? “I very much hope so.” The London Tribunal has pointed out that if you trade with the CCP, you are trading with a criminal state. I hope the verdict will cause the world to cut ties with the Chinese doctors who conduct organ transplants.”

Gutmann explained what cutting ties means: Chinese doctors doing organ transplants are not welcome at Western conferences and cannot publish articles in Western medical magazines, receive Western training, or buy equipment. Western medicine companies should stop clinical trials in China.

Gutmann believes that cutting ties is the most powerful means that the West can use.

He also pointed out that cutting ties would mean the CCP will lose a lot of money which is what the CCP really cares about. “If the Western pharmaceutical industry wants people to buy medicine from China, people must first have a high confidence in China’s medical system. If people lose that confidence because of the organ harvesting, the CCP’s ability to make money will be impacted dramatically.”

Source: Epoch Times, June 30, 2019
http://www.epochtimes.com/gb/19/6/29/n11354404.htm

Briefings | | |   Economy/Resources Government/Politics

China’s Companies Are Facing Credit Default Challenges

The 21st Century Business Herald reported that 96 businesses suffered credit defaults for a total valuation of 66.8 billion yuan (US$ 9.7 billion) in the first six months of 2019, a 263 percent increase from the same period in 2018.

Some analysts think this is the continuation of the credit default wave outburst from the second half of last year, which reached 100 billion yuan in that period.

CITIC Securities analyst Lv Pin warned about the increasing risk of credit defaults in the coming months, since companies are facing more difficulties in getting new money to pay back their debts. “The speed of credit defaults in the second half of this year may increase for the following reasons: First, the market is re-assessing (downgrading) the credit rating of many institutions. Second, the market is tightening the requirements for securing properties when issuing loans to companies that have a low credit rating. Third, the special ways of issuing bonds in the past may no longer continue, which will make bond issuance harder.”

Source: 21st Century Business Herald, July 2
https://m.21jingji.com/article/20190702/c28db078ab114f9ff3a7938acae0ec7f.html

Briefings | | |   Economy/Resources

China’s Ministry of Commerce Admitted Manufacturers Are Moving Out of China

Well-known Chinese news site Sohu recently reported that multiple senior leadership team members of the Chinese Ministry of Commerce jointly held a press conference on July 2. The Ministry admitted that industrial players and even supply chains are moving out of China. However, they suggested that it is normal for companies to move in and out as their globalization priorities change. It is understandable that places with lower costs may attract some companies to move out of China. One cannot simply conclude that this is a direct result of the China-US trade friction, since there are many causes. In the press conference, the Ministry also mentioned that its focal points for work this year are to “stabilize foreign trade” and to “stabilize foreign investments.” The Ministry is currently “cleaning up” existing regulations in preparation for the new Foreign Investment Law to take effect next January.

Source: Sohu, July 2, 2019
http://www.sohu.com/a/324264713_115479

Briefings | | |   Economy/Resources US-China Relations

China’s June Manufacturing PMI Numbers Showed Declines

Well-known Chinese news site Sina recently reported that the just-released Caixin Chinese Manufacturing PMI June number reached 49.4, which indicated a decline in the manufacturing sector. This number is in line with the Manufacturing PMI index that China’s National Bureau of Statistics released a couple of days earlier. It was also 49.4. It is unusual for these two independent indicators to be exactly the same. In June, China’s total manufacturing industrial output suffered a decline. Employment in manufacturing continued to shrink. Many manufacturers did not hire people to fill the vacancies freed up by workers who left their job. The new order level continued to see a decline. Product inventory level decreased due to the production slowdown and the companies have been filling orders with inventory. Manufacturers are reducing the purchasing volume for raw materials. In June, the average cost reached a seven-month high and the product price saw a slight increase as well. PMI (Purchasing Managers Index) is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline.

Source: Sina, July 1, 2019
https://finance.sina.com.cn/china/gncj/2019-07-01/doc-ihytcitk8835974.shtml

Briefings | | |   Economy/Resources

Xinhua: China’s Micro Leverage Ratio Hit New High

Xinhua reported that, by the end of the first quarter of this year, China’s Micro Leverage Ratio increased by 5.1 percent over last year, reaching 248.8 percent. The record that this set establishes a new high. The Micro Leverage Ratio is defined as the total government debt over the GDP.

This reason for the new high ratio is the slowdown of the increase in fiscal income. On the one hand, the fiscal income increase ratio went down to 2.9 percent in April, the lowest since 2016. On the other hand, government spending is increasing at a faster rate. The actual deficit ratio, defined as (general public fiscal spending minus general public fiscal income), when divided by GDP, has increased to 4.5 percent, the highest in the past ten years.

Therefore, local governments have resorted to issuing bonds to raise money thus hiking up the debt ratio.

Source: Xinhua, June 14, 2019
http://www.xinhuanet.com/money/2019-06/14/c_1210159511.htm

Briefings | | |   Economy/Resources

China’s Movie Market Saw First Box Office Decline in Nine Years

The China Business Journal recently reported from the Shanghai International Film Festival that statistics showed that the Chinese movie market saw a box office year-over-year decline of 6.35 percent in the first five months of this year. During this period, the national total viewership also declined from 689 million people to around 589 million. This is the first time since 2011 for the Chinese movie market to suffer a decline in box office revenue. One of the reasons for this dramatic decline was that, in 2018, the entertainment industry was hit with tax related scandals. Domestic movie makers were affected when the stock they held lost 72 percent of its value in the stock market. Another major issue is that half of the movies in the Chinese market were from the United States. The current poor relationship between China and the U.S. led to a government intervention which affected U.S. movie distribution in China. Even domestic movies were limited in choosing themes and stories.

Source: China Business Journal, June 16, 2019
http://www.cb.com.cn/index/show/zj/cv/cv13451781268/p/1.html

Briefings | | |   Economy/Resources Social Stability

Lianhe Zaobao: China’s Industrial Output Growth Rate In May Reached 17-Year Low

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that, according to data that the National Bureau of Statistics of China just released, in May, China’s industrial output saw a five percent year-over-year growth. However, this rate is the lowest it has been in 17 years, since February 2002. Apparently, this is a direct result of the trade war between China and the United States. Analysts expressed their belief that the cause of the lower growth was a massive stimulus package, which includes tax cuts, more debt, and government spending. The growth rate was lower than expected. The same data report from the Bureau of Statistics also indicated that, in May, government revenue suffered a negative growth. Experts expect the Chinese government to make more infrastructure investments in the near future.

Source: Lianhe Zaobao, June 15, 2019
http://www.unzbw.com/shiju/20190615/58395.html

Briefings | | |   Economy/Resources