Economy/Resources - 97. page

Major Taiwanese news network Liberty Times Network (LTN) recently reported that Mainland media have given heavy coverage to the news of the first quarter GDP growth rate of 6.4 percent, which was better than expected. However, the unemployment rate for the same period of time was reported at a half-decade low. Thus the economic rebound appears to be an illusion. In the past years, after the Chinese New Year, China’s unemployment rate typically went down since many workers returned to work and a large number of college graduates joined the workforce. However, according to the latest study by the China Institute for Employment Research (CIER), the national unemployment situation is getting worse and the market is seeing a lot more job applicants (with a year-over-year increase of 31 percent) with substantially fewer job offerings (with a year-over-year decline of 11 percent. The gap is the widest since 2014, and it has been on the decline for six consecutive quarters. Even with a decent stock market rebound in the first quarter, the financial sector jobs still saw a year-over-year decline of 39.7 percent.

Source: LTN, April 22, 2019
https://ec.ltn.com.tw/article/breakingnews/2766439

The latest research shows that the gap between the rich and the poor in Chinese society continues to widen. In the past few decades, the fiscal income of the top groups has grown at an alarming rate and their proportion of the national income has almost doubled, making them the biggest beneficiary of China’s income growth.

The London School of Economics and Political Science issued a report on April 12. According to the report, it studied China’s recent public and non-public statistics, analyzed the income of Chinese society from 1978 to 2015, and drew the above conclusions. The report said that the ordinary Chinese people benefited from economic development and their incomes have greatly improved, but the gap between the rich and the poor has expanded significantly. It is worth noting that the proportion of the top income group, that is, those whose incomes are in the top one percent in China, accounted for only six percent of the income of the the entire population in 1978, but rose to about 14 percent in 2015, higher than the 10 percent in France, and second only to the 20 percent in the U.S. The distribution growth rate of China’s top one percent income group is the highest in the world for the 35 years of this period, reaching an alarming 8.6 percent, much higher than the US’s four percent and France’s 1.4 percent. The report found that China’s private wealth is also growing rapidly. By 2015, the growth rate of China’s private income had increased from 115 percent in 1978 to 487 percent, which has pushed China’s overall wealth income growth rate from 350 percent in 1978 to 700 percent in 2015.

Source: Voice of America, April 12, 2019
https://www.voachinese.com/a/china-inequality-more-like-us-12042019/4873853.html

China’s National Bureau of Statistics recently released its official numbers for the first quarter. The national level profit of industrial Enterprises Above a Designated Size (EADS, that is, companies whose primary business income is above RMB 20 million or around US$2.97 million) recorded a year-over-year 3.3 percent decline. State-owned enterprises suffered a profit decline of 13.4 percent; joint-stock companies declined by one percent; and foreign investment companies saw a profit decline of 7.9 percent, while privately-owned companies had a profit increase of seven percent. In the first quarter profit category, the mining industry declined year-over-year by 3.4 percent and the manufacturing industry declined by 4.2 percent. At the same time, at the national level, corporate debts and inventory both increased.

Source: Official Site of the National Bureau of Statistics, April 27, 2019
http://www.stats.gov.cn/tjsj/zxfb/201904/t20190426_1661900.html

Xinhua recently reported, based on newly released CAAM (China Association of Automobile Manufacturers) data, that China’s March domestic automobile sales suffered a year-over-year decline of 5.2 percent. Passenger car sales declined by 6.9 percent. The market has been sliding for nine consecutive months. It is estimated that the automobile market will not recover in the first half of the year. Commercial vehicles saw a mild growth due to increased government spending. One special market characteristic worth noting is that domestic brands are losing market share. In March, domestic sales dropped by 16.4 percent, reaching a market share of 41.3 percent, which represents a 4.7 percent decline. Domestic brand SUV sales declined the most. They suffered a year-over-year decline of 13 percent. Foreign brands demonstrated more flexibility in promotions.

Source: Xinhua, April 13, 2019
http://www.xinhuanet.com/fortune/2019-04/13/c_1124361340.htm

According to an article that Sputnik News published, U.S. Consumer News and Business Channel (CNBC) recently reported that, as China is unable to solve the African swine fever issue, African swine fever could drive up the global prices of protein since China consumes 40 percent of the pork in the world. China’s problem may also cause shortages in other countries’ food markets.

African swine fever is an acute viral infection in pigs that is not transmitted to other animals and humans. In August 2018, the African swine fever epidemic broke out in Liaoning Province for the first time and the virus spread rapidly to other provinces in China. Now Chinese officials have confirmed that more than 120 cases of African swine fever have been recorded in 30 provinces and autonomous regions. According to the UN Food and Agriculture Organization, nearly one million pigs have been slaughtered, but China has still failed to control the spread of the dangerous virus of African swine fever.

In an interview with Chinese media, Chinese agriculture minister Han Changfu reported that the African swine fever virus has been brought under control and the occurrence rate has decreased. From the beginning of 2019, only 23 new cases were recorded. However, the U.S. CNBC pointed out that the price of achieving this result was that healthy pigs were slaughtered. Many farms slaughtered all of their pigs because they were worried about the spread of African swine fever.

According to estimates from the Shanghai JCI Consulting Company, China’s pork production will be reduced by 16 percent in 2019, or 8.5 million metric tons, which will result in a pork shortage of around 7 million metric tons. Under the current conditions, a rise in pork prices will be inevitable. The issue of African swine fever has caused active discussions on Chinese blogs. One blogger whose name is “Tangshan Wangzi” wrote, “What happened to China’s pig industry? Take a look. People’s lives are ruined.” Another blogger named “Musalaisi” wrote, “African swine fever can be spread in a number of ways. Prevention is the key. Sterilization of tools is very important. Once this is over, the price of pork will definitely rise.” The blogger named “I am Lin Shu” wrote, “The production of Chinese pork has been cut back, but there is imported pork. Now the domestic pork prices are very bad.”

Washington hopes that China will once again increase imports of U.S. pork in light of the shortage of pork in China. According to Reuters’ data, 90 percent of U.S. exports of pork in 2017 were sold to China. After China imposed a 70 percent responsive tariff on US pork products in 2018, the US exports of pork products to China dropped by 55 percent.

Source: Sputnik News, April 12, 2019
http://sputniknews.cn/opinion/201904121028177192/

According to the National Bureau of Statistics of China, the Chinese industrial profit in the first two months of this year shows a year-over-year reduction of 14 percent to 708 billion yuan (US$105 billion), the largest drop since 2011. The main reason is believed to be the weak demand both at home and abroad, resulting in a slowdown of the economy.

The world’s second-largest economy has been growing the slowest in nearly 30 years. The Chinese government has lowered its economic growth target this year from 6.6 percent to a range of 6.0 percent to 6.5 percent.

A National Bureau of Statistics official said in a statement that the profits of major industries such as automobile, petroleum processing, steel, and chemical industries have dropped significantly. These are the main contributors to the lower profit.

Source: Central News Agency, March 27, 2019
https://www.cna.com.tw/news/acn/201903270155.aspx

After South Korea’s Samsung, Japan’s Olympus, and Ricoh, another Japanese multinational company is following suit and withdrawing from China. According to the Securities Times, a subsidiary of the official People’s Daily, Epson China confirmed that it will close its manufacturing company in Shenzhen in March 2021. The factories that Epson will close down belong to Epson Precision (Shenzhen) Ltd., a watch manufacturer, established in 2011.

Although Epson confirmed that the closure of the Shenzhen factory won’t take place until two years later, the layoffs have begun. One employee told Securities Times that the factory of Shenzhen in Baoan district  has stopped recruiting and plans to lay off 1,700 people. The other Nanshan factory is still recruiting.

Radio Free Asia interviewed some Chinese netizens, who said that the retreat of large foreign-funded enterprises has something to do with the increase in operating costs. One interviewee said, “Overall, it has a lot to do with the increase in the cost of labor and land, as well as environmental costs. The corporate cost is still the major reason. As a result, some businesses have turned to Southeast Asian or Latin American countries.”

Another interviewee believes it is also due to the fact that the Chinese government attaches more importance to state-owned enterprises than to foreign and private enterprises. He believes that if China does not carry out structural reforms, the pace of withdrawal of foreign-funded enterprises will not stop.

Source: Radio Free Asia, March 22, 2019
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql1-03222019092619.html