Economy/Resources - 98. page

According to the Epoch Times, the latest issue of the “China Automobile Dealer Inventory Alert Survey” shows that the mainland’s automobile inventory index in May is above the inventory warning line. The car inventory has exceeded the inventory warning line for 17 consecutive months.

The China Automobile Dealers Association (China Automobile Association) recently released the latest issue of the “China Automobile Dealer Inventory Alert Survey.” The survey showed that the automobile dealer inventory warning index was 54.0 percent in May, down 7 percent from the previous month and up 0.3 from the same period last year. Since 2018, mainland car sales have declined for 10 consecutive months, and dealers’ revenue targets have fallen sharply. The high inventory has become a major concern.

According to Changjiang Business Daily news, the “Report on the current living conditions of China’s auto dealers and related report recommendations” that the China Automobile Association issued show that the current inventory in the industry is more than 3 million units, the equivalent to two months of sales. The cost of carrying a high inventory has eroded the gross profit on the new cars. In addition, the implementation of emission standards for phase VI also increased the dealers’ pressure to clear the inventory of cars made using the emission standard of phase V.

According to the survey of the Automobile Association, in June, the automobile market is about to enter the off-season. Therefore, the market demand in June is expected to decline compared with that in May. The automobile market will continue to be sluggish and the pressure on dealers will further increase.

The article quoted comments stating that the decline in automobile sales shows that the economic environment is also slowing down. For the mainland, the causes are the economic downturn and the expected decrease in personal income. In addition, the sharp rise in the price of necessities, such as pork and fruits and vegetables, has caused the people’s monthly living expenses to rise. When people revise their spending plans, they have to delay or eliminate spending on big expenditures such as tourism and car purchases.

Source: Epoch Times, June 9, 2019
http://www.epochtimes.com/gb/19/6/9/n11309829.htm

Well-known Chinese news site Sina recently reported that China’s National Bureau of Statics just released its May Manufacturing PMI (Purchasing Managers Index) number. The PMI index for the Chinese manufacturing sector turned out to be 49.4 percent. The key sub-indexes that brought down the overall number were New Orders (49.8 percent), Raw Material Inventory (47.4 percent) and Employment Level (47.0 percent). These meant that the market demand for manufacturing products is weak and the manufacturers are consuming existing material for production while unemployment is increasing in the sector. Among the different sizes of the companies, large scale manufacturers are doing relatively well (50.03 percent), medium and small scale manufacturers are suffering declines (48.8 percent and 47.8 percent, respectively). 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: Sina, May 31, 2019
http://https//finance.sina.com.cn/china/2019-05-31/doc-ihvhiews5840637.shtml

As the US-China trade tensions intensify, China expects a record 8.34 million college graduates to enter the job market this summer. It is believed that the recent increase in tariffs that the U.S. has imposed has made China’s export-dependent economy more vulnerable. China’s employment situation will become more and more severe for all job seekers, including college graduates. A recent survey showed that the actual employment rate this year was only 52 percent due to the fact that college graduates have not been able to find matching professions after their graduations. The survey found that this means that at least 4 million graduates will soon become unemployed, although many of them may choose to continue their studies. A report that Renmin University of China and the Career Platform Recruitment Network completed jointly found that, in the first quarter of this year, the number of job seekers in China increased by 31 percent compared to the same period last year. It was the highest increase since 2011. The report concluded that the China Job Market Prosperity Index has fallen to its lowest level since 2014. However, the latest official statistics describe a slightly different situation. According to official data, the unemployment rate in China’s urban areas remained at 5.2 percent in March, down 0.1 percentage points from February.

Source: Voice of America, May 17, 2019
https://www.voachinese.com/a/escalated-trade-tensions-add-pressure-on-the-employment-of-chinese-graduates-20190517/2407537.htmla/us-defense-secretary-20161206/4921705.html

On May 13, 2019, Chinese Premier Li Keqiang chaired and spoke at a recent national conference on entrepreneurship and jobs where he demanded that cadres at all levels make job creation their top priority.

Li said that, “the situation is complicated and grim” in the job market and that priority should be given to fresh graduates, demobilized military personnel and migrant workers.

To address this “complicated and grim situation,” Li said it’s the responsibility of regional governments, for they “must not break the bottom line of no large-scale unemployment.”

For migrant workers, Li asked regional authorities to take charge of their own unemployment issues. For provinces where large numbers of migrant workers tend to come to work, Li said that local authorities must do all they can to keep unemployed people in their region and to prevent migrant workers from returning to their hometowns en masse.

Meanwhile, Li said, authorities in provinces where most people leave to find work elsewhere, usually poor provinces where residents leave for work in the big cities, must assist those who have returned to their hometowns in securing jobs or starting their own businesses locally,

Source: Xinhua, May 13, 2019
http://www.xinhuanet.com/politics/leaders/2019-05/13/c_1124488813.htm

According to Chinese media, in the first half of 2017, mainland China’s resident debt burden exceeded 53 percent of China’s GDP. This figure includes residential mortgages and loans from Peer to peer (P2P) lending.

Without residential mortgages and P2P lending, the resident debt was 3 percent of GDP in 1996, 18 percent in 2008 and it hit 47.5 percent in 2017. From 2008 to 2017, it increased by 30 percentage points. It is noteworthy that it took the United States 60 years to increase from 20 percent to 50 percent while China took fewer than 10 years.

Further, based on data from banks, the debt-to-income ratio is much higher than 78.1 percent. From 2006 to 2017, the debt-to-disposable income ratio for mainland China’s residents surged from 18.3 percent to 78.1 percent. If other types of borrowing were included, the figure would be even more alarming. That is to say, it is much higher than 78.1 percent.

Source: Sohu, May 12, 2019
http://www.sohu.com/a/313385609_100202672?sec=wd

On May 13, 2019, the official Beijing Municipal Development and Reform Commission (BMDRC) website released the “Beijing Grain and Oil Market Supply and Price Volatility Emergency Control Plan.”

On May 14, 2019, China Business News reported that the BMDRC stated that the grain and oil fluctuation emergency plan announced on May 13, 2019 has nothing to do with U.S.-China trade friction.

The Control Plan “is a work that has been promoted before and it is part of the long-term price control. The time of the release just happens to be at this time. [The Control Plan] has nothing to do with Sino-US trade friction,” said the person in charge at the BMDRC

The BMDRC stated that the price of grain can affect the price of hundreds of items. Food security is an important foundation for national security. Food prices such as grain can play a critical role in balancing the entire price level. China’s edible oil market is highly dependent on foreign countries.  Domestic and international market prices are closely linked. It is equally important to stabilize the supplies in the edible oil market and to [secure] price stability.

The Control Plan sets three warnings: green, yellow (year-on-year price increase of 5 to10 percent for grain and 10 to 20 percent for edible oil) and red (year-on-year price increase of over 10 percent for grain and over 20 percent for edible oil). The three warning area indicators trigger three levels of government intervention respectively. The intervention may be through organized sourcing, increasing supply, speeding up distribution, cracking down on illegal activities such as hoarding and raising prices, price emergency measures, temporary price interventions, subsidies, and other emergency assistance.

Source: China Business News, May 14, 2019
http://www.cb.com.cn/index/show/zj_m/cv/cv13448901260