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Nikkei Shimbun: China’s 2023 GDP Growth Was Actually Negative

Japan’s Nikkei Shimbun ran an article saying that China’s 2023 GDP numbers reported by the communist regime are likely fake. Given suspicions of data tampering by both local and central party apparatuses in China, Nikkei Shimbun put together a rough alternative estimate using three data points that have a significant impact on GDP: real estate investment, net exports, and household consumption.

  • Real estate investment accounts for about 10 percent of GDP. Adding in Chinese consumer spending on electrical products, the sum accounts for about 30 percent of GDP. In 2023, China’s real estate investment decreased by 16.7 percent compared to 2022, which could lead to a decrease of 5 percent in GDP.
  • China’s net exports (i.e. the difference between imports and exports) historically accounts for about 3 percent of China’s GDP. However, from January to November 2023, net exports decreased by 32.3 percent compared to the same period in 2022, resulting in an estimated reduction in 2023 GDP of about 1 percent.
  • Chinese officials have not publicly disclosed household consumption data, which accounts for about 40 percent of China’s GDP. Nikkei estimated this data using total retail sales to consumers, a figure which increased by 7.2 percent in 2023 compared to 2022, impacting GDP positively by about 2.8 percent.

Adding these three numbers together, the resulting estimated true change in GDP is negative 3.2 percent. Even accounting for the impact of inflation, the change in GDP should be at least negative 2 percent, significantly below the positive 5.2 percent change in GDP published by the Chinese government.

The Nikkei report urged Japanese investors in China to withdraw their funds as soon as possible.

Source: New Talk (Taiwan), January 31, 2024
https://newtalk.tw/news/view/2024-01-31/907283

Briefings | | |   @CS Economy/Resources Government/Politics

Chinese Stock Investors Vent Frustration in Comments on US Embassy Weibo Posts

The Chinese stock market has been continuously declining since mid-2023, reaching new lows as the Shanghai Composite Index fell below 2,700 points on February 2nd. Many investors who suffered heavy losses flooded the comments section on the official Weibo account of the U.S. Embassy in China, venting their frustration or imploring the United States to take over the Chinese stock market. (Weibo is a Chinese social media platform)

A large number of pleas from Chinese stock investors flooded a U.S. Embassy post titled “Science and Technology Help Researchers Protect Giraffes by Increasing Awareness”:

  • “Do you want to protect me? Giraffes are life forms, but so am I.”
  • “Anyway, (the Chinese officials) eventually will take our money (from the stock market) away and immigrate to your country. How about we give you the money directly? Otherwise they will charge us processing fee (in addition).”
  • “We know they are lying, and they know they are lying. They know we know they are lying, and we know they know we know they are lying. But they still keep lying. Can you tell me which ‘glorious era’ this description refers to?”

On the same day, a post by the U.S. embassy titled “Joint Statement on the Third Anniversary of the Military Coup in Myanmar” was flooded with messages from Chinese stock investors asking for help from the U.S.:

  • “America, please come and rescue the hundreds of millions of A-share investors in deep trouble.”
  • “Save the poor Chinese stock investors. I love America.”
  • “I beg the United States to save A-shares.”
  • “America, the Earth needs you! It desperately needs you! God bless America.”
  • “Whoever treats us well, we will love them.”
  • “I love the United States of America.”
  • “The official media doesn’t let us speak. I come here to request rescue.”
  • “Before trading stocks, I was very patriotic.”
  • “Trading stocks has brought hatred to our country. It’s also tragic.”
  • “Get rid of the China Securities Regulatory Commission!”

Source: Epoch Times, February 3, 2024
https://www.epochtimes.com/gb/24/2/3/n14172430.htm

Briefings | | |   @CS Economy/Resources Social Stability

Lianhe Zaobao: Profits of Chinese Industrial Companies Fell Last Year

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that, according to the official data released by the Chinese National Bureau of Statistics, China’s industrial enterprises above a designated size achieved a total profit of RMB 7.6858 trillion yuan (around US$1.08 trillion) last year, a year-over-year decrease of 2.3 percent. This decrease reflects how lower prices and weak domestic and foreign demand have continued to weigh down profit growth for industrial companies. Among these industrial enterprises, there was a significant drop of 6.7 percent year-over-year in total profits for foreign-owned enterprises and Hong Kong, Macao and Taiwan-owned enterprises. The profits of state-controlled enterprises fell by 3.4 percent year-over-year. The profits of joint-stock enterprises fell by 1.2 percent year-over-year. The total profits of private enterprises had a growth of 2.0 percent year-over-year. However, many companies are nearing the end of an inventory destocking cycle.

Source: Lianhe Zaobao, January 27, 2024
https://www.zaobao.com.sg/news/china/story20240127-1464777

Briefings | | |   Economy/Resources

Artistically Shaping China’s Image Based on Three Principles

The China Social Science website posted a theoretical article, suggesting that “a beautiful and artistic image of China, organically integrated with profound Chinese wisdom, can better fulfill Beijing’s mission to be a great nation.” The article listed three “cultural principles” by which to craft an artistic image of China:

  • Values: “The image of Chinese people should be trustworthy and sincere.” This image not only comes from the traditional Chinese culture, but also from “the communist revolutionary cultural values and advanced socialist cultural values.”
  • Ethics: “China has developed an ethical concept that ‘family and home country are integrated as one.'” “Patriotism becomes the fundamental political and ethical spirit, giving rise to the individual ideal that one should ‘cultivate oneself, harmonize the family, govern the country, and settle the world.'”
  • History: “Chinese culture is diversified because the vast Chinese territory comprises multiple geographical units, leading to diverse economic forms and nurturing different cultures.”

Source: China Social Science, January 19, 2024
https://www.cssn.cn/skgz/bwyc/202401/t20240119_5729627.shtml

Briefings | | |   Economy/Resources Government/Politics

Xinhua: China Unveils “Thousand Groups Going Abroad” Initiative, Aiming to Boost Overseas Trade

As China’s exports continue to decline, the China Council for the Promotion of International Trade (CCPIT) announced a new initiative this year called “Thousand Groups Going Abroad.” The plan is to organize over 1,000 batches of business delegations to participate in overseas exhibitions, inspections, and negotiations, aiming to secure export orders and expand China’s overseas markets. The initiative will target China’s key export markets such as the Europe Union, the U.S., Japan, South Korea, ASEAN, and Latin America.

China organized approximately 900 overseas exhibitions in 2023.

Source: Xinhua, January 15, 2024
https://app.xinhuanet.com/news/article.html?articleId=a2b554b08f23afaff0f499798e1b9f74

Briefings | | |   @CS Economy/Resources Government/Politics

Survey: German Companies in China Face Stiff Competition, Geopolitical Risks, and Economic Headwinds

A survey by the German Chamber of Commerce Abroad found that 46% of German companies operating in China believe that their Chinese competitors will become leaders in their respective industries within the next 5 years. Some 37% of surveyed companies feel that innovativeness in the Chinese market makes doing business in China increasingly attractive, and 11% of German automotive companies in China view their Chinese competitors as already being the innovation leaders in their industry.

About 83% of German companies surveyed believe that China’s economy is declining, though 64% anticipate this downward trend being just a temporary 2-3 year slowdown. Some 42% of respondents expect positive developments in Chinese industry this year.

The investment outlook among surveyed companies was mixed – 54% think that China’s investment appeal is falling, while a similar percentage plan to increase investment in China over the next 2 years. Risks are top of mind, with about 37% of respondents reportedly taking action to mitigate geopolitical risks and some 20% taking action to mitigate risks related to China’s economy.

Source: German Chamber of Commerce in China, January 24, 2024
https://china.ahk.de/market-info/economic-data-surveys/business-confidence-survey-1

Briefings | | |   Economy/Resources

Beijing Office Vacancies Hit 13-Year High as Demand Falls in Slowing Economy

Demand for office space in Beijing has fallen a;s China’s economy weakens and companies are becoming more conservative about expansion. According to Caixin.com, the vacancy rate for Beijing office space has hit a 13-year high of 20.4%. This is the first time in recent years that the rate has topped 20%.

The shrinking technology industry in Beijing, coupled with conservative growth strategies and cost-cutting measures adopted by companies facing stiff economic headwinds, have combined to dampen office rental demand. According to the Caixin report, the high office vacancy rate in Beijing is mainly attributable to the following factors:

  • companies relocating their headquarters out of Beijing over the past year,
  • downsizing and taking less rental space, and
  • an overall lack of new demand to replace surrendered office space.

The market will likely face further challenges until broader economic growth rebounds. Not only are vacancy rates high, but rents have also fallen. Beijing’s office real estate market is highly dependent on state-owned enterprises, whose long-term tenancy have played an important role in stabilizing the local office rental market.

Source: Radio Free Asia, January 26, 2024
https://www.rfa.org/mandarin/Xinwen/5-01262024134758.html

Briefings | | |   Economy/Resources

China’s 2023 Crude Oil Imports from Russia Exceeded 100 Million Tons for the First Time

China imported more than 107 million tons of crude oil from Russia in 2023, according to data from China’s General Administration of Customs reported by well-known Chinese news site Sina (NASDQ: SINA). This represents a year-over-year increase of 24 percent in Chinese oil imports from Russia, accounting for approximately 19 percent of China’s total crude oil imports last year and marking the first time in four years that Russia was the biggest source of crude oil supplying China.

In the meantime, Saudi Arabia supplied 85.96 million tons of crude oil to China, a year-over-year decrease of 1.7 percent, ranking second among sources of oil supplying China; Iraq exported 59.26 million tons of crude to China, ranking third; Malaysia and the United Arab Emirates supplied China with 54.79 million tons and 41.82 million tons of crude oil, ranking fourth and fifth, respectively.

Following the outbreak of the Russia-Ukraine conflict in February 2022, Russia has responded to Western sanctions by increasing oil and gas exports to China, India and other Asian countries. In 2023, about 90 percent of Russia’s oil and petroleum exports went to China and India. In the past two years India, has accounted for about 40 percent of Russia’s total crude oil exports, Russia supplied almost no crude oil to India before the Russian invasion of Ukraine.

According to the Sina news article, “China and Russia are continuing to deepen energy cooperation.”

Source: Sina, January 22, 2024
https://finance.sina.cn/2024-01-22/detail-inaeknmk4499156.d.html?from=wap

Briefings | | |   Economy/Resources Geo-Strategic Trend