Chinascope – Page 117

Economy: China’s Three-Tiered Social Security Structure

On January 13, Yingtan City, Jiangxi Province, posted on social media that the county has finished the delivery of social security payments for January. 75,500 retirees of companies received 178.85 million yuan; 13,600 government retirees received 69.09 million yuan; and 137,800 other retirees (residents not working for the government or established companies) received 28.54 million yuan.

People were thus able to calculate the three-time payment structures: 5,080 yuan (US$749) per month for government employees, 2,368 yuan (US$349) per month for company retirees, and 207 yuan (US$31) per month for normal residents. This created a hot discussion on the Internet about the unfair social security treatment based on people’s classes.

Source: Epoch Times, January 16, 2023
https://www.epochtimes.com/gb/23/1/16/n13908521.htm

Hot Topics | | January 24, 2023 | Economy/Resources

Economy: Banks in China Try to Stop Early Payoff of Mortgage Loans

The Caijing website published an article discussing the phenomenon that banks are creating hurdles to prevent people from paying off their mortgage principle earlier than is stated in their schedule.

The online App of a large state-owned bank told its users that early repayment cannot be handled online and that they need to make an appointment for an office visit. However, this type of appointment has a long waiting time. A customer called on January 3 and got an appointment on June 13. Some other banks also have people wait 3 months for an appointment.

Banks prefer customers to follow the mortgage payment schedule so that they can have the interest create a steady cash flow.

People, on the other hand, prefer to pay off their mortgage earlier because, nowadays, the normal financial investment options in China, such as bank’s saving accounts, mutual funds, hedge funds, etc. have a volatile and lower return than the mortgage interest rate. Thus people would rather pay off their mortgage principle.

Source: Caijing, January 19, 2023
https://estate.caijing.com.cn/20230119/4913830.shtml

Hot Topics | | January 23, 2023 | Economy/Resources

China Signed a 25-Year Deal with Afghanistan in Oil Exploration

With the departure of the U.S. invaders, the Afghan people did not live the life they expected, and were still struggling under the poverty line. The Taliban government in Afghanistan has been in power for more than a year. The results have proved that it is basically impossible to rely solely on the power of Taliban to save the Afghan economy. Looking at the whole world, it can be said that there are very few countries that are able and willing to provide assistance to Afghanistan in terms of economic construction. Atta can only focus on the big eastern countries.

China Central Asia Petroleum and Natural Gas Co., Ltd. signed a 25-year oil exploration contract with the Afghan Taliban government. According to the contract, the Chinese company and the Afghan government will jointly explore oil in the Amu Darya Basin in northern Afghanistan, where the oil reserves are estimated to exceed 80 million barrels. Chinese companies have been approved to carry out mining operations in an area of 4,500 square kilometers across the three provinces of Sar Pul, Jowzjan, and Faryab. The daily oil production will be 1,000 tons in the initial stage, and will gradually increase to 20,000 tons later. It is reported that the Chinese company in charge of the cooperation project will invest a maximum of US$150 million per year in the first three years, and will increase to US$540 million per year after three years. If the 25-year contract period is successfully fulfilled, the cumulative investment of the Chinese side will exceed US$12 billion.

Source: qq.com, January 6, 2023

https://view.inews.qq.com/a/20230106A0633500?tbkt=G&uid=&refer=wx_hot

Briefings | | January 22, 2023 | Geo-Strategic Trend

“He Who Created the Debt Owes the Debt” – China’s Finance Minister Told Local Governments

China’s local government debts have grown to an alarming high level. Liu Kun, China’s Minister of Finance expressed that local governments are responsible for resolving the issue and the central government will not help. During an interview with the China Central Television (CCTV), Liu said that “(we will) adhere to the principle of no bailout by the central government, and it should be ‘whose child it is who holds (the debt).” (In other words, he who created the debt owes the debt.)

Liu stressed the importance of regulating the local government’s financing platform companies. It has been a common practice for local governments to establish these companies to raise money to finance their spending. These companies usually use land (taken from the government) as collateral to get loans from banks, and later pay back the loans after the local governments sell the land. Now with the collapse of the real estate industry, local governments have a hard time selling land, and thus these companies are unable to pay back the bank loans.

Cheng Xiaonong, a Chinese economist living in the U.S. pointed out that all 31 provinces and municipalities in China had fiscal deficits in 2022. Now the central government is not willing to fill the hole. The result will be that banks will lose the money their customers deposited. In addition local governments must cut spending including salary reductions and layoffs.

According to Bloomberg, in the next five years, nearly 15 trillion yuan (US$2.2 trillion) of China’s local governments’ bonds will mature.

Last December, China’s Ministry of Finance issued 750 billion yuan (US$110 billion) in special national bonds for “economic reform, responding to major emergency events, and other expense items.”

Source: Radio Free Asia, January 9, 2023
https://www.rfa.org/mandarin/yataibaodao/jingmao/hcm1-01092023025727.html

Briefings | | January 20, 2023 | @CS Economy/Resources

Economy: How Will China’s Local Governments Manage Their Debts?

The high level of China’s local government debts has grown to a point of being alarming. Liu Kun, China’s Minister of Finance asked local governments to be responsible for their own debts and that the central government will not help, as “whose child do they hold?”

A Taiwanese media Up Media republished an article by Yan Cungou, a former Wen Wei Po editor, commenting on this policy:

Why was Liu Kun so cold-hearted? It is because the central government has depleted its money. It does not have the ability to cover local governments any more. It is just giving a warning up front.

In China, the local governments have accumulated 65 trillion yuan (US$9.6 trillion)in debt. Where can local governments find the money to pay off these debts? One possibility is to exploit private companies. This can result in the massive death of private companies. A second way is to exploit the people. However, people do not have much left after the three years of “zero-COVID” control and over-exploitation can lead to escalated conflicts between people and the authorities. The third option is to cut spending and lay off government staff members. However, the officials might be so hurt that they would stop working hard for the communist regime. In the end, the local government will run out of money and won’t even be able to pay for stability control efforts. Then there would be more social turmoil.

There might be several consequences for the central government’s “not holding local governments’ children.” First is that the central government will lose its authority over the local governments. Second is that local governments will focus on own interests and depart from the central government. Third is that the infighting among local governments (for resources) would intensify. Fourth is that people would protest and add to the pressure on the authorities.

Source: Up Media, January 17, 2023
https://www.upmedia.mg/news_info.php?Type=2&SerialNo=163946

Hot Topics | | January 19, 2023 | @CS Economy/Resources Government/Politics

China’s Housing Prices Have Been Going South for 16 Months

On January 16, China’s National Statistics Bureau released information on the housing prices in 70 major and medium-sized cities during the month of December, 2022. New house sales prices in 55 cities were lower than the previous month, an increase of four more cities from November’s statistics. Existing house sales prices went down in 63 cities, with the addition of one more city from November.

According to the National Statistics Bureau’s data, starting in September 2021, prices of both new house sales and existing house sales in 70 major and medium-sized cities have dropped down and the downward trend has lasted for 16 months, through the present.

Source: China News Agency, January 16, 2023
https://www.cna.com.tw/news/acn/202301160299.aspx

Briefings | | January 19, 2023 | Economy/Resources

Central Economic Work Conference Stressed Expanding Domestic Demand

China Daily published an article that an author wrote commenting on China’s economic focus for the year 2023. The article said that a Central Economic Work Conference was held on December 15 and 16, 2022. The conference provided a comprehensive plan for China’s economic work in 2023. In the plan, the recovery and expansion of consumer spending has a high priority and thus the expansion of domestic demand is the focal task for China’s economic work.

The article acknowledged that, for the past three years, China’s economy has been impacted negatively by international relations and by COVID. Consumer spending has also gone down significantly. In the first three quarters of 2022, China’s GDP growth rates were 4.8 percent, 0.4 percent, and 3.9 percent, respectively. The growth rate in those three quarters for total retail sales of consumer goods was 3.3 percent, -4.6 percent, and 3.5 percent, respectively. This shows that residents’ consumption dragged down the GDP.

The world economy is very likely to slow down in 2023. Western countries may be trapped in inflation and enter recession. Thus the external demand for China is likely to drop significantly. In fact, this has already happened. The growth rate for China’s exports in January 2022 was 24.1 percent over the same period a year ago, but only 5.7 percent in September 2022. It could keep sliding in 2023.

Therefore, China’s economic growth will have to rely on domestic consumption.

Source: China Today, January 10, 2023
http://www.chinatoday.com.cn/zw2018/bktg/202301/t20230110_800318097.html

Briefings | | January 19, 2023 | Economy/Resources Government/Politics

Wu Guoguang: Xi Jinping’s Reversal of the Course, Will China’s Transition be Peaceful or Marked with Bloodshed?

Cheng Xiaonong: U.S.-China Strategic Relations Have Crystallized

Xinhua Commentaries: “Exposing the Three Major Political Deficits of the U.S.”

The CCP’s Performing Arts Troupes in the U.S.