EU Raids Chinese Company Offices in Europe
Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that the European Commission raided the offices of Chinese companies in Europe on April 23, conducting inspections on the grounds that the companies have allegedly accepted foreign subsidies. This is the fifth subsidy investigation launched by EU since February 2024. All such subsidy investigations have targeted Chinese companies. This was the first time such an investigation has led to an on-site search.
The head of the Trade Remedy Bureau of the Chinese Ministry of Commerce told the press that the Chinese industrial community was shocked and was strongly dissatisfied with this move by the EU. He said the European Commission directly raided normal office premises and detained regular business operating equipment without prior warning or legal notice, violating the principles of due process. The Sina article stated that “In a series of recent investigations conducted by the EU, the purpose has been clear, the rules and procedures have been abused, and the investigation tools have been weaponized… China will pay close attention to the EU’s subsequent developments and take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies.”
Source: Sina, April 24, 2024
https://news.sina.com.cn/c/2024-04-24/doc-inasxuyu8421014.shtml
Lianhe Zaobao: North Korean Minister of Foreign Economic Relations Visits Iran
North Korea’s official news agency KCNA (Korean Central News Agency) reported on April 24 that a North Korean delegation led by Yun Jong Ho, the North Korean Cabinet Minister of Foreign Economic Relations, was visiting Iran. Ho flew out of Pyongyang on April 23 for the visit. The official report provided no other details.
Singapore’s primary Chinese language newspaper Lianhe Zaobao wrote that it is very rare for KCNA to publicly report on this type of visit. The outside world widely believes that there are secret military ties between North Korea and Iran. The two countries have long been suspected of cooperating on the production of ballistic missiles, possibly exchanging technical expertise and cooperating to manufacture needed parts.
Western news reports say that Iran has been supplying Russia with a large number of ballistic missiles for use in the war in Ukraine. North Korea is also suspected of supplying missiles and artillery to Russia. Both countries deny these charges.
Source: Lianhe Zaobao, April 24, 2024
https://www.zaobao.com.sg/realtime/world/story20240424-3488224
RFA Chinese: 460,000 Restaurants in China Closed in First Quarter
Radio Free Asia (RFA) Chinese Edition recently reported on the latest data from the Chinese National Bureau of Statistics, showing that around 460,000 Chinese restaurants were deregistered or had their licenses revoked in the first quarter of this year, a year-over-year increase in restaurant closures of approximately 230 percent. Among the closed restaurants, 180,000 closed in March alone. People in the industry lamented that business has become increasingly difficult. China’s consumer market has continued to decline in the post-COVID-19 era, and a wave of business closures has spread from the manufacturing and international trade sectors to the restaurants industry.
A consumer said in an interview with RFA that many residents in her city could not find jobs and have lost their sources of income; they are cutting back on food and clothing expenses. She also said that people from all walks of life are experiencing the current recession. Prospects now are not particularly good, and people don’t dare to spend their money. Thus, China’s day-to-day consumption patterns have changed. People don’t see hope, nor can they see a future.
The recession in the restaurant business is the most direct manifestation of the reduction in the income of Chinese residents – they are not eating out. Some domestic experts suggested that restaurant owners follow the lead of the green energy automobile industry – reduce prices and go overseas.
Source: RFA Chinese, April 23, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql1-04232024012355.html
Graduates Debate County vs. City Jobs as China’s Youth Unemployment Crisis Deepens
A recent survey by an education consultancy in China has sparked heated discussions among Chinese netizens. It claims that, in recent years, an increasing number of university graduates are choosing to work in small counties instead of in big cities, and that the job satisfaction of such graduates has risen. Two young Chinese people interviewed by Voice of America disagreed with the survey results, saying that jobs in smaller counties actually offer lower salaries and fewer career development opportunities, contrary to the survey’s findings.
Wei, a 21-year-old tourism management student, is anxious about his future job prospects (like many of his graduating peers). He feels torn between working in a big city, which would mean intense competition and high living costs, or working in a small county, which would offer fewer opportunities for career growth and have lower-skilled job opportunities, unmatched to his degree.
The survey suggested that, in small counties, employment for bachelor’s degree graduates rose from 20% in 2018 to 25% in 2022, with job satisfaction improving by 9%. The survey reported that 70% of graduates employed in county jobs were working in roles relevant to their degrees. Wei stated that there is a huge gap between the survey results and the reality in China – small counties offer few private sector jobs, have lower pay, have policy implementation issues, and offer only unstable temporary work unless one is in the government sector.
While the survey data show that, in small counties, the monthly income of people with bachelor’s degrees has risen from 4,640 yuan (US$ 640) in 2018 to 5,377 yuan (US$ 742) in 2022, Wei believes that the official numbers are “false rhetoric disconnected from the reality of a decade’s wage stagnation,” and that many graduates end up returning home unemployed.
Some experts suggest that youth are leaving big cities due to lack of opportunities amid China’s current economic downturn and industrial restructuring, and that small counties are seen as providing better work-life balance despite lower salaries.
Source: Voice of America, April 21, 2024
https://www.voachinese.com/a/surveys-found-china-s-college-graduates-seek-job-opportunities-in-smaller-cities-20240421/7578947.html
China’s Struggling Real Estate Sector Faces Arduous Transition
The downturn in China’s real estate market continues. In the first quarter of 2024, sales by the top 100 real estate companies plunged 47.5% year-on-year. Official data show the prices of new homes and second-hand homes (i.e. homes that are not newly constructed) continuing to decline for several consecutive months.
Though the market for non-new homes showed some positive changes, reports indicate that the real estate market’s overall downward trend is unlikely to reverse, with the winter far from over. Major developer Vanke, once considered a “model player” in the industry, saw its 2023 net profit plummet 46.4% and has implemented management pay cuts. Analysts warn that even “quality” developers face default risks while troubled firms like Evergrande remain in limbo, signaling that the market has not yet bottomed out.
Some expect 2024 to be the year that China’s property market rebounds. However, a greater proportion of experts view the downturn as symptomatic of structural issues, with a solution requiring new economic drivers to replace traditional industries like real estate. The “new productive forces” concept promoted by China’s central government places hope in new industrial areas as economic drivers to spur growth. Doubts remain, however, about whether such “new productive forces” can match the enormous impact of the real estate sector on employment and on the broader economy in the short-term.
The current transitional state of China’s real estate market poses major challenges to the economy, including labor mismatch and overcapacity risks. Real estate had been an economic pillar, contributing around 17% of China’s GDP and employing over 15 million. While strategic shifts towards green energy and digital economies are inevitable directions in the long-term, filling the void left by a struggling real estate sector will not be easy.
Source: BBC Chinese, April 15, 2024
https://www.bbc.com/zhongwen/simp/chinese-news-68786662
China Establishes New Information Support Force, Dissolving Strategic Support Force
On April 19th, the Chinese Communist Party (CCP) dissolved the Strategic Support Force and established a new Chinese People’s Liberation Army Information Support Force. At the inauguration ceremony, CCP leader Xi Jinping stated that the Information Support Force is a brand new strategic military branch, emphasizing that it must resolutely follow the Party’s command.
According to state media reports, the inauguration ceremony began at 4pm. Xi Jinping awarded the military flag to the Information Support Force’s commander Bi Yi and to political commissar Li Wei. Xi extended congratulations from the CCP Central Committee and the CMC. Former commander Ju Qiansheng of the Strategic Support Force did not transfer to become commander of the new Information Support Force; his next move will be closely watched.
Xi Jinping instructed the new force to implement “military thought for the new era,” adhering to strategy of “building the military through politics, reform, science and technology, personnel, and rule of law.” He said that the force must focus on combat readiness, pursue system integration and full-domain support, and build a powerful modern Information Support Force.
Xi stressed absolute obedience to the Party’s command and comprehensive implementation of the Party’s absolute leadership over the military to ensure absolute loyalty, purity and reliability. He said that the force must “powerfully support operations through information dominance and joint victory.”
Li Wei vowed on behalf of the force to resolutely implement Xi’s instructions, obey the CCP Central Committee, CMC and Xi’s command, focus on combat preparedness, and loyally fulfill duties.
After the ceremony, Xi met with the Information Support Force’s leadership team.
Source: Central News Agency (Taiwan), April 19, 2024
https://www.cna.com.tw/news/acn/202404190314.aspx
CNA: China’s First-Quarter FDI Fell Sharply
Primary Taiwanese news agency Central News Agency (CNA) recently reported that, according to the latest data released by China’s Ministry of Commerce, China’s actual use of foreign direct investment (FDI) in the first quarter was 301.67 billion yuan (around US$42.5 billion), a year-over-year decrease of 26.1 percent.
{Editor’s note: The Ministry of Commerce press release mentioned several industries in China that saw year-over-year increases in FDI, as well as several foreign countries that increased their direct investment in the country. The release omitted data about which industries’ FDI contracted and which foreign countries decreased their FDI in China.} China’s accommodation and catering industry grew the fastest in terms of FDI in the first quarter, reaching 84.7 percent year-over-year growth, followed by the construction industry, which grew at 17.5 percent year-over-year. The actual use of foreign investment in the medical equipment and instrumentation manufacturing industry increased by 169.7 percent year-over-year. In the first quarter, German investment in China increased by 48 percent year-over-year. ASEAN investment in China increased by 5.8 percent year-over-year. The head of the Foreign Investment Management Department of the Chinese Ministry of Commerce explained that fluctuations in data are common. The official press release did not disclose investment figures for other countries.
Source: CNA, April 19, 2024
https://www.cna.com.tw/news/acn/202404190337.aspx
China’s Three Largest Exchanges to Stop Disclosing Real-Time Trading Volume Data
Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that China’s three major stock exchanges (the Shanghai Exchange, Shenzhen Exchange and Hong Kong Exchange) will stop disclosing real-time trading volume data starting in mid-May so as to reduce market volatility. The announcement has triggered concerns about downgraded data transparency in the market.
As part of the Chinese State Council’s recent market guidelines, a key effort is the tightening of control over high-frequency trading in mainland Chinese markets. The Shenzhen exchange regulator said that the move to cut real-time market data disclosures was aimed at “unifying investor practices” so as to ensure “fair access to information”.
The newly-announced exchange rules may further reduce foreign investability in China’s equity markets and restrict Hong Kong’s role as a gateway for investment into China. Since 2014, foreign investors have been allowed to invest in A-shares through the Shenzhen-Hong Kong Stock Connection and the Shanghai-Hong Kong Stock Connection. Real-time data is critical for fund managers, especially hedge funds, to measure liquidity and execute their trades in a timely fashion.
The Shanghai and Shenzhen exchanges are China’s two primary mainland stock exchanges. As of Monday, the A-shares market value on these exchanges was 71.21 trillion RMB (about US$9.84 trillion). A-shares are RMB-denominated shares of mainland Chinese companies, generally only available to trade by domestic investors and certain qualified foreign institutional investors.
Source: Sina, April 19, 2024
https://portal.sina.com.hk/finance/marketdigest/2024/04/19/814828/