Taiwan’s Central News Agency (CNA) recently reported on data from Shandong-based Chinese weekly newspaper Economic Observer, saying that China saw the emergence of only 15 new “unicorn companies” (startups valued at over $1 billion) during 2023. Meanwhile, the United States added 179 unicorns during the same time period.

Lu Ming, executive dean of the China Development Research Institute at Shanghai Jiao Tong University, noted a widening economic gap between China and the US in the digital sector. Although China ranked second globally in terms of number of unicorn companies, with a total of 316 such companies in 2023, the addition of only 15 new unicorns in 2023 represented a sharp decline compared with new unicorn formation in previous years.

Lu cited four reasons for the widening gap between China and the US: technology, talent, capital markets, and policy factors:

• The US has a strong advantage in generative AI technology and innovation, particularly in language models trained on vast English content.
• The US remains a talent hub.
• Foreign capital markets are better at valuing the growth potential of emerging industries, attracting more investment. In contrast, China’s capital markets lack openness and inclusiveness.
• “While the US government takes a more diversified approach to emerging trends, China sometimes introduces ‘contractionary’ policies. ‘[The Chinese government] is more sensitive to negative sentiments, and uses contractionary policies to avoid problems. This leads companies to become overly cautious, hampering their development and potentially creating vicious cycles.'”

The CNA article went on to say, “Although the [Economic Observer] report did not provide specific examples, China’s recent antitrust crackdown on platform companies and proposed regulations to tighten control over online games have been seen as ‘contractionary policies that suppress industries,’ affecting business expectations and economic growth. Officials have repeatedly stressed the need for caution in introducing contractionary or restrictive measures.”

Source: Central News Agency (Taiwan), March 11, 2024
https://www.cna.com.tw/news/acn/202403110306.aspx

Shanghai-based Chinese financial news site East Money recently reported that in February 2024, the top 100 Chinese real estate companies suffered a sales volume decrease of 20.9 percent month-over-month. The year-over-year decrease for February was 60 percent. Single-month performance hit the lowest point seen in recent years.

During the period January through February 2024, total sales of the top 100 real estate companies had a year-over-year decrease of 51.6 percent. Among these companies, only 14 had sales exceeding RMB 10 billion (around US$1.41 billion), a decrease of 12 compared with the same period last year; eight companies had sales exceeding RMB 5 billion (around US$705 million), a decrease of 18 compared with the same period last year.

Both central state-owned real estate enterprises and private enterprises have been facing pressure. 38 of the top 50 real estate companies experienced a year-over-year sales decrease of more than 50 percent in a single month. Only one company achieved year-over-year growth in the month of February, compared with seven companies in January.

Source: East Money, March 1 2024
https://finance.eastmoney.com/a/202403012999671120.html

People’s Daily recently reported that, according to data jointly released by the Chinese National Bureau of Statistics and the China Federation of Logistics and Purchasing, China’s February manufacturing purchasing managers index (PMI) was 49.1 percent, down 0.1 percentage points from the previous month.

“The manufacturing industry was in the traditional off-season in February. In addition, the easing of COVID-19 controls means that more employees are returning home for the holidays than in previous years. This has greatly affected the production and operation of [Chinese] companies. The overall activity of the manufacturing industry has declined.”

The production sub-index of the PMI was 49.8 percent, down 1.5 percent from the previous month, reflecting a deceleration of corporate production activities; the new orders sub-index was 49.0 percent, remaining the same as in January. The PMI of large enterprises remained above the critical point, at 50.4 percent, the same reading as the previous month. The PMI for medium-sized enterprises was 49.1 percent, an increase of 0.2 points from the previous month. The small business PMI was 46.4 percent, a decrease of 0.8 percentage points from January. The high-tech manufacturing PMI was 50.8 percent, down 0.3 percentage points from January. The PMIs for equipment manufacturing and producers of consumer goods were 49.5 percent and 50.0 percent, respectively, down 0.6 and 0.1 percentage points from the previous month.

Source: People’s Daily, March 2, 2024
http://finance.people.com.cn/n1/2024/0302/c1004-40187337.html