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Xinhua: Foreign Politicians, Scholars, and Media Talking Trash About China’s Economy

China’s Xinhua news agency has published an article countering the numerous reports and predictions by foreign media regarding China’s economic downslide. The article blames Western politicians, scholars, and media for wearing “colored glasses” (having a biased perspective), “doomsaying” China’s economy. The article states that such “doomsaying” has existed for several decades and has always been incorrect. The article does not provide concrete evidence in defense of China’s current economic situation.

Some of the sentiments expressed in the article include:

  • “Gordon Chang, a ‘China collapse theory expert,’ has become a laughing stock.”
  • “During the 2008 international financial crisis, some U.S. politicians and scholars blamed the U.S. real estate bubble and global economic imbalances on ‘the high savings rates of China and other emerging market countries.'”
  • “In 2015, Western media revived the ‘Chinese economic collapse theory'”
  • “The West has substituted China as a scapegoat, blaming it for economic crises and socioeconomic problems.”
  • The West has “a stubborn Cold War mentality and ideological bias, aiming to undermine the outside world’s confidence in China’s economy.”

Source: Xinhua, February 22, 2024
http://www.news.cn/mrdx/2024-02/22/c_1310764956.htm

People’s Armed Forces Departments Expanding Within Chinese State Owned Enterprises

Several Chinese State-Owned Enterprises (SOEs) have established People’s Armed Forces departments (人民武装部) within their organizations. Examples include the Shanghai Municipal Investment Group (Shanghai’s government financing company), the Mengniu Group in Inner Mongolia, as well as 10 SOEs in Wuhan City, Hubei Province and several SOEs in Huizhou City, Zhejinang Province.

Senior Colonel Wu Qian, the spokesperson of China’s Ministry of National Defense, stated at a press conference on October 26, 2023 that “Our national defense is the defense of the whole people. The People’s Armed Forces departments of state-owned enterprises are part of the national defense system and are the armed work departments of the Party within state-owned enterprises.”

Political observers suggest a few possible explanations for why Beijing is establishing these new People’s Armed Forces departments within state-owned enterprises. Integration between SOEs and the People’s Liberation Army (PLA) could help to quell potential domestic unrest resulting from China’s economic downturn. It could also help to save resources for the PLA and could potentially enhance the military’s ability to mobilize in preparation for an invasion of Taiwan.

Source: Deutsche Welle, February 23, 2024
https://www.dw.com/zh/中企纷纷设立人民武装部为哪般/a-68353845

China’s Household Bank Deposits Increased by 58 Billion Yuan Over Last Four Years

According to the latest data released by the People’s Bank of China, household bank deposits increased by a total of 58.24 Trillion Yuan (US$ 8 Trillion) during the period from early 2020 to January 2024. Of the increase, 82% was attributable to time deposits. The total increase in deposits over these four years is equivalent to the increase seen during the period from 2009 to 2019.

Commentators have attributed the influx in bank deposits to “the international and domestic situation.” Many affluent families decided to halt investments during the pandemic. Meanwhile, ordinary families, facing reduced income, chose to conserve their resources and earn interest by saving money in banks.

With the increase in deposits, Chinese banks have been under pressure to issue loans and generate returns. Since the start of the COVID-19 pandemic, China has seen reduced demand for bank loans due to the decrease in China’s overseas orders and the rapid shrinkage of the country’s investment in infrastructure / housing construction. Property values have been falling, the Chinese stock market is declining, and private capital investment have seen significant contraction. Apart from export-oriented companies with existing orders, other businesses learned the lesson that they should not make investments, putting banks in a difficult position.

Source: Radio Free Asia, February 26, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/gt1-02262024233157.html

 

 

China’s Foreclosure Market Sees Record Listings, Flat Sales in 2023

Data from China Index Academy, a Chinese real estate research firm, shows 100,400 foreclosed properties were put up for auction in January 2024, a 48.2% year-over-year increase from January 2023. About 12,700 foreclosed properties sold in January 2024 for ¥27.31 billion (US$ 3.8 billion). The transaction rate of 12.63% was lower than the 15.8% seen in January 2023.

Foreclosure transaction rates were higher in economically strong regions. Five provinces/municipalities – Shanghai, Zhejiang, Beijing, Tianjin and Fujian – saw rates of over 20%. Shanghai had the highest rate, at 38.6% (154 out of 399 listings sold). Zhejiang had the second highest rate, 35.94% (1,185 out of 3,297 sold).

China’s foreclosure market has seen increased attention in recent times due to economic headwinds and uncertainty. The China Index Academy estimates that there are about 800,000 foreclosure listings in China in 2023, a record 36.7% year-over-year increase compared with 2022. Only 149,000 of these 2023 listings transacted, however, totaling ¥300.41 billion (US$ 41.7 billion), on par with the total for 2022.

Industry insiders believe foreclosure listings and transactions will keep rising in 2024, indicating a hot foreclosure market. The economic climate and real estate conditions will continue to be key factors influencing supply and demand.

Source: Central News Agency (Taiwan), February 25, 2024
https://www.cna.com.tw/news/acn/202402250010.aspx

Chinese E-Commerce Giants Temu and SHEIN Gain Ground in Japan

Chinese e-commerce platforms like Temu and SHEIN have seen large gains in Japan by offering low prices and decent quality. Temu, which focuses on daily essentials, has acquired over 15 million monthly active users in Japan within 6 months of its launch. This figure already exceeds 50% of the average user base of Japan’s top 3 e-commerce sites – Amazon Japan, Rakuten Ichiba, and Yahoo Shopping. Meanwhile, SHEIN has surpassed leading Japanese fashion marketplace ZOZOTOWN with 8.39 million users in January 2024, more than triple the number from a year earlier.

The secret behind behind the business models of Temu and SHEIN is the direct supply chain they have with small and medium manufacturers in China. This allows them to offer competitive pricing without compromising much on quality. Aggressive marketing tactics like heavy discounts and coupons have also helped them to rapidly gain market share.

As growth in the overseas footprint of Chinese ecommerce firms (now including TikTok) continues, they face barriers ranging from national security concerns to consumer rights and competition / IP infringement issues.

Some have voiced concern that the rise of Temu and SHEIN in Japan could threaten existing Japanese players. Moreover, these firms may face issues with the Japanese government over human rights concerns and intellectual property violations affecting the companies’ supply chains. SHEIN is also facing a lawsuit from leading Japanese fashion brand Uniqlo.

In the US, Temu and SHEIN are already in the crosshairs of the US-China Economic and Security Review Commission for links to forced labor in Xinjiang as well as IP theft.

Source: Nikkei Chinese, February 21, 2024
https://zh.cn.nikkei.com/china/ccompany/54870-2024-02-21-05-00-53.html

Foreign Automakers Struggle in China’s Shifting Market

Japanese and Western automakers are struggling in the Chinese market, with steeper sales declines in 2023 compared to the Chinese auto market more broadly.

Honda’s 2023 sales fell 10% to 1.23 million vehicles in China while Nissan’s sales dropped 16% to 790,000 units. Toyota sales were flat at 1.9 million units. Mitsubishi Motors announced in October 2022 that it would cease production in China due to poor sales. Within about two months Mitsubishi’s dealership in Guangzhou was replaced by an outlet for a Chinese auto brand.

Volkswagen’s 2023 sales in China rose 2% to 3.23 million while sales of GM’s Buick brand fell 20% and Cadillac sales dropped by 8%.

Sales in China of electric and plug-in hybrid passenger vehicles increased by 30% in 2023, with Chinese automaker BYD expanding its selection of electric car models. China’s market for gasoline passenger vehicles shrank 7%, while the broader market for passenger vehicles (including electric vehicles) grew 4% to 21.92 million units.

Japanese brands Honda and Nissan lagged in electric vehicle sales even as their gasoline models face fierce price competition from Chinese brands. Japanese automakers face hard choices on where to focus limited resources. They face stiff price competition from Chinese manufacturers, though sales in China remain high enough to warrant continued competition in the electric vehicle segment. The plug-in hybrid segment may get less attention going forward.

Fierce price competition has spread to affect gasoline car models, and major foreign brands have cut prices substantially. Japanese brands offered steep discounts, with discounts on new Hondas averaging $3,500 and Nissan discounts averaging $3,200. Meanwhile, the average discount on BYD vehicles averaged just $750.

Source: Nikkei Chinese, February 22, 2024
https://zh.cn.nikkei.com/industry/icar/54748-2024-02-22-05-00-31.html

CNA: China’s Parenting Costs Near Highest in the World

The cost of raising a child to age 18 in China is 6.3 times greater than China’s per-capita GDP, according to a recent report by primary Taiwanese news agency Central News Agency (CNA). By comparison, the cost of raising a Child in Australia is only 2.08 times Australia’s per-capita GDP. The costs in France, Sweden, Germany, the United States and Japan were (respectively) 2.24 times, 2.91 times, 3.64 times, 4.11 times, and 4.26 times each country’s per-capita GDP.

The CNA article cited the “China Childbirth Cost Report, 2024 Edition,” published by Chinese think tank Yuwa Population Research. Yuwa specializes in population and related public policy issues. The Report said that the cost of parenting is one of the most important factors affecting families’ willingness to have children. According to a 2017 survey by China’s National Health and Family Planning Commission, the top three reasons why women of childbearing age abstain from having children are: heavy financial burden (77.4 percent), age (45.6 percent), and lack of a caretaker for the child (33.2 percent).

China’s population shrunk in 2023 for the second consecutive year after peaking in 2021. The number of Chinese newborns in 2023 has dropped to about half of the level seen in 2016.

Source: CNA, February 21, 2024
https://www.cna.com.tw/news/acn/202402210348.aspx

Xinhua: National Data Administration Launches Survey on Data Resources

A recent Xinhua article reported that, according to China’s National Data Administration (NDA), China has launched a “national data resources survey.” This nationwide survey will investigate the generation, storage, circulation, exchange, development, utilization, and security of China’s data resources. Its goal is to “implement the NDA’s ‘Overall Plan for the Construction of Digital China,’ assess China’s baseline of data resources, accelerate the utilization of data resources, and better leverage the value of the data element.” The survey will be jointly conducted by the NDA, the Office of the Central Cybersecurity and Information Technology Commission, the Ministry of Industry & Information Technology, and the Ministry of Public Security.

The survey targets the following organizations: provincial data management agencies, industry and information technology departments, public security departments (bureaus), provincial key data collection and storage equipment vendors, consumer Internet platform and industrial Internet platform companies, big data and artificial intelligence technology companies, application companies, data exchanges, central-government-owned enterprises, industry associations, chambers of commerce as well as the National Information Center.

Source: Xinhua, February 21, 2024
http://www.xinhuanet.com/20240221/3e499e3361d947619b117cfc4b9c9a9b/c.html