Economy/Resources - 21. page

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported on the Chinese Ministry of Finance’s fiscal revenue and expenditure report for 2024. The report shows that, in 2024, local government revenues from state-owned land use rights (land transfer income) were RMB 469.9 billion (about US$ 65.4 billion), a year-over-year decrease of 16 percent.

This was the third consecutive year of decline in local government land use revenues. The decline in 2024 was larger than in 2023 (which saw a 13.2 percent decrease in revenue). The accelerated decline is mainly attributed to the continuing downturn in China’s real estate market. Local government land sales suffered both in terms of volume and price. Some experts said that the real estate market is still in a period of adjustment — it is estimated that the national land sales revenue will continue to see negative growth in 2025.

Local government tax revenue generally declined last year, affected by China’s overall economic downturn, the sluggish real estate market, and reduced tax rates imposed by Beijing. Local governments’ financial resources are becoming more and more scarce.

Source: UDN, January 26, 2025
https://udn.com/news/story/7333/8516135

Deutsche Welle Chinese Edition recently reported on the Chinese National Bureau of Statistics’ manufacturing purchasing managers’ index (PMI), a monthly survey of factory purchasing managers. The index fell from 50.1 last month to 49.1 in January. The PMI for the construction industry fell as well.

In the manufacturing industry, new orders and industry output both fell in January. The raw material inventory sub-index for January was 47.7 percent, a decrease of 0.6 percentage points from the previous month, indicating that the main raw material inventory of the manufacturing industry continued to decrease. The employment sub-index is 48.1 percent, still showing a low outlook. A PMI higher than 50 represents expansion, and lower than 50 indicates reduction in activity.

Analysts indicated that one reason for the slowdown in purchasing may be that external demand has weakened. The new export order PMI sub-index fell to the lowest level seen since last March. Given US President Trump’s recent moves to impose tariffs on goods imported from China, export prospects are still unclear.

Last year, China’s trade surplus reached nearly US$1 trillion. Manufacturers hope to transfer inventory overseas to cope with weak domestic demand and the tariffs. But inside China, declining prices have eroded corporate profits and workers’ income.

Source: DW Chinese, January 27, 2025
https://p.dw.com/p/4pg13

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that, according to sources familiar with the matter, China is about to set up an annual salary cap of RMB 1 million yuan (around US$ 139,144) for the employees of central-government-owned financial companies.

The salary cap for 27 such financial companies will be realized mainly by cutting bonuses. Salaries of high-level managers who have exceeded the new standard may be halved. The affected financial companies include three major policy banks, five major state-owned commercial banks, six major insurance companies and four non-performing asset management companies. Subsidiaries of these companies will also have a pay ceiling of RMB 3 million yuan (around USD 417,432). Salary reductions and limits may make it difficult for these financial companies to retain top talent, as private financial institutions may provide more competitive salaries.

The move by Beijing follows another recent salary reduction of 50 percent affecting employees of the three major government financial regulatory agencies, namely the People’s Bank of China, the State Administration of Finance and Administration of China, and the China Securities Regulatory Commission.

Source: Lianhe Zaobao, January 22, 2025
https://www.zaobao.com.sg/finance/china/story20250122-5774430

United Daily News (UDN), one of the primary Taiwanese news groups, recently reported on statistics showing that nearly 3 million Chinese restaurants closed in 2024, setting a new record. Consumers face shrinking incomes and the public’s spending outlook is “pragmatic,” leading to lower demand. Some analysts indicated that the first half of 2025 may see an even higher rate of closures.

The types of restaurants that closed in 2024 belonged to a wide range of categories, including formal dining, tea houses, coffee shops, bakeries, buffets, as well as restaurants specializing in hot pot, desserts, or barbecue. At the industry level, statistics show that the supply of restaurants on the market greatly exceeded demand. Currently, there are 7 restaurants for every 7 people living in China; according to UDN, China has more restaurants per capita than anywhere else in the world.

Market experts pointed out that weak domestic demand, rising costs, and excessive competition are the main reasons leading to such a high number of restaurant closures. Despite the record number of restaurant bankruptcies, however, many are still eager to enter the restaurant business.

Source: UDN, January 22, 2025
https://udn.com/news/story/7333/8506127

Radio Free Asia (RFA) recently reported that the Chinese stock market started the year quite poorly. People familiar with the matter said China’s major stock exchanges have currently restricted large funds from selling stocks, requiring daily transactions to “buy more than sell.”

While the funds can still sell shares if the total value of the sales exceeds the total value of the purchases, they need to follow the exchange’s guidance to buy more stocks to balance the accounts or “risk facing strict regulatory scrutiny.” On the first trading day of the new year, the Chinese stock market suffered the worst new year’s start since 2016.

Analysts indicated that China’s stock market is currently affected by three major selling forces. First, state-owned enterprises, who sell their shares to cash out as they face financial constraints. Secondly, foreign-funded institutions need to transfer funds to Hong Kong before remitting them out. Finally, there are long-term retail investors who have been trapped in the early years – they quickly sell to finally cash out.
Along with these new market interventions, China’s U.S. Treasury bond holdings has further reduced since last October, while China’s central bank continuously increased gold reserves. Observers pointed out that Beijing is getting prepared for Trump’s second term.

Source: RFA, January 7, 2025
https://www.rfa.org/mandarin/shangye/jingji/2025/01/07/chinas-stock-market/

Beijing News recently reported on data released by the China Index Research Institute showing that the sales by the TOP100 Chinese real estate companies in 2024 totaled RMB 4354.73 billion (around US$596.56 billion), a year-over-year decrease of 30.6 percent. Well-know developer Vanke’s ranking dropped out of the top three.

As the Chinese real estate market is undergoing deep adjustment in 2024, the sales of the TOP100 housing companies have shown an overall downward trend. There are 11 real estate companies with total sales exceeding RMB 100 billion (around US$13.7 billion), a decrease of 5 compared with 2023. There are 86 real estate companies with total sales on RMB 10 billion (around US$1.37 billion) level, a decrease of 30 from 2023.

With the Chinese real estate sector struggling, more and more companies have stopped prior years’ practice of increase sales targets and pursuing large-scale development. Instead, they seek stability through actively controlling the scale of their sales. Data show that, in terms of real estate companies’ sales target completion rate, the average rate of the top six developers in 2024 was 86.0 percent. Compared with 98.5 percent in 2023, the target completion rate dropped by 12.5 percentage points. Experts have remarked on the current market environment, saying that housing affordability remains the key issue for consumers.

Source: Beijing News, January 1, 2025
https://www.bjnews.com.cn/detail/1735712472168331.html

China Business Network (CBN) recently reported that, according to statistics from the Enterprise Early Warning Database, nearly 200 small and medium-sized banks have been deregistered since the beginning of 2024, mainly rural financial institutions. This includes direct deregistration, approved mergers, approved dissolutions. The number far exceeds the previous three years (2021 to 2023) combined.

According to CBN, Chinese government promotes the merger and reorganization of high-risk small and medium-sized financial institutions as an important means to lower financial risks. According to the “Financial Stability Report (2024)” recently released by the Chinese central bank, at the end of 2023, the central bank conducted financial ratings on 3,936 banking institutions. Judging from the rating results, there were 357 “red zone” banks, among which, rural cooperative institutions, as well as village and town banks accounted for a higher proportion.

Financial experts expressed beliefs that, in the future, regional small and medium-sized banks will enter a “era of subsistence”, and that the number of high-risk banks is expected to further decline due to the ongoing wave of mergers.

Source: CBN, December 30, 2024
https://m.yicai.com/news/102422829.html