Economy/Resources - 9. page

China has recently intensified efforts to combat cutthroat competition across key industries, with the Ministry of Industry and Information Technology (MIIT) convening a meeting on July 28th to outline priorities for the second half of the year. The ministry specifically targeted the new energy vehicle and solar energy sectors for enhanced governance, aiming to raise industry standards and force inefficient capacity to exit the market.

The national conference of industrial and information technology officials in Beijing outlined eight key focus areas for the remainder of the year, including expanding domestic demand, clearing outstanding corporate debts, advancing high-quality development in key industrial chains, promoting integration between technological and industrial innovation, and accelerating reform implementation to address race-to-the-bottom competition—defined as ineffective competition that lacks beneficial outcomes.

MIIT emphasized strengthening governance in the new energy vehicle and solar energy industries, using elevated standards to eliminate backward production capacity. The ministry indicated that relevant departments are working to establish comprehensive long-term mechanisms to combat over-competition, with related institutional and legal regulatory systems becoming increasingly refined.

The campaign has gained momentum across multiple sectors, with industry associations in steel, cement, battery, and plastic processing issuing calls against disorderly competition. According to Wei Qijia, director of the Industrial Economics Research Office at the National Information Center’s Economic Forecasting Department, this comprehensive approach targets improper practices that violate market and industrial development principles, aiming to better leverage market mechanisms in resource allocation.

Recent data shows positive price changes in affected industries. In June, conventional and new energy vehicle manufacturing prices rose 0.5% and 0.3% respectively month-over-month. Solar equipment and electronic component manufacturing prices fell 10.9% year-over-year, though the decline narrowed by 1.2 percentage points. Lithium-ion battery manufacturing prices dropped 4.8% compared to the previous year, with the decline narrowing by 0.2 percentage points.

Source: Central News Agency (Taiwan), July 30, 2025
https://www.cna.com.tw/news/acn/202507300171.aspx

China News recently reported that due to the manufacturing industry entering the traditional off-season, high temperatures in some areas, heavy rains and floods, China’s manufacturing purchasing managers’ index (PMI) fell to 49.3 percent in July – according to China’s National Bureau of Statistics.

In the manufacturing PMI, the production sub-index and new orders sub-index were 50.5 percent and 49.4 percent respectively, both down from the previous month. Manufacturing production activities continued to expand, while market demand slowed down. The raw materials price sub-index and the ex-factory price sub-index were 51.5 percent and 48.3 percent respectively. This indicates the overall factory price level in the manufacturing market continues to drop.

In July, the PMI for large enterprises was 50.3 percent, down 0.9 percentage points from the previous month. The PMI for medium-sized enterprises was 49.5 percent, up 0.9 percent from June. The PMI for small enterprises fell again to 46.4 percent.

Source: China News, July 31, 2025
https://www.chinanews.com.cn/cj/2025/07-31/10456794.shtml

Mitsubishi Motors announced on Tuesday its withdrawal from engine production operations in China, dissolving its joint venture partnership with local Chinese companies due to declining demand in the market.

The Japanese automaker had previously exited vehicle manufacturing in China in 2023, redirecting its business resources toward more promising markets in Southeast Asia and other regions with stronger growth prospects.

The company’s Chinese operations began in 1997 when Mitsubishi Motors established a joint venture with China Aerospace Automobile and other partners in Shenyang, Liaoning Province. The facility produced engines for both Mitsubishi vehicles and Chinese domestic manufacturers.

Following Mitsubishi’s departure from vehicle production in China, the engine manufacturing plant continued operations. However, the rapid shift in Chinese consumer demand toward pure electric vehicles (EVs) ultimately forced the company to exit this segment as well. The company emphasized that after-sales services will continue to be provided to existing customers.

Industry analysts expect the factory to maintain production under new ownership, with current employees retaining their positions following the joint venture dissolution.

Mitsubishi’s exit reflects broader challenges facing Japanese automakers in China’s rapidly evolving automotive landscape. The rise of domestic Chinese manufacturers like BYD and intensifying competition in EV development have created significant difficulties for Japanese companies in the market.

Other Japanese automakers have faced similar pressures. Nissan ceased production at its Jiangsu Province passenger car factory last year, while Honda closed its Guangdong facility and suspended operations at its Hubei plant, highlighting the widespread challenges confronting traditional automotive manufacturers in China’s transformation toward electric mobility.

The move underscores the strategic shift among international automakers as they adapt to China’s accelerating transition to electric vehicles and the competitive dominance of local manufacturers.

Source: Kyodo News, July 22, 2025
https://china.kyodonews.net/news/2025/07/c97325adcc83.html

Xinhua News Agency published an article, stating that some U.S. officials claim Chinese exports are “flooding” global markets and that China needs to “rebalance” its economy, but that the term “China’s economic rebalancing” is a misleading argument that ignores economic facts.

It argues that since 2010, China’s export-to-GDP ratio has declined, and is now significantly lower than that of economies like Vietnam, Germany, and South Korea. China’s trade dependence is lower than that of many developed countries. China’s growth is now driven more by domestic consumption and investment.

It claims that China’s manufacturing strength stems from market-driven advantages and global industrial integration. Chinese innovation, especially in sectors like electric vehicles, is helping upgrade global value chains. The “rebalancing” narrative reflects a zero-sum mindset and repackages outdated “China threat” rhetoric. In reality, China’s manufacturing benefits global consumers and companies alike, making this claim both baseless and unconvincing.

Source: Xinhua, July 25, 2025
http://www.xinhuanet.com/fortune/20250725/080961de980d46a685d0ed9b5d52f7d1/c.html

China’s steel industry faces mounting challenges from overproduction and destructive internal competition that is disrupting market order and eroding industry profits. A stark illustration of this crisis emerged when financial analysis revealed that the combined annual net profits of China’s top four most profitable listed steel companies failed to match the earnings of a single Japanese competitor.

According to calculations by Yicai Global based on 2024 financial reports, Japan’s Nippon Steel Corporation generated net profits of 350.2 billion yen (approximately $2.37 billion USD) last year. In contrast, China’s five most profitable listed steel companies—Baosteel ($1.03 billion USD), CITIC Special Steel ($715 million USD), Nanjing Iron & Steel ($315 million USD), Hualing Steel ($284 million USD), and Jiuli Hi-Tech Metals ($208 million USD)—earned significantly less individually.

Despite China’s dominance in production volume, with China Baowu Group leading globally at over 130 million tons of crude steel output, profitability remains elusive. The World Steel Statistics 2025 shows multiple Chinese steel companies among the world’s top 10 producers, yet their profit margins lag far behind those in the Japanese steel industry.

Industry experts attribute this disparity to structural advantages held by Japanese steel companies. Ge Xin, deputy director of Lange Steel Research Center, explains that Japanese firms secured overseas mineral resources through equity participation decades ago, reducing raw material costs. Additionally, they focus on high-end steel products, achieving superior profit margins.

Following Japan’s real estate bubble collapse in the 1990s, Japanese steel companies pivoted from construction materials to specialized products, including high-strength automotive steel and precision materials for electronics. Meanwhile, Chinese companies remain trapped in homogeneous competition, with even previously profitable sectors like cold-rolled products experiencing continuous price declines.

China Steel Association President Yao Lin recently acknowledged the industry’s failure to control capacity expansion and promote consolidation, citing persistent low-price competition strategies that continue undermining market stability and industry profitability.

Source: Central News Agency (Taiwan), July 20, 2025
https://www.cna.com.tw/news/acn/202507200072.aspx

BBC Chinese Edition recently reported based on data from China’s National Bureau of Statistics that in the first half of the year, the growth rate of fixed asset investment declined 2.8 percent year-over-year. This is also a decline from the 3.7 percent year-to-date figure for May. From the beginning of this year, China’s foreign direct investment (FDI) is also down 13.6 percent, year-over-year, continuing to shrink.

Uncertainty surrounding tariffs and geopolitical developments continued to weigh on fixed asset investment as businesses delayed new investments until there was greater clarity. With further tariff-related uncertainty likely to again emerge in August, the Chinese market may see this weak investment demand continue in the coming months.

According to the Bureau of Statistics, government-led fixed asset investment continued to outperform private investment, growing five percent year-to-date, while private investment declined by 0.6 percent year-to-date, turning negative for the first time this year and hitting the lowest level since 2023.

Source: BBC Chinese, July 15, 2025
https://www.bbc.com/zhongwen/articles/ce8zp58vq69o/simp