china economic – Bizchina Update http://bizchina-update.com/ Sun, 27 Mar 2022 00:44:19 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://bizchina-update.com/wp-content/uploads/2021/10/icon-120x120.jpg china economic – Bizchina Update http://bizchina-update.com/ 32 32 The Chinese economy accelerates in January-February; Omicron cases cloud outlook https://bizchina-update.com/the-chinese-economy-accelerates-in-january-february-omicron-cases-cloud-outlook/ Tue, 15 Mar 2022 06:17:00 +0000 https://bizchina-update.com/the-chinese-economy-accelerates-in-january-february-omicron-cases-cloud-outlook/ Industrial production Jan.-Feb. +7.5% y/y vs f’cast +3.9% Retail sales +6.7% y/y vs f’cast +3.0% Investment in fixed assets +12.2% y/y, vs f’cast +5.0% Strength may not last as COVID cases jump – analysts BEIJING, March 15 (Reuters) – China’s economy rebounded in the first two months of 2022, with key indicators all beating analysts’ […]]]>
  • Industrial production Jan.-Feb. +7.5% y/y vs f’cast +3.9%
  • Retail sales +6.7% y/y vs f’cast +3.0%
  • Investment in fixed assets +12.2% y/y, vs f’cast +5.0%
  • Strength may not last as COVID cases jump – analysts

BEIJING, March 15 (Reuters) – China’s economy rebounded in the first two months of 2022, with key indicators all beating analysts’ expectations, although an increase in Omicron business, weak real estate and heightened global uncertainties weigh on the outlook.

Industrial production rose 7.5% in January-February from a year earlier, the fastest pace since June 2021 and up from a 4.3% increase seen in December, Tuesday showed data from the National Bureau of Statistics. This compared to a 3.9% rise expected by analysts in a Reuters poll.

Retail sales, a lagging indicator of consumption since the hit of COVID-19, rose 6.7% year-on-year amid rising demand during the Lunar New Year holidays and the Olympics. winter. It also marked the fastest clip since June last year and beat expectations for a 3.0% rise in the poll.

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It posted a 1.7% gain in December.

The surprisingly strong performance of the world’s second-largest economy in the new year may have enabled the People’s Bank of China (PBOC) to keep its policy rates stable on Tuesday, said Iris Pang, chief economist for Greater China at ING, in a note.

The PBOC kept its one-year medium-term lending rate unchanged earlier in the day, dashing expectations of a cut, although investors believe policymakers may soon resume monetary easing to support the slowdown. economy. Read more

The statistics released combine economic data from January to February to help smooth out distortions caused by the Lunar New Year holiday, which fell in early February this year.

One of the data highlights was strong retail sales growth, which was boosted by sales of Winter Olympics-related products, such as ski gear and ice sports, Fu said. Linghui, spokesperson for the statistics bureau, at a press conference.

Bing mascot Dwen Dwen was an unexpected star of the Beijing Olympics, with thousands of fans queuing in sub-freezing temperatures to buy goods – from magnets and key rings to bags and soft toys – and factories scrambling to make more. Read more

The strong numbers came after growth lost momentum throughout last year due to a liquidity crunch in the housing market and stringent anti-virus measures that hit consumption.

“Indeed, every data point has bounced back, mainly because the political effects started early this year, with an easing in the infrastructure and real estate sectors. Restoration spending also remained relatively strong,” said Qu Qing, chief economist at Jianghai Securities.

However, analysts warn that any nascent recovery, which would help China reach an ambitious target of around 5.5% for 2022, could not be sustained due to the surge in COVID cases, a weak real estate market and the uncertain global recovery. Read more

Chinese stocks fell sharply on Tuesday as a rise in coronavirus cases overshadowed data and threatened the outlook.

“The momentum of economic recovery in January-February has been good. At the same time, we must also see that the external environment is still complex and severe, and China’s economic development faces many risks and challenges. “said Mr. Fu from the statistics office.

Analysts expect the central bank to continue to ease policy to support the economy.

“We still need to cut interest rates and reserve requirement ratios as soon as possible. There should be no hesitation in supporting easing policies,” said Wang Jun, chief economist at Zhongyuan Bank.

Premier Li Keqiang said last week that he was confident of achieving the economic growth target of around 5.5% for this year despite challenges including the war in Ukraine. Li also promised to provide more political support during the year. Read more

RESUMPTION OF INVESTMENTS IN INFRASTRUCTURES

Investments in fixed assets rose 12.2% in January-February from a year earlier, compared with a 5.0% increase predicted by a Reuters poll and 4.9% growth in 2021. The figure was the highest since July last year.

Investments in infrastructure rose 8.1%, helped by the move to this year’s early-loading 2022 local government special bonds.

Real estate investment rose 3.7% year on year in the first two months of 2022, following a 13.9% plunge in December, the data showed.

The slowdown in the housing market has also shown signs of easing, but sales are still mired in contraction while new construction starts have fallen by double digits.

“We continued to stabilize land prices, house prices and expectations, and there were positive changes in the real estate market,” Fu said.

China’s property market cooled last year as Beijing’s deleveraging drive triggered a liquidity crunch in some major property developers, leading to bond defaults, plummeting stock prices and suspended or suspended projects. left unfinished.

“The resurgence of COVID in several provinces is an additional drag on activity growth. Despite the relaxation of local real estate policy, real estate indicators, in particular new housing starts and land sales, have continued to Further policy easing would be needed to meet the challenging roughly 5.5% ‘growth target this year,’ Goldman Sachs analysts wrote in a note.

The national survey-based unemployment rate rose to 5.5% in February from 5.3% in January, but Fu said the rise was largely due to seasonal factors and the rate could drop after March.

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Additional reporting by Ellen Zhang, Liangping Gao and Ryan Woo; Editing by Sam Holmes, Bernard Orr

Our standards: The Thomson Reuters Trust Principles.

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China’s economy starts 22 with vigor https://bizchina-update.com/chinas-economy-starts-22-with-vigor/ Wed, 16 Feb 2022 08:00:00 +0000 https://bizchina-update.com/chinas-economy-starts-22-with-vigor/ BEIJING (Reuters) – With engines spinning and machines roaring, China’s industrial enterprises have started the first week after the Chinese Lunar New Year holiday full of vigor and vigor. Facing multiple challenges in 2022, Rong Juchuan, founder of Beyond Group, a textile company headquartered in Ningbo, eastern China’s Zhejiang province, said the company “can’t just […]]]>

BEIJING (Reuters) – With engines spinning and machines roaring, China’s industrial enterprises have started the first week after the Chinese Lunar New Year holiday full of vigor and vigor.

Facing multiple challenges in 2022, Rong Juchuan, founder of Beyond Group, a textile company headquartered in Ningbo, eastern China’s Zhejiang province, said the company “can’t just wait , but must take the initiative”.

In 2022, the company will prioritize improving its digital capabilities and leveraging new sales channels such as live streaming platforms to reduce operating costs and tap into potential demand, Rong said. .

Recent economic data has echoed this enthusiasm for the company. China’s manufacturing Purchasing Managers’ Index (PMI), a key economic barometer, stood at 50.1 in January, remaining in expansion territory for three straight months.

In particular, manufacturing business confidence was on the rise, with the production and operating activity forecast sub-index coming in at 57.5, up 3.2 percentage points from the previous month.

China’s economic performance in the first quarter is expected to beat market expectations, said Li Chao, chief economist at Zheshang Securities, citing PMI remaining above the boom-bust line for three straight months and growth regular credit.

The resilience of China’s industrial economy was also reflected in other barometers, including total electricity consumption.

One of the country’s industrial powerhouses, east China’s Jiangsu Province, saw its total electricity consumption rise 18.27 percent year-on-year during the holidays, while Hubei, a key manufacturing base in China, reported a 36.45% year-on-year increase. use.

According to an estimate by the China Electricity Council, the country’s total electricity consumption will increase by 5 to 6 percent year-on-year in 2022.

Faced with headwinds such as high commodity prices and supply chain challenges, China has prioritized stable growth for industrial development in 2022, which is the “ballast stone” of the market. macroeconomic.

Xiao Yaqing, minister of industry and information technology, said in an earlier interview with Xinhua that ensuring stable industrial growth, especially a good start in the first quarter of 2022, should be the most important task.

To ensure stable expansion, multiple measures have been deployed, including boosting the development of small and medium-sized enterprises, improving supply chain resilience, and highlighting the role of emerging sectors such as vehicles. new energies (NEV).

The ministry aims to incubate about 3,000 “little giant” companies this year, referring to small businesses in their early stages of development and focusing on cutting-edge technologies.

“In 2022, greater emphasis will be placed on promoting collaboration and innovation among small, medium and large enterprises,” said Xu Xiaolan, vice minister of industry and information technology. .

The NEV market could be another driver of Chinese industrial growth.

The country’s NEV sales ranked first in the world for a seventh consecutive year in 2021.

Going forward, China aims to further facilitate the growth of this burgeoning sector by alleviating chip shortages, improving support facilities such as battery swapping stations, and carrying out recycling and recycling. use of NEV power batteries.

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China’s economy is increasingly isolated from the West https://bizchina-update.com/chinas-economy-is-increasingly-isolated-from-the-west/ Sat, 12 Feb 2022 08:00:00 +0000 https://bizchina-update.com/chinas-economy-is-increasingly-isolated-from-the-west/ As the Beijing Winter Olympics begin, all eyes are on China. There have been a lot of reports about China’s cold relations with the West and its persecution of Uyghurs and other minorities, but there is also a lot to be said about China’s economy. China’s great rise in recent decades has been the great […]]]>

As the Beijing Winter Olympics begin, all eyes are on China. There have been a lot of reports about China’s cold relations with the West and its persecution of Uyghurs and other minorities, but there is also a lot to be said about China’s economy.

China’s great rise in recent decades has been the great economic success of our time, lifting hundreds of millions of people out of poverty and giving wheels to the global economy in the years following the financial crisis of 2007-09.

Over the past decade, however, the miracle has become a little more ordinary as growth has gradually slowed. China has struggled to continue growing its exports at the same pace year after year, especially in the face of weaker international demand for its products, including due to the trade war with the United States. Other problems included an aging population and the fact that growth had become increasingly dependent on debt, which was unsustainable.

China’s economic growth 1997-2021

Trade Economics/National Bureau of Statistics of China, CC BY

China appears to have weathered the pandemic better than many major economies, having contained the virus so aggressively. Yet the situation has since deteriorated as new national outbreaks of Covid, including the new omicron variant, have caused further economic disruption.

The effect of Omicron on other major economies is also not good news for Chinese exports. Nor has the resurgence of inflation in many countries prompted the US Federal Reserve and other central banks to threaten to raise interest rates and end money creation via quantitative easing. This should further dampen demand for Chinese products.

China’s debt has also become an even bigger problem. Leading property developer Evergrande’s financial struggles in 2021 grabbed headlines, but excessive debt is rampant throughout the real estate industry and beyond. If the bubble bursts, it could lead to a prolonged downturn that would significantly damage the wider economy.

The government has pressured big business to reduce debt, while limiting borrowing in the property sector and cracking down on informal lending across the country. He also sent a warning to excess borrowers by his willingness to let Evergrande default.

Falling exports and debt reduction mean China is heading for a slowdown: the World Bank projects its economic growth to be just over 5% in 2022, down from 8% in 2021.

China’s challenges

More broadly, China’s traditional growth model based on exports, infrastructure and real estate investment seems to have run its course. The nation faces a difficult rebalancing act as it aims to shift to a much greater reliance on Chinese households consuming goods and services, while having to transition to a much less carbon-intensive economy.

Unfortunately for the ruling Communist Party, the best way to achieve this rebalancing is arguably to implement reforms that would limit government influence in Chinese life. For example, the World Bank believes China must make it easier for businesses to fail and allow greater private competition in sectors like education and health to increase productivity. It also recommends allowing workers to move around the country by removing the hukou registration system in cities, since this system stipulates where someone permanently resides.

Some World Bank recommendations involve greater government intervention, such as making the tax system more progressive to encourage consumers to spend more, and increasing public spending on health and education so people don’t have to. need to save so much. Generally speaking, however, further liberalization is on the agenda – and seems to be the right way forward in my view.

Yet China has become more interventionist in the Xi era, cracking down on everything from tech billionaires to the number of hours children can play video games each day. Meanwhile, China’s zero Covid strategy has involved tightly sealed borders, rapid citywide lockdowns and mass testing.

China adopted this strategy partly out of fear that its poor healthcare system would be completely overwhelmed by Covid, and more recently as a means of ensuring the smooth running of the Winter Olympics. However, the climate in China is such that some commentators fear that it will reopen, that the health crisis will turn into a political crisis of more committed isolation.

China is therefore at a crossroads. On the one hand, it wants to play a bigger role in the global economy, as evidenced by its Belt and Road Initiative to boost infrastructure development around the world in exchange for closer ties with Beijing.

But there is a contradiction between continuing to engage in global trade and the Chinese government’s instinct for technological self-sufficiency and local innovation. Trade liberalization also involves, for example, opening up the banking sector to foreign lenders to make it more efficient. However, we are far from Beijing’s interventionist approach. Indeed, the fact that banks, which are partly state-owned, were mandated to lend to state-owned enterprises in poor financial condition was the cause of many debt problems in the first place.

Unfortunately, the indications are that China is more likely to move towards greater western isolationism. This could mean restricting visits to the country and focusing more on domestic consumption than global trade. We could see him moving further away from globalization via trade wars, as well as imposing more capital controls to make it harder for money to move in and out of the country. Clearly, China is acting partly out of provocation from the West, but its overall policy shift is to a large extent home-grown.

As with the Winter Olympics, where China tries to separate the athletes from its people, the nation also behaves similarly towards the rest of the world. What should be a celebration of international cooperation is happening at a time when the exact opposite is happening.The conversation

Kate Phylaktis, Professor of International Finance and Director, Emerging Markets Group, City, University of London

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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China’s economy overtakes EU’s for first time https://bizchina-update.com/chinas-economy-overtakes-eus-for-first-time/ Tue, 01 Feb 2022 08:00:00 +0000 https://bizchina-update.com/chinas-economy-overtakes-eus-for-first-time/ By 2030, China is expected to become the largest economy in the world, for now it has just overtaken the EU. At a pivotal moment, China’s economy overtook the whole of the European Union (EU), for the first time. Figures released this week by the European Statistical Office (Eurostat) show that the EU’s gross domestic […]]]>

By 2030, China is expected to become the largest economy in the world, for now it has just overtaken the EU.

At a pivotal moment, China’s economy overtook the whole of the European Union (EU), for the first time.

Figures released this week by the European Statistical Office (Eurostat) show that the EU’s gross domestic product (GDP) grew by 5.2% for 2021, following a record recession in 2020.

EU GDP stood at just over $17 trillion, reverting to pre-Covid-19 size.

GDP is a measure of the market value of all final goods and services produced during a given period.

On the other hand, China’s GDP for 2021 grew by 8.1 percent, according to figures released last month by the National County Bureau of Statistics. Full-year GDP led to an increase in the value of China’s economy by $3 trillion between 2020 and $17.7 trillion in 2021, outpacing the EU.

The second largest economy in the world benefited greatly during the Covid-19 crisis from its status as the factory of the world. However, most of China’s economic gains have been driven by strong industrial production and exports.

China, however, has largely followed a zero Covid-19 policy, meaning the country has often locked down entire cities in an effort to prevent the spread of the virus.

The result has been that while the country’s manufacturing sector continues to grow, growth in services, consumption and investment has not returned to pre-pandemic levels due to localized outbreaks across the country that have prevented a return to normal.

China’s GDP growth rate easily exceeded the government’s target of more than 6% growth, and the country is now expected to account for more than 18% of global GDP.

As the country rebounded from the worst of the pandemic, analysts warn the country is still reeling from a weak real estate sector that saw businesses go bankrupt last year.

Likewise, the EU has yet to fully recover from the tight restrictions of the Omicron variant, which have led to tighter restrictions across the economic bloc, resulting in lower consumer spending and bottlenecks in the supply chain, affecting manufacturing.

China’s ability to leapfrog the bloc has also been influenced in part by the UK’s withdrawal from the EU after Brexit. The UK’s GDP of $2.7 trillion was the second largest in the bloc after Germany.

Beijing still has a long way to go before becoming the largest economy on the planet.

In a report released last month, the British consultancy Center for Economics and Business Research (CEBR) predicted that China will overtake the United States as the world’s largest economy by 2030.

In 2021, US GDP was just under $23 trillion, an increase of $2.10 trillion from 2020 figures.

The CEBR report projects that the US economy will continue to grow without any of the growth spurts needed to maintain its lead. He also added that China’s massive pool of engineers would be an important engine of growth unlike the United States, which cannot produce the same level of highly skilled labor.

In recent years, Chinese leaders have shifted their focus from achieving maximum levels of GDP growth to a high-quality growth stage.

Chinese President Xi Jinping said at the 19th National Congress of the Communist Party of China in 2017 that the country’s economy was emerging from a phase of rapid growth.

This means that the country is now seeking to invest and manufacture high-end products through innovation and technological self-sufficiency.

In a report on China’s reforms towards higher quality growth, the World Bank said the country needed to rebalance “external demand towards domestic demand and growth led by investment and industry towards greater dependence on consumption and services”.

The report adds that the country will also need to transition from a high-carbon to a low-carbon economy. China is already a world leader in renewable energy production figures and is currently the largest producer of wind and solar power in the world. It also has the largest electric vehicle market in the world.

Source: World TRT

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How rising US interest rates will challenge the Chinese economy https://bizchina-update.com/how-rising-us-interest-rates-will-challenge-the-chinese-economy/ Sun, 30 Jan 2022 08:00:00 +0000 https://bizchina-update.com/how-rising-us-interest-rates-will-challenge-the-chinese-economy/ A sharp about-face by President Xi Jinping suggests China is in crisis mode as rising interest rates pose a serious threat to its economy. In the years leading up to the pandemic, Chinese President Xi Jinping warned that the global economy was facing challenges and that a Black Swan event posed a serious risk to […]]]>

A sharp about-face by President Xi Jinping suggests China is in crisis mode as rising interest rates pose a serious threat to its economy.

In the years leading up to the pandemic, Chinese President Xi Jinping warned that the global economy was facing challenges and that a Black Swan event posed a serious risk to the Chinese economy and the world.

Since the start of the pandemic, the People’s Bank of China, financial regulators and senior Chinese Communist Party leaders have further intensified their calls for consideration of systemic risk, as growing concerns about developments in global financial markets have were expressed last year.

But in recent months, the mood has changed considerably.

President Xi’s U-turn

In a virtual address atop the agenda of the World Economic Forum in Davos in mid-January, President Xi sent a very clear message to the US Federal Reserve and its Chairman, Jerome Powell: Please, don’t raise interest rates.

“If major economies slow down or reverse course in their monetary policies, there would be serious negative fallout. They would present challenges to global economic and financial stability, and developing countries would bear the brunt,” Xi said. .

With US inflation currently running at 7% a year and inflation posing a growing risk to post-pandemic economic recovery around the world, Xi’s comments run counter to the intentions of many. growing number of central banks, including the US Federal Reserve.

Growing risks in China

Although we can only speculate on the reasons for the change in the narrative coming out of Beijing, it is clear that risks are developing within the Chinese economy.

The Chinese government’s crackdown on the riskiest elements of its real estate sector has had a major impact on the industry, demand for materials and the economy in general.

According to a recent report by investment bank UBS, housing starts were down 31% year-on-year in December.

With the real estate sector and associated industries accounting for nearly a third of China’s GDP, there are growing fears that problems within the industry could cause a broader slowdown in the economy.

As risks continue to accumulate and growth in the consumer-driven elements of the economy deteriorates, this has created a rather ironic and, in some ways, contradictory set of circumstances.

One foot on the accelerator, one foot on the brake

Despite the economic difficulties that the Chinese government’s much-needed attempts to rein in risks in the real estate sector have created, they have so far refused to significantly alter course.

However, with so much of China’s economic fortune in the real estate sector, the Chinese government had only a simple choice, accept much weaker growth figures or find another engine of economic expansion.

Given the vastness of the Chinese economy and the practical impossibility of replacing real estate-led growth with sufficient domestic consumption in the short term, Beijing has been left with a very familiar option that it has largely previously used, the construction of infrastructures.

This is yet another departure from the course established by Beijing.

Under the leadership of President Xi’s predecessor, former President Hu Jintao, Hu Jintao reiterated the need for China to rebalance its economy away from capital investment and construction towards a more market-driven growth model. consumer.

Even in the middle of last year, the Chinese government halted work on two high-speed rail projects worth 130 billion yuan ($29 billion), due to concerns over rising debt. local governments.

Now that risks within the global economy continue to pile up and the true extent of China’s economic slowdown is becoming clear, Beijing is not just putting its foot back on the accelerator of infrastructure construction. , he puts his foot to the floor.

In megalopolis Shanghai, a full year of infrastructure and investment bonds will be issued by the end of June.

For the 2022 calendar year, Beijing has allocated a quota of 1.46 trillion yuan ($326 billion) in local government special bonds, as the country seeks to boost investment in local infrastructure and steady economic growth.

Local governments recently issued 190 billion yuan ($42 billion) worth of bonds in just one week, according to a report by Yuan Talks, a Chinese economy- and market-focused media outlet.

The course of Chinese monetary policy has also changed significantly in recent days, with the People’s Bank of China (PBOC) cutting the benchmark one-year lending rate twice in as many months for the first time in a short time. after the start of the pandemic.

Australia’s Fortune

In recent years it has been said that Australia’s economic fortunes rest on a bulk carrier and with up to half of all exports going to China, the Middle Kingdom’s economic fortunes have certainly come to define ours.

The trillion-dollar question that could define Australia’s economic fortunes in 2022 could be this: Can Chinese infrastructure building fill the inevitable hole that will be left by the real estate sector if Beijing continues on its path? current?

With Omicron still a major factor affecting the Chinese economy significantly and the IMF warning of a slowing global economy, the outlook is bleak at best.

As the Chinese government’s strategy continues to evolve, they no doubt have their finger on the panic button. They have already cut interest rates and flouted caution in increasing local government debt. New measures to stimulate growth may require an even greater degree of action.

Ultimately, if the US Federal Reserve raises interest rates in March as markets expect, against President Xi’s advice, China could face tough economic dilemmas in 2022.

Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator

Read related topics:China

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Chinese economy: MOFCOM: foreign trade hits a new high in 2021 https://bizchina-update.com/chinese-economy-mofcom-foreign-trade-hits-a-new-high-in-2021/ Thu, 27 Jan 2022 08:00:00 +0000 https://bizchina-update.com/chinese-economy-mofcom-foreign-trade-hits-a-new-high-in-2021/ China has become the world’s second-largest consumer market, the largest trader of goods for five consecutive years and the second-largest destination for foreign direct investment in 2021, the Chinese ministry announced on Tuesday. of Commerce during a press conference while unveiling the affairs of the country. and business performance for 2021. Yang Shanshan has more. […]]]>

China has become the world’s second-largest consumer market, the largest trader of goods for five consecutive years and the second-largest destination for foreign direct investment in 2021, the Chinese ministry announced on Tuesday. of Commerce during a press conference while unveiling the affairs of the country. and business performance for 2021. Yang Shanshan has more.

Despite COVID-19, China’s foreign trade hit new highs in 2021, with total imports and exports up 21.4 percent to RMB 39.1 trillion, or about $6 trillion. However, China’s Ministry of Commerce warns that the global economy still faces uncertainties in 2022.

LI XINGQIAN Head of Department of Foreign Trade Ministry of Commerce “The pandemic continues and there is still a risk of supply chain cuts, which could slow down the global economic recovery. We will support trade enterprises, diversify trade routes, use the international e-commerce platform to promote trade, improve the digitalization of trade, and develop green trade.

In 2021, China’s domestic consumption gradually recovered, and the total retail sale of consumer goods increased by 12.5%. As the world’s second-largest consumer market, consumption has remained the main driver of China’s economy. China also becomes the second largest destination for foreign direct investment in 2021, as well as a major global investor.

CHEN CHUNJIANG Head of Trade Service Department Ministry of Commerce “We will continue to reform and open up to the rest of the world. We will ease the automotive industry and provide land and tax policy to attract more foreign investors to invest in high-tech industries, advanced manufacturing, digital and green economy, as well as low-carbon technologies. carbon. We will also help foreign companies to solve their difficulties in China.

YANG SHANSHAN CGTN Reporter “To help support China’s economic growth, China promises to improve the business environment for investors and promote global trade through bilateral and multilateral cooperation. Yang Shanshan, CGTN.
Source: CGTN

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As China’s economy slows, policymakers look to revive growth https://bizchina-update.com/as-chinas-economy-slows-policymakers-look-to-revive-growth/ Sat, 22 Jan 2022 08:00:00 +0000 https://bizchina-update.com/as-chinas-economy-slows-policymakers-look-to-revive-growth/ VSHINA A hasn’t had much success in curling, which will be featured at the Beijing Winter Olympics from February 4. But the country’s economic decision-makers could take inspiration from this obscure event. Like curlers, they have a hard target to hit. They are believed to be targeting growth of 5% or more in 2022, despite […]]]>
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China’s economy is estimated to be off to a good start (Best Economic Planner) https://bizchina-update.com/chinas-economy-is-estimated-to-be-off-to-a-good-start-best-economic-planner/ Tue, 18 Jan 2022 08:00:00 +0000 https://bizchina-update.com/chinas-economy-is-estimated-to-be-off-to-a-good-start-best-economic-planner/ A worker checks a chip product at a factory in Sihong Economic Development Zone in Sihong County, east China’s Jiangsu Province on Monday. At present, Sihong County has formed electronic information, new materials, mechanical and electrical equipment and other leading industry development poles. Photo: CGV China’s top economic planner, the National Development and Reform Commission […]]]>

A worker checks a chip product at a factory in Sihong Economic Development Zone in Sihong County, east China’s Jiangsu Province on Monday. At present, Sihong County has formed electronic information, new materials, mechanical and electrical equipment and other leading industry development poles. Photo: CGV

China’s top economic planner, the National Development and Reform Commission (NDRC), is confident of achieving a smooth start to this year’s economy in the first quarter of 2022 while envisioning stable, healthy growth. and sustainable, an official said Tuesday.

Yuan Da, spokesperson for the NDRC, said China’s economic development in 2022 still faces serious challenges, although the country has made remarkable achievements in 2021, pointing out that the complicated international environment and the Unbalanced and insufficient domestic economic development were among the challenges.

The response came as reporters asked for the NDRC’s opinion on the economic challenges facing the country during a press conference held on Tuesday. The Central Economic Labor Conference in December listed the challenges as “declining demand, supply shocks and weakened expectations.”

Yuan said sporadic COVID-19 outbreaks in China will continue to affect domestic consumption, in addition to uncertainties regarding the investment and foreign trade situation in the coming months.

Micro, small and medium-sized enterprises have encountered more difficulties in their normal operations, which has negatively impacted market expectations and business confidence, Yuan added.

China achieved strong performance in economic growth and coronavirus containment last year. The country’s national strength is now consolidating, with a GDP exceeding 114 trillion yuan ($17.98 trillion) in 2021, reflecting the growing resilience of the country’s industrial supply chains, Yuan said.

China recorded GDP growth of 8.1 percent in 2021 on Monday, defying market expectations and further cementing the leading position of the world’s second-largest economy in the global economy’s recovery from the COVID-19 pandemic.

Yuan noted that supply shortages have been largely resolved, with the price of coal falling and power supply stabilizing, with more than 20 days of coal reserves available. In 2021, semiconductor production increased by 33.3% compared to a year ago.

And, the country has upgraded and promoted digitalization of a number of key industries while deepening reform in key areas and accelerating opening up, Yuan said, adding that the economy would be boosted by higher levels. equality based on supportive government policies.

world times

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Collapse of the Chinese Economy: Why China Could Face Major Problems in 2022 | World | News https://bizchina-update.com/collapse-of-the-chinese-economy-why-china-could-face-major-problems-in-2022-world-news/ Tue, 18 Jan 2022 08:00:00 +0000 https://bizchina-update.com/collapse-of-the-chinese-economy-why-china-could-face-major-problems-in-2022-world-news/ The bureau released the results of its review on January 17, noting a 4% increase in GDP in 2021. But the continued pandemic dampened its potential, as the rate had risen at its slowest pace in 18 months. The People’s Bank of China cut an instrumental lending rate as the economy failed to match the […]]]>

The bureau released the results of its review on January 17, noting a 4% increase in GDP in 2021. But the continued pandemic dampened its potential, as the rate had risen at its slowest pace in 18 months. The People’s Bank of China cut an instrumental lending rate as the economy failed to match the 6.5% growth at the same time in 2020, and several factors could hold it back again in 2022.

Zero Covid Policy

The Chinese government has zero tolerance for domestic Covid cases and has dramatic measures designed to torpedo transmission.

Continued lockdowns are not uncommon, with some cities forced to endure weeks of mandatory quarantine and testing.

The restrictions have proved game-changing for many of the country’s most successful businesses, as the measures strangle supply chains and the workability of workers.

In early 2022, China faces an influx of people during Lunar New Year and the Winter Olympics, forcing officials to crush at-risk regions.

READ MORE: China’s economic takeover of Europe laid bare by damning data

The Winter Olympics

The Winter Olympics, scheduled for February 4 this year, has led Chinese authorities to crack down on areas near the host city of Beijing.

The roughly 14 million residents of Tianjin, 100 km from the city, are currently living under compulsory testing.

Tighter measures ahead of the games could end up straining the economy even more, as the competition itself could lead to diminishing returns.

While hosting the Olympics would traditionally provide a valuable financial boost to a nation, several participants are considering a boycott.

Activists are calling on competitors to stand down in protest at China’s human rights record, including the oppression of pro-democracy protesters in Hong Kong and abuses against Uyghur Muslims.

No country has yet committed to a full boycott, but the US, UK, Australia and Canada have withdrawn their diplomatic presence, saying their officials will not attend ceremonies or events.

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The real estate sector

China’s vast economy is partly supported by a strong real estate sector that accounts for around 30% of its total output.

As with the rest of the world, the pandemic has also reduced this, with the factors responsible still in effect at the start of 2022.

The Chinese have accumulated more debt, which has led to lower consumption, a slowdown in real estate and slower growth.

A political adviser told the Financial Times they were “all connected”, leading to anxious conversations behind closed doors.

Local ministers have expressed – both publicly and privately – that they will struggle to make ends meet if the problems persist.

Demography

In recent years, China has had to deal with the fallout from its decades-long one-child policy.

Although the government purged its remaining one-child limits in 2015, birth rates have not recovered.

From 2011 to 2020, census data showed stagnant population growth, with the lowest rates in decades.

In 2021, it fell to 12 million, the lowest since the country grappled with the fallout from the Great Chinese Famine of 1959 to 1961.

In response, authorities relaxed the rules again last year, introducing a three-child limit in July.

Stagnant demographics have a ripple effect on the economy as they leave businesses with a shrinking pool of workers.

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China’s economy is slowing, a worrying sign for the world https://bizchina-update.com/chinas-economy-is-slowing-a-worrying-sign-for-the-world/ Mon, 17 Jan 2022 19:52:30 +0000 https://bizchina-update.com/chinas-economy-is-slowing-a-worrying-sign-for-the-world/ BEIJING – Construction and real estate sales have fallen. Small businesses have closed due to rising costs and weak sales. Local authorities in debt reduce the salaries of civil servants. China’s economy slowed markedly in the final months of last year as government measures to curb property speculation also hurt other sectors. Lockdowns and travel […]]]>

BEIJING – Construction and real estate sales have fallen. Small businesses have closed due to rising costs and weak sales. Local authorities in debt reduce the salaries of civil servants.

China’s economy slowed markedly in the final months of last year as government measures to curb property speculation also hurt other sectors. Lockdowns and travel restrictions to contain the coronavirus have also weighed on consumer spending. Strict regulations on everything from internet businesses to after-school tutoring businesses have sparked a wave of layoffs.

China’s National Bureau of Statistics said Monday that economic output from October to December was only 4% higher than the same period a year earlier. This is a deceleration from the 4.9% growth in the third quarter, from July to September.

Global demand for consumer electronics, furniture and other home comforts during the pandemic has produced record exports for China, preventing its growth from stalling. For the whole of last year, China’s economic output was 8.1 percent higher than in 2020, the government said. But much of the growth took place in the first half of last year.

The snapshot of the Chinese economy, the main engine of global growth in recent years, reinforces expectations that the global economic outlook is beginning to darken. Worse still, the Omicron variant of the coronavirus is now beginning to spread in China, leading to more restrictions across the country and raising fears of further disruption to supply chains.

The slowing economy poses a dilemma for Chinese leaders. The measures they have imposed to tackle income inequality and curb businesses are part of a long-term plan to protect the economy and national security. But officials fear they could cause near-term economic instability, especially in a year of unusual political importance.

Next month, Beijing will host the Winter Olympics, which will shine the international spotlight on the country’s performance. In the fall, Xi Jinping, the Chinese leader, is expected to seek a third five-year term at a Communist Party congress.

Mr. Xi sought to strike an optimistic note. “We have every confidence in the future of China’s economy,” he said in a speech to a virtual session of the World Economic Forum on Monday.

But with slowing growth in his country, slowing demand and debt still at near-record levels, Mr. Xi could face some of the biggest economic challenges since Deng Xiaoping began to pull the country out of debt. its Maoist yoke four decades ago.

“I fear that the operation and development of China’s economy in the coming years will be relatively difficult,” Li Daokui, a prominent economist and adviser to the Chinese government, said in a speech late last month. “Looking at the five years as a whole, this is perhaps the most difficult period since our reform and opening up 40 years ago.”

China also faces the problem of a rapidly aging population, which could create an even greater burden on the Chinese economy and its workforce. The National Bureau of Statistics said on Monday that China’s birth rate had fallen sharply last year and was now barely higher than the death rate.

As the costs of many raw materials have risen and the pandemic has prompted some consumers to stay home, millions of private businesses have collapsed, most of them small and family-owned.

This is a big concern because private companies are the backbone of China’s economy, accounting for three-fifths of output and four-fifths of urban employment.

Kang Shiqing invested much of her savings nearly three years ago to open a women’s clothing store in Nanping, a river town in southeastern Fujian province. But when the pandemic hit a year later, customer numbers dropped drastically and never recovered.

As in many countries, there has been a broad shift in China towards online shopping, which can undermine stores by using less labor and operating from cheap warehouses. Mr. Kang was forced to pay high rent for his store despite the pandemic. He finally closed it in June.

“We can barely survive,” he said.

Another lingering difficulty for small businesses in China is the high cost of borrowing money, often at double-digit interest rates from private lenders.

Chinese leaders are aware of the challenges faced by private companies. Premier Li Keqiang has promised further tax and fee cuts to help the country’s many struggling small businesses.

On Monday, China’s central bank made a small move to cut interest rates, which could help slightly reduce interest charges for the country’s heavily indebted property developers. The central bank cut its benchmark interest rates for one-week and one-year loans by about a tenth of a percentage point.

The construction and equipping of new housing represents a quarter of the Chinese economy. Large loans and widespread speculation have helped the country erect the equivalent of 140 square feet of new housing for every urban resident over the past two decades.

This fall, the sector faltered. The government wants to limit speculation and deflate a bubble that had made new housing unaffordable for young families.

China Evergrande Group is just the largest and most visible of a long list of real estate developers in China that have faced serious financial difficulties in recent times. Kaisa Group, China Aoyuan Property Group and Fantasia are among other developers who have struggled to make payments as bond investors grow wary of lending money to China’s property sector.

As real estate companies try to conserve cash, they are launching fewer construction projects. And that has been a big problem for the economy. The price of steel rebar for concrete in apartment towers, for example, fell by a quarter in October and November before stabilizing at a much lower level in December.

Falling house prices in small towns have hurt the value of people’s assets, making them less willing to spend. Even in Shanghai and Beijing, apartment prices are no longer rising.

There have been faint signs of renewed government support for the property sector in recent weeks, but no sign of a return to lavish lending by state-controlled banks.

Evergrande’s financial distress “is a signal that money will be pushed from real estate to the stock market,” said Hu Jinghui, an economist who is a former chairman of the China Alliance of Real Estate Agencies, a trade group. national. “Policies can be relaxed, but there can be no turning back.”

The slowdown in the housing market has also hurt local governments, which rely on land sales as their main source of revenue.

The International Monetary Fund estimates that government land sales each year have raised funds equivalent to 7% of the country’s annual economic output. But in recent months, developers have scaled back land purchases.

Starved of revenue, some local governments have halted hiring and cut bonuses and benefits for civil servants, prompting widespread complaints on social media.

In Hangzhou, the capital of Zhejiang province, a civil servant’s complaint about a 25% cut in her salary quickly spread on the internet. The city government did not respond to a fax requesting comment. In the northern province of Heilongjiang, the city of Hegang announced that it would no longer hire “junior” workers. City officials removed the ad from the government website after it came to public attention.

Some governments have also increased fees charged to businesses in an attempt to make up the shortfall.

Bazhou, a city in Hebei province, levied 11 times more fines for small businesses from October to December than in the first nine months of last year. Beijing has criticized the city for undermining a national effort to reduce the cost of doing business.

Strong foreign demand for Chinese exports, especially consumer goods, has spurred a domestic wave of investment in new factories, up 13.5 percent last year from 2020.

Some areas of consumer spending have been quite robust, notably the luxury sector, where sports cars and jewelry are selling well. Retail sales rebounded 12.5% ​​last year from pandemic-depressed levels in 2020. But retail sales fell in December from November as coronavirus restrictions kept some shoppers at home.

Few expect the government to allow a severe economic downturn this year ahead of the Communist Party Congress. Economists expect the government to ease restrictions on lending and increase public spending.

“The first half of the year will be tough,” said Zhu Ning, vice dean of the Shanghai Advanced Institute of Finance. “But then the second half will see a rebound.”

Li you contributed to the research.

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