long term – 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 long term – Bizchina Update http://bizchina-update.com/ 32 32 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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Ed Sheeran slams 2005 episode of ‘South Park’ after it ‘ruined’ his life https://bizchina-update.com/ed-sheeran-slams-2005-episode-of-south-park-after-it-ruined-his-life/ Sat, 15 Jan 2022 10:08:49 +0000 https://bizchina-update.com/ed-sheeran-slams-2005-episode-of-south-park-after-it-ruined-his-life/ These days, it can be hard to imagine Ed Sheeran being anything other than universally beloved. The best-selling musician burst onto the music scene in 2011 and hasn’t let up since. Along with having chart-topping hits and a worldwide following, Sheeran has also endeared himself to fans with some impressive collaborations and even a game […]]]>

These days, it can be hard to imagine Ed Sheeran being anything other than universally beloved. The best-selling musician burst onto the music scene in 2011 and hasn’t let up since. Along with having chart-topping hits and a worldwide following, Sheeran has also endeared himself to fans with some impressive collaborations and even a game of thrones cameo.

Despite his popularity, Sheeran admits he hasn’t always had it so easy. He pointed to an unlikely source of his problems: South Park.

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What an Unusual 2021 Says About the Future of China’s Economy https://bizchina-update.com/what-an-unusual-2021-says-about-the-future-of-chinas-economy/ Fri, 31 Dec 2021 08:00:00 +0000 https://bizchina-update.com/what-an-unusual-2021-says-about-the-future-of-chinas-economy/ In a year marked by unexpected disruptions and growing uncertainties, China is expected to deliver stable growth thanks to its swift policy response. The world’s second-largest economy grew 9.8% year-on-year in the first three quarters, a hard-won result amid various challenges including pandemic resurgences and mounting debt pressures, reflecting the effectiveness of policies aimed at […]]]>

In a year marked by unexpected disruptions and growing uncertainties, China is expected to deliver stable growth thanks to its swift policy response.

The world’s second-largest economy grew 9.8% year-on-year in the first three quarters, a hard-won result amid various challenges including pandemic resurgences and mounting debt pressures, reflecting the effectiveness of policies aimed at supporting growth while defusing risks.

For the year as a whole, the World Bank forecast that China’s economy would grow by 8%, above the government’s target of “more than 6%”.

A review of the government’s fine-tuned policymaking in 2021 provides insight into how China has addressed common challenges facing the global economy and what that means for the year 2022 and beyond.

ACCURATE PANDEMIC CONTROL

Two years into the pandemic, global policymakers are still trying to figure out the best way to balance growth with controlling the pandemic.

China has adopted strict pandemic control policies in 2021, eliminating new epidemics as soon as possible through early detection, rapid response, targeted containment and effective treatment of COVID-19 patients.

Such policies have proven effective not only in ensuring public health, but also economically, as the gains from normalized production and consumption outweigh the costs of fighting the pandemic, analysts said.

“Overall, the policies have brought significant benefits. Thanks to these policies, the growth rate of the Chinese economy has outpaced the majority of other economies over the past year,” said Lu Ting, chief economist for China at Nomura securities firm.

Next year, striking a balance between precise pandemic control and economic growth will be increasingly critical, Lu said.

Although COVID-19 has caused consumption disruptions, the impact will be mitigated by the “learning effect”, reflected in the strengthening of government capacity to precisely contain COVID-19 and improve the willingness of people to consume offline, said the China International Capital Corporation (CICC). in a report.

“For 2022, we should not be too pessimistic about the possible impact of COVID-19. We expect household consumption to pick up slightly on the back of growth-friendly policies,” the CICC said.

TARGETED CREDIT SUPPORT

Another challenge facing global policymakers in 2021 is how to provide much-needed credit support to the COVID-battered economy without adding excessive debt.

Instead of printing money and pumping money into the entire financial system, China adopted a prudent monetary policy in 2021, channeling funds through targeted monetary tools to specific sectors such as the manufacturing industry as well as the most vulnerable small and medium-sized enterprises.

The country’s central bank has cut the reserve requirement ratio (RRR) of financial institutions twice this year to provide liquidity to the real economy.

Additionally, the country has been more proactive in taking fiscal measures to support growth, reducing taxes and fees for businesses while transferring central funds to support regions affected by natural disasters.

On the other hand, the country has remained cautious in channeling funds to the housing sector, continuing its debt reduction campaign that has been going on for years on the principle that “housing is for living in, not for living in.” speculation”.

In its latest effort to support the real economy, the country cut the benchmark one-year market-based benchmark rate by 5 basis points in December, but left the benchmark five-year plus rate unchanged, on which many lenders base their mortgage rates on.

Recent reductions in the reserve requirement ratio and lending rate signal more accommodative monetary policy, although efforts to reduce financial sector risk should continue, the World Bank said in a report.

In 2022, China will continue to implement proactive fiscal policies and prudent monetary policies, decided the Central Conference on Economic Work, adding that the country will stimulate the virtuous cycle and healthy development of the real estate sector with specific policies to the city.

ORDERLY GREEN TRANSITION

Despite growing pressure on growth, China has steadily pushed its cutting-edge and carbon neutral agenda with institutional innovations in 2021.

As a market-based mechanism to incentivize companies to reduce their carbon emissions, a national carbon market began trading in July, which saw the active trading of carbon emissions allowances.

While encouraging the use of green energy, policy makers paid particular attention to the potential disruption of energy supply and economic activity, reiterating that local governments should avoid carbon reduction “style countryside “.

“Achieving peak carbon and carbon neutrality is an inherent requirement for promoting high-quality development, which requires constant effort. It is impossible to achieve the goal all at once,” the Central Economic Labor Conference said.

To ensure a smooth transition to low-carbon development, China has stepped up investment in green technologies and created opportunities for domestic and foreign enterprises.

Within the framework of carbon targets, investments in the green manufacturing sector will see notable growth over the next year, particularly sectors such as pollution control, the digital economy as well as new energies and materials, the Bank of Communications said in a report.

Investments in these areas will boost near-term demand and help China transition to new engines of long-term growth, according to the report.
Source: Xinhua

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‘Money Heist’ comes to an end | Show biz https://bizchina-update.com/money-heist-comes-to-an-end-show-biz/ Thu, 02 Dec 2021 21:55:32 +0000 https://bizchina-update.com/money-heist-comes-to-an-end-show-biz/ [ad_1] Spanish actor Miguel Herran (left) and Spanish actress Ursula Corbero pose during a photocall for the presentation of the final part of the fifth season of the Spanish TV show “Money Heist”. – Photo ETX Studio LOS ANGELES, December 3 – Netflix will release the last five episodes of its hit Spanish series on […]]]>


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Spanish actor Miguel Herran (left) and Spanish actress Ursula Corbero pose during a photocall for the presentation of the final part of the fifth season of the Spanish TV show “Money Heist”. – Photo ETX Studio

LOS ANGELES, December 3 – Netflix will release the last five episodes of its hit Spanish series on Friday Money theft which opened the door to other non-English series on streaming services.

Created by Spanish private network Antena 3, the thriller about a gang of thieves and their elaborate heists became Netflix’s most-watched series not in English after resuming the show in December 2017.

The plight of the robbers, who all carry code names for cities around the world, even hooked audiences in the United States, who were not used to dubbed shows at the time.

The New York Times hailed the series and its twists as a “ride of joy in every direction” while the Israeli newspaper Haaretz called it “seriously captivating”.

Salvador Dali’s red overalls and masks worn by the show’s renegade gang members quickly became popular around the world at costume parties and street protests.

“This is the first non-English language series to become a global phenomenon,” said Elena Neira, professor of communication sciences at the Open University of Catalonia.

Thanks in part to the show’s success, Netflix and its competitors “realized they didn’t need to produce everything in the United States” to get a global audience, she added.

Netflix quickly scored points with other non-English series, like the French thriller Lupine and South Korean Dystopian Drama Series Squid game which this year became the most watched series on the platform.

‘Very addictive

While the Money theft The script is “not revolutionary”, it tells “a very universal story, of the struggle between good and evil … with messages about the power of women, camaraderie and the need to rebel,” said said Neira.

Lupine shares many features of the show, such as the focus on a thief with “a certain moral aspect” who is “very intelligent,” she added.

Money theft was also fortunate enough to have been picked up by Netflix shortly after the Steam service went live in January 2016 in more than 130 countries, bringing its coverage to almost everyone except China.

Netflix’s recommendation algorithm also favors series like Money theft which end in a cliffhanger and are “very addicting,” said Alberto Nahum Garcia, professor of audiovisual communication at the University of Navarre.

“There was a kind of alignment of the planets at a time when the distribution became even more global,” he added.

Neira said the show also benefited from the US streaming giant’s willingness to invest heavily in dubbing and adding subtitles to shows in dozens of languages.

Launch pad for Spain

The worldwide success of Money theft has also given a huge boost to the Spanish audiovisual sector.

“It put the Spanish industry in a place where we never dreamed it could be,” series creator Alex Pina said on Tuesday at a press conference in Madrid to promote the second part of the fifth and final season of the series.

Netflix in 2018 signed a deal with Pina to produce new series and projects exclusively for the streaming giant.

And the following year, it opened its first European production center in Madrid, as part of a multi-million euro investment in Spanish-language content.

Money theft has shown that “stories can be created anywhere in the world and enjoyed anywhere in the world,” Netflix vice president of content for Spain and Portugal, Diego Avalos, told AFP.

Several “Money Heist” stars have become regulars on other Netflix shows.

Jaime Lorente, who plays the angry thief Denver, and Miguel Herran who plays the young hacker Rio, appear in the teenage drama Elite, another Spanish global success.

Netflix director Reed Hastings said it was “amazing” to see Spanish shows like Money theft and Elite “Winning the hearts of fans not only in Spain, but all over the world”.

“Our goal is to be part of the Spanish creative ecosystem. We are investing for the long term, ”he added when the company’s production center opened in Madrid. – ETX Studio

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China’s economy likely remained weak as factories collapse https://bizchina-update.com/chinas-economy-likely-remained-weak-as-factories-collapse/ Sun, 28 Nov 2021 08:00:00 +0000 https://bizchina-update.com/chinas-economy-likely-remained-weak-as-factories-collapse/ [ad_1] (Bloomberg) – China’s manufacturing activity likely remained subdued in November, as weak domestic demand in the economy outweighed any relief from easing energy shortages. The official purchasing managers index for the manufacturing sector is expected to improve slightly to 49.7 from 49.2 in October when it was released on Tuesday, according to the median […]]]>


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(Bloomberg) – China’s manufacturing activity likely remained subdued in November, as weak domestic demand in the economy outweighed any relief from easing energy shortages.

The official purchasing managers index for the manufacturing sector is expected to improve slightly to 49.7 from 49.2 in October when it was released on Tuesday, according to the median estimate of a Bloomberg survey of economists. This would be the third month it remains below the 50 mark, indicating a contraction in production.

The non-manufacturing gauge, which measures activity in the construction and service sectors, is expected to fall to 51.5 from 52.4 the previous month.

Energy shortages in China, which ravaged industrial production in September and October, likely eased this month as coal producers ramped up production and inventories rose. However, the housing market crisis shows no signs of ending and frequent Covid-19 outbreaks continue to dampen consumption.

“Restrictions on the supply side have improved slightly, so production has probably rebounded somewhat,” said Xing Zhaopeng, senior Chinese strategist at Australia & New Zealand Banking Group Ltd. But there is “not much of a positive signal from domestic demand”, which continued to weigh on business. , he said.

Economic growth is expected to slow to 5.3% next year, according to a Bloomberg survey median, with some economists seeing expansion as low as 4%. Bloomberg Economics is forecasting growth of 5.7%, as the government will likely target a 5-6% range.

What Bloomberg Economics Says …

“In 2021, politics played a secondary role in defining the growth path. In 2022, it will be decisive. The extent of the slowdown will largely depend on how well China balances supporting short-term growth and pushing forward with long-term reforms.

… We see the People’s Bank of China cut the interest rate on its one-year medium-term loan facility by 20 basis points and the reserve requirement ratio from 100 to 150 basis points by the end of 2022. .

– Chang Shu and David Qu

For rull’s report, click here

The authorities are trying to moderate the sharp decline in the real estate market, while providing targeted support to areas such as small businesses and green technologies. Officials will reveal more clues about the policy easing they plan to deliver at two key policy meetings in December by the Politburo and the Central Economic Work Conference.

China will adopt a more proactive macroeconomic policy next year to respond to the challenges of an uneven recovery in the global economy and instability in containing the pandemic, the Securities Times, led by the Daily, said on Monday. People, in a comment on the front page.

The authorities have shown restraint in the use of monetary and fiscal tools amid an economic slowdown this year, creating sufficient space for political maneuvering next year, according to the commentary.

The slowdown is being dampened by strong export demand, which likely remained strong in November, judging by the latest shipping figures from South Korea.

Consumption and travel continue to be affected by an upsurge in cases of the virus and the country’s growing determination to stick to its strict Covid Zero strategy. Passenger traffic on the subway in six major cities in China fell by less than 10% in November from October, although the drop was smaller than that of the August epidemic, according to Xing.

(Updates to the latest estimate in the second paragraph.)

© 2021 Bloomberg LP

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Chinese economy under pressure as industrial growth slows in third quarter (MIIT) https://bizchina-update.com/chinese-economy-under-pressure-as-industrial-growth-slows-in-third-quarter-miit/ Tue, 19 Oct 2021 07:00:00 +0000 https://bizchina-update.com/chinese-economy-under-pressure-as-industrial-growth-slows-in-third-quarter-miit/ [ad_1] China has seen increasing downward pressure on its economy as industrial production growth slowed in the third quarter, the Ministry of Industry and Information Technology (MIIT) said on Tuesday at a press conference. Industrial production growth fell to 3.1% year-on-year in September from 5.3% in August, marking the slowest growth since March 2020 during […]]]>


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China has seen increasing downward pressure on its economy as industrial production growth slowed in the third quarter, the Ministry of Industry and Information Technology (MIIT) said on Tuesday at a press conference.

Industrial production growth fell to 3.1% year-on-year in September from 5.3% in August, marking the slowest growth since March 2020 during the first wave of the COVID-19 pandemic, according to the reports. Data from the National Bureau of Statistics (NBS) released on Monday.

The slowdown in the growth of industrial production has been particularly affected by the recent resurgence of COVID-19, flooding, rising commodity prices, the energy crisis and chip shortages, according to the ministry.

“The current external environment is still complex and changing, and there are still many unstable and uncertain factors facing the growth of the country’s information industry and sector,” said Luo Junjie, an MIIT official. .

SNB data also showed that in the first nine months, the total value added of industrial enterprises above the designated size increased by 11.8% year-on-year, a two-year average growth of 6 , 4%.

There are concerns and even speculation about a possible disruption in Chinese manufacturing industries, as the country eases the electricity shortage due to a coal shortage and rising global prices.

A number of provinces and regions, especially in northeast China, experienced power outages in the past month. The government said it would keep an eye on the situation and mitigate the impact by further improving the industry’s shift from high energy consumption to low carbon emissions.

“We believe that the constrained energy supply and its impact on industrial economic performance will be mitigated through measures such as market-oriented reforms and ensuring supply and price stability,” Luo said. .

COVID-19, the chip shortage and other factors at home and abroad have put the Chinese economy to the test. Despite this, China’s overall economic growth in the first 9 months reached 9.8%, better than the annual growth target, set at over 6%.

Officials say they are confident in keeping the industry and the information economy running and, despite the challenges, meeting the targets set for this year.

“In general, industry and information technology have been stable since the start of this year, demonstrating that the Chinese economy is on a long-term positive development trend with strong resilience,” Luo said.

(CGTN’s Sun Tianyuan and Shen Hui also contributed to the story.)

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China’s GDP in Q3: China’s economy is weighed down by energy, maritime and real estate crises https://bizchina-update.com/chinas-gdp-in-q3-chinas-economy-is-weighed-down-by-energy-maritime-and-real-estate-crises/ Mon, 18 Oct 2021 07:00:00 +0000 https://bizchina-update.com/chinas-gdp-in-q3-chinas-economy-is-weighed-down-by-energy-maritime-and-real-estate-crises/ [ad_1] “The challenges to keep the economy running smoothly have increased,” Fu Linghui, spokesperson for China’s National Bureau of Statistics, said at a press conference in Beijing on Monday. He said the country’s recovery from the Covid-19 pandemic is “still volatile and uneven”. China was the only major economy to escape 2020 without falling into […]]]>


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“The challenges to keep the economy running smoothly have increased,” Fu Linghui, spokesperson for China’s National Bureau of Statistics, said at a press conference in Beijing on Monday. He said the country’s recovery from the Covid-19 pandemic is “still volatile and uneven”.

China was the only major economy to escape 2020 without falling into recession. But it has this year encountered a series of challenges that weigh heavily on growth.

The country is in the midst of an energy crisis that is reducing the output of factories and leading to blackouts in some regions. This problem was fueled by demand earlier this year for construction projects that require fossil fuels and are at odds with Beijing’s pursuit of ambitious carbon reduction targets.

Shipment delays and increased inventories have also hit small manufacturers in China who are now strapped for cash, leading to lost orders and cutbacks in production.

The real estate sector is also suffering from a government desire to curb excessive borrowing. Real estate investment is now on the decline. This is straining developers, notably Evergrande, whose debt crisis has raised concerns about the risk of contagion for the sector and the economy in general. Some other real estate companies have already indicated that they are struggling to pay off their debts.

The fallout from those headwinds was apparent in all of Monday’s data.

Industrial production rose only 3.1% last month from a year ago, the lowest rate since March 2020, when the pandemic hit the Chinese economy. Real estate-related activities, including the production of cement and steel, recorded sharp contractions. Investments in fixed assets, meanwhile, appear to have declined in September, reversing a slight gain in August, according to Goldman Sachs estimates.

“Official GDP growth slowed at a breakneck pace in the last quarter,” wrote Julian Evans-Pritchard, senior Chinese economist at Capital Economics, in a research note, adding that “industry and construction appear to be on the verge of dying. ‘a deeper slowdown “.

Slammed on three fronts

The triple threat of simultaneous crises in the energy, shipping and real estate sectors is unavoidable.

The manufacturing sector has been “hit hard” by supply chain disruptions, noted Iris Pang, chief economist for Greater China at ING Group. She pointed out in a research note on Monday that operations in some ports have been affected by the Covid outbreaks and the measures taken by authorities to contain them in the last quarter.

Meanwhile, a massive power crisis made matters worse. Larry Hu, head of the Chinese economy for the Macquarie Group, noted that the slowdown in industrial production was “more pronounced in energy-intensive sectors,” such as steel and cement.

Record inflation in Chinese factories poses another threat to supply chains

Beijing on Monday tried to allay fears about the impact of the energy crisis. Fu, spokesperson for the National Bureau of Statistics, said that “the limited energy supply is only a phase and the impact on the economy is controllable.”

While energy prices have “risen sharply” this year, he said the crisis would be “alleviated” as the government implements measures to bring the problem under control. In early October, for example, China ordered coal mines to increase production, just months after ordering the opposite to curb carbon emissions.

Some experts agreed that the energy crisis would likely dissipate.

“We believe electricity shortages and production cuts will become less of a problem” later in the fourth quarter, said Louis Kuijs, head of Asian economics for Oxford Economics. “Key policy makers have started to focus on growth and we expect them to start calling for the pursuit of climate goals on a more measured timeframe.”

Long-term problems in the real estate industry

The debt problems plaguing the country’s real estate sector could be more difficult to resolve.

Property, along with related industries, accounts for up to 30% of the country’s GDP. If Evergrande, the country’s second-largest developer in terms of sales, collapsed, investors and buyers could be frightened. A potential wave of developer defaults could have a significant impact on growth and pose risks to financial stability.

Real estate sales, investment and construction activity are already struggling. Real estate investment fell about 4% in September compared to a year ago, after leveling off in August. Compare that to the start of this year, when those investments jumped 38% in January and February.

“This shows how quickly the real estate industry has cooled recently,” Macquarie’s Hu wrote in a note on Monday, highlighting the data. He suspected the real estate sector would be “the key to watch” over the next year, and suggested that problems could be the biggest obstacle to China’s growth in 2022.

Fearing that the real estate market was overheating, Beijing began to tighten the screws on the sector in the summer of 2020 in forcing developers to reduce their debt.

And Earlier this year, the government made it clear it would prioritize “common prosperity” and tame leaking house prices, which it accused of worsening income inequality and threatening social stability.

Evergrande experienced a major liquidity crisis. He warned last month that he could default and has since missed at least three interest payments. The corporate crisis has also destabilized global investors in recent weeks, raising concerns about a potential domino effect on the wider Chinese economy and financial markets.

Beijing has tried to allay fears about the real estate sector. After weeks of silence on the developer, the People’s Bank of China said on Friday that Evergrande had mismanaged its affairs but that the risks to the financial system were “controllable”.

Beijing’s crackdown on The housing sector is “China’s key long-term challenge,” said Aidan Yao, senior economist for emerging Asia at AXA Investment Managers.

He told CNN Business, however, that problems with companies like Evergrande are unlikely to cause Beijing to make a political “U-turn” on the housing sector. Instead, the government can focus on trying to stop rampant speculation in the housing market.

“I think there might be some sort of fine-tuning of the margin on the tightening measures,” he said, while adding that the weakness in the sector “will spill over” into next year.

A housing slowdown will almost certainly continue to weigh on economic growth. Oxford Economics cut its growth forecast for the fourth quarter to 3.6%. It would be the worst performance since the second quarter of 2020.

A few bright spots, but trouble to come

There were encouraging signs, especially in services. Retail sales rose 4.4% in September, an acceleration from the 2.5% increase in August.

This is in large part because of China’s efforts to contain the coronavirus, according to Goldman Sachs analysts. While the country remains largely closed to the rest of the world, its zero-tolerance approach to containing infections has kept the virus from spreading uncontrollably.

Goldman analysts noted in a Monday note that while the controls reduced retail sales growth in August, those restrictions were quickly relaxed, contributing to a rebound.

The Delta variant hit the Chinese economy hard.  Now a real estate crisis is looming

They said they expected consumer spending to continue to recover in the fourth quarter, barring “big waves” of Covid-19 outbreaks.

Despite the slowdown in growth this quarter, China is also still on track to meet Beijing’s annual growth target of over 6%. For the first three quarters of 2021, GDP grew 9.8% compared to a year ago, when the Covid-19 pandemic was wreaking havoc.

“Overall, the economy continues to recover,” said Fu, spokesperson for the National Bureau of Statistics, adding that the country had “the capacity and the conditions” to achieve its development goals this year.

But many analysts remain concerned. Several companies have downgraded their growth forecasts for China this year. And the country will likely have to take more steps to support growth in the coming months, according to Kuijs from Oxford Economics.

He wrote that China is likely to relax aspects of “comprehensive credit and real estate policies,” for example, and said policymakers are likely to encourage more infrastructure projects. also.

– CNN’s Kristie Lu Stout and Sophie Jeong contributed to this article.

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Evergrande’s debt wakes up the Chinese economy https://bizchina-update.com/evergrandes-debt-wakes-up-the-chinese-economy/ https://bizchina-update.com/evergrandes-debt-wakes-up-the-chinese-economy/#respond Thu, 23 Sep 2021 07:00:00 +0000 https://bizchina-update.com/evergrandes-debt-wakes-up-the-chinese-economy/ [ad_1] The debts that plague the biggest Chinese real estate giant Evergrande Group are a red flag for the economy of the country. Emily Feng, writing in NPR, said buyers of around 1.4 million Evergrande units across China are now uncertain whether the properties they paid for will ever be built. Dozens of angry and […]]]>


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The debts that plague the biggest Chinese real estate giant Evergrande Group are a red flag for the economy of the country.

Emily Feng, writing in NPR, said buyers of around 1.4 million Evergrande units across China are now uncertain whether the properties they paid for will ever be built.

Dozens of angry and worried investors have been picketing the Evergrande headquarters in the southern city of Shenzhen for weeks. They had bought investment products from Evergrande which now appear almost worthless as its Hong Kong-listed stocks have fallen nearly 90% in value this year.

Evergrande is in default on at least a tranche of bond interest payments totaling around $ 120 million, due in late September.

The struggling developer, China’s second-largest sales volume last year, is grappling with debt it can’t pay off. She owes a total of $ 368 billion in loans to banks, as well as debts to contractors and suppliers, said Emily Feng.

The financial difficulties run counter to the two competing goals of the Communist Party of China: to force the Chinese private sector to move away from the speculative and risky lending practices that have pushed debt to dangerous levels, while avoiding financial collapse and collapse. the real estate sector, in which more than 70% of the country’s urban wealth is locked up.

“This is part of a long-term tax reform aimed at reducing risk, reducing debt and moving away from [local government] land finance. Both of these goals are a good thing, “said Bo Zhuang, chief economist for China at Loomis Sayles, an investment firm.” But there is a risk of further spillover to other developers, potentially causing a crisis. banking or a debt crisis. ”

For nearly three decades, Evergrande – like dozens of Chinese developers – has bet big on China’s booming infrastructure construction. He took out loans that often carried double-digit interest rates and bet his sales of new build apartments would be high enough to pay off growing debt, NPR reported.

Financial regulators have tolerated these risky lending practices because of how developers like Evergrande have helped generate huge amounts of real estate wealth, as well as land sales income for local governments while transforming properties. millions of citizens as owners.

The Chinese state has firmly indicated that it will no longer allow developers like Evergrande to take out loans it cannot repay and sell investment apartments that no one needs just to raise house prices. .

Policymakers have also indicated that they will push local governments to reduce their financial dependence on the sale of land for a fee, one of the main drivers of China’s real estate boom, said Emily Feng.

An economic slowdown caused by the COVID-19 pandemic was already weighing on real estate purchases. Then last summer, new government policies to curb speculative investment restricted the number of homes people could buy. These rules have taken some buyers by surprise.

“We only learned about the new limits after my mother had already signed a contract with Evergrande. If the company knew the rules at the time, why did they charge us for the apartment?” says a Shanghai resident whose mother bought a unit in the Evergrande Taicang project when she already owned a second home in the city.

His purchase is illegal under the new rules, which is why the resident asked NPR not to use his name. He is now trying to get his mother’s deposit back.

Last year, Beijing also implemented its “three red lines” policy, with the number referring to three strict ceilings imposed on the ratio of debt a real estate developer can hold to its assets, its equity. and its liquidity.

Under this combination of new rules, Evergrande couldn’t sell enough apartments fast enough to pay off debts at the pace imposed by regulators, Emily Feng said.

One question is whether pushing Evergrande to get back into shape can really destabilize the entire Chinese banking system. Buyers are so scared of Evergrande that other developers are now seeing lower property sales and falling stock prices, which could trigger more property defaults in China.

Global equity markets have also been rocked by the uncertainty. This month, the Dow Jones Industrial Average had its worst performance since July, and the S&P 500 and Nasdaq composite were at their lowest since May.

Government regulators are now trying to find other companies that can buy out Evergrande and its assets before its woes spread. But they lack the time to contain the potential economic fallout.

This is because Evergrande owes more than loans to banks. It also has unpaid bills totaling around $ 300 billion owed to contractors and suppliers – who are now also facing economic hardship, NPR reported.

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Evergrande fiasco could hit Chinese economy: NPR https://bizchina-update.com/evergrande-fiasco-could-hit-chinese-economy-npr/ Wed, 22 Sep 2021 07:00:00 +0000 https://bizchina-update.com/evergrande-fiasco-could-hit-chinese-economy-npr/ [ad_1] AUDIE CORNISH, HOST: A real estate developer in China could go bankrupt. And that may not sound like a big deal, but NPR’s Emily Feng reports that the company is at the center of such debt that its collapse could set off a chain reaction of defaults. (MUSIC EXTRACT) EMILY FENG, BYLINE: I’m in […]]]>


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AUDIE CORNISH, HOST:

A real estate developer in China could go bankrupt. And that may not sound like a big deal, but NPR’s Emily Feng reports that the company is at the center of such debt that its collapse could set off a chain reaction of defaults.

(MUSIC EXTRACT)

EMILY FENG, BYLINE: I’m in a half-finished villa. The marble floors are covered in dust. And although the chandeliers have already been installed, the entire mansion is still missing its doors. The house is part of the Taicang Cultural City Project and was built by Evergrande, one of China’s largest real estate developers. But now the construction has stopped.

MAO KAI: (Speaking a language other than English).

FENG: Mao Kai, a real estate agent, tells me that all the units are sold, although it is not clear if they will ever be completed. Buying property is everything in China. It serves as a dowry for the marriage and allows access to the best public schools. And it has generated huge returns for the middle class. More than 70% of urban wealth is real estate. That’s why Shanghaier (ph) Penelope Wu and her husband splurged for a $ 200,000 one-bedroom Evergrande apartment here. There was so much competition last year that she offered to pay the full cost upfront in cash before Evergrande even broke new ground.

PENELOPE WU: (Via interpreter) I had no idea then that Evergrande was in desperate need of the money. Never mind. Buying property is like betting on stocks. You win and you lose.

FENG: Now she’s waiting for Evergrande to finish building her apartment, along with 1.4 million other units the developer has pre-sold. But the developer has no more money to continue building. Wu is hoping the government will step in to save Evergrande or at least make sure he finishes building the homes he has already sold.

WU: (Via interpreter) Evergrande is too big to fail. Even if it went bankrupt, the government would step in to save it.

FENG: Angry and worried investors are already picketing the Evergrande headquarters. They bought investment products from Evergrande which now seem worthless as its stock has lost almost 90% in value this year.

NIGEL STEVENSON: Well, now it looks like the day of the accounts is just around the corner.

FENG: Nigel Stevenson is a Hong Kong-based analyst at GMT Research, and he’s been following Evergrande for years. He became one of the biggest Chinese developers by playing a risky game, selling bonds and borrowing money at double-digit interest rates to finance new projects, which he then sold. just in time to pay off debts and take out new loans.

STEVENSON: So it’s always been able to kind of postpone the pain day kind of day in a way. And in the meantime, the type of assets and the balance sheet were getting bigger and bigger. And in a way, the problem just got bigger and bigger.

FENG: The problem started at the beginning of this year. COVID has slowed down real estate purchases. New policies limited the number of homes people could buy, and much stricter limits on the amount of debt developers could take on. This is Bo Zhuang, chief China economist at investment firm Loomis Sayles.

BO ZHUANG: It’s part of China’s long-term debt reduction, risk reduction. At the start of this year, it was, like, very rigorously implemented. So that’s the key factor.

FENG: That’s what the Chinese state wants. He’s had enough of risky developers like Evergrande taking out loans they can’t repay and selling apartments that no one needs just to raise house prices. So China is forcing Evergrande and others to repay their debts. Next, he wants local governments to reduce their financial dependence on the sale of land for profit. The question is, could pushing Evergrande to get in shape really destabilize the entire economy?

ZHUANG: In Chinese it is said to kill chickens to scare the monkeys – but the point is, maybe they’re trying too hard to kill the chickens, but all the monkeys are scared.

FENG: It’s possible that Evergrande will miss interest payments on bonds this month, and buyers are so scared of Evergrande that other developers are now seeing property sales plummet and stock prices plunge. which could trigger more faults.

ZHUANG: Household confidence in buying a new property – (unintelligible) this pre-sale property – is deteriorating very quickly. If my mom knows the story of Evergrande, it means everyone knows the story of Evergrande.

FENG: Evergrande doesn’t just owe banks loans. He also has liabilities, like unpaid invoices totaling around $ 370 billion that he owes to contractors and suppliers who could also go bankrupt if Evergrande defaults. One of those entrepreneurs is Nantong Sanjian, who was supposed to complete the Taicang Evergrande project. Here is one of its managers, Sheng Weixin.

SHENG WEIXIN: (While performing) The past two days have been filled with endless brawls with the police and with desperate buyers. Evergrande doesn’t have the money to reimburse us, so we also fight with the renovators and other contractors.

FENG: Sheng’s face wan with worry. He has already sent all his workers home because he cannot afford to pay them.

SHENG: (While performing) We still owe our workers three months’ wages. Our own business is also at risk of going bankrupt.

FENG: Sheng points out the concrete and steel skeletons of nearly a dozen unfinished Evergrande projects that surround us.

SHENG: (non-English language spoken).

FENG: He’s waving a bunch of towers to our east, which another developer agreed to bail out in July, only to deal with debt issues themselves. Government regulators are now seeing if other developers can buy out Evergrande before its financial problems spill over into China’s real estate industry. But they also appear fragile, and Beijing is running out of time to contain the economic fallout.

Emily Feng, NPR News, Taicang, China.

Copyright © 2021 NPR. All rights reserved. See the terms of use and permissions pages on our website at www.npr.org for more information.

NPR transcripts are created within an emergency time frame by Verb8tm, Inc., an NPR entrepreneur, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative recording of NPR’s programming is the audio recording.

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Chinese economy receives welcome boost from strong exports https://bizchina-update.com/chinese-economy-receives-welcome-boost-from-strong-exports/ https://bizchina-update.com/chinese-economy-receives-welcome-boost-from-strong-exports/#respond Tue, 07 Sep 2021 07:00:00 +0000 https://bizchina-update.com/chinese-economy-receives-welcome-boost-from-strong-exports/ [ad_1] Chinese exports unexpectedly increased at a faster pace in August on strong global demand, helping to ease some of the pressure on the world’s second-largest economy as it weaves its way through headwinds over several fronts. The Asian giant had staged an impressive recovery after a crisis caused by coronaviruses. But the economic dynamic […]]]>


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Chinese exports unexpectedly increased at a faster pace in August on strong global demand, helping to ease some of the pressure on the world’s second-largest economy as it weaves its way through headwinds over several fronts.

The Asian giant had staged an impressive recovery after a crisis caused by coronaviruses.

But the economic dynamic has recently weakened due to the outbreaks of Covid-19 caused by the Delta variant, high prices of raw materials, the slowdown in factory activity, stricter measures to control the prices of the real estate and a campaign to reduce carbon emissions.

Shipments from the world’s largest exporter in August rose 25.6% year-on-year, accelerating from a 19.3% gain in July, customs data showed today, indicating some resilience of the economy. Chinese industrial sector.

Analysts polled by Reuters had forecast growth of 17.1%.

“While short-term headwinds remain, supply constraints in China have eased and we believe the global economic recovery will continue to support Chinese exports later this year and into 2022,” said Louis Kuijs, manager. of the Asian economy at Oxford Economics.

Exports from neighboring countries also showed encouraging growth last month, with South Korean shipments accelerating due to strong foreign demand.

The distribution of shipments showed a widespread increase in all types of commodities, said Sheana Yue, assistant economist at Capital Economics.

“In particular, the rebound in Chinese-made consumer goods such as electronics, furniture and hobbies may have reflected advanced economy retailers restocking their stocks ahead of the Christmas shopping season,” Yue said. .

Meanwhile, some of the traffic congestion at the port appears to have cleared, which gave Chinese shippers a boost last month.

Eastern coastal ports have suffered congestion as a terminal at the country’s second-largest container port was closed for two weeks due to a Covid-19 case.

This has put additional pressure on global supply chains already struggling with a shortage of container ships and high commodity prices.

The stretched global shipping capacity has left many boxes of finished goods piled up in Chinese factories, a factor that is expected to increase the number of Chinese exports in the coming months, said Meng Xianglong, founder of Heji Trade & Credit Research. Center based in the port city of Ningbo.

“I think China’s robust export growth is expected to continue until the end of this year (around Christmas) or even early next year,” Meng said, adding that some factories were fully booked until the first quarter of 2022.

However, behind the big, robust numbers, companies are struggling on the ground.

Businesses faced mounting pressure in August as factory activity increased at a slower pace as the service sector collapsed in the contraction. A global semiconductor shortage has added to the pressure on exporters.

The country appears to have largely contained the latest outbreaks of the coronavirus of the more infectious Delta variant, but it has prompted measures including mass testing for millions of people as well as varying degrees of travel restrictions in August.

Many analysts expect the central bank to further reduce the amount of liquidity banks must hold as reserves later this year to revive growth, in addition to the July cut that freed up about 1 trillion yuan. ($ 6.47 billion) long-term liquidity in the economy.

Imports rose 33.1% year-on-year in August, beating an expected gain of 26.8% in the Reuters poll, led by still high commodity prices and partly reflecting the statistical effect of weak figures from ‘one year ago.

Commodity prices remain high despite Beijing’s attempts to cool them down. In July, imports increased 28.1%.

Chinese coal imports in August rose 35.8% from a year ago due to tight domestic supply and strong demand, while iron ore imports also increased for the first time in five months.

China posted a trade surplus of $ 58.34 billion in August, while the poll forecast a surplus of $ 51.05 billion and $ 56.58 billion in July.

The trade surplus with the United States – a source of friction that has lasted for years between the two economic powers – reached $ 37.68 billion from $ 35.4 billion in July, according to Reuters calculations based on customs data.

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