China’s economic growth may have ‘peaked’, will ‘wane’ for rest of 2021 after April sentiment slowdown
China’s official manufacturing and non-manufacturing purchasing managers’ indices (PMI) dropped in April, but continued to show growth in the economy. Some analysts said China’s economy has peaked after a record year-on-year growth rate of 18.3 per cent in the first three months of 2021 and will slow gradually for the rest of the year. “The hi-tech manufacturing suppliers’ delivery time index has been below 44 for three months, the raw material procurement cycle has been extended, and normal production activities have been affected to some extent. “The manufacturing PMI in April continued to expand on top of the obvious rebound in the previous month, the intensity was weakened, but it was still higher than the level of the same period in 2019 and 2020, and the manufacturing industry maintained steady growth,” Zhao said. “The non-manufacturing sector still showed rapid expansion, but the pace has slowed down. Thanks to the Tomb Sweeping Day holiday [on April 5] and the [coronavirus] outbreak prevention progress, consumer spending in the service sector recovered further recently.”
China’s factory activity growth slows on supply bottlenecks, soft demand
China’s factory activity growth slowed and missed forecasts in April as supply bottlenecks and rising costs weighed on production and overseas demand lost momentum. The country’s official manufacturing purchasing managers’ index (PMI) fell to 51.1 in April from 51.9 in March, data from the national Bureau of Statistics (NBS) showed on Friday (April 30). It remained above the 50-point mark that separates growth from contraction on a monthly basis but was below the 51.7 expected in a Reuters poll of analysts.
With China’s coming economic ascendancy, how will the US react?
China is now expected to leapfrog the US by 2028, and amplify its power projection to a new level To the US, this will be an ego-shattering moment, as it has long leveraged its economic advantage into strategic power In the next decade, one can expect a China that is uncompromising in asserting and defending its national interests, especially as its economic rise translates into strategic ascendancy. While it does not seek to rewrite the world order, Beijing will no doubt guard whatever its interests are by whatever means possible, even if that means war. With China’s economic ascendancy over the US all but assured, how Washington will take it is the great unknown. Judging by the present state of relations, it should be anything but a smooth handover.
China Politburo Reiterates No Sharp Turn in Macro Policies
China’s top leaders pledged to deepen supply side reform and drive a rebound in domestic demand, staying the course for now to bolster the economy’s recovery. The state will continue to keep macro policies consistent to boost a recovery in manufacturing and private investment, the state-run Xinhua News Agency reported, citing a meeting of the Communist Party’s Politburo chaired by President Xi Jinping. The meeting also called for strengthening and improving regulatory supervision of the so-called platform economy and avoiding an inflation in home prices.
China’s Hidden Bank Assets Are Emerging from the Shadows
Lenders are being pushed to recognize $1.3 trillion of products sold in racier times. That could prove costly. Chinese banks’ books are looking cleaner as soured loans are cleared out. But it’s worth keeping an eye on what’s happening in the shadows. Over the last year, the country’s lenders wrote off big chunks of non-performing loans – around 3 trillion yuan ($463 billion). A commendable effort. But as the bad loans fall, banks including Bank of China Ltd. and Industrial and Commercial Bank of China Ltd., or ICBC, have been preparing to bring their off-balance sheet activities into the light: impairment provisions on so-called non-loan assets such as wealth management products or WMPs rose by a staggering 128% last year. At China Merchants Bank Co., another large lender, provisions largely due to expected losses from this business segment rose over 65% to 13.6 billion yuan as of March. At ICBC, impairments on such other assets rose to 30.8 billion yuan last year. That’s worrying. Banks typically set aside money for future losses. The almost 2 trillion in loan loss provisions set aside last year was in keeping with the cleanup effort that Beijing has undertaken over the last few years. That’s served them well, and in the last quarter of the year, their credit costs fell too Now they have to focus on the real elephant in the room: almost 8.5 trillion yuan ($1.3 trillion) of loan-like assets they’re sitting on. These products, sold to their customers and some housed at other non-bank financial institutions, are held off the books, but new regulations on how they’re handled and accounted for are supposed to kick in later this year. That means they’ll have to be brought out of the shadows.
Global supply chain continues to shift away from China, but it remains the top sourcing location
American and European companies are gradually reducing their reliance on China, and its popularity as a sourcing market among Western buyers took a hit during the pandemic As a regional alternative to China, Vietnam maintained its popularity during the turbulent 2020, and this year it was named as a top-three sourcing market by a quarter of respondents globally
Global FDI hit 15-year low in 2020, China overtook U.S.: OECD
Global foreign direct investment flows ebbed to a 15-year low last year and China, one of the few major economies to eke out growth, overtook the United States as the top destination, OECD data showed on Friday. As the coronavirus wreaked havoc on the global economy, global FDI flows dropped 38% in 2020 to $846 billion, the lowest level since 2005, according to the Paris-based Organisation for Economic Cooperation and Development. That represented only 1% of global gross domestic product, a level not seen since 1999. A recovery in cross-border mergers and acquisitions activity in the latter part of 2020 and so far this year could fuel a rebound in FDI in 2021, the OECD said. China surpassed the United States last year as the leading destination for foreign investment while large parts of the world’s biggest economy were shut down due to the pandemic. India and Luxembourg, where many shell companies are legally registered, followed as top destinations for inflows, the OECD said.
Patent Eligibility in China
Before filing patent applications globally, it is of great importance to know whether the pursued subject matter is patentable in the targeted jurisdiction, as filing a patent application for an unpatentable subject matter will end up in waste of time and money. As China is emerging as a significant destination for patent filings, and that the patent system of China differs somewhat from other jurisdictions, it would be beneficial for global patent filers to have a knowledge of patent eligibility in China. In addition, recently there were some changes in the Patent Law and patent practice of China, bringing something new to the patent eligibility issue. This article is trying to provide up-to-date information on patent eligibility in China.
Aluminium, cement makers are under pressure to help China achieve carbon emission goals
They are being pushed to switch to cleaner fuels, reduce output and boost recycling The latest pressure comes from the environment watchdog, which plans to raise the bar for approval of new emission-intensive industrial projects
Beijing summons online financial platforms and warns over unfair market practices
Companies asked to attend include Tencent, Baidu’s fintech arm, JD Finance, ByteDance and Meituan Finance among others Regulators say there have been breaches of consumer rights with some platforms operating outside permitted business areas
Giants Tencent, Bytedance among companies reined in by China
Chinese regulators have called on 13 online platforms to adhere to tighter regulations in their financial divisions, as part of a wider push to rein in China’s tech giants.
Taiwan bans recruitment for jobs in China to combat brain drain
Home of TSMC and Foxconn takes drastic move to secure lead in semiconductors Taiwan has told staffing companies to remove all listings for jobs in China, a drastic move to prevent the outflow of vital tech talent to the mainland amid rising tensions between Taipei and Beijing. China has long viewed the democratic Taiwan as part of its territory. But relations between the two sides soured following the U.S.-China tech disputes. Taiwan’s chip industry ranks second only to the U.S., and Washington hopes to partner with Taipei to curb Beijing’s tech advancement. Taiwan has been intensifying efforts to prevent talent, especially in semiconductors, from flowing to China. Taiwanese prosecutors alleged last month that China’s Bitmain Technologies, the world’s leading cryptocurrency mining chip developer, illegally lured more than 100 engineers in Taiwan to boost its artificial intelligence prowess. Prosecutors raided seven places in New Taipei City and Hsinchu, the heart of Taiwan’s chip industry, and summoned more than 20 people for questioning. Taiwan’s Executive Yuan in April initiated working groups and asked the Mainland Affairs Council, Ministry of Economic Affairs, Labor Ministry and Justice Ministry to study how to prevent poaching by China, the notice said.
Analysis: Chip shortages expose Achilles’ heel of Germany’s recovery
“In the medium to long term, it’s also in Europe’s interest to increasingly localize these technologies in Europe,” the VDA’s Rotter said. “But that takes time and does not solve the current bottleneck problem.” Further complicating the economics of such re-locating steps is the problem that the German car industry’s share in the global semiconductor market itself is too small for a complete and profitable in-house production, he added. In alliance with the European Union’s executive, German Economy Minister Peter Altmaier and French counterpart Bruno Le Maire are planning to pour billions of euros into state aid schemes to support the construction of local chip factories and development of next-generation semiconductors. As parts of the efforts, the European Commission last month launched a 10-year plan, setting its sights on a 20% global semiconductor market share and building a fabrication plant that can make superfast 2 nanometer chips. On Friday, European Commission Thierry Breton will meet the chief executive of chipmaker Intel (INTC.O) and a top executive of Taiwanese competitor TSMC as the EU seeks to shield the bloc from future shocks in the global supply chain. Breton is seeking to persuade a leading chipmaker to site a major fabrication plant in the EU that would help realise the Commission’s strategic goal of securing the most advanced chip production technology over the next decade.
Daniel Zhang on Leadership and His Vision for Alibaba
On Wednesday, Alibaba Group Chairman and CEO Daniel Zhang joined Retail Connected 2021 to share his vision for Alibaba and the growth engines behind the company. Below is the transcript of his conversation with Sherry Ding, partner at Spencer Stuart China. His answers have been lightly edited for clarity.
Alibaba Fuses Digital Stores with Livestreaming
As livestream e-commerce – a trend accelerated by the Covid-19 pandemic – continues to heat up, Taobao Live pumped out a series of measures for brands to supercharge their growth through its immersive technology. One way that the Alibaba Group-owned livestreaming platform has sought to do this is by deeply integrating its livestream technology with brands’ e-commerce stores.
Time for investors to take a hard look at China hard tech
Global investors are missing opportunities in R&D-heavy sectors China has become a huge magnet for foreign capital. In 2020, despite the COVID-19 pandemic, China passed the United States as the world’s largest recipient of foreign direct investment, while its exchanges hosted half of the world’s 10 largest IPOs and four of the top five. Meanwhile, US pension funds continue to pour money into big Chinese private equity deals—$13 billion between 2010 and 2019—despite geopolitical tensions and disappointment over the sudden halt of the IPO of fintech juggernaut Ant Group.
How Xiaomi went from China’s hottest smartphone start-up to lifestyle brand
Xiaomi got its start by cultivating an avid fan base with its MIUI Android software, quickly incorporating highly demanded features After becoming China’s hottest start-up, Xiaomi transformed itself into a lifestyle brand a la Japan’s Muji
China’s Big Four state-owned banks’ first-quarter earnings growth comes in line with analysts’ expectations
China Construction Bank led the profit growth, reporting a net income of 83.1 billion yuan (US$12.85 billion), up 2.8 per cent year on year ICBC was the only major bank that did not see a drop in its bad-loan ratio, which was unchanged at 1.58 per cent at the end of March
Hong Kong stocks sink with Meituan, Alibaba losses amid tech clampdown concerns, slower Chinese manufacturing
Hang Seng Index is headed for the biggest pullback in a week as Meituan, Alibaba Group and Tencent drag tech stocks lower A government report today shows Chinese manufacturing slowed this month by more than economists expected
China’s US$11 trillion stock market needs cyclical catalysts to end lethargy amid debates on growth outlook, BCA Research says
Defensive stocks’ strength over cyclicals and benchmark gauges bode ill for the broader market and economic growth, BCA Research says Cyclical stocks – proxied by energy, materials, and consumer discretionary among others in MSCI China gauges – remain depressed in onshore and offshore markets
China opens state-owned satellite internet company
Xiong’an New Area, a new development zone 100 kilometers south of Beijing in Hebei province, became the home of a newly established state-owned satellite company as China ramps up efforts to build its own satellite internet to compete with Elon Musk’s Starlink and Amazon’s similar project, reported Caixin. China Satellite Network Groupis the first state-owned enterprise controlled by the central government to be headquartered in Xiong’an. China Satellite Network will be responsible for the overall planning and operation of satellite internet construction as part of a new infrastructure plan published by the National Development and Reform Commission in April 2020. “China has been slow in satellite internet,” a researcher in the field told Caixin. “Others have started to run, so we can’t wait. After all, orbit and spectrum resources are limited.”
JD.com’s logistics unit gets go-ahead for up to US$4 billion IPO in Hong Kong
IPO would follow US$3.5 billion Hong Kong listing by JD Health, secondary listing by parent last year Logistics and other services accounted for 5.4 per cent of parent JD.com’s revenue in 2020
EV maker Nio sees little threat from legacy rivals: CEO
Chinese electric vehicle maker Nio downplayed competition while delivering its first-quarter results on Friday, with chief executive William Li relaying minimal concern about its growing list of challengers in China.
Why Luxury Brands Need to Think Like Media Platforms
Consumers now demand to be entertained by branded content, with longer and more immersive formats holding stronger appeal. Taking a “media platform” approach to marketing content is a key to closing the loop between attracting consumer attention and making sales. It’s not a question of if, but rather when, major luxury brands take the initiative in producing content for platforms like Netflix or Amazon that can educate, entertain, and ultimately sell to a global consumer base.
China adds teeth to crusade against food waste with new law
Restaurants, broadcasters and more face penalties for promoting overindulgence — China enacted a wide-ranging law Thursday designed to reduce food waste in the country, including by imposing fines of up to 100,000 yuan ($15,500) on broadcasters and streaming services involved in content that promotes binge eating.
Hainan Airlines, hit by Covid-19 and HNA Group restructuring, posts biggest-ever annual loss for a listed Chinese company
Haikou-based carrier reports a loss of US$9.9 billion for 2020 Airline unprofitable this year too, reports first-quarter loss of 2.6 billion yuan
China’s top airlines see recovery in traffic, but not in profits
Weak performance during holidays hurt bottom lines, but outlook looks brighter
US has ramped up reconnaissance in Chinese-claimed waters, says Beijing
China says US reconnaissance is up 20 per cent for warships and 40 per cent for planes in areas claimed by Beijing, causing warships’ close encounter It comes as President Joe Biden tells Congress the US is ‘in competition with China and other countries to win the 21st century’
A message for US and China as India and Russia put two and two together
A meeting of the Indian and Russian foreign and defence ministers has a purpose beyond clearing up bilateral misunderstandings, experts say New Delhi reminds US of its strategic autonomy and soothes Russian qualms about Quad. Moscow tells Beijing it will keep selling arms to China’s Himalayan rival
China’s ambassador blames Australia’s ‘economic coercion’ for breakdown in relations
Cheng Jingye cited Australian government’s decision to cancel infrastructure deal between Beijing and the state of Victoria among litany of ‘negative moves’ ‘Clinging to ideological bias as well as Cold War mentality and regarding China as a threat will lead nowhere,’ he told a group of business leaders
If you want peace, prepare for war
In the 1980s, Australian intelligence services assessed that American installations at North West Cape, Nurrungar and Pine Gap were likely nuclear targets for the Soviet Union during the Cold War. While Nurrungar is now closed and technology has made North West Cape less relevant, Pine Gap remains a likely target. Sometimes unfortunately also, it is in Australia’s national interest to follow America into war. Were there to be conflict between China and America over Taiwan, Australia would have no choice but to follow America, including by ceasing food, energy and iron ore exports to China. Were Australia to not follow and to try to maintain strategic neutrality, we would most likely lose the protection of America’s Pacific defence umbrella exposing Australia to even great threats and risks. America’s and Australia’s defence preparedness and resolve is essential for preventing armed conflict, but it does not necessarily indicate the eventuality of conflict. Yet paraphrasing Leon Trotsky, Australia may not be interested in a war for Taiwan, but if there was a war for Taiwan, it would be interested in Australia.
China’s imports of US coal, Canadian barley continue to climb amid ban on Australian exports
US coal exports to China more than doubled between February and March, moving Beijing closer to meeting US-China trade deal obligations Canada has also gained from China-Australia trade tensions, with barley exports to China more than doubling during the current harvest season
Bolstering the Quad beyond its military dimensions
The Quadrilateral Security Dialogue (Quad) — comprising the United States, India, Japan and Australia — has been reinvigorated in response to China’s growing assertiveness. Improved interoperability and collaboration over shared defence and security concerns may help deter China. But other measures are needed for the Quad to make a real difference, including prioritising trade, investment and the environment, and enhancing cyber and maritime security cooperation in the Indian Ocean. The Indo-Pacific strategy is developing on a number of levels, pointing to the need to include more like-minded nations as part of a multilateral response to China’s geopolitical ambitions. These ambitions are manifested militarily in China’s maritime advances and economically through the BRI. Any Quad-plus expansion will have to be handled sensitively and inclusively to avoid undue pushback from ASEAN and its members. An expanded Quad grouping at some future time could look to involve countries like South Korea, New Zealand, Vietnam and other concerned ASEAN member states. After some ups and downs, the Quad has emerged as a body which its members see as having considerable utility. If the Quad is to be successful in balancing and deterring an increasingly assertive China, it will need to extend its focus beyond security. It must venture into the realm of trade and investment with a focus on environmental issues to address the needs of states buffeted by growing great power competition.
China-US rivalry poses challenge for Vietnam’s leaders, observers say
Recent meeting of senior Chinese and Vietnamese officials suggests Hanoi has ‘picked a side and is leaning closer to its neighbour’, academic says But others say Vietnam cannot afford to sacrifice its core interests in the South China Sea just to placate Beijing
Why investors are already missing the Covid-19 pandemic
Markets have benefited hugely from the virus-induced disruption. But, as the recovery gathers momentum, uncertainty remains about which changes will prove permanent and which will be less consequential As I argued previously, while fears about an inflation shock are overdone, there is a significant risk that this year’s growth spurt forces the US Federal Reserve to signal a withdrawal of stimulus sooner than markets anticipate, triggering a much sharper rise in bond yields. A year ago, investors could only dream of a vaccine-driven boom that is expected to deliver a 6 per cent global growth rate in 2021. Yet, the post-pandemic landscape is proving difficult to navigate, while the risk of America’s economy overheating is preying on investors’ minds. Last year’s blistering rally looks increasingly like the high water mark for asset prices.
Xi Jinping offers China’s help to address Indian Covid-19 crisis
Chinese president tells Indian Prime Minister Narendra Modi he is willing to strengthen cooperation and provide support and assistance India reports almost 390,000 new cases and 3,500 deaths on Friday, and has appealed for aid such as oxygen concentrators
China on alert for Covid-19 variant from India as Labour Day stress test looms
The B.1.617 strain has been detected among some inbound travellers, Chinese health authorities say Government expects the number of national holiday trips to reach pre-Covid levels
Why China may struggle to meet its Covid-19 vaccination target by June
Jabs in acute shortage, with production capacity yet to catch up with domestic need and export demand Average doses given per day would need to more than double for China to hit its June target of vaccinating 40 per cent of the population
Shanghai Offers Locals Cash, Groceries to Get COVID-19 Vaccine
The city is just the latest in China to offer incentives as the country strives to inoculate 40% of its population by June
How many people?
As we race into the May Day holiday, there was the interesting question this week of just how many people there are in China. The National Bureau of Statistics is scheduled to announce the once-in-a decade latest count real soon now, and the FT had a story saying that the number would show the population has already started to shrink—a year-on-year decline for 2020, the first since the great famines of the late 1950s. But then the Stats Bureau leapt in with a statement saying that the country’s population increased in 2020. One explanation is that the numbers for 2011 to 2019 are being re-calculated, but one way or the other, it suggests that China’s population is leveling out much faster than expected—it was previously estimated that the population would peak in 2027. This has interesting implications in terms of the psychology of the whole nation. Why does it matter? Answer—it impacts on the sense of national identity, as well as having big economic implications. India’s population is growing much faster, even with the unfolding virus nightmare, and we are not too far away, it would seem, from the point where the standard line is: India, the world’s most populous nation. In other news before the holiday, Huawei reported a big drop in quarterly revenues, the EU-China investment deal may have difficulty getting ratified by the European Parliament, iron ore demand is soaring, and the big tech companies, now including Meituan, are under big big pressure to clean up their acts to show they are acting in the interests of the state and the people, and not just slavishly fighting for profit. Jack is also being very quiet. But enough of all that—the people of China are going on holiday, backed by a sense of relief that they are not locked into a virus nightmare like India.
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