Must-Read China Economic News for Past Week (Aug.28- Sept.3)
Key messages from China-U.S. commerce senior officials' meeting; China announced to further open up services sector; China adjusted housing credit policies, cut forex RRR to spur growth...
Greetings and welcome to the newest edition of PekingEnsight. Join us as we delve into a wealth of in-depth perspectives on the dynamic and ever-changing landscape of the Chinese economy.
PekingEnsight has meticulously gathered all the crucial updates necessary for understanding the complexities of this significant moment.
👍Policies:
— China announces measures for expanding opening up of services sector
China will open wider in such services areas as telecommunications, tourism, law and vocational examinations, Chinese President Xi Jinping said while addressing the Global Trade in Services Summit of the 2023 China International Fair for Trade in Services via video on Sept. 2.
To make its development environment more open and inclusive, China will expand the globally-oriented network of high-standard free trade areas, and actively engage in negotiations on the negative list for trade in services and investment, Xi said.
The national integrated demonstration zone for greater openness in the services sector as well as eligible pilot free trade zones and free trade port will be the first to align their policies with high-standard international economic and trade rules, said the president.
"We will widen access to China's services sector, advance the opening up in cross-border services trade in an orderly manner, improve the level of standardization of services trade, and steadily expand institutional opening up," Xi said.
Xi also announced that the country will establish a national voluntary greenhouse gas emission reduction trading market and pledged support for the services sector's role in green development.
— China adjusts housing credit policies
China's financial watchdogs announced on Aug. 31 that housing credit policies will be adjusted and optimized.
The interest rates of existing mortgages for first-home purchases will be lowered, according to a joint statement released by the People's Bank of China and the National Administration of Financial Regulation.
Starting from Sept. 25, borrowers of existing mortgages for first-home purchases can seek to lower their interest rates by applying for a rate change in the contract or a swap for a new mortgage.
— China's central bank to cut forex reserve requirement ratio
China's central bank said on Sept. 1 that it will cut forex reserve requirement ratio for financial institutions by 2 percentage points from Sept. 15.
The reserve requirement ratio will be reduced to 4 percent from the current 6 percent, the People's Bank of China said in a short notice on its website.
—China announces further reduction on individual income tax
China will further reduce the tax burden for those who have children to raise or elderly to support, according to a State Council circular issued on Aug. 31.
Starting Jan. 1, 2023, the individual taxable income of parents rearing children under 3 years old will be reduced by 2,000 yuan (about 278.5 U.S. dollars) per month for each child, up from the current 1,000 yuan deduction, the circular stated.
— China removes COVID-19 test requirements for int'l arrivals
China's customs authorities on Aug. 29 announced the removal of COVID-19 nucleic acid or antigen test requirements for all inbound international travelers.
Starting from Aug. 30, travelers to China will no longer need to report the results of their nucleic acid or antigen tests taken within 48 hours when making health declaration to China's customs, according to a statement from the General Administration of Customs.
— Plan for Shenzhen-Hong Kong sci-tech zone released
China's State Council has released a plan to boost the high-quality development of the Chinese-mainland part of a sci-tech innovation cooperation zone jointly developed by the southern tech hub Shenzhen and the Hong Kong Special Administrative Region (HKSAR).
By 2025, an efficient mechanism will be basically established to support the scientific and technological innovation cooperation between the two regions, the plan states, while the reconstruction of the Huanggang Control Point will be completed and customs clearance procedures will be realized.
By 2035, the Shenzhen section is expected to become a world-class research hub that enjoys a free and orderly cross-border flow of innovation factors, solidly supporting the development of the Guangzhou-Shenzhen-Hong Kong-Macao sci-tech innovation corridor.
— China in process of updating national biodiversity strategy, action plan
China is updating its National Biodiversity Strategy and Action Plan (NBSAP) as part of efforts to implement the Kunming-Montreal Global Biodiversity Framework, Minister of Ecology and Environment Huang Runqiu said on Aug. 29.
The framework was one of the milestone achievements made last year through joint global efforts, including those made by China, which held the presidency of the 15th meeting of the Conference of the Parties to the Convention on Biological Diversity, Huang said.
He called on all parties to accelerate the revision of their NBSAPs in line with the framework, and to mobilize more resources to reverse biodiversity loss.
— China aims for 27 mln auto sales in 2023
China is aiming to bring this year's annual auto sales to about 27 million vehicles, an increase of 3 percent from the 2022 level, according to a work plan unveiled Saturday.
For new energy vehicles (NEVs), the country is targeting annual sales of around 9 million units, or a 30 percent rise year on year, said the plan jointly released by the Ministry of Industry and Information Technology and six other government departments.
📈Data Box:
— China's manufacturing PMI up in August
China's manufacturing sector continued to warm up in August as a key indicator went up for a third straight month, while the non-manufacturing sector sustained its vibrancy.
The purchasing managers' index (PMI) for China's manufacturing sector came in at 49.7 in August, up from 49.3 in July, according to the National Bureau of Statistics (NBS).
Insufficient market demand is still the major problem faced by enterprises in the manufacturing sector, said Zhao, adding that the recovery foundation of the industry needs to consolidate.
The PMI for the non-manufacturing sector came in at 51 in August, standing well above the boom-or-bust line for eight consecutive months.
— China's service trade up in first seven months
China's service trade value grew 8.1 percent year on year in the first seven months of this year to 3.67 trillion yuan (about 510.6 billion U.S. dollars), according to customs data.
Service imports climbed 21.6 percent year on year to 2.13 trillion yuan, while service exports fell 6.3 percent from a year ago to 1.54 trillion yuan.
— China's SOEs see revenue up 4.3 pct in first 7 months
China's state-owned enterprises (SOEs) and state holding enterprises saw their revenues and profits grow in the first seven months of 2023, the Ministry of Finance said Tuesday.
Revenues hit 47.72 trillion yuan (about 6.64 trillion U.S. dollars), up 4.3 percent year on year, while profits reached 2.73 trillion yuan, an increase of 3.9 percent from a year earlier.
— China's listed companies report steady growth in H1
The combined operating revenue of listed companies reached 35.39 trillion yuan (about 4.93 trillion U.S. dollars) in the first year of the year, climbing 1.61 percent year on year, data from the China Association for Public Companies showed.
Their net profits stood at 3.19 trillion yuan, down 3.38 percent from a year earlier, the association said, citing H1 financial statements of 5,206 firms listed on the A-share market.
— China has 322 online ride-hailing companies by end of July
China's online ride-hailing companies reached 322 by the end of July, four more than the number registered in the previous month, data from the Ministry of Transport shows.
By the end of last month, the authorized ride-hailing vehicle certificates and driver licenses in the country hit 2.5 million and 5.98 million, respectively, according to the ministry.
In 2022, online ride-hailing trips made up about 40.5 percent of total taxi trips, an increase of 6.4 percentage points from a year earlier.
🌏China & The World:
— Chinese commerce minister holds talks with U.S. counterpart
*Statement from China's Ministry of Commerce on the talks
Chinese Minister of Commerce Wang Wentao held talks with visiting U.S. Commerce Secretary Gina Raimondo on Aug. 28 in Beijing, according to a statement of China's Ministry of Commerce.
The two sides engaged in rational, candid and constructive communication regarding the implementation of the consensus reached by the two heads of state at their meeting in Bali, Indonesia, focusing on China-U.S. economic and trade relations, as well as economic and trade issues of common concern, said the statement.
Economic and trade relations are the cornerstone of China-U.S. relations, Wang said, adding that trade between the two countries is important for their respective economies and the global economy.
China is willing to work together with the United States to create a favorable policy environment for cooperation between the business sectors of both countries and to promote bilateral trade and investment while upholding principles of mutual respect, peaceful coexistence and win-win cooperation, Wang said.
Wang has raised serious concerns about issues including the U.S. Section 301 tariffs on Chinese goods, its semiconductor policies, restrictions of two-way investment, discriminatory subsidies, and sanctions on Chinese enterprises.
Noting that the United States has repeatedly stated that it does not seek decoupling with China, Wang said the U.S. side should match its words with actions.
While acknowledging the importance of conducting open and productive dialogues between China and the United States in the field of economy and trade, Wang and Raimondo announced the establishment of new communication channels between China's Ministry of Commerce and the U.S. Department of Commerce, according to the statement.
A working group has been set up, composed of deputy ministerial and bureau-level government officials from both China and the United States, along with representatives from the business sector, to seek solutions to specific business issues, said the statement. The working group will hold deputy ministerial-level meetings twice a year.
Wang and Raimondo agreed to maintain regular communication, meeting at least once a year, said the statement.
Additionally, the two sides have initiated an export control information exchange mechanism, which serves as a mechanism for explaining their respective export control systems and improving communication. Both sides will exchange information on export control in accordance with their respective laws, according to the statement.
The two sides also discussed and agreed that experts from both countries will engage in technical consultations on the protection of trade secrets and confidential business information during the process of enhancing administrative licensing, the statement added.
*Comments from spokesperson of China’s Ministry of Commerce on the talks
Establishing new communication channels between China's Ministry of Commerce (MOC) and the U.S. Department of Commerce is a crucial step to stabilize bilateral economic and trade ties and create an enabling environment for industrial and business communities to conduct practical cooperation, an MOC spokesperson said on Aug. 31.
Speaking at a regular press conference, spokesperson Shu Jueting said the move would provide an important platform for the MOC and the U.S. Department of Commerce to carry out discussions on economic and trade issues of respective concern in an institutionalized and regular manner.
The establishment of the new communication channels was announced when U.S. Commerce Secretary Gina Raimondo visited China from Aug. 27 to 30.
The best way to "de-risk" is to guide bilateral trade and economic relations back onto a healthy and stable development track and give better play to the cornerstone role of bilateral economic and trade relations, the spokesperson said, adding that this will help anchor enterprises' expectations and boost their confidence in trade and investment.
The spokesperson said that China will only open wider to the outside world. Enterprises from all countries, including U.S. companies, are welcome to invest and share the development opportunities in China, she said.
In response to questions concerning tariffs, Shu said that China has raised serious concerns about additional tariffs imposed on Chinese goods under U.S. Section 301.
The United States has imposed these additional tariffs on Chinese products for as long as five years, and the move has had adverse impacts on businesses in the two countries, U.S. consumers, bilateral and global trade, and the global economy, the spokesperson said.
Removing all additional tariffs imposed on Chinese goods would benefit China, the United States, and the whole world, Shu said.
— China, IMF pledge further cooperation
Chinese Premier Li Qiang met with International Monetary Fund (IMF) Managing Director Kristalina Georgieva in Beijing on Sept. 1. The two sides pledged to further strengthen cooperation.
Noting that the Chinese economy has maintained a sustained recovery trend this year, Li said China will further strengthen policy coordination and promote economic growth while sticking to reform and opening-up.
China will optimize the development environment for private enterprises, improve the scale and structure of foreign trade, and make greater efforts to attract and utilize foreign capital, according to the premier.
The country is confident and capable of promoting sustained and sound economic development, he said.
Li said China is willing to deepen cooperation with the IMF and support the IMF in continuing to play a significant role in global governance. He voiced hope that the IMF's 16th general quota review will achieve meaningful outcomes.
China will continue to support the IMF in playing its role in debt issues, and hopes that all parties will meet each other halfway and support developing countries with concrete actions, said Li.
With China contributing one third of the world's economic growth, Georgieva said the IMF appreciates the solid efforts taken by China to promote economic growth, and values China's leading role in helping the vulnerable as well as low- and middle-income countries develop and realizing global economic growth.
The IMF is willing to further cooperate with China, said Georgieva. She called on all parties to keep global supply chains steady and smooth to prevent fragmentation risks, saying that the IMF will work to achieve positive outcomes in the general quota review.
— China, Nicaragua ink free trade deal to boost economic ties
China and Nicaragua on Aug. 31 signed a free trade agreement (FTA) after year-long negotiations in the latest effort to enhance bilateral economic and trade cooperation.
As an important measure to implement the consensus reached by the leaders of the two countries, the FTA will facilitate high-level mutual opening up in areas such as goods and services trade and investment access, according to the statement.
Compiled by Jeanne Zheng