Must-Read China Economic News (March 20 - 26)
President Xi on energizing the central region; Premier Li urges efforts to resolve local government debt risks; Cross-border trade in services negative lists rolled out...
Greetings and welcome to the latest edition of PekingEnsight! We're thrilled to have you join us once again as we navigate the ever-evolving landscape of the Chinese economy.
We've implemented some exciting changes to enhance your understanding of China's unfolding narrative.
At Peking Ensight, we've painstakingly gathered all the essential updates to help you unravel the complexities of this pivotal moment. Your journey through China's economic landscape is about to become even more enlightening, and we're thrilled to have you along for the ride.
⭐Under Spotlight:
Xi calls for solid efforts to further energize China's central region
Chinese President Xi Jinping on March 20 called for solid efforts to further energize the central region at a higher starting point.
In his speech, Xi highlighted the central region's pivotal role as the country's important grain production base, energy and raw material base, modern equipment manufacturing and high-tech industry base, and comprehensive transportation hub.
He called for synergy in promoting high-quality development and writing new chapters of energizing the central region in the process of advancing Chinese modernization.
Chinese premier calls for efforts to resolve local government debt risks
Chinese Premier Li Qiang said on March 22 that continuous efforts should be made to promote the prevention and resolution of local government debt risks.
Efforts should be made to defuse risks on financing platforms and clear outstanding payments owed to enterprises, he said.
He also noted the importance of efforts to build a government debt management mechanism in accordance with high-quality development, fine-tune the investment and financing systems of local governments, and improve the long-term mechanism to prevent outstanding payments.
China's loan prime rates remain unchanged
China's one-year loan prime rate (LPR), a market-based benchmark lending rate, was 3.45 percent on March 20, unchanged from the previous month.
The over-five-year LPR, on which many lenders base their mortgage rates, also held steady from the previous reading of 3.95 percent, according to the National Interbank Funding Center.
Last month, China cut the over-five-year rate by 25 basis points to 3.95 percent, the largest drop in recent years. The one-year rate remained unchanged in February.
A lower LPR is expected to shore up the credit and property markets, reduce the financial cost of businesses and individuals, and contribute to a steady economic recovery.
China rolls out cross-border trade in services negative lists
China has rolled out national and pilot free trade zone (FTZ) versions of negative lists for cross-border trade in services to boost opening up, the Ministry of Commerce announced on March 22.
It is the first time that China has formulated a negative list for cross-border trade in services at the national level, according to the ministry. The national-level list consists of 71 items.
Such moves are deemed as China's major measures to align itself with high-standard international economic and trade rules and boost institutional opening up.
China released its first negative list in services trade at the Hainan Free Trade Port in July 2021, specifying that domestic and overseas service providers should enjoy equal access in sectors not on this list, said ministry spokesperson He Yadong at a press conference in November last year.
China welcomes Australia ending anti-dumping measures on wind towers
China welcomes Australia's recent decision to suspend anti-dumping measures on Chinese wind towers, a spokesperson for the Ministry of Commerce (MOC) said on March 21.
China and Australia have huge room for cooperation in terms of clean energy development, spokesperson He Yadong said, adding that China is willing to strengthen cooperation with Australia to cope with global climate change.
"We hope that the Australian side will keep working with China to resolve trade differences through dialogue and cooperation, and terminate other trade remedy measures against China as soon as possible," the spokesperson said.
The Australian Anti-dumping Commission recently released a final ruling notice, announcing the decision to terminate anti-dumping measures on wind towers imported from China, which are due to expire on April 16, 2024.
📢Voices on Spot:
China says U.S. subsidies, tax incentives for domestic chip sector discriminatory
In response to the recent U.S. moves on the chip sector, China's MOC said the United States has overstretched the concept of national security, abused export controls and disrupted the global semiconductor industry chains.
The United States has been providing huge subsidies and tax incentives to its domestic chip sector, and some measures have been forcing companies to abandon China and choose the United States, which are discriminatory and have violated market laws and international economic and trade rules, distorting the global semiconductor industry chain, MOC spokesperson He Yadong said on March 21.
The semiconductor sector is highly globalized after decades of development and this is the combined effects of resources endowment of different countries and market laws, he said.
China is committed to promoting high-level opening up and welcomes global semiconductor firms to invest in China and boost the healthy development of the global semiconductor industry chain, he noted.
While urging the United States not to adopt wrong practices, the spokesperson said China will take necessary measures to safeguard the legitimate rights and interests of its enterprises.
Chinese commerce minister meets Apple CEO Tim Cook
Chinese Commerce Minister Wang Wentao met with Apple CEO Tim Cook on March 22.
The China-U.S. economic and trade cooperation is a stabilizing force for the bilateral relations, Wang said, adding that China is willing to work with the United States to create a fair, stable and predictable environment for cooperation between enterprises of the two countries.
China is accelerating the development of innovation-led new quality productive forces and has broad prospects in high-tech fields such as artificial intelligence and cloud computing, which means great opportunities for enterprises from all over the world including Apple, according to the commerce minister.
China welcomes Apple to continue to develop its business in China and achieve common development, Wang said.
Cook said that China is an important market and a key supply chain partner for Apple due to its rich talent resources and strong innovation vitality.
Apple remains committed to long-term development in China and will continue to increase investment in the supply chain, research and development, as well as sales in the country, Cook added.
⭐Policy Moves Much-Talked:
China ramps up efforts to attract foreign investment across diverse industries
China has started revising the industry catalog of sectors encouraging foreign investment, the country's top economic planner said on March 20.
During the revision process, the National Development and Reform Commission will engage in extensive communication with foreign chambers of commerce and enterprises through field investigations and seminars, said Hua Zhong, an official of the commission.
The revision will maintain a focus on the manufacturing sector as one of the priorities for attracting foreign investment, Hua said, adding that China will step up support to advanced manufacturing, modern services, advanced technology, energy conservation and environmental protection to attract more foreign investment in these areas.
China's new rules on consumer finance to defuse risks, promote consumption
China's recent new regulations on consumer finance companies will improve market regulation and risk control and let the sector better play its role in bolstering consumption growth, analysts said.
The National Financial Regulatory Administration published earlier this month a series of measures that lifted the access threshold of consumer finance companies, stepped up regulatory rules, and enhanced the protection of consumer rights.
According to the official document, the main investor of a new firm providing consumer loans needs to hold a stake of at least 50 percent, up from 30 percent previously. Its shareholders with related business expertise and experience are also required to have a bigger stake. The minimum level of registered capital for the company is also raised.
Consumer finance companies mainly satisfy the small borrowing demand of consumers in a wide range of everyday scenarios, from buying home appliances and electronics to paying for home decorations and rent. Compared to bank loans, such lending is more flexible and accessible.
China's first consumer finance companies were established in 2010, and there are currently 31 such lenders nationwide. At the end of 2023, their asset scale and loan balance both exceeded 1.1 trillion yuan. Last year, more than 370 million customers borrowed from them.
China unveils regulations on water conservation
Chinese Premier Li Qiang has signed a decree of the State Council, unveiling regulations on the country's water conservation work.
Effective on May 1 this year, the regulations on water conservation aim to provide legal guarantee for China's water security, advancement of ecological progress and high-quality development.
The regulations determine rules on water use management, including setting water use quotas for key crops, industrial products and service sectors, controlling annual water use amounts within administrative regions, and restricting water-intensive projects in regions with severe water shortage or groundwater over-exploitation.
📊Key Macroeconomic Indicators:
Non-financial ODI
China's non-financial outbound direct investment (ODI) increased 10 percent year on year to 149.64 billion yuan (about 21.09 billion U.S. dollars) in the first two months of the year.
Non-financial ODI in countries participating in the Belt and Road Initiative came in at 33.18 billion yuan during the period, an increase of 0.6 percent year on year.
The turnover of contracted projects overseas grew 9 percent year on year to 138.06 billion yuan.
(Source: Ministry of Commerce)
New foreign-invested firms
Some 7,160 new foreign-invested firms were set up across China during the first two months of 2024, marking a 34.9 percent increase year on year.
Foreign direct investment (FDI) in the Chinese mainland in actual use stood at 215.09 billion yuan during the period, down 19.9 percent year on year.
FDI in the high-tech manufacturing sector jumped 10.1 percent year on year to 28.27 billion yuan in the two months.
FDI from France, Spain and Australia increased by 585.8 percent, 399.3 percent and 144.5 percent, respectively.
(Source: Ministry of Commerce)
⭐Read More:
China to develop Guangzhou's Nansha into "go global" hub
China is planning to develop Nansha District in the southern city of Guangzhou into a comprehensive services hub aimed at facilitating the global expansion of Chinese companies.
As part of the country's "go global" strategy, Nansha will strengthen the connections between China's advantageous productive forces and the countries or regions participating in the Belt and Road Initiative, Ministry of Commerce official Zuo Xianghua said at a press conference.
While offering world-class services to Chinese firms that are going global, the district will provide support in areas such as administrative services, customized tax policies for citizens of Hong Kong and Macao, and business licensing, according to Zuo.
Nansha is located in the heartland of the Guangdong-Hong Kong-Macao Greater Bay Area, serving as a major platform for cooperation among the three regions.
China to carry out third residents' time use survey
China's National Bureau of Statistics (NBS) will carry out a nationwide survey on time use by local residents in an effort to gather information about the amount of time people spend doing various activities, such as those that align with basic needs, paid or unpaid work, and others carried out based on individuals' free will.
The NBS said that the main purpose of the survey, to be carried out from May 11 to 31 this year, is to comprehensively understand the time use by residents in the world's second-largest economy and find out more about people's life quality and lifestyle changes so that government policies affecting people's livelihood and well-being can be formulated scientifically.
China carried out two similar surveys in 2008 and 2018, respectively. Compared to the previous surveys, the scope of the third survey will expand nationwide while survey respondents will cover residents above the age of 6.
The survey categories will also be expanded to 34 to better reflect the situations and expectations of residents in areas such as work, studies, life, mobility, elderly care, seeing doctors, and cultural and entertainment.
Compiled by WW