In the Financial/Economic News

[Randy W]

U.S. Warns Professional Services Firms of China Risks
The warning on due-diligence efforts came in an advisory highlighting a gulf between the U.S. and China on forced-labor questions

from the WSJ (paywalled)

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Due-diligence companies and professional-services firms should weigh the risks of operating in China, the Biden administration said in an advisory that highlighted the continuing rift between the two countries as the U.S. cracks down on goods from China’s Xinjiang region that it says are linked to forced labor.

Firms in China have faced heightened scrutiny and have been subject to raids, actions that contradict the country’s message that it remains “open for business,” the State Department said Tuesday in an advisory statement on supply chains linked to Xinjiang. 

The Treasury Department, Commerce Department, Labor Department, Department of Homeland Security, and Office of the U.S. Trade Representative joined the State Department in publishing the advisory.

The statement Tuesday, an update to an earlier advisory, emphasized the sustained gulf between U.S. and Chinese officials on Xinjiang, home to the country’s Uyghur people and other minority groups as well as a major source of cotton, solar panel components and other exports. 

The U.S. has focused on Xinjiang in a campaign to confront what it describes as the widespread use of forced labor and other human rights abuses in the region. Goods traceable from the region are presumed to be made with forced labor and largely banned from the U.S. under the Uyghur Forced Labor Prevention Act, which entered into force about 15 months ago.

 

 

[Randy W]

The tremor following Chinese developer Evergrande’s downfall

from Lei's Real Talk

Two years after Chinese developer Evergrande's debt crisis became headline news, its founder, Xu Jia Yin or Hui Ka Yan, is detained to be investigated for criminal conduct. Evergrande is notorious for its massive debt, almost the size of Vietnam's annual GDP. Its downfall will send tremors to China's already fragile economy. How much debt does China's real estate industry have in total? 

3:11         Latest development regarding Evergrande and its founder, Hui Ka Yan
11:43      Evergrande's debt structure and impact of its downfall
23:11      How much total debt does China's real estate industry have? 
34:03       Q&A

 

[Randy W]

China's Exports, Imports Fell 6.2% in September as Global Demand Faltered

from VOA News

FILE - Containers are seen at the Yangshan Deep-Water Port in Shanghai.

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China’s exports and imports both fell in September from a year earlier, though they contracted at a slower pace even as global demand remained muted.

Customs data released Friday showed exports for September slid 6.2% to $299.13 billion in the fifth straight month of decline. Imports also slid 6.2% to $221.43 billion.

China posted a trade surplus of $77.71 billion, up from $68.36 billion in August.

Lu Daliang, spokesperson of the General Administration of Customs, said in a press conference Friday in Beijing that the unstable momentum of the global economy’s recovery from the pandemic was the biggest challenge facing China’s exports.

China's economy has declined at a slower pace after leaders enacted a slew of policy support measures in recent months. China’s property sector, however, remains a drag on the economy, with sales slumping and developers struggling to repay massive amounts of debt.

 

 

[Randy W]

China economy growth slowed in third-quarter but beat forecasts

from Japan Today

China's economy has been hobbled by a crisis in the country's vast property sector  Photo: AFP

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China's economy grew more than expected in the third quarter, data showed Wednesday, but the reading was still below target and officials continue to face calls for more stimulus while struggling to contain an unprecedented property crisis.

The 4.9 percent expansion in July-September was helped by forecast-beating retail sales figures and follows a series of broadly positive readings that point to a period of stability following months of weakness despite the lifting of strict zero-COVID measures.

But authorities are still on edge over turmoil in the real-estate sector, which has long accounted for a quarter of the country's gross domestic product, supports thousands of companies and is a major source of employment.

The industry enjoyed dazzling growth for decades, but the recent woes of key developers including Evergrande and Country Garden are now fueling buyer mistrust while homes lie unfinished and prices plummet.

 . . .

Bloomberg News reported last week that Beijing was looking at issuing almost $140 billion in sovereign debt to boost the beleaguered economy, with cash would be spent on various projects.

However, observers say the blockbuster spending splurge unveiled in 2008 during the financial crisis was unlikely.

In a sign of the need for more support, data Wednesday also showed industrial production growth in September stayed flat at 4.5 percent, while urban unemployment dipped to 5.0 percent in September from 5.2 percent in August.

Unemployment data no longer includes a breakdown for 16- to 24-year-olds, after it hit a record high in June of 21.3 percent.

 

 

[Randy W]

China’s regional banks facing US$300 billion shortfall, local government debt ‘pain could be too much to bear’

• Regional banks could suffer a capital shortfall of 2.2 trillion yuan (US$301 billion) from China’s local government debt crisis, according to S&P Global Ratings
• Amid concerns over default risks from local government financing vehicles (LGFVs), regional banks had about 12 trillion yuan of exposure as of the end of 2022

China’s regional banks have relatively high exposure to local government financing vehicles (LGFVs) – the off-budget platforms set up by regional authorities to carry out infrastructure spending as well as investments. Photo: Xinhua

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The lenders, which are smaller in terms of asset size compared to state banks, have relatively high exposure to local government financing vehicles (LGFVs) – the off-budget platforms set up by regional authorities to carry out infrastructure spending as well as investments.

There are growing concerns over the default risks from LGFV debt as a result of a persistent downturn in the real estate market that has reduced revenue from land sales for many regions in China.

Local government revenues from land sales in September have yet to be released, but between January and August, they fell by 19.6 per cent year on year, far below the annual government growth target of 0.4 per cent.

S&P Global Ratings estimated that Chinese regional banks had about 12 trillion yuan of exposure to the LGFVs as of the end of last year.

In a downside scenario involving substantial LGFV debt restructuring, 20 per cent of the 80 regional banks sampled by S&P could fall below the minimum regulatory capital adequacy ratio of 8 per cent, the ratings agency said on Wednesday.

This means the banks would need a fresh injection of capital, which would likely come from local governments.

“Regional banks with concentrated exposure in resource-constrained regions, most of them in lower-tier cities, will likely feel the most pain. And for some of these banks, the pain could be too much to bear by themselves,” the report said.

 

 

 

Edited October 19, 2023 by Randy W (see edit history)

[Randy W]

China's first deficit in foreign investment signals West's 'de-risking' pressure

from Reuters

People walk at the venue of the China International Import Expo (CIIE) in Shanghai, China November 6, 2023. REUTERS/Casey Hall
 

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China recorded its first-ever quarterly deficit in foreign direct investment (FDI), according to balance of payments data, underscoring capital outflow pressure and Beijing's challenge in wooing overseas companies in the wake of a "de-risking" move by Western governments.

Direct investment liabilities - a broad measure of FDI that includes foreign companies' retained earnings in China - were a deficit of $11.8 billion during the July-September period, according to preliminary balance of payments data.

That's the first quarterly shortfall since China's foreign exchange regulator began compiling the data in 1998, which could be linked to the impact of "de-risking" by Western countries from China, as well as China's interest rate disadvantage.

 

 

[Randy W]

Dear the West. Please send your money. You know you want to and besides, we need it. Lots of Love, China

China backs ‘around 170 measures’ to open up services sector in Beijing as capital outflows, sluggish recovery bite

• Measures aimed at aligning with ‘international high-standard economic and trade rules’, Chinese commerce vice-minister Ling Ji says
• Plan endorsed by State Council comes as China grapples with continued outflow of foreign capital and a less than stellar post-pandemic recovery.

from the SCMP

The deeper reforms will relate to telecoms, finance, healthcare, culture and professional finance services in Beijing, with overseas investors given greater access to many industries. Photo: EPA-EFE

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China’s capital city is opening up its services sector to overseas and private investors as the country struggles with foreign capital flight, a sluggish post-pandemic economic recovery and a slowing global economy.

The plan endorsed by the State Council, China’s cabinet, aims to deepen reforms in Beijing’s telecommunications, finance, healthcare, culture and professional finance services, with overseas investors given greater access to many industries.

The move comes three years after the city was chosen to host a pilot zone on opening up the services sector.

Beijing was selected because of its “strategic positioning as the capital city”, the council said in a statement published on its website on Thursday.

The new opening-up policy involves around 170 measures, and its key task would be to “align with international high-standard economic and trade rules,” China’s commerce vice-minister Ling Ji said.

The measures include lifting the cap on foreign investment for certain value-added telecoms services, such as internet access providers. New national internet exchange centres and further opening up value-added telecoms services might be considered at “an appropriate time”, the council said.

 

 

[Randy W]

On 9/8/2022 at 1:55 AM, Randy W said:

China’s Pinduoduo Quietly Launches U.S. E-Commerce Site Temu
Temu is the latest example of Chinese companies expanding overseas as the economy loses steam at home

E-commerce company Pinduoduo is popular in China for its competitive prices.PHOTO: REUTERS STAFF/REUTERS

 

Link to site - https://us.temu.com/w/index.html

Pinduoduo is Temu's Chinese parent company

Chinese e-commerce firm Pinduoduo’s market capitalization surged to $195.89 billion on Thursday, higher than that of longtime rival Alibaba.

Check out more Daily Tones: https://ow.ly/BlQe50QefG5

https://www.facebook.com/sixthtone/posts/pfbid0QiSQAQJh8gRcETGLbmgP26WkT8kQsLi8csCyd6tFUyGzbS7SmPsBLenjswq42kf4l

[Randy W]

Americans are just not buying any "Christmas Crap" from China this year! Black Friday was a BUST!

Export slump brings lean times at China's "Wal-Mart on steroids'"

Christmas comes but once a year. For Leo Ho, who runs a factory that makes plastic Christmas trees in Yiwu, China's export capital for novelty knick-knacks, it comes in July, when tree orders start rolling in.

But early signs point to a lean Christmas for low-cost exporters like Ho, who told Reuters his sales were down 20 percent year-on-year in 2012.

Ho's pain reflects broader conditions in China's export sector. Amid a faltering global economy, Chinese vice premier Wang Qishan on Friday said that China would have trouble meeting its 10 percent trade growth target this year.

 

 

Not to worry, though - Shein and Temu are offering the leftovers at bargain basement prices

https://www.temu.com/kuiper/un2.html?_p_rfs=1&subj=un-search1&_p_jump_id=831&_x_vst_scene=adg&search_key=yiwu products&_x_ads_sub_channel=search&_x_ads_channel=google&_x_ads_account=7167335749&_x_ads_set=20763294212&_x_ads_id=158497108507&_x_ads_creative_id=680288735467&_x_ns_source=g&_x_ns_gclid=Cj0KCQiAyKurBhD5ARIsALamXaGC7AbSFwopQ5bCJgj6f4wZSZNWAVHAWwIbScLGPlcO8WSzd5QuGVQaAi_pEALw_wcB&_x_ns_placement=&_x_ns_match_type=b&_x_ns_ad_position=&_x_ns_product_id=&_x_ns_target=&_x_ns_devicemodel=&_x_ns_wbraid=CjkKCQiAyKurBhCAARIoAP55qh-mwj13P2eCUd3a-MCCTW6SEDdEvA5Z6NKeMOx2UQ2M85wt1hoCUZU&_x_ns_gbraid=0AAAAAo4mICEqS5g0UHyzWutdrHIpeOqbX&_x_ns_keyword=yiwu products&_x_ns_targetid=kwd-4212092204&_x_ns_extensionid=&gad_source=1&gclid=Cj0KCQiAyKurBhD5ARIsALamXaGC7AbSFwopQ5bCJgj6f4wZSZNWAVHAWwIbScLGPlcO8WSzd5QuGVQaAi_pEALw_wcB&adg_ctx=f-9334aa4e

 

[Randy W]

Moody’s warns it may downgrade China

from CNN Business

China's real estate sector is in crisis.

 

 

[Randy W]

China's Consumer Prices in Longest Streak of Declines Since 2009

(Bloomberg) - China's consumer prices dropped for a third straight month in December, a sign of weak domestic demand that's leading economists to call for more stimulus.     https://ground.news/article/chinas-consumer-prices-in-longest-streak-of-declines-since-2009.

Edited January 12 by Randy W (see edit history)

[Randy W]

China needs reforms to halt ‘significant’ growth declines, IMF chief says

from CNBC  

China’s economy saw sluggish growth in 2023, hampered by real estate issues and a slump in exports. Investors expect the economy to have grown by around 5% last year.

 

Speaking to CNBC at the World Economic Forum in Davos, Switzerland, Kristalina Georgieva said China was facing both short-term and long-term challenges.  In the short-term, she said China’s property sector still needed “fixing,” along with a high level of local government debt. Longer-term, Georgieva noted demographic changes and a “loss of confidence.”  “Ultimately, what China needs are structural reforms to continue to open up the economy, to balance the growth model more towards domestic consumption, meaning create more confidence in people, so [they] don’t save, they spend more,” Georgieva said.

Edited January 21 by Randy W (see edit history)

[Randy W]

Letters | What drives the popularity of a Chinese comedy about lay-offs

• Readers discuss the prevailing mood of anxiety among China’s working professionals, the failings of democracy, and Western officials’ fixation with Hong Kong’s national security law

The highly publicised lay-offs started by certain tech giants drew wide attention and negative reactions. To avoid similar repercussions, some companies are undertaking hidden lay-offs.

As the term implies, companies do not openly declare that they are reducing staff to cut costs. Instead, they package the process as high-quality development or corporate optimisation, while quietly dismissing employees deemed unsuitable because of their age, educational level, salary or because they are challenging to manage.

 

 

 

Edited January 27 by Randy W (see edit history)

[Randy W]

Filipino fisherman to China’s coast guard on disputed shoal: `This is Philippine territory. Go away’

 

https://apnews.com/article/china-philippines-disputed-scarborough-shoal-south-china-sea-13cf6ee1b11136ae79c949cd8e7237a0
 

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A Filipino fishing boat captain protested on Tuesday the Chinese coast guard’s aggression in the disputed South China Sea, where he asserted that Chinese officers drove him and his men away from a disputed shoal and ordered them to dump their catch in the sea.

The face-to-face confrontation on Jan. 12, which Joely Saligan and his men reported to Manila’s coast guard after returning from the voyage, is testing efforts by China and the Philippines to deescalate tensions around a potential Asian flashpoint.

 

 

[Randy W]

https://www.facebook.com/groups/going2china/permalink/6942617909199854/?ref=share&mibextid=NOb6eG

 

Great Wall