Category News of China

December manufacturing activities expand to four-year high: private survey

China’s manufacturing sector continued to expand with the purchasing managers’ index hitting a 47-month high in December, a private survey showed Tuesday.

Caixin General China Manufacturing Purchasing Managers’ Index (PMI), a private gauge of China’s manufacturing activity, came in at 51.9 in December, up from 50.9 in November, according to a survey conducted by financial information service provider Markit and sponsored by Caixin Media Co. Ltd.

This was the index’s biggest rise since January 2013, and production grew at the fastest pace in nearly six years thanks to an increase in total new work.

Official manufacturing PMI released on Sunday stood at 51.4 in December, lower than 51.7 in November and staying above the 50-point boom-bust line for the fifth straight month.

China’s car sales growth to slow in 2017

Automobile sales are expected to slow next year after a boom in 2016, the Ministry of Commerce (MOC) said Thursday.

Growth in auto sales in 2017 could slow to an annual 2 percent to 6 percent, said MOC spokesperson Shen Danyang, citing industry estimates.

About 25 million cars were sold in China in the first 11 months this year, up 14.1 percent year on year thanks to a preferential car purchase taxation policy and other government measures.

Earlier this month, the Ministry of Finance continued its preferential car purchase taxation policy but cut the tax reduction ratio for 2017.

A high comparison base and a discounted preferential taxation policy will drag down auto sales growth next year, Shen said.

China’s VR industry tumbles after explosive growth

When Fang Wenxin founded a virtual reality (VR) firm in 2015, he never expected the industry would go bust so soon.

The boom in China’s VR industry following Facebook’s U.S.$2-billion buyout of Oculus, a U.S. producer of VR gadgets and computer games, in 2014 has declined, with about 90 percent of start-ups in the domestic market declaring bankruptcy.

“There were about 200 to 300 firms engaged in producing VR helmets in 2015, but now no more than 10 companies remain functioning,” Fang said.

During the past few months, domestic VR companies, such as Storm Magic Mirror, Miido and AlfaReal, started to downsize organizations or delay payments of employee salaries due to a diminution in venture capital.

According to the latest report issued by iiMedia Research, a third party data collector and analyst of technological digital platforms, the supply of high-end smart glasses in the domestic market has failed to lure consumers, with more than 70 percent of respondents among smart cell phone users expressing no willingness to buy one.

Taken up by gigantic tech firms, such as HTC, Facebook and Sony, the market for VR hardware has left slim chances for smaller manufacturers to slot in, so that the VR businesses of domestic manufacturers focus mostly on content production.

However, despite the increasing involvement of VR start-ups, cheap copycats have eaten up the market, blocking the channels necessary for high-end innovation to reach customers.

The slump in the VR market during the second half of 2016 in China is probably the result of deficient industrial innovations, said Wu Limei, an analyst of the iiMedia Research.

But the recent fall of the VR industry may be less ominous than a sign of industrial recession when the frenetic flows of capitals have cooled down.

Zhao Ziming, an analyst from Analysys, Ltd., an agent of data collection and analysis, said the industry will be reshuffled by the entries of big companies, like BAT and NetEase, following the bankruptcies of small companies with broken capital chains. The threshold will be elevated and the money will be spent more reasonably.

Investment in the Chinese VR industry soared to 270 million yuan (U.S.$38.9 million) in 2014, a robust rise followed by 2.4 billion yuan in 2015 and 1.54 billion yuan in the first half of 2016.

China’s industrial profit growth accelerates to 14.5% in November

Profits of China’s major industrial firms increased 14.5 percent year on year in November, up from 9.8 percent registered in October, official data showed Tuesday.

Profits of industrial companies with annual revenues of more than 20 million yuan (about 2.87 million U.S. dollars) totaled 774.57 billion yuan last month, the National Bureau of Statistics said.

In the first 11 months of the year, industrial profits expanded 9.4 percent year on year to 6.03 trillion yuan, faster than the 8.6 percent rise for the first ten months, the NBS said.

NBS statistician He Ping said the sharp growth in November was a result of acceleration in the growth of both industrial production and sales, a significant rise in producer prices and the strong performance of electronics, special equipment manufacturing and oil refining sectors.

China’s producer price index (PPI), which measures costs for goods at the factory gate, continued its growth, rising by a five-year high of 3.3 percent year on year in November.

China’s Sany sets up commercial bank

Sany Group, the parent company of heavy machinery manufacturer Sany Heavy Industry Co. Ltd, on Monday led a group of ten private companies in setting up a commercial bank.

The Sanxiang Bank, based in Hunan Province, will operate with a registered capital of 3 billion yuan (435 million U.S. dollars). It is China’s eighth private commercial bank since the regulatory allowed private capital into the banking sector in 2013.

The Sanxiang Bank will focus on Chinese manufacturers, especially those investing heavily in technology.

Bank president Liang Zaizhong said that while operating with much less capital than state banks, it is China’s first bank associated with a major manufacturer.

Sany Heavy Industry Co. Ltd. sells a wide range of construction machinery such as excavators and cranes and has extensive global presence. It operates 25 manufacturing bases and 100 offices worldwide. Key overseas research and production hubs are based in Brazil, Germany, India and the United States.

The company has ventures in clean energy, with a focus on wind power.

Taiwan unemployment rate falls to 3.87 pct in November

Taiwan’s unemployment rate was 3.87 percent in November, down 0.08 percent from October, and 0.04 percent lower year on year, the island’s statistics agency said Thursday.

There were around 455,000 unemployed people in Taiwan at the end of November and 11.3 million in employment, according to a statement on the agency’s website.

More university graduates landing jobs in the month were cited as the main reason for falling unemployment, the agency said.

The seasonally-adjusted rate of unemployment for the month was 3.84 percent, down 0.06 percent from October.

China faces trade friction with developing markets

Lack of differentiated competition amid global trade downturn to blame: experts

Trade frictions between China and other developing markets over almost everything from home appliances to chemicals are increasing, a heating up in competition that comes amid a downturn in global trade.

Some of the latest disputes were initiated by Argentina, which opened up five anti-dumping probes against Chinese imports, including on steel pipes, food processing machines and dishwashers, on December 7, according to trade alerts issued by China’s Ministry of Commerce (MOFCOM).

Such “intensive” investigations aroused attention in China, Wang Hejun, director of Trade Remedy and Investigation Bureau with the MOFCOM, said in a press release on Wednesday.

According to the press release, China will thoroughly defend the rights of its firms and expects Argentina to strictly follow WTO rules.

So far this year, Argentina has launched 11 anti-dumping probes against imports from China, according to the MOFCOM.

China is Argentina’s second-largest trade partner with $11.8 billion worth of goods exported to the Latin American nation in 2015, an increase of 9.7 percent year-on-year, according to media reports.

“Emerging nations including Argentina, India, Brazil and Pakistan are prone to file WTO complaints to guard their homegrown industries against imported peers, as they are suffering from sluggish global demands and economic downturns,” said Wang Jun, deputy director of the Department of Information at the China Center for International Economic Exchanges.

Rising probes

In recent years, developing economies have filed more frequent complaints against China’s exports.

MOFCOM data showed that, so far this year, Pakistan hit China with eight anti-dumping investigations and India has started some 20.

India initiated a total of 10 anti-dumping and anti-subsidy cases in 2015, according to a statement issued by China Council for the Promotion of International Trade in February.

That year, 49 anti-dumping and anti-subsidy investigations were launched by developing countries, accounting for more than 60 percent of all probes against China, and a 22.5 percent increase from 2014, the statement showed.

China’s aggressive push in its going out strategy has made it an easy target for the current trade protectionism fever, Wang, the expert, told the Global Times Thursday.

The first 11 months this year witnessed a surge of 55.3 percent year-on-year in China’s outbound investment to $161.7 billion, official data showed.

Premier Li Keqiang predicted in October that China’s overseas investment would grow to about $720 billion in the following five years, and that its import volume would reach $8 trillion, according to the Xinhua News Agency.

A long-term challenge

“Most Chinese services and products sold to foreign consumers are the similar as products emerging countries are developing themselves,” Chen Fengying, an expert at the Institute of World Economics Studies under the China Institute of Contemporary International Relations.

The lack of differentiation will continue to create heated competition and will spur more complaints from other developing countries and regions, Chen told the Global Times Thursday, signifying long-term challenges Chinese firms will face while going global.

Wang, the expert, suggested that China would see more trade disputes as long as there is no sign of recovery in global trade.

“The U.S. and the EU are expected to start more trade battles with China in the following years, which will drive some developing countries to follow suit,” he explained.

President-elect Donald Trump is packing his transition team with veterans of U.S. steel battles with China, likely indicating a more aggressive approach to U.S. complaints against China, Reuters reported on Tuesday.

In order to carry out its “One Belt, One Road” initiative, China may need to make some compromises to settle trade disputes with other developing countries, Wang said.

Still, Chen noted that trade frictions with India, Argentina and other developing countries would not greatly impact Chinese trade volumes which mainly bank on the U.S. and EU markets.

In November, China exported 34.5 billion yuan ($4.98 billion) and 15.2 billion yuan worth of goods to India and Brazil, respectively. In contrast, China exported 247.4 billion yuan worth of products to the U.S. last month.

China predicts 958 million working-age population in 2030

The number of people in China of working age is expected to have shrunk slightly to 958 million by 2030, the Family Planning Association (FPA) announced Wednesday.

Wang Pei’an, vice president of the FPA, said the country had 1.003 billion people of working age in 2015, which will gradually decline to 958 million in 2030 and 827 million in 2050.

“Though China still has a healthy labor force at this moment, the decreasing number of women of childbearing age means we should not wait any longer to fully implement the two-child policy,” Wang said.

There were 826 million people of working age in Western developed countries in 2015, thus, while boasting a huge population, China’s overall labor productivity is just one eighth that of the developed countries, said Wang.

The FPA will improve its family planning services, such as reproductive health consultation, Wang said.

Wang added that the FPA will also pay special attention to protecting the rights and interests of the nation’s migrant population, and will provide health services to “left-behind” women and children in rural areas.

Since Jan. 1, all married couples have been allowed to have two children. This follows an earlier easing of the policy in 2013 allowing couples to have a second child if either parent was an only child.

The latest change ended the “one child” policy that had been in place since the late 1970s.

Now, UnionPay slips through barcode for payments pie

China UnionPay, the national bankcard association, launched on Monday its own app and security standard for two-dimensional barcode payment.

It thus joined existing players Alipay and WeChat Pay in the internet-based mobile payments segment.

Song Hanshi, general manager of UnionPay’s technology department, said it will adopt unified technical solutions to achieve interconnectivity among different financial institutions and to ensure consistency in user experience.

Currently, commercial banks have their own two-dimensional barcode payment apps and UnionPay hopes to promote the use of barcodes across different banks.

It will also apply token technology to protect sensitive account information from leaking and to ensure payment security.

The bankcard association is working on risk control standards for two-dimensional barcode payments and will launch its own product in this area, according to Cai Jianbo, first executive vice-president of China UnionPay.

Zhao Yao, a special research fellow at the Institute of Finance and Banking at the Chinese Academy of Social Sciences, said: “This is an important measure taken by UnionPay and commercial banks to deal with competition from third-party payment institutions, in terms of retail payment, as small merchants have become increasingly unwilling to use POS (point-of-sale) machines due to higher bankcard swipe fees.”

He said that UnionPay is likely to replicate its existing offline rules on bankcard fees, merchant administration and risk management, and apply them online.

“Whether or not it will succeed in the market is hard to say, considering that Alipay and WeChat Pay have taken a dominant share of the market. Not to mention that these two payment service providers can provide more payment scenarios through e-commerce, social networking and vertical applications than UnionPay and commercial banks,” he said.

Wang Pengbo, a senior analyst with Analysys, a Beijing-based provider of big data analyses, agreed.

In e-commerce and social networking, Alipay and WeChat Pay definitely have an advantage now, he said.

“With UnionPay and its member institutions gradually expanding their market share in this field, the competition based on consumption scenarios will grow more intense,” Wang said.

He noted that the UnionPay standards will also promote the protection of personal information and money security.

China homebuilders see record-high auctioned land price: report

Chinese largest real estate companies witnessed record-high costs for purchasing auctioned land in the first 11 months of the year, evidence that their profitability might be squeezed in the face of recent tightening moves, an industry report showed.

The combined funds earmarked for purchasing auctioned land for property development by the 40 largest Chinese homebuilders in terms of sales volume stood at 1.01 trillion yuan (147.3 billion U.S. dollars) by the end of November, said Centaline Property, a leading Chinese real estate agency.

This translates into an average price of 6,062 yuan per square meter, surging 50 percent from the previous year, the report said.

The report was released after several measures were introduced to rein in speculative housing purchases, check the risk of asset bubbles and stabilize the market, with dozens of Chinese cities modifying market rules, including the introduction of higher deposits and more purchase restrictions.

“More than 70 percent of these auctioned land plots are located in cities that have rolled out tightening moves, which presages sales and funding difficulties for some homebuilders,” said Zhang Dawei, a Centaline Property analyst.

Observers believe that a surge in housing mortgage loans and auctioned land prices contributed to the sweeping increase in home prices across China earlier this year, triggering a string of policies to cool an overheated market.

Some Chinese local governments rely too heavily on land sales for fiscal revenue and deliberately slow supply to push up prices, experts have said.