Category News of China

China’s property climate index drops in May

China’s property development climate index dropped 0.77 points from April to 95.02 points in May, the National Bureau of Statistics (NBS) said on Friday.

The figure has declined month on month for four consecutive months.

In the first five months, the country’s investment in property development rose 14.7 percent year on year to 3.07 trillion yuan (about 500 billion U.S. dollars), slowing down by 1.7 percentage points from the Jan.-April period, the NBS said in a statement.

State Council makes logistics industry’s growth a priority

China is stepping up its efforts to develop its logistics industry, as the government announced its goal of building a modern national logistics service system by 2020.

The State Council’s executive meeting, chaired by Premier Li Keqiang, approved a plan on Wednesday to develop the logistics industry in the middle and long term.

The move aims to lower the operational costs of logistics enterprises and improve logistics infrastructure networks, as well as to develop large-scale companies to improve the industrial chain, according to a statement released after the meeting.

China’s economy has grown at a fast pace, but its logistics and transportation sector as a whole remains in comparatively early stages of development.

The fierce competition has created a market in which rivals offer similar and limited services.

A total of 12 logistics issues, including services for agriculture, manufacturing, industrial material supply chain and recycling materials, will become priorities because these businesses can create more new market growth points to the industry, the statement said.

The government will accelerate the reform pace to upgrade the management style of various couriers and crack down on illegal charges and regional protectionism to create a fair market environment.

It also promised to ensure land supplies and use for building logistics service facilities such as warehouses and package sorting centers, to improve the statistical system of logistics costs, and to introduce preferential financial policies for the sector.

Zhou Zhicheng, deputy director of the research department of the China Federation of Logistics and Purchasing in Beijing, said making medium- and long-term plans is a useful way to optimize industrial structure, as diversified distribution models and the fast development of e-commerce today have changed the operation method and network density of China’s logistics market.

“As more Chinese companies are inclined to expand and create new businesses nationwide, their demand for logistics will expand beyond coastal cities, with broader national network coverage, and consistent, upgraded and standard services will become a key differentiator in comparison with previous market condition,” Zhou said.

The meeting also arranged the work details of building an economic belt along the Yangtze River to underpin China’s sustainable economic development.

The statement stressed that the Yangtze River Delta is a key pole in China’s economic growth while the central and western regions along the belt boast the largest space for further economic growth.

China Mobile eyes 100b devices with 5G network

China Mobile Corp’s chairman Xi Guohua described his vision of the next-generation telecom network on Wednesday, saying the company is aiming to build a super-fast 5G network that could bring 100 billion mobile devices on the network.

The 5G technology, which remains on papers, will have a connection speed similar to the fiber Internet, the fastest fixed-line connection as of today, said Xi.

Xi, who heads the world’s largest carrier by subscriber number, did not disclose the possible launch date of 5G service. Analysts believe commercial use of 5G in China is years – if not a decade – away because the previous technology just kicked off in the country this year.

Local research of next-generation telecom technologies is most likely to get government support in the coming years however, meaning the development process could be greatly shortened.

Liu Lihua, vice-minister of the Ministry of Industry and Information Technology, told the Mobile Asia Expo on Wednesday that development of 5G technology will receive a “full government support” in the years ahead.

China Mobile launched its 4G networks in the country about half a year ago. Coverage of China Mobile 4G is mostly confined in city areas in developed coastal regions today. Xi pledged to add the amount of 4G stations to half a million by year end.

Will China’s housing market strike iceberg?

Will the bubble in China’s real estate burst in the near future, just like the titanic hitting the iceberg?

The answer may be no, some experts said.

After a round of soaring prices, the housing market is showing increasing signs of cooling down.

May was the fifth consecutive month in which the rate of price growth slowed.

Worries raised high that the decline may continue as banks become reluctant on mortgage lending.

According to official data, sales of residential property slumped 7.7 percent during the first quarter of 2014 to 1.1 trillion yuan (about 176.6 billion U.S. dollars). Month to month, home prices have been falling in more of the 70-strong pool of major cities surveyed by the National Bureau of Statistics.

When asked whether China’s housing market is experiencing a “turning point” as sales have plunged in recent months, Feng Jun, chief economic manager with the Ministry of Housing and Urban-rural Development, said recently changes in the housing market are normal and should be viewed in a broader context.

He reiterated that the aim of property control policies is to create a balanced and steady market.

“The policy is to protect reasonable buying demand and to restrain investment,” he said.

The fact is that the underlying demand-supply equation has changed, with ongoing construction exceeding the demand of a growing urban population and upgrading.

Meanwhile, investment demand is being eroded by stagnant property prices, the anti-corruption drive and investment alternatives such as wealth management products and overseas assets, according to investment bank UBS AG.

“We do not expect a sudden collapse of property prices or a financial or balance-of-payments crisis, as is often seen in emerging economies,” said Wang Tao, China economist with UBS.

A big drop in construction activity—even without a large price correction—would likely have a serious negative impact on the industrial complex and, through that, economic growth and banks’ balance sheets.

Hence, at present the real estate market is facing a serious adjustment, and the era of the secular property boom is forever behind us, he added.

More grads still opting to start own businesses

Graduates use posters to promote themselves at a job fair in Bozhou, Anhui province, on Sunday.

The percentage of Chinese college graduates choosing to start their own businesses has risen for three consecutive years, a survey shows.

It also found that the average monthly salary of self-employed graduates is higher than those who are not.

Of the college students who graduated in 2013, 2.3 percent started their own business, higher than the figure for 2012 (2 percent), 2011 (1.6 percent) and 2010 (1.5 percent).

This is according to the 2014 Chinese College Graduates’ Employment Annual Report, released on Monday by MyCOS, an education consulting and research institute in Beijing.

The survey polled 268,000 graduates from 28 provinces and regions.

Chen Yu, vice-president of the China Association for Employment Promotion, said the increase results from government efforts in recent years to support graduates in starting their own businesses, such as reduced intervention, the offer of micro loans and cuts in taxes and fees.

“These measures provide a good environment for college graduates who intend to start their own businesses,” Chen said.

The survey also found the education sector is graduates’ preferred choice when they decide to start a business, with 15 percent of them choosing to begin their careers in this area.

Other areas, including retail, wholesale, architecture, media, information and telecoms, are among the top choices.

Feng Lijuan, chief consultant at 51job.com, a major recruiting website in China, said starting a business in these fields is comparatively easier and college graduates have a bigger chance of keeping their businesses going.

“The education sector, especially test-oriented training, is expanding quickly in China and therefore college graduates, as a group of highly educated people, can easily find a place in it,” Feng said.

Research shows post-1990 generation picky about jobs

As for the retail and wholesale industries, Feng said a series of online trading websites such as taobao.com provide a simple and convenient platform for college graduates to establish their own online stores.

The report shows that only 8 percent of self-employed college graduates started their own businesses because of difficulty in landing jobs, while 48 percent did so because they wanted to become entrepreneurs.

Other reasons include having good entrepreneurial ideas, being invited by friends or peers to start a business together and believing in the income prospects of entrepreneurship.

The report said college students who started their own businesses after graduating in 2010 now earn an average of 8,424 yuan ($1,349) a month, 41 percent higher than the average for all college students who graduated that year.

Despite the good incomes earned by college graduate entrepreneurs, experts voiced concern for such businesses.

Feng believes that real entrepreneurship lies in innovative developments in areas such as the high-tech sector.

“But most Chinese college graduates can’t make it with their current knowledge structure and therefore most of the Chinese graduate entrepreneurs end up in the service industry.”

Chen said, “An ideal entrepreneurship program can solve the problem of college graduates’ employment and also create new industries and promote the development of the economy, science and technology, just like Steve Jobs and Apple did.”

Businesses more active in Beijing Fair

Bruno Masier, chairman of World Trade Point Federation, a not-for-profit organization helping trade, said he saw more companies, rather than institutions, appear at the China Beijing International Fair for Trade in Services.

Maiser, who had attended all the CIFTIS, also the Beijing Fair, since its launch in 2012, told chinadaily.com.cn on Wednesday this indicated that real players are taking opportunities in the sector of trade in services.

He said the federation has brought 60 businesses from more than 40 countries to the fair and deals worth 120 billion yuan will be signed by the closing ceremony on June 1, according to a Beijing Daily report.

In addition to companies attending with help from global institutions, some specializing in traditional Chinese medicine also took the chance to showcase products or services.

Fan Kui, chairman of Hunan Hongyao biological Polytron Technologies Inc, set up late last year, said his company needs this platform to let people know what they can do.

Fan said his company has developed a cream, containing Chinese herb extracts which, according to clinical experiments, can help control blood sugar when applied to the skin. Fan said the product can be used in elderly care but it may take a year for people to know of its existence.

The Beijing Fair was launched by the Ministry of Commerce of China and the Municipal Government of Beijing in 2012 and has been held annually.

Vanke president says property sector’s golden era over

The days of rapid growth in China’s real estate sector are over, but the government’s urbanization drive will continue to fuel demand for the next 15 years, the country’s biggest residential property developer China Vanke Co said.

After climbing at double-digit rates through most of last year, home prices in China started cooling in late 2013, with the annual growth in average new home prices slowing to an 11-month low in April as a sustained campaign to clamp down on speculative investment and easy credit gained traction.

Vanke president Yu Liang said the slowdown heralded the end of the golden era for Chinese real estate, but said the outlook remained healthy.

“The white silver era has just begun,” Yu told reporters at its research and development center in Dongguan in South China’s Guangdong Province this week.

“The industry is now after quality and service and back to real demand…The industry was worth 8.1 trillion yuan ($1.30 trillion) last year, even growing at a single-digit rate, it’s still large enough for us.”

His comments came nearly a week after ratings agency Moody’s lowered its outlook for China’s property sector and forecast flat to 5 percent yearly growth over the next 12 months, compared to 26.6 percent growth at the end of 2013.

Yu said he believed government measures to curb speculation in the property sector had worked and prices were now more sustainable.

“I don’t agree there’s a bubble. Since the tightening measures in 2008, financial leverage of developers and individual investors has dropped significantly,” Yu said.

Analysts said the latest land transaction prices have shown that the market is becoming more rational.

“Land sales in first-tier cities weakened in April as housing prices softened. It’s important for developers to time and source the land purchase better because land cost is a big factor to determine margins,” said Hong Kong-based analyst Karen Kwan.

Kwan said developers in April were bidding on average 40 percent higher than the asking price at land auctions, compared to 80-100 percent above opening bids last year. Transaction prices in April were also 1 percentage point lower than the previous month.

She said data also showed that developers had been delaying some new housing projects so she expected less oversupply in the fourth quarter.

New housing starts in the first quarter fell 25.2 percent compared to a year ago, sparking concerns that a sharp drop in construction activity and falling prices would weigh on economic growth in the world’s second-largest economy.

Yu’s comments came just days after the chairman of SOHO China sounded an alarm over the real estate sector.

“I am not upbeat about the residential market. I think China’s real estate is like the Titanic and it will soon hit an iceberg up front,” local media quoted Soho China chairman Pan Shiyi as telling a financial forum last week.

China Vanke also aims to get listed in the second half of June, Yu said.

Guangdong launches local stimulus plan

Authorities in Guangdong province, an economic powerhouse in South China, plan to allocate a large sum of money this year to boost its economy.

According to a financial budget report submitted to a provincial legislative meeting for approval on Wednesday, the province will arrange for up to 64.7 billion yuan ($10.47 billion) to support development of infrastructure, maintain stable trade growth, expand consumption and promote the transformation of industry.

The move comes after relatively slow economic growth in the first four months of 2014.

The province’s gross domestic product grew 7.2 percent year-on-year in the first quarter, or 1.3 percentage points lower than the same period last year, data from the Guangdong Provincial Statistics Bureau show.

“The economy faces pressures, and there are some uncertain factors ahead, following a tough trade situation, sluggish performance in the real estate sector and weakening demand in domestic consumption,” Zeng Zhiquan, director of Guangdong Provincial Finance Department, said. “That’s why we had to introduce financial measures to keep stable economic development for the whole year.”

Guangdong, a longtime leader in terms of economic development in China, has a GDP growth target of 8.5 percent for 2014.

“A prompt and efficient financial policy is of great importance to adjusting the economy, given the slower economic growth of the past few months,” Zeng said. There’s “an urgent need for the government to introduce measures to boost the economy.”

Of the budget, up to 14.8 billion yuan will come from local Treasury bonds, Zeng said.

“We expect that financial input will drive more social investment, which will help boost infrastructure development and expand domestic consumption,” Zeng said.

Guangdong’s fixed investment increased 17.3 percent year-on-year in the first three months, 2.2 percentage points lower than the same period last year.

Before the financial measures, the provincial government also decided to exempt 39 administrative fees for businesses from May 1.

“In such an economic situation, the exemption of administrative fees and increased financial support represented the government’s determination to cope with the economic slowdown,” Zeng said.

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Expected salary of university graduates has fallen to 3,680 yuan per month, a record low in past four years, the Beijing News reported on Wednesday.

According to China Graduates Employment Pressure Report of 2014 released by Beijing Youth Stress Management Service Center, the expected salary was 5,537 yuan in 2011, almost 2,000 yuan more than this year.

It also shows that there are more than seven million university graduates this year, the highest number in history. However, salary and employment pressure are at the lowest in past four years.

Although the expected salary this year was a slight drop compared to 2013, but seen against the 5,537 yuan in 2011, the decline was substantial.

Meanwhile, with the drop in expected salary, the employment pressure also fell from 18.17 percent last year to 16.91 percent in 2014.

China’s foreign companies pay top salaries

Employees in China’s foreign-invested companies earned more than any other group last year, according to new survey results released Tuesday.

The National Bureau of Statistics (NBS) said in a statement on its website that foreign companies paid an average annual salary of 61,694 yuan (10,001 U.S. dollars) to their employees in 2013, topping all other types of companies.

State-owned companies paid the second highest at 56,728 yuan, while companies with investment from Hong Kong, Macao and Taiwan paid 49,683 yuan to employees, the statement showed.

The NBS tracked 870,000 companies in 16 sectors for the survey. The average salary of all tracked companies was 45,676 yuan.