Category Archives: Economy

Canton Fair down in numbers, up in spirits

The country’s biggest trade fair wrapped up this week with disappointing numbers but buoyant hopes for an upturn, according to local media. This was for two reasons: the US-China trade talks appeared to be edging toward an agreement that could see tariffs start to be lifted; and there had been a surge in orders from Asean countries, i.e., the Belt and Road Initiative appears to be working.

Nothing could dampen the mood of the fair’s irrepressible spokesperson, Xu Bing, deputy director of the China Foreign Trade Centre, who pointed out that although orders were down 1.9% in comparison to last year’s Fall session, they were up from the Spring session held earlier this year: RMB 207.09 billion vs RMB 199.5 billion.

Moreover, although attendance of 186,000 was the lowest since 2017, the 2% decline was less than the 3.9% year-over-year drop at the Spring session.

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Shenzhen confirms 6.6% growth, blames nothing

After the provincial government leaked Shenzhen’s GDP headline number for the first three quarters yesterday, causing a rush of commentary by bloggers and real-estate analysts, the city government decided today to clarify the reasons why its economy slowed so sharply, to 6.6% from 7.4% in the first six months.

Understandably, the report was full of numbers that the Shenzhen Daily tried to portray in a positive light.

At the heart of the data was an unmistakeable weakness: a sharp slowdown in industrial output and input, as we had expected in our report published yesterday.

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Services pumping in hi-tech Guangzhou

More detail is dribbling out in local media after Guangzhou reported strong GDP numbers last week. One of the clear standouts was growth in the services sector, especially the so-called “modern services industry”, which is dominated by software and other IT-related services.

Although the city is often thought of as a bastion of heavy industry and manufacturing, while Shenzhen is usually described as the “tech hub”, Guangzhou’s economy is increasingly being driven by software and other IT-related services. According to official data, this sector accounted for 68.6% of Guangzhou’s GDP in the first three quarters, an increase of 0.1% over the first half of the year. Its added-value was up 15.5% YoY.

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Shenzhen sees sharp slowdown in Q3

Something is going on in Shenzhen. The city has not yet released any reports on its economic performance in the first three quarters, yet provincial data show that the city’s GDP growth dropped sharply in Q3.

Private commentators have been reporting the provincial data today, many with alarmist analysis. This is rightly so: the 6.6% growth number recorded by Shenzhen for the first three quarters of this year follows 7.4% reported for the first six months. If accurate, that is an unprecedented quarterly slowdown.

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Dongguan tops GBA growth charts

The Greater Bay Area’s fastest-growing economy is not Guangzhou or Shenzhen, but Dongguan, which saw its GDP rise 7.2% in the first three quarters of this year – an acceleration from 6.9% recorded in the first half.

Driving this growth was the city’s staple of manufacturing – both in terms of output and input. In the year to end-September, the added value of industrial enterprises above designated size rose by 8.0%, while fixed-asset investment surged by 18.1%.

September seems to have been a particularly strong month. Industrial production was up 15.9% over August, which was a clear departure from a steadily slowing month-on-month trend up to that point.

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Macau as MICE rival to Hong Kong?

Macau’s outgoing Chief Executive, Fernando Chui, must have been surprised by the call (assuming it came) from Beijing last night, letting him know that China had offered Macau as an alternative venue to host the APEC meeting of economic ministers. It was obviously a quick decision, as Fox News was reporting on the offer within hours of the announcement by Chile that it could no longer host the November 16-17 event in Santiago.

One has to wonder whether Las Vegas Sands boss Sheldon Adelson was equally quick off the mark, perhaps offering his properties on the Cotai Strip for accommodation and meeting space. He might not care to host the entire APEC gathering – because it likely would require turfing out gambling guests from hotel suites –  but he would certainly appreciate the chance to host the presidents of the United States and China, who were supposed to sign some kind of trade deal on the sidelines of the APEC meeting.

It looks like we will never know, because sources have been quoted as saying that the US president is highly unlikely to do the meeting on Chinese soil. 

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Guangzhou: the sum of some parts

As we reported earlier this week, Guangzhou is putting in a relatively strong economic performance this year, despite the worst effects of the US-China trade war weighing on trade, the city’s traditional engine of growth. This is largely because it has new growth nodes, not only in certain industries or sectors, but also in its key districts. It is made more evident by a breakdown of the sum of its parts, which shows some of those parts are doing incredibly well, while others are lagging.

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Retail sales keep growing

Retail sales continue to be a pillar of strength for the Guangzhou economy. In the first three quarters, they rose 8.2% to RMB 734.695 billion. This was well above the 7% target set for the year, and 0.6 percentage points higher than the same period last year. After a blip in the early part of the year, it has stabilized at more than 8% for five consecutive months.

This is music to local officials’ ears, of course. Against the backdrop of the difficult external trade environment, local demand has had to fill the gap. This it appears to be doing, as consumers, businesses and government all opened their wallets to spend on consumption, not just investment.

Two key drivers of consumption have been cross-border e-commerce, and the booming “night economy”.

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