Category Archives: Economy

AmCham members decry tariffs

The American Chamber of Commerce in China has released its Second Joint Survey on the Impact of Tariffs. The survey received nearly 250 responses, with 61.6% manufacturing-related, 25.5% services, 3.8% retail and distribution, and 9.6% from other industries.

Findings include:

The negative impact of tariffs is clear and hurting the competitiveness of American companies in China. The vast majority (74.9%) of respondents said the increases in US and Chinese tariffs are having a negative impact on their businesses.

To cope with the impact of the tariffs, companies are increasingly adopting an “In China, for China” strategy (35.3 percent), or delaying and canceling investment decisions (33.2 percent). In China, for China is a strategy to localize manufacturing and sourcing within China to mainly serve the China market.

While over half of respondents (53.1%) have not seen any increase in non-tariff retaliatory measures by the Chinese government, roughly one in five have experienced increased inspections (20.1%) and slower customs clearance (19.7%).

Approximately 40.7% of respondents are considering or have relocated manufacturing facilities outside China. For those that are moving manufacturing out of China, Southeast Asia (24.7%) and Mexico (10.5%) are the top destinations.

Read the full report here.

Guangdong’s consumers prove resilient, so far 

Retail sales held up in Guangdong in March, judging by Q1 statistics released today. At RMB1.01 trillion, up 6.9% over Q1 last year, growth was 0.5 percentage points higher than the cumulative total for January-February.

Tourism is seen as contributing to the growth, according to local media. Chinese new year brought record numbers to the province, and the momentum has been maintained since then, as seen over the recent Labor Day holidays in early May. Retail sales in the key cities, including the GBA’s nine, accounted for the lion’s share, at RMB881.662 billion, up 6.7%. However, rural areas grew 8.2% to hit RMB136.234 billion.

Local media said growth was likely to speed up more in the rural areas, as major fast-moving consumer goods companies were focused there. So are commercial property developers: In Q1, of all shopping centers opened in the country, 20% were in third-tier cities and 22% in fourth-tier cities.  Moreover, it is consumers from these cities that are seen as driving growth in the bigger cities on shopping trips.

Read more (in Chinese).

Shenzhen’s private firms benefit most from tax cut

Private enterprises accounted for 70% of the corporate savings generated by tax cuts in Shenzhen, according to the city’s tax bureau.

In Q1, a new micro-enterprise inclusive tax reduction policy saved RMB1.354 billion, while a new personal income tax reduction policy saved RMB10.15 billion for individuals. The VAT rate, which was lowered on May 1 last year, generated RMB2.183 billion in savings, while interest income was also exempt for SMEs, saving RMB687 million.

Manufacturers benefited the most from the new policy, saving RMB3.9 billion in tax, accounting for 27.1% of the total reduction.

Read more (in Chinese).

Shunde’s foreign trade grows

For the first four months of the year, Foshan’s Shunde recorded a total of RMB59.44 billion in foreign trade, up 9.6% year on year. Of which, exports achieved RMB47.34 billion, up 11.2%; imports RMB12.1 billion, up 3.6%.

Shunde’s trade volume with the Belt and Road Inititive countries maintained stable growth, with trade reaching RMB15.51 billion, up 9.9%, accounting for 26.1% of Shunde’s total during the first fourth months of 2019. Trade with Southeast Asian nations clocked RMB6.13 billion, up 25%.

Mechanical and electrical products accounted for 72.6% of exports, to RMB34.35 billion, up 9% YoY. Of this, air-conditioners accounted for RMB5.61 billion, down 3.6%; microwaves RMB3.12 billion, up 6.2%; jewelry RMB3.11 billion, down 10.1%; and furniture RMB2.75 billion, up 16.1%.

China’s growth slows; markets shrug

April’s economic indicators were released yesterday by the National Statistics Bureau and, perhaps predictably, they sagged, after a strong Q1. Industrial production (+5.3%) and retail sales (+7.2) slowed, while exports, to no one’s surprise, went into negative territory (-2.7%). Fixed-asset investment continued to show resilience, at +6.1% YoY, but it was slightly down from the Q1 number and slightly missed analysts’ expectations.

The numbers worried reporters at the SCMP. Markets, however, didn’t seem to care, as the Hang Seng Index and Shenzhen A-Share Indices rose. Trump Tweet Fatigue may be the cause, but it may also simply be too soon to say.

Guangdong will report its numbers fairly soon, which will give a clearer idea of what the state of play is in the Greater Bay. For reference, the province increased its share of the national total in trade during Q1. We will look for a closer read on industrial production, retail sales, and fixed-asset investment when they are released.

Tianhe leads Guangzhou; Nansha catches up

As we reported previously, Guangzhou’s Q1 GDP was RMB550.77 billion, up 7.5% in Q1. Now we have data on the city’s 11 districts, which shows the Tianhe CBD area – a hub for services – driving growth. It was up nearly 10%, accounting for one-fifth of the city’s total at RMB111.88 billion.

Yuexiu and Huangpu came second and third. However, the fastest moving district was Nansha, which came in at seventh, on the back of its new investments in the technology industry. Construction and manufacturing drove the special economic zone to a 12% YoY growth rate in Q1.

Read more (in Chinese).

‘Big Three’ drive Dongguan Q1 growth

Dongguan’s three smartphone giants – Huawei, Oppo and Vivo – had a strong Q1, with their combined sales accounting for almost two thirds of the city’s 8.5% growth in GDP.

According to the latest data released by the city government, Dongguan’s industrial upgrading plans are well under way. In Q1, advanced manufacturing (+11.7%) and high-tech manufacturing (13.9%) accounted for 53.8% and 40.3% of total output, respectively. The star, however, was “information device manufacturing” – smartphones, notepads, laptops, and other IoT devices – which grew 15.6%. 

Investment figures paint a rosy picture for future growth, too. In Q1, total investment was up 37.6% YoY – and it accelerated sharply in March, which was also when a flurry of new manufacturing projects opened. The growth rate was second only to Guangzhou among all 11 of the Greater Bay Area cities. Driving this was R&D investment, which soared 79.1%, second only to Shenzhen’s. 

Read more (in Chinese).

Tablets, lamps drive Shenzhen’s Q1 exports

Detailed numbers from Shenzhen’s Customs Department make for some interesting reading. In Q1, the city’s foreign trade accounted for just under 10% of the national total. That is right: one GBA city, population 12 million, accounted for a tenth of all imports and exports in China, population 1.4 billion. 

Exports were dominated, as usual, by mechanical and electrical products, accounting for 80% of the total. The fastest-growing categories were lighting equipment, at RMB7.82 billion, up 19.2%, and tablet computers, at RMB6.87 billion, up a whopping 50%. 

Imports, meanwhile, showed strong growth in consumer products, up 14.3%. Half of these came into Shenzhen in January alone. Perhaps most surprising was the single biggest source of these: Chile, up 26.1% at RMB7.15 billion yuan. By comparison, imports from the EU were RMB5.93 billion, up 11.5%, while imports from ASEAN were RMB5.11 billion, up 18.1%.

Perhaps the breakdown of imports by type might explain Chile’s strength. Fresh and dried fruits and nuts were up 30.4% at RMB10.56 billion. However, Shenzhen’s tai-taisobviously know their priorities: imported cosmetics and jewelry rose 54.5% and 32.7%, respectively.

Read more here (in Chinese).

Zhuhai boosted by Gree as investment slows

Zhuhai’s economy is being held aloft at an above-average growth rate by its key industrial enterprises, especially Gree Group, the home-appliances king, latest data show. However, investment has been slowing recently, and foreign trade is under pressure, with exports declining sharply in Q1.

In Q1, the city’s GDP rose 7.4%, a percentage point above the national average, to RMB67.168 billion. It was the third-fastest growing city in the Greater Bay Area, behind Dongguan and Shenzhen. This was despite a YoY decline of -2.8% in the primary sector (raw materials). Industrial production was up 7.7%, thanks to the contributions of large-scale enterprises. Services were up 7.5%, with retail sales showing a recovery from a slump last year.

Gree, led by the formidable Dong Mingzhu, winner of a billion-yuan bet recently with Xiaomi chairman Lei Jun, had a strong quarter. The city’s home appliance industry was up 21%. The bio-pharmaceutical industry was next best at +12%, while precision instruments and petrochemicals came in at +9.0% and +7.6%, respectively. However, the electronic information industry saw anemic growth, up just1.6%.

More worrying was investment. Overall investment, at +5.7%, was several percentage points slower than the same period last year. This was due to a slump in private-sector investment, which was down 5.9% in the quarter. 

Trade is clearly feeling the effects of a weakening external environment.The total volume of imports and exports was -11.4% YoY, pulled down by a -19% plunge in exports.

Foreign direct investment rose by just1.6%.

In the services sector, retail sales are recovering and domestic demand is improving. Tourism is being seen as a key driver of future growth in Zhuhai. This is especially considering the Hengqin Railway Station opens at the end of the year, which is expected to boost arrivals to the seaside city. The Zhuhai-Hengqin Intercity Railway Line will improve access to both the Chimelong Ocean Resort – which opens a big new phase this year – and the soon-to-open Novotown resort in Hengqin.Read more here (in Chinese).