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).

HSBC plans more China tech jobs  

HSBC plans to add more than 1,000 jobs this year at its technology development centers in Guangzhou, Shanghai and Xi’an, reports Reuters.

HSBC’s expansion plan in China, a key market for the bank, comes amid growing use of technology in the financial sector – from payments to transactions. At stake is a bigger share of the billions of dollars worth of retail and corporate banking business in a major financial market with a growing customer base.

About 30% of the work done at the Guangzhou center, the largest HSBC tech facility in China with more than 5,000 employees, is for the mainland market and that share is expected to grow over the next couple of years.

Read more.

Netease Pay gets into export settlement 

Netease Pay, Guangzhou-based internet company Netease’s payment arm, has partnered with US-based Citibank to provide cross-border e-commerce operators with accounts that can collect payments in foreign currencies. China UnionPay and China Netcom will handle the forex conversion, reports Yicai Global.

The service is aimed primarily at Chinese exporters and is a new focus for Netease, which established itself as the country’s leading e-commerce platform for Chinese buying goods internationally. Cross-border financing, tax refunds and other services will likely be added in Q3, after the platform has improved its basic functions, according to a company spokesperson.

Netease’s Koala had a 27.5% market share of total cross-border e-commerce in Q1, according to Guangdong-based iiMedia Research. Alibaba’s Aliexpress service is its prime competitor.

Ren Zhengfei’s black swans prove prescient

The newswires are full of analysis today of President Xi Jinping’s visit to a Rare Earths plant and his extolling of “Long March spirit”. We won’t add to it. Better to focus on Ren Zhengfei, enigmatic leader of Huawei, who gave another interview this week at the company’s Shenzhen HQ that demonstrates what the president is talking about. 

This is a man who had black swans placed in the artificial lake outside his windows years ago. If US President Donald Trump’s team thought they were going to catch Ren unawares by putting Huawei on a blacklist last Friday, they clearly haven’t been reading Nassim Nicholas Taleb like he obviously has.

Ren listed a number of measures the company had taken in recent years to prepare for what happened last Friday and which was acted upon yesterday by various US firms such as Google, Intel, Qualcomm and others. If Ren is concerned about Huawei’s ability to survive the depths of the China-US trade war, he isn’t showing it. He had the gumption not only to hit back at the Trump administration, but also to not-so-subtly hint to Chinese policymakers – at least, those that might have been entertaining the thought of intervening – to stand back and let him manage this crisis with his team.

We don’t yet know how much any of this will mean, given the uncertain reaction of consumers to product changes, as well as the extent to which Huawei is exposed to the US ban. That will take time to ascertain. We do admire Ren’s coolness, however, and believe it will come as reassuring not only to Huawei staff, but to many others in the company’s supply chain, and many others who call the Greater Bay Area home.

As we have written previously, Huawei is not any company. It is a symbol of China’s emergence as a tech power every bit as much as it is a tech innovator. If Huawei is able to make good on Ren’s promises in the coming weeks and months, many participants in the GBA economy will have less to worry about, not just all those gazing out at the black swans.

Where the China-US trade war goes next is anyone’s guess. We are still on the side of the cautious optimists who believe that reason will prevail, in time, and the worst-case scenarios being reflected in recent waves of stock-market selling will not be realized. In the meantime, it’s best to stay tuned to SupChina, Sinocism and Trivium for detailed daily analysis at the national level, and stay tuned to GBA Today at the regional level.

Projects attract RMB900b from insurance funds

Insurance funds have invested about RMB900 billion on infrastructure projects related to the development of the Greater Bay Area. According to data from the Guangdong Banking and Insurance Bureau, the steady investment flow from these funds, which typically have ROI horizons of 30 years, acts as a “stabilizer” for the region’s construction.

China Taiping, for example, has supported the construction of Baotou-Maoming Expressway, Chaozhou-Huizhou Expressway, Yunfu-Yangjiang Expressway, Lecang-Guangzhou Expressway and Nansha Bridge through debt schemes, raising a total of RMB5 billion. In addition, it assisted the government-backed Shenzhen Investment Holdings to acquire Hopewell Highway Infrastructure Ltd. for HK$1.4 billion.

Besides China Taiping, as of the end of Q1, the People’s Insurance Company Group (PICC) has invested RMB45 billion, Ping An Life Insurance close to RMB40 billion, and Ping An Property & Casualty Insurance RMB30 billion in the region. In 2017, Ping An Group and the provincial government jointly launched the “Guangdong Ping An Development Fund” with a target of RMB150 billion to invest in large-scale infrastructure projects in the Greater Bay Area including high-speed railways, inter-city railways and airports.

Read more (in Chinese).

Tencent co-founder gifts HK$4b to education

Chen Yidan, one of the co-founders of Tencent, has donated more than HK$4 billion (US$510 million) of the company’s shares to establish a charitable trust for educational causes, according to the Chen Yidan Foundation.

The donation procedure was completed last year. It was said that the total volume of donations contributed by Chen had reached nearly HK$10 billion, according to the Shenzhen Daily.

The money will be used to connect with quality educational projects from overseas and support new projects that are significant to the development of Chinese education.

“In today’s highly developed world, if education looks to achieve any breakthrough, it needs to have a global vision and this is more important than ever,” said Chen. “If education is for the future, then it’s a future for all mankind.” Chen added that he hopes he can further facilitate exchanges between the Chinese education system and its international counterparts.

Uniform policies focus of Bay Area integration

Policymaking that applies to all cities in the Greater Bay Area is a focus point of regional development, but not an easy one to undertake. This much was made clear by key GBA officials this week.

Cao Dahua, executive deputy director-general of the Office of the Leading Group on Construction of the Guangdong-Hong Kong-Macao Greater Bay Area, said during a group media interview on Monday that local governments will first research key areas for policymaking such as innovation and technology, customs clearance, business environment and people’s livelihoods. One Country, Two Systems will be respected, he added.

Patrick Nip Tak-kuen, Hong Kong’s secretary for constitutional and mainland affairs, said that healthcare will be one of the top areas that require cross-boundary policy breakthroughs as the provision of top quality healthcare service is vital for attracting talented workers to live and work in the Bay Area.

He added that the Hong Kong government will put in greater efforts to coordinate the institutional differences in healthcare between Hong Kong and the mainland, so that funds, drugs and medical equipment in Hong Kong can be used in clinics and hospitals in Guangdong.

This includes research on how to enable Hong Kong residents to use their elderly healthcare vouchers in the Bay Area, Nip noted.

The Hong Kong government will also facilitate more training for medical professionals in the Bay Area, through cooperation with medical schools in Guangdong, he said.

Read more. 

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).

Zhuhai ferry route to link islands

Some of Zhuhai’s most pristine and picturesque offshore islands will soon be accessible by ferry from Macau and Hong Kong.

The Wanshan Marine Development Test Zone has signed an agreement with the Guangdong Province Navigation Group to launch the service. Wanshan, meaning ten thousand islands in Chinese, is a cluster of 76 islands located between Hong Kong and Zhuhai . These islands, scattered over an area of 2,600 square kilometers have had varying degrees of exposure to tourism. Dongao Island, for example, is ranked as one of the top 10 Zhuhai destinations. Guishan Island is closest to Zhuhai, with a population of around 6,000. It  has the capacity for docking yachts. Nearby there is also a Chinese white dolphin reserve, a macaque reserve, a coral reserve and a recreational fishing zone.

However, the islands are currently only accessible by ferry from within Zhuhai. The companies have released few details of their planned cooperation so far. They have simply said they wish to explore the potential of leisure tourism within the Greater Bay Area and build greater connectivity among Wanshan, Hong Kong and Macau.

Read more (in Chinese).