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This week marks the 50th anniversary of diplomatic relations between China and Brazil.
The commemoration comes with a groundbreaking announcement: The two countries have elevated their ties to a China-Brazil community with a shared future for a more just world and a more sustainable planet, and agreed to align the Belt and Road Initiative (BRI) with Brazil's development strategies.
China and Brazil have also signed 37 bilateral agreements that range from protocols on agricultural exports and joint projects in innovative technology to plans for enhancing AI capabilities and promoting sustainable mining practices.
Over the past half-century, the two nations have made significant achievements in economic and trade cooperation, strengthening bilateral economic and trade ties.
China has been Brazil's largest trading partner for 15 consecutive years and is a major source of foreign investment, while Brazil has long been China's top trading partner in Latin America.
China's trade with Brazil increased by nearly 10 percent in the first 10 months of 2024, as China's annual imports from Brazil in the past three years have stayed above USD100 billion.
According to Chinese customs, trade with the South American country grew by 9.9 percent year-on-year to reach 1.14 trillion yuan (USD157.62 billion), maintaining steady growth and outpacing China's overall trade growth rate by 4.7 percentage points.
Beyond traditional manufacturing and goods trade, Chinese companies have actively participated in renewable energy projects in Brazil, including hydropower, solar and wind energy projects. This involvement in green economic development has further diversified and advanced China-Brazil investment cooperation.
A recent analysis by Brazilian digital media outlet Poder360 estimated such investment from Chinese enterprises alone has exceeded USD51 billion.
Earlier this year, State Grid Corp of China won a 30-year franchise agreement to build a 1,500-kilometer transmission line in northeast Brazil.
China’s “new three exports” - electric vehicles (EVs), lithium-ion batteries, and photovoltaic (PV) panels - to continental Latin America have surged from USD3.2 billion in 2019 to USD8.9 billion in 2023, with Brazil absorbing 63 percent of these imports by value last year.
China’s apparent focus on Brazil for new three exports can be attributed to the size of the Brazilian market, strong environmental and policy fundamentals, and the influence of Beijing’s trade and investment diplomacy.
Cultural exchanges between China and Brazil have also thrived, strengthening the friendship between their peoples. To celebrate the 50th anniversary of diplomatic relations, the Brazilian city of Recife has designated 2024 as the "Year of China" to foster a conducive environment for cultural relations.
Over the past five decades, China and Brazil have nurtured a partnership that has grown in depth and breadth, mirroring the broader shifts in international power dynamics. As the world's second-largest economy and Latin America's most influential nation, their relationship has far-reaching implications beyond their bilateral ties.
The China-Brazil partnership is largely founded on their economic complementarity. Brazil's abundance of natural resources, including agricultural products like soybeans and meat, and minerals like iron ore, align seamlessly with China's vast market demands. For China, Brazil provides critical raw materials and a strategic entry point for common development with South America.
Beyond economics, in a rapidly changing world, China and Brazil are coordinating closely and consistently within multilateral frameworks, such as the UN, G20 and BRICS, on crucial issues, including global governance and climate change, amplifying the voices of developing countries and safeguarding the interests of emerging markets.
In May, China and Brazil jointly issued a six-point common understanding on political settlement of the Ukraine crisis, receiving a positive response from the international community.
Meanwhile, the two countries, together with some other Global South countries, launched the group of "Friends for Peace" on the crisis, with the goal of bringing together more voices for peace.
In terms of poverty reduction, both countries are determined to tackle challenges and are willing to share their solutions with others.
Looking back, the two sides have every reason to be proud of the achievements in their relations. Looking ahead, the China-Brazil partnership is poised to become even more integral to the global geopolitical calculus. Their cooperation is both an emblem of the benefits of South-South collaboration and a harbinger of the increasing complexity of international relations in the 21st century.
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Hi everyone. I’m Stephanie LI.
Coming up on today’s program
China's stock buyback loan program reaches 35.2 billion yuan in one month;
Hong Kong outlined plans for the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone.
Here’s what you need to know about China in the past 24 hours
Chinese listed companies have secured 35.2 billion yuan in loans through the country's stock buyback borrowing scheme launched a month ago.
So far, 152 listed firms have announced their participation in the stock buyback loan program, of which 109 with share repurchases and 43 with stakeholding increases, according to data from Wind Information. Nearly two-thirds of them are private companies.
Yesterday alone, China Resources Chemical Innovative Materials, Zanyu Technology, Tecon Biology, AiSen Semiconductor Material, and other companies announced how they plan to use the loans they have obtained.
The People's Bank of China unveiled the new re-lending facility on Sept. 24, with initial funding of 300 billion yuan, as part of a broader economic stimulus package. It officially launched on Oct. 18, and the first batch of 23 participants was announced two days later.
Commercial banks can offer stock repurchase loans at rates up to 50 basis points higher than the facility's 1.75 percent benchmark, Governor Pan Gongsheng said at a press conference. By allowing businesses and major shareholders to use loans to buy back their own shares, the PBOC aims to boost stock prices, support liquidity, and increase investor confidence in Chinese markets, Pan added.
The new financial instrument is gaining rapid market acceptance, helping stabilize share prices, boost market confidence, and promote the high-quality development of listed companies, experts noted.
Greater Bay Area, Greater future
Hong Kong on Wednesday unveiled the development outline for the Hong Kong section of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone, with the gross floor area in phase one doubling from what was initially planned. The SAR section will be developed in two five-year phases, with phase one covering 1 million square meters. The plan focuses on four main objectives, including building a world-class research and development platform, creating a competitive R&D and pilot production base, fostering global innovation, and promoting institutional and policy innovation.
The People's Bank of China successfully issued a total of 45 billion yuan of central bank bills in Hong Kong on Wednesday. Among which, 30 billion yuan of three-month central bank bills were issued at a bid rate of 3.2 percent, while 15 billion yuan of one-year central bank bills were issued at 2.6 percent.
Next on industry and company news
China approved 112 domestic games and seven imported games this month, bringing the total of this year to 1,184 and 97, respectively, according to the National Press and Publication Administration.
Huawei will debut its latest Xuanwu architecture and use it on its upcoming Mate X6, Richard Yu, chairman of the Chinese telecoms giant’s Consumer BG, said on Weibo today. The ultra-reliable framework has a basalt body, durable polyamide fiber material, and next-generation Kunlun glass.
Earnings reports express
Nio’s third-quarter net loss widened 11 percent year on year to 5 billion yuan, the Chinese EV startup said in a financial report. Deliveries reached 61,855 vehicles, up 11.6 percent from a year ago and 7.8 percent on the previous quarter. Nio expects to ship 72,000 to 75,000 autos in the fourth quarter, up 44 percent to 50 percent from a year earlier.
Meanwhile, Xpeng saw its net loss shrink nearly 54 percent to 1.8 billion yuan in the same period from a year earlier, thanks to a strong growth in sales. Revenue rose over 18 percent to 10.1 billion yuan. The EV maker delivered 46,500 cars in the third quarter, up 16 percent from the same period last year.
Wrapping up with a quick look at the stock market
Chinese stocks closed almost flat on Thursday as the benchmark Shanghai Composite gained less than 0.1 percent while the Shenzhen Component eased 0.1 percent. Hong Kong’s Hang Seng index closed 0.5 percent lower, and the TECH index dropped 1.2 percent.
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Hi everyone. I’m Stephanie LI.
Coming up on today’s program
Hong Kong kicks off its annual flagship financial summit with the largest mainland delegation;
Guangzhou becomes the first tier-1 city to grant permanent residency to homebuyers.
Here’s what you need to know about China in the past 24 hours
Chinese Vice-Premier He Lifeng has urged Hong Kong to go big on reforms to foster development while raising its status as an international finance hub, with the state leader speaking at the city’s flagship industry summit.
The three-day Global Financial Leaders’ Investment Summit, organized by the the Monetary Authority opened to a 300-capacity audience on Monday.
Speaking in his keynote address on Tuesday, the state leader highlighted three areas of focus for Hong Kong’s finance sector: deepen financial reforms and innovate to boost the city’s competitiveness; expand cooperation and opening up; and dovetail with national developments.
The central government will help more mainland companies list in Hong Kong, improve mutual market access, issue treasury bonds and strengthen its position as a global offshore yuan hub, which will help the city become a stronger international financial centre and support China in opening up its economy, He said.
He added that the financial cooperation in the Greater Bay Area will be deepen, including interfacing the rules and mechanisms between mainland cities in the GBA, Hong Kong and Macao.
China’s securities regulator also gave its strongest endorsement yet to expand and add financial products to a trans-border investment channel with Hong Kong.
Wu Qing, Chairman of the China Securities Regulatory Commission (CSRC), said commodities may be added to the stocks, bonds, options and wealth management products that are currently tradable in the Connect scheme, which allows global investors and mainland capital to tap into each other’s markets via Hong Kong.
Delivering his welcoming remarks, Hong Kong’s acting Chief Executive Eric Chan Kwok-ki said the city should look to meaningful opportunities for growth in emerging sectors such as fintech and green and sustainable finance.
“Investors are increasingly seeking opportunities that align with sustainable development goals, and green technologies and green finance were central to that goal,” said Chan.
This year’s event is attended by the biggest delegation of top Chinese officials on-site since the annual event began in 2022. Top executives from HSBC, Goldman Sachs, JPMorgan Chase, Citigroup, BNP Paribas, among many others, are also in town in a show of support for Hong Kong, a key profit centre for many of them and a major regional headquarters for others.
Beijing followed Shanghai on Tuesday to eliminating the distinction between ordinary and non-ordinary housing and expanding tax incentives for property transactions. This means that homeowners selling apartments purchased over two years prior will be exempted from the 5 percent of value added tax in both first-tier cities. Apartments larger than 144 square meters or those intended for commercial use are generally considered "non-ordinary".
Greater Bay Area, Greater future
Guangzhou is set to become the first Chinese first-tier city to introduce a policy allowing home buyers to receive a permanent residence permit. Individuals who buy an apartment in seven suburban districts and have paid social security in Guangzhou for at least one year can apply to obtain residency status, also known as hukou, according to a draft policy issued by the local government yesterday.
Guangzhou will purchase stock commercial housing below 90 square meters in the city as affordable housing. The city government-owned Guangzhou Anju Group announced on Tuesday that it will start buying residential properties for affordable housing and outlined the criteria for the properties it is seeking, which now expands to cover the entire city.
The 19th China International Small and Medium Enterprises Fair in Guangzhou drew more than 10,000 buyers and 120,000 visitors, generating intended transactions worth over 96 billion yuan a year. The fair featured companies from the low-altitude economy, high-end equipment, robotics core components, biomedicine, advanced medical equipment, and other sectors this year.
Earnings reports express
Xiaomi’s third quarter profit rose 9.7 percent from a year earlier after the Chinese electronics giant increased the price of its handsets and saw more shipments. Net profit stood at 5.3 billion yuan in the three months, while revenue surged 31 percent to 92.5 billion yuan. Its auto unit delivered 39,790 units of its first EV, the SU7, last quarter, having produced 100,000 units as of Nov. 13. The company has raised its annual delivery target to 130,000 from 120,000.
EHang’s net loss narrowed 28 percent to 48.1 million yuan in the third quarter from a year earlier, the Chinese drone maker said in a financial report. Revenue surged 348 percent to 128 million yuan.
Trip.Com's net profit jumped 47 percent to 6.8 billion yuan and revenue rose 16 percent to 15.9 billion yuan in the third quarter of the year from a year earlier, the Chinese online travel agency announced today. Offshore hotel and outbound flight bookings in the quarter have recovered to 120 percent of the level in the same period of 2019.
Switching gears to financial news
China's fiscal revenue expanded 5.5 percent last month, mainly because the policy package introduced in September supported economic recovery and boosted business confidence. Tax revenue achieved positive growth for the first time this year in October, up 1.8 percent from a year earlier, data released yesterday by the Ministry of Finance showed.
China's holdings of US treasury bonds fell to USD772 billion in September, a drop of USD2.6 billion from a month earlier, marking the third consecutive monthly decline, according to the latest data released by the US Department of the Treasury on Monday.
SF Holding plans to raise up to HKD6.2 billion in a Hong Kong listing by issuing 170 million shares priced between HKD32.30 and HKD36.30 a share, according to regulatory filings the Chinese express delivery company released yesterday.
Wrapping up with a quick look at the stock market
Chinese stocks rose on Tuesday with the benchmark Shanghai Composite gaining 0.7 percent and the Shenzhen Component jumping 1.9 percent. Hong Kong’s Hang Seng index also inched up 0.4 percent and the TECH index added 1.2 percent.
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Hi everyone. I’m Stephanie LI.
Coming up on today’s program
Asia-Pacific summit closes in Peru with members calling for effective multilateral cooperation;
Some 285.6 billion yuan worth of deals were signed at Airshow China 2024.
Here’s what you need to know about China in the past 24 hours
APEC members on Saturday jointly called for effective multilateral cooperation as areas including trade and investment, environment, food security and energy security are facing challenges.
They made the remarks in the 2024 APEC Leaders' Machu Picchu Declaration released following the conclusion of the 31st APEC Economic Leaders' Meeting on Saturday.
Unprecedented and rapid changes continue to shape the world today, it said, adding that in this regard, leaders of APEC economies have noted the significant changes affecting areas such as trade and investment, environment, food security and energy security.
"Effective multilateral cooperation is even more important in this context," it noted.
They also reiterated their commitment to advancing economic integration in the Asia-Pacific region, and continuing to foster a regional trade and investment environment in response to emerging global challenges.
The leaders also reaffirmed their commitment to enhancing supply chain connectivity to establish secure, resilient, sustainable, inclusive supply chains.
Meanwhile, China announced to host the APEC Economic Leaders' Meeting in 2026, the third time China will host the gathering since APEC's founding in 1989.
To advance Asia-Pacific cooperation, China took the initiative to shoulder the responsibility by offering to host APEC in 2026, which was welcomed by APEC members and received their endorsement at this year's APEC Economic Leaders' Meeting, a Chinese Foreign Ministry spokesperson said on Saturday.
Hong Kong Chief Executive John Lee said his visit to Peru and participation in the APEC meeting achieved fruitful results. Lee explained that signing a free trade agreement with Peru, which will take effect in about six months, enables Hong Kong to explore new growth areas and market opportunities in South America. Hong Kong and Peru have also commenced negotiations on a separate investment promotion and protection agreement, he added. Furthermore, through joining the APEC sessions, Lee said Hong Kong enhanced connections and relationships with Association of Southeast Asian Nations economies, as well as built connections with other economies.
Greater Bay Area, Greater future
Around 285.6 billion yuan worth of deals were signed at the Airshow China in Zhuhai, which involve 1,195 aircraft of various models. The six-day event which closed on Sunday attracted nearly 590,000 spectators and participated by 1,022 companies from 47 countries and regions, with 261 aircraft and 248 types of ground equipment exhibited, according to the organizers.
Sunday marked the 10th anniversary of the mutual access mechanism connecting capital markets in the Chinese mainland and the Hong Kong SAR. Financial Secretary Paul Chan Mo-po said the average daily trading value of mainland investors buying and selling Hong Kong stocks through the programs reached 38 billion yuan in the first three quarters of this year - a 40-fold increase compared with that of the first month after the launch of the Shanghai-Hong Kong Stock Connect in 2014. Nearly 77 percent of foreign investors got access to mainland stock and over half to bond markets via the programs, HKEX's CEO Bonnie Chan said Monday. The Northbound and Southbound Stock Connect recorded new monthly highs of 510 billion yuan and HKD280 billion in turnover last month, she added.
Next on industry and company news
Huawei Mate 70 series is live for reservations and the new lineup already exceeded 1 million pre-orders within minutes after the tech giant opened reservation of its new flagship smartphone series at around 12 a.m. on Monday. The page also reveals the colors, storage variants, and models available for pre-order.
China is set to launch electric vertical takeoff and landing aircraft (eVTOL)pilot projects in six cities, said an official of China Air Transport Association on Monday. These six pilot cities are Hefei in Anhui province, Hangzhou in Zhejiang province, Shenzhen in Guangdong province, Suzhou in Jiangsu province, Chengdu in Sichuan province and Chongqing.
Yiwu-Madrid China-Europe freight train service, the world's longest international rail cargo route, marks 10th anniversary on Monday. Over the past decade, the Yiwu-Madrid route completed 1,800 round trips, transporting 145,500 containers of commodities, worth more than USD8 billion in value, according to China Railway Shanghai Group.
China's National Oil and Gas Pipeline Network Group announced on Monday that the China-Russia east-route natural gas pipeline has completed construction and entered its final commissioning phase. The pipeline will supply annually 38 billion cubic meters of natural gas to China once fully operational.
China's annual parcels delivery volume surpassed 150 billion on Sunday, marking the first time the parcels hit this number, the State Post Bureau said.
Earnings reports express
Alibaba Group Holding reported a 63 percent increase in net profit in the fiscal second quarter from a year ago, mainly thanks to the Chinese company's latest strategic adjustments to its core e-commerce and cloud businesses. Net profit was 43.9 billion yuan in the period, while revenue rose 5 percent to 236.5 billion yuan driven by improving monetization of Taobao and Tmall Group. Alibaba's Cloud Intelligence Group logged 29.6 billion yuan in revenue in the second fiscal quarter, up 7 percent from a year earlier thanks to a double-digit public cloud growth.
JD.com reported a 48 percent surge in third quarter net profit from a year earlier thanks to a strong performance in its retail and logistics divisions. The Chinese e-commerce giant raked in net profit of 11.7 billion yuan in the third quarter, while revenue advanced 5.1 percent to 260.4 billion yuan.
Lenovo Group reported a 44 percent profit surge for the second fiscal quarter, mainly thanks to a jump in sales of artificial intelligence-related products such as AI personal computers. Profit was USD359 million in the quarter, while revenue surged 24 percent to USD17.9 billion from a year earlier.
Chinese video-sharing and gaming platform Bilibili turned a profit for the first time in the third quarter after a surge in revenues from mobile gaming and advertising. Bilibili had an adjusted net profit of 236 million yuan in the period,as its net loss shrank 94 percent to 79.8 million yuan from a year ago, while revenue jumped 24 percent to 7.31 billion yuan.
Wrapping up with a quick look at the stock market
Chinese stocks fell on Monday as the benchmark Shanghai Composite slid 0.2 percent and the Shenzhen Component lost 1.9 percent. While Hong Kong’s Hang Seng index closed 0.8 percent higher and the TECH index inched up 0.3 percent.
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Lima, the capital of Peru, enters “APEC time” this week as the South American country hosts the 31st Asia-Pacific Economic Cooperation (APEC) Economic Leaders' Meeting.
Under the theme of “Empower, Include, Grow,” senior officials, ministers and leaders from APEC's 21 member economies, which together account for almost two-thirds of world GDP and half of global trade, will tackle core challenges facing the Asia-Pacific region, including climate change, sustainable energy solutions, the digital economy transition and trade facilitation.
Spanning across the vast Pacific Ocean, China and Peru have long-lasting sincere friendship. Peru was one of the first Latin American countries to establish diplomatic relations and a comprehensive strategic partnership with China. It was also the first Latin American country to sign a package of free trade agreements with China.
The two countries have witnessed increasingly close economic and trade cooperation as well as cultural exchanges. Peru is one of the Latin American countries where Chinese immigrants first arrived and settled in large numbers. "Chifa," a word that originated from the Cantonese dialect for "having meals," has become the term that Peruvians use to refer to Chinese restaurants.
At the just concluded 2024 China International Import Expo (CIIE), an alpaca doll named Gordita traveled far from Peru to China to participate in the expo. The fluffy adorable alpaca doll captured the attention of many visitors. Moreover, toys crafted from alpaca wool by Peruvian artisans were also on display. From the first CIIE to the seventh, these Peruvian alpaca toys have been a part of every expo, showcasing their unique charm to China and the world.
Peru was also one of the first countries to benefit from Chinese cooperation. In 1992, the Shougang company of China acquired an iron mine in Marcona, Peru (one of China's first investments abroad). Since then, collaboration and cooperation between Peru and China have increased, with the two countries signing a free trade agreement in 2009, and raised the bilateral relationship to a comprehensive strategic partnership in 2013.
China's first investment in the Marcona iron mine was $120 million. Today, it has increased to $35 billion, spread across sectors such as mining, infrastructure, energy, communications and services.
In 2010, the FTA officially came into effect and serves as a catalyst for bilateral trade growth. In June of this year, the two countries announced the completion of negotiations on upgrading the FTA.
Thanks to the FTA, Peru's products have begun to reach Chinese households. Peru has become the largest supplier of blueberries and avocados to China, with products such as quinoa, grapes, maca, and alpaca wool, among others, gaining popularity in the Chinese market.
It is reported that China and Peru are actively negotiating on issues such as the export of high-quality Peruvian frozen fruits to China, and positive progress has been made.
The Chinese and Peruvian economies are highly complementary. With joint efforts from both sides, China has become Peru's largest trading partner for 10 consecutive years, and Peru is the second largest investment destination of China in Latin America.
In 2023, the bilateral trade volume reached $37.69 billion. According to Peruvian statistics, over the past 14 years, Peru's exports to China have grown by 325.9 percent, with an average annual growth of 13.2 percent, making Peru China's fourth-largest Latin American trading partner.
The signing of the FTA has greatly enhanced the level of trade between Peru and China. Since the agreement came into effect, Peru's non-traditional exports to China have increased by 227 percent, making Peru the second largest fruit supplier to China in Latin America.
Since China and Peru signed the memorandum of understanding (MOU) on Belt and Road Initiative cooperation in 2019, bilateral cooperation has achieved fruitful results, with increasingly close collaboration in the economy, trade, finance, culture and other fields. A notable milestones include the Chancay Port, a flagship project under the Belt and Road Initiative.
Chancay Port was officially inaugurated on Thursday, which will turn into a business hub of the Americas and trigger a true economic revolution in the region, directly boosting its development and reconfiguring the map of maritime routes in the Asia-Pacific region.
The Sino-Peruvian partnership is being continuously reinforced. Reputable Chinese companies in consortium with local companies are in charge of important projects in different regions of Peru, creating direct and indirect employment and contributing to Peru's development.
Among the emblematic projects are the construction of the San Gabán III Hydroelectric Power Plant, worth $500 million, in the forest region of Puno in southeast Peru, which includes the construction of an about 15-kilometer-long tunnel that will divert the waters of the river of the same name to generate 206 MW of electricity and feed the national interconnected system.
In the neighboring region of Cusco, another important Chinese company is building a road, including a 2-km-long tunnel, from Santa Maria to Machu Picchu, a UNESCO World Heritage Site, to provide easier and better access to the Inca sanctuary.
Peru is witnessing economic development on such a scale for the first time in its history thanks to its partnership with China, which is based on goodwill, mutual trust and mutual respect. Peru's development is an example of brotherhood and common destiny of two ancient civilizations, which will become an example for Latin America.
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Hi everyone. I’m Stephanie LI.
Coming up on today’s program
China unveils new tax breaks to boost property sales;
Tencent logs 47% jump in Q3 profit on strong gaming growth.
Here’s what you need to know about China in the past 24 hours
China is amending its tax structure on residential property transactions, effectively lowering the cost of ownership and extending fresh incentives to a wider pool of buyers, in a round of measures to arrest a four-year slump.
First-time buyers will enjoy a 1 percent deed tax on homes measuring 140 square meters and below from December 1, the Ministry of Finance said on Wednesday, while a 1.5 percent rate will be taxed on purchase of units above that size. The existing threshold is 90 square meters.
The revised regulation on home transaction deed tax will mainly benefit those who plan to purchase bigger homes, said Zhang Dawei, chief analyst with real estate agency Centaline Property.
Home buyers planning to buy second homes in Beijing, Shanghai, Guangzhou and Shenzhen will benefit most from the revised deed tax, as a previous rate of 3 percent had been applied to all four of these first-tier cities, Zhang said.
Under the new policy, buyers planning to buy a second home with a floor area of 140 square meters or less will enjoy a lowered deed tax of 1 percent, while for those intending to buy a second home with a floor area above 140 square meters, the revised deed tax has been lowered to 2 percent.
More impactful policies are expected to roll out in the future, which will help stabilize real estate market expectations.
The transaction volume of new homes went up 0.9 percent year on year in China in October, reversing a decline that started in June last year, while second-hand home transactions rose for the seventh consecutive month and by 8.9 percent year on year.
Additionally, authorities will clarify policies on value-added taxes and land appreciation taxes in line with the scrapping of standards for ordinary and non-ordinary housing, reduce second-hand housing transaction costs, and keep tax burdens on real estate companies stable.
Warming home sales, along with further trade improvement in October and vibrant manufacturing activity, have added to evidence proving that the Chinese economy is gaining more traction thanks to pro-growth measures.
China's trade with Asia-Pacific Economic Cooperation (APEC) economies reached a historic high, surpassing 21 trillion yuan in the first 10 months of 2024, underscoring their deepening economic integration and strong trade connections. According to China Customs, trade with APEC economies accounted for 59.1 percent of China's total trade, which grew by 5.7 percent year-on-year, outpacing China's overall trade growth rate by 0.5 percentage points.
Greater Bay Area, Greater future
Several Chinese aviation companies, including Aero Engine Corp. of China and Xpeng AeroHT, reported record-breaking orders at the ongoing Zhuhai airshow. AECC signed procurement contracts of intent for over 1,500 general aviation power products with 10 major clients that valued at more than 10 billion yuan, marking the largest order sum ever for the civil aviation engine manufacturer. EV startup Xpeng’s flying car unit Xpeng AeroHT signed cooperation and pre-order agreements with 12 prospective clients, totaling nearly 2,010 units.
Hong Kong Chief Executive John Lee has confirmed that a free-trade agreement between the SAR and Peru will be signed this week during the APEC Economic Leaders’ meeting, with the agreement to cover goods and services, as well as investment and a dispute settlement mechanism.
Hong Kong climbed to seventh in a survey of countries ranking their global digital competitiveness. According to the latest World Digital Competitiveness Ranking compiled by the Switzerland-based International Institute for Management Development, Hong Kong had advanced three places following an improvement in three areas - technology, knowledge and future readiness.
Next on industry and company news
China’s annual production of new energy vehicles surpassed 10 million units for the first time, marking a global milestone, said the China Association of Automobile Manufacturers. Experts predict production could exceed 12 million by year-end.
Dingdong Maicai has chosen Saudi Arabia as its first overseas destination for international expansion and is in the process of building a team there, sources said. The Chinese online grocer will focus on selling prepared meals in the Middle East, alongside fresh produce and frozen goods.
Earnings reports express
Chinese social media and gaming company Tencent on Wednesday reported better-than-expected profit in the third quarter, spurred by growth in games, advertising and cloud services. Tencent reported profit attributable to shareholders surged by 47 percent year-on-year to 53.23 billion yuan in the third quarter, while revenue rose by an annual 8 percent to 167.19 billion yuan. Gaming remained the company's backbone, with the unit's domestic revenue up 14 percent year-on-year to 37.3 billion yuan, while that for online advertising surged by an annual 17 percent to 29.99 billion yuan, making it one of the fastest-growing categories outside gaming.
Alibaba Health’s net profit soared 73 percent to 769 million yuan in the six months ended Sept. 30 from a year earlier, the Chinese online healthcare provider latest earnings report showed yesterday. Revenue rose 10 percent to 14.27 billion yuan.
Geely-backed Zeekr today reported a 22 percent reduction in net loss to 1.1 billion yuan in the third quarter from a year earlier. Revenue surged 31 percent to 18.4 billion yuan, with vehicle sales rising 42 percent to 14.4 billion yuan during the period.
Seres Group announced yesterday that it would distribute 500 million yuan worth of cash dividends to all shareholders. The NEV maker reported its operating revenue surged 636 percent in the third quarter from a year earlier to 41.6 billion yuan.
Wrapping up with a quick look at the stock market
Chinese stocks declined on Thursday as the benchmark Shanghai Composite dropped 1.7 percent and the Shenzhen Component tumbled 2.8 percent. Hong Kong’s Hang Seng index also closed 2 percent lower, and the TECH index fell 2.2 percent.
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Hi everyone. I’m Stephanie LI.
Coming up on today’s program
More than 200 Chinese A-Share companies announce Q3 cash dividends, boosted by capital market support policy;
China adds two public holidays starting next year.
Here’s what you need to know about China in the past 24 hours
In a significant development for China's stock market, more than 200 A-share companies had announced cash dividend plans for the third quarter as of Monday, as policies to support the healthy development of the capital market take effect.
As of Monday, 219 listed companies had disclosed cash dividend proposals, with a combined total of 31.18 billion yuan earmarked for distribution, data from financial information service provider Wind.
Compared with previous years, this year's increase in both the number and frequency of dividends represents a notable shift within the A-share market. In the third quarter, the number of companies declaring dividends hit a multi-year high.
As of October 31, the number of listed companies announcing cash dividend plans in their third-quarter reports was up 273 percent year-on-year. The total expected dividend amount surged 72 percent, with five companies planning to distribute more than 1 billion yuan, according to the China Association for Public Companies.
In April, China's State Council, the cabinet, released a guideline on strengthening regulation, forestalling risks and promoting the high-quality development of the capital market.
It urged tighter regulation of cash dividend payments by listed firms. Incentives will be increased for companies with strong dividend performances, and various strategies will be employed to boost dividend yields. Efforts will focus on enhancing the stability, sustainability and predictability of dividends, and promoting multiple dividend distributions within a year, according to the guideline.
Listed companies' increased enthusiasm for dividends is primarily driven by the active encouragement of regulators. Companies with higher dividend levels tend to attract more investors, and this market feedback encourages those companies to enhance their dividend payouts, experts noted.
China will add two days to public holidays starting from Jan 1 next year, according to the State Council yesterday. The Spring Festival holiday will extend to four days, now including Chinese New Year's Eve, while the May Day holiday will increase to two days, adding May 2.
The European Union and China will continue their negotiations this week seeking an alternative to the imposition of extra tariffs on electric vehicles, on the heels of the talks earlier this month in Beijing, which yielded some progress, according to the European Commission, the bloc's executive arm. Sources disclosed that both Beijing and Brussels have demonstrated willingness and made efforts to find a mutually acceptable solution.
Greater Bay Area, Greater future
China’s state-owned aircraft manufacturer Commercial Aircraft Corporation of China (COMAC) on Tuesday announced more than 100 aircraft orders at the opening of the biennial Zhuhai International Air Show. The new orders, which include an additional 60 C919s for the HNA Group, push cumulative orders of China’s first domestically developed large commercial jet past 1,200. Meanwhile, COMAC announced the ARJ21, China’s home-grown regional jetliner, had been improved and rebranded as the C909. The manufacturer secured 70 orders for the model from Hainan Airlines and Colorful Guizhou Airlines on the opening day of the airshow. Also, the model of China's first commercial uncrewed spaceplane was displayed by state-controlled aerospace company AVIC which said it was being developed to deliver cargo to China's space station. The military's Z-20 helicopter was also on display.
Hong Kong Chief Executive John Lee plans to garner support for the city's accession to the Regional Comprehensive Economic Partnership (RCEP) during a high-level summit in Peru this week. Lee, who is leaving for Lima to attend the Asia-Pacific Economic Cooperation conference (APEC), also said on Tuesday that he is going to meet with other leaders to promote the SAR.
Next on industry and company news
China's express delivery services reached a new milestone on Monday, Nov 11, processing a total of 701 million packages, according to the State Post Bureau of China on Tuesday. This record-breaking figure represents a 9.7 percent year-on-year increase and is 151 percent of the daily average volume.
Chinese video influencer and famous YouTuber Li Ziqi made a comeback yesterday after a three-year hiatus, sharing two videos across multiple social media platforms. Her new video quickly passed 100 million views on Weibo within five hours.
Xiaomi Auto said that the 100,000th SU7 electric vehicle rolled off the production line today, just 230 days after launch. The EV arm of Chinese smartphone giant plans to ramp up production capacity with the goal of delivering 120,000 vehicles by year-end.
Wrapping up with a quick look at the stock market
Chinese stocks rebounded on Wednesday with the benchmark Shanghai Composite inching up 0.5 percent and the Shenzhen Component up 0.4 percent, while Hong Kong’s Hang Seng index dipped 0.1 percent and the TECH index closed flat.
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Hi everyone. I’m Stephanie LI.
Coming up on today’s program
PLA Air Force celebrates 75th anniversary at Airshow China 2024 with J-35A stealth fighter;
China's e-commerce giants report robust sales during the “Double 11” shopping festival.
Here’s what you need to know about China in the past 24 hours
Aviation enthusiasts are gearing up for China’s biggest air show which begins on Tuesday in the southern city of Zhuhai, in Guangdong province.
The 15th China International Aviation and Aerospace Exhibition – a biennial event also known as Airshow China – will give visitors a glimpse of the country’s expanding aviation industry and military advances.
This year’s show opens a day after the People’s Liberation Army Air Force marks its 75th anniversary. Fighter jets and attack drones took centre stage with the air force debuting some of its most advanced weapons, including the J-35A medium-sized stealth fighter, the HQ-19 surface-to-air missile weapon system and a new attack reconnaissance unmanned aerial vehicle at the airshow.
J-35A, the super star of the air show this year, has attracted attention from world media and military enthusiasts that have made the trip to Zhuhai. The jet, which uses airstrips to take off and land, is a variant of the J-35, a stealthy aircraft China is developing for use on aircraft carriers. Experts noted that with the official commissioning of the J-35A into the PLA Air Force, China becomes the world's second country to operate two types of stealth fighter jets.
A group of J20s also performed a display flight on Tuesday morning, in a diamond formation across the sky. Experts said that the combination of the two models greatly enhances the PLA Air Force's ability to conduct offensive operations in high-threat and contested environments.
The Air Force will bring 36 types of equipment for aerial flight demonstrations and ground static displays to showcase the development of its equipment in a comprehensive and close-up manner, it announced on Tuesday at a press conference.
The 6-day air show also features spectacular aerospace performances and showcases the latest advanced military equipment for global visitors. The airshow has attracted 1,022 companies from 47 countries and regions, including Russia, France, the United States, Saudi Arabia and Italy.
Greater Bay Area, Greater future
According to official statistics released Monday, Guangdong, China's biggest foreign trader, achieved an import and export volume of more than 7.5 trillion yuan in the first 10 months, up year-on-year by 10.6 percent and representing 20.9 percent of the country's total.
Nearly 1.9 million AI enterprises were set up in China as of the end of October, with Guangdong province leading other provincial-level regions by being home to 280,000 AI companies, the country's top market authority said.
Next on industry and company news
Chinese e-commerce giants Tmall and JD reported strong sales during the 2024 "Double 11" shopping festival, which came to a close on Monday. The trading value of 589 brands on Tmall reached 100 million yuan during Double 11, up 47 percent from a year earlier, official data showed. JD's livestreaming orders nearly quintupled while recording a 20 percent year-on-year growth of shoppers on its platform. Meanwhile, JD has become the latest online shopping site to accept a third-party payment provider, allowing customers to make online purchases using Alipay, following the integration of Tencent's WeChat Pay with Taobao and Tmall in late September.
China's Ministry of Education yesterday stipulated that social capital shall not control public or non-profit private kindergartens through buyout activities, and kindergartens shall not be listed as enterprise assets on domestic or overseas stock exchanges. No exams or tests in any form will be allowed for preschool-aged children to be enrolled into kindergartens, the ministry said. Some 40.93 million children were enrolled in kindergartens in China last year.
The Commercial Aircraft Corporation of China (COMAC) on Tuesday said that national carrier Air China would be the launch customer for the company's C929 wide-body aircraft under development that is designed to compete with twin-aisle models from Airbus and Boeing. While Hainan Airlines said yesterday that its subsidiary Urumqi Air plans to purchase 40 ARJ21-700 aircraft from COMAC at USD38 million each, totaling up to USD1.52 billion. Deliveries are set to take place in batches from 2025 to 2032.
FedEx yesterday opened its Qingdao international gateway, the company's fifth gateway facility in China, joining those in Beijing, Shanghai, Guangzhou and Shenzhen. The US delivery giant has also increased its Qingdao-U.S. cargo flights to five times a week.
Switching gears to financial news
China's yuan-denominated loans rose by 16.52 trillion yuan in the first 10 months of 2024, central bank data showed on Monday. The M2, a broad measure of money supply that covers cash in circulation and all deposits, increased 7.5 percent year-on-year to 309.71 trillion yuan at the end of October 2024, accelerating the pace of increase from a 6.3 percent boost a month earlier, according to the People's Bank of China. Outstanding yuan loans reached 254.1 trillion yuan at the end of October, an increase of 8 percent year-on-year. New yuan loans totaled 16.52 trillion yuan for the first ten months.
Wrapping up with a quick look at the stock market
Chinese stocks fell on Tuesday with the benchmark Shanghai Composite down 1.4 percent and the Shenzhen Component slid 0.65 percent. Hong Kong’s Hang Seng index also sank 2.8 percent and the TECH index tumbled 4.2 percent.
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Hi everyone. I’m Stephanie LI.
Coming up on today’s program
Double 11 rides in a climax today as the shopping gala shows resilience in China’s retail sales;
CIIE concludes with record of over USD80 billion in tentative deals.
Here’s what you need to know about China in the past 24 hours
This year's Double 11 Singles' Day shopping festival, spanning from October 8th to November 11th, marks the longest edition yet, a testament to the intensified e-commerce competition and robust purchasing power in China.
Data from Tmall, Chinese tech heavyweight Alibaba Group's business-to-customer platform, showed that in the first four hours after the shopping carnival officially kicked off at 8 pm on Oct 21, 174 brands saw their sales surpass 100 million yuan.
During this period, the turnover of more than 12,000 brands surged over 100 percent year-on-year and the sales of nearly 6,000 brands skyrocketed more than 500 percent compared with the same period last year. Moreover, sales from some top-tier livestreamers on Taobao Live, Alibaba's livestreaming arm, surpassing 100 million yuan within a short period.
JD, another major Chinese e-commerce player, has launched a subsidy campaign worth 10 billion yuan, and given discounts for commodities included in the consumer goods trade-in program, such as home appliances and computers. It has also stepped up efforts to upgrade supply chains and logistics services.
JD said it recorded a double-digit year-on-year growth in transaction volume, orders, and user numbers between 8 pm on Oct 14, when its promotional gala opened, and 9 pm on Oct 31.
This year, a series of pro-consumption policies, such as the consumer goods trade-in program, have played a significant role in bolstering the sales of consumer electronic products and household appliances on major online marketplaces.
Some 20.25 million customers bought over 30 million home appliances in China since the country implemented policy of giving subsidies for trade-ins of home appliances this year, according to the Ministry of Commerce.
On Tmall, the turnover of trade-in home appliances in Shanghai jumped 16 times compared with a week before the opening of sales, and that of Shandong and Guangdong provinces was 5 times than before.
The China International Import Expo (CIIE), the world's first national-level exposition dedicated to imports, concluded its 7th edition on Sunday, with this year's cumulative intended transaction value reaching USD80.01 billion, a new record since its launch in 2018.
Greater Bay Area, Greater future
Hong Kong Financial Secretary Paul Chan said the SAR government will sign agreements with 17 more strategic enterprises – from the mainland, the US and Europe – on Monday to establish or expand their businesses in the city. These companies are involved in fields such as AI, big data and new energy, and 90 percent of them plan to set up headquarters in Hong Kong. Together with the first two batches of nearly 50 strategic enterprises, Chan said they will bring HKD42 billion in investment to Hong Kong and create more than 17,000 jobs.
Air China's domestically produced C919 aircraft, adorned with the national flag, has made its debut at Macao International Airport on Thursday and would remain in the SAR for four days, offering the public a close-up view of the jet. This appearance serves as a special tribute from Air China, celebrating the 75th anniversary of the founding of the People's Republic of China and the 25th anniversary of Macao's return to the motherland.
Next on industry and company news
China's auto sales rose 7 percent year on year to 3.05 million units in October, data from the China Association of Automobile Manufacturers showed Monday. In the first 10 months of the year, auto sales exceeded 24.6 million units, up 2.7 percent year on year.
ByteDance is adding video-generation ability to its ChatGPT alternative Doubao, as the short-video giant doubles down on a potential blockbuster in China’s fast-growing generative artificial intelligence market. The Doubao chatbot – powered by its namesake large language model (LLM), the same underlying technology behind ChatGPT – has started testing a new video function that is able to convert text or images into lifelike video clips, thanks to its “outstanding semantic understanding capability”, according to the app’s introduction.
Switching gears to financial news
Chinese lawmakers approved a State Council bill on raising the ceiling on local government debt by 6 trillion yuan to replace existing hidden debts, according to a press conference Friday. Under the new arrangement, the debt ceiling for special local government debt will be increased to 35.52 trillion yuan from 29.52 trillion yuan by the end of 2024. Also starting from 2024, China will set aside 800 billion yuan from each year's new special-purpose bonds for local governments for five consecutive years, thereby providing debt relief to replace 4 trillion yuan of hidden debts, according to Minister of Finance Lan Fo’an. The new measures will add a combined 10 trillion yuan to China's debt relief resources.
China has offered over 2.08 trillion yuan in tax cuts, fee reductions and tax refunds in the first three quarters of the year, to support development of scientific and technological innovation and manufacturing industry, data from the Ministry of Finance showed on Sunday.
The final tranche of treasury savings bonds (electronic) this year began to be issued on Sunday and the issuance will end on November 19, according to a statement on the website of China's Ministry of Finance. Two types of savings bonds will be issued in this new round, with the interest rate on both the three- and five-year bonds at near 2 percent, marking the fourth time that the rate has been reduced this year.
Wrapping up with a quick look at the stock market
Chinese stocks rose on Monday as the benchmark Shanghai Composite gained 0.5 percent and the Shenzhen Component surged 2 percent, while Hong Kong’s Hang Seng index closed 1.45 percent lower and the TECH index dipped 0.35 percent.
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On Tuesday, Shanghai officially entered "CIIE moment," which has become an annual feast of global trade cooperation, and the colorful billboards on the streets of Shanghai and bustling scenes at the exhibition halls put on vivid display of the strong vibrancy and attractiveness of the Chinese market.
A record high of 297 Fortune Global 500 and industrial leaders are present. Additionally, 186 companies and institutions are participating for the seventh consecutive year, earning the title of "full attendance" at the CIIE.
Chinese Premier Li Qiang said at the opening ceremony that China will open its doors wider to the outside world, regardless of how the international environment changes.
In their speeches at the ceremony, foreign leaders and heads of international organizations remarked that the CIIE has become an important international platform for promoting trade and investment and boosting opening up and cooperation.
They voiced their confidence in the Chinese economy and its prospect, and expressed willingness to advance cooperation with China in jointly building the Belt and Road as well as in areas such as economy, trade, connectivity and green development, maintain free trade, and promote equality, progress and sustainable development in the world.
Harry Wu, our correspondent in Shanghai, is now at the CIIE. Today in this episode we’ve invited Harry to chat with us and share his thoughts on the grand event. And he’s also brought us some guests.
Stephanie: Hi Harry, thank you for joining the program.
Harry: Hi Stephanie. Thanks for having me.
Stephanie: So Harry, you’re at the 7th China International Import Expo now. It’s also the biggest edition in terms of size and participation since it inaugurated in 2018. What’s your first expression of the event this year?
Harry: I’m here at the media center for seventh CIIE. There are so many correspondents here that we have to come very early to get a seat to work or a seat to eat. At the booths of National Exhibition and Convention Center (Shanghai), all I can see is people looking for new opportunities. The huge crowds also benefit from China's visa-free policy. I see exhibitors from France, Germany, Italy, Netherlands, Spain, Malaysia and so on.
At Malaysia Pavilion, the crowds wait in long lines to taste fresh Musang King durian from Malaysia. Unlike previous shipments that were frozen or processed, these fresh durians are tree-ripened, requiring fast logistics to ensure their quality. Musang King durian can now be enjoyed fresh, offering Chinese consumers a unique and elevated taste experience.
Stephanie: You’ve been covering to the CIIE for the fourth year now. What struck you the most this year? What are the highlights?
Harry: What impressed me most is the record participation. Well, you know the numbers. Let me give you a specific example. Marking 70 years of diplomatic relations between Norway and China, Norway has established its first national pavilion at the seventh CIIE, where Norwegian exhibitors aim to strengthen bilateral cooperation and explore new opportunities. Norway’s Minister of Fisheries and Ocean Policy, Marianne Sivertsen Næss, visited China and attended the CIIE. She made Chinese dumplings to celebrate Lidong, the start of winter on Chinese lunar calendar. There are so many firsts and stories this year.
Stephanie: The CIIE is often seen as a gateway to China. Every year during the event, the world is coming to China and it underlines China's essential role in the global economy. What do you think the CIIE mean for China?
Harry: With a population of over 1.4 billion, China has a diverse range of consumer groups, each with a massive scale, which translates into enormous demand for products and services. The tremendous potential and increasingly open market have brought tangible returns to foreign companies that are expanding their presence in China. The keen interest from global participants has shown the growing influence of the CIIE and the attraction of the Chinese market. It also highlights China's efforts to push forward the building of an open world economy.
For example, during the CIIE I talked to Dr. David Blair, senior economist of Alliance of Global Talent Organizations (AGTO) and Professor of Economics at the Eisenhower School, National Defense University, Washington, DC. He thinks the CIIE is a signal of China’s opening up to the world. Take a listen.
David: I think it's a signal to the world that China is open for trade. I think the main thing is that it's signaling China is not closing itself off, and it’s going to continue the reform and opening-up policies.
Stephanie: Harry, you’ve been talking with a lot of exhibitors, what do they think about this year’s expo?
Harry: Yes, they are all very excited to be here. This is Sigmund Bjørgo, director of the Norwegian Seafood Council in China. Norway made a debut at this year's CIIE by establishing a national pavilion for the first time, tapping into the vast potential of the Chinese market. The pavilion features a wide range of industries, including maritime and energy, health and nutrition, design and lifestyle, food and agriculture, as well as seafood and consumer goods.
Sigmund: So the industry is at the CIIE to promote the Norwegian seafood in general, and of course it’s the key species that caught the highest attention - salmon, mackerel, different types of shellfish, and of course the Norwegian Arctic cod. But of course the biggest is salmon. It has grown tremendously in the past years and is still continuing to grow.
At the same time, China is still a young market for salmon, so there are many new industrial and customer players that are interested in searching for Norwegian salmon.
If you look at the global perspective, China is the eighth biggest salmon market in the world. But that is for now. We expect it to grow and for China to climb up the rank and grow into one of the biggest salmon market in the future.
(Harry: How many CIIEs have you participated? What do you think about this year's event?)
Sigmund: This is the third time the Norwegian Seafood Council joined the CIIE. The past two years has been with a pure Norwegian seafood pavilion together with Norwegian exporters. This year due to the celebration of the 70th anniversary of diplomatic relationships (between China and Norway), we have decided to join the Norwegian pavilion for the first time and bring in the both the seafood companies and also other Norwegian companies. We expect many visitors there this year and we are already thinking about next year. I expect to be present next year to build on Norwegian-Chinese seafood collaboration.
(Harry: What’s the significance for you and your company to come to the CIIE?)
Sigmund: It is to meet the major buyers, the major industrial players, but also to show Chinese authorities that we are here (because) we want to invest in the Chinese market. And we believe that the Norwegian seafood still have a room for growth in China.
Harry: And here we also have Alfonso Alba, CEO of Bayer Crop Science (BCS) for Greater China. BCS is one of the three divisions of Germany-headquartered life science enterprise Bayer AG.
Alfonso: I’ve always loved to come here because this provide us an opportunity to share with all the stakeholders in the Chinese government, customers, and colleagues from the industry.
What Bayer is doing in innovation is how our innovation contribute to the development of agriculture in China and how our technologies contribute to modernizing China’s agriculture. So this is an incredible opportunity to talk to everyone about what we do.
Harry: Having heard voices from foreign companies and economist, the Chinese market is still one of the best choices for foreign companies. It's a win-win situation.
Stephanie: Harry, thanks again for joining CBN’s special coverage of the 2024 CIIE.
Harry: My pleasure.
Stephanie: And thanks everyone for listening. Have a nice day and until next time. Bye.
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Hi everyone. I’m Stephanie LI.
Coming up on today’s program
China’s foreign trade edges up 5.2 percent in first 10 months;
US companies embrace opportunities at China's import expo in Shanghai.
Here’s what you need to know about China in the past 24 hours
China’s total goods imports and exports grew by 5.2 percent year-on-year in the first 10 months this year to reach 36.02 trillion yuan (USD5 trillion), extending stable growth and displaying consistent structural improvement, official data showed on Thursday.
According to the General Administration of Customs (GAC), exports rose 6.7 percent year-on-year to 20.8 trillion yuan, while imports climbed 3.2 percent year-on-year to 15.22 trillion yuan in the first 10 months.
In October alone, exports rose 12.7 percent from a year earlier, the fastest growth in more than two years, while imports fell 2.3 percent year on year. China’s trade surplus rose to USD95.7 billion in October, up from USD81.7 billion in September.
Exports far surpassed analyst’s estimates of about 5.5 percent growth and outpaced September’s growth of just 2.4 percent. It was the fastest expansion since July 2022, thanks to a package of the government’s pro-growth policies.
Throughout the period, ASEAN remained China’s top trading partner, with bilateral trade volume reaching 5.67 trillion yuan, up 8.8 percent from a year ago, accounting for 15.7 percent of the country’s total foreign trade, followed by the EU with a trade volume at 4.64 trillion yuan, and the US at 4.01 trillion yuan.
Between January and October, the bilateral trade between China and the US inched up by 4.4 percent year-on-year to reach 4.01 trillion yuan, the GAC data showed. Over the period, China’s exports to the US grew by 4.9 percent year-on-year to reach 3.04 trillion yuan, while imports up by 2.9 percent to reach 969.48 billion yuan.
During the first 10 months, China’s trade with partner countries participating in the Belt and Road Initiative totaled 16.94 trillion yuan, marking a 6.2 percent year-on-year increase.
International semiconductor firms – including ASML, Advanced Micro Devices (AMD) and Qualcomm – have put the spotlight on some of their latest products at the ongoing CIIE. They joined about 400 other companies at the Intelligent Industry & Information Technology exhibition, a part of the CIIE. Michael Hart, president of the American Chamber of Commerce in China (AmCham China), said that "Every year we look forward to coming to CIIE, so we can see the existing American presence in China.” The US companies are using CIIE to show the products and services they offer and there are some companies that are doing new launches of products at the expo, said Hart, noting that this is a great place to exhibit to Chinese companies, the Chinese government and the Chinese public, their commitment to China.
Greater Bay Area, Greater future
Hong Kong hopes to continue utilizing the CIIE to promote the expansion of Hong Kong enterprises in the Chinese mainland with better development, Kent Lyu, the regional director of Eastern and Central China of the Hong Kong Trade Development Council (HKTDC), told media on Wednesday. This year marks the seventh year for the HKTDC to organize Hong Kong firms to attend the expo, with a total of 52 enterprises organized by the council participating, including 34 enterprises exhibiting in the agriculture and food section and 18 with a presence in the section of trade in services. Hong Kong Chief Executive John Lee Ka-chiu led a delegation of high-level officials to Shanghai on Tuesday to attend the CIIE and take part in a major promotion event. More than 300 Hong Kong enterprises are participating in this year's CIIE to promote quality Hong Kong products and services, representing almost 10 percent of the total number of exhibitors in the enterprise and business exhibition.
Next on industry and company news
Sinopec has penned a 15-year procurement contract for liquified natural gas with France’s TotalEnergies, the world's third-biggest LNG supplier, at the ongoing CIIE. Sinopec will buy two million tons of LNG from TotalEnergies a year over a 15-year period starting 2028, the Beijing-based company said. On day two of the expo, the Chinese oil major has already signed USD40.9 billion worth of procurement contracts with 38 overseas suppliers.
Major multinational automakers, including Volkswagen Group, Ford Motor, and Stellantis, reported disappointing third-quarter sales in China as the country’s fast-growing electric vehicle market continued to favor local brands. Volkswagen sold about 2.1 million cars in China in the first nine months of this year, marking a 10 percent year-on-year drop, according to its interim earnings report. Even the luxury segment faces challenges. Porsche logged a 29 percent drop in China sales, delivering just 43,000 vehicles over the first three quarters. Other brands also reported double-digit declines. Ford sold 133,000 vehicles in China during the three months, a decrease of 11 percent. Stellantis saw sales in China, India, and the Asia-Pacific region contract by 30 percent to just 14,000 units in the third quarter from a year ago.
Wrapping up with a quick look at the stock market
Chinese shares rallied after the government reported that exports jumped nearly 13 percent in October over a year earlier, the fastest pace in more than two years. The benchmark Shanghai Composite bounced 2.6 percent and the Shenzhen Component gained 2.4 percent. Hong Kong’s Hang Seng index also closed 2 percent higher and the TECH index rose 2.25 percent.
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Hi everyone. I’m Stephanie LI.
Coming up on today’s program
Chinese Premier gave keynote speech at the 7th CIIE opening ceremony, pledging further opening up;
Shenzhen drafted an action plan to push for high-quality development of the low-altitude economy.
Here’s what you need to know about China in the past 24 hours
Chinese Premier Li Qiang on Tuesday pledged to further expand opening up and turn China's vast market into great opportunities for the world.
Li made the remarks during his keynote speech at the opening ceremony of the seventh China International Import Expo (CIIE) and the Hongqiao International Economic Forum in Shanghai.
Hosting the CIIE is an important measure for China to expand opening up and cooperation, representing China's solemn commitment to the world, Li said.
China will further expand institutional opening up and actively align with high-standard international economic and trade rules, Li said, pledging efforts to implement the strategy for upgrading pilot free trade zones.
Li said the country is willing to open up its enormous market further, including implementing the unilateral opening up and offering zero-tariff treatment for all tariff lines from the least developed countries, and effectively turn the huge market into great global opportunities.
China has continued to walk the talk in expanding opening up, said Li, adding that China's overall tariff level has been reduced to 7.3 percent, overshooting its target of 9.8 percent.
China has achieved remarkable progress in its opening-up path, according to the latest World Openness Report 2024 released on Tuesday at the 7th Hongqiao International Economic Forum.
Between 2008 and 2023, China's openness index rose to 0.7596 from 0.6789, up by 11.9 percent, which was among the biggest advancements globally.
China firmly safeguards the multilateral trading system with the World Trade Organization at its core and supports developing countries in sharing more benefits of globalization, Li added.
Ngozi Okonjo-Iweala, director-general of the WTO, said in a video speech at the opening ceremony that as geopolitical tensions intensify and signs of fragmentation emerge in global trade and investment, it is crucial for political and business leaders around the world to collaborate on preserving and reforming the multilateral trading system.
Meanwhile, the premier stressed the fundamentals of the Chinese economy remain sound, and the Chinese government is capable of promoting steady economic growth and contributing more to global development and the welfare of humanity.
Greater Bay Area, Greater future
Officials vowed on Tuesday to deepen collaboration between Shanghai and Hong Kong to further unleash the two economic engines' potential in the nation's further opening-up. Addressing the 2024 Hong Kong Investment Promotion Conference-Shanghai Forum during the CIIE, Hong Kong Chief Executive John Lee stressed that the SAR possesses the capacity to serve as an investment and financing hub for the development of Shanghai and related mainland businesses, welcoming more enterprises to leverage Hong Kong for global expansion. He said Hong Kong is home to over 1,400 mainland companies listed on the city's stock exchange, with close to 200 originating from Shanghai alone — boasting a total market value exceeding HK$2 trillion. Shanghai Mayor Gong Zheng stated that Shanghai will further encourage its enterprises to invest in Hong Kong, while particularly strengthening cooperation between the two cities in emerging industries such as artificial intelligence and biomedicine.
Shenzhen on Tuesday released a draft action plan for supporting the high-quality development of the low-altitude economy, seeking public feedback. The draft listed direct financial support for specific low-altitude enterprises that relates to the research, development, and manufacturing of eVTOL (electric vertical take-off and landing aircraft) and large to medium-sized unmanned aerial vehicles of up to 20 million yuan.
Switching gears to financial news
China’s top legislature is expected to approve an increase in local government debt limits this week to enable them to swap out their hidden debts, thereby helping mitigate fiscal risk and enhance financial transparency. The Standing Committee of the 14th National People's Congress began reviewing the proposal during the session that opened yesterday. A decision is expected to be announced when the session concludes on Nov. 8.
The Ministry of Finance said on Tuesday that it would issue up to $2 billion of US dollar-denominated sovereign bonds in Riyadh, Saudi Arabia, during the week starting Nov.11, following approval by the State Council.
The Nasdaq-style sci-tech innovation board of the Shanghai Stock Exchange, known as the STAR market, on Tuesday marked its sixth anniversary of announcement. As of Tuesday, the market had attracted the listing of 577 enterprises in high-tech and strategic emerging industries, which had raised over 1 trillion yuan since its inception.
UnionPay International, a subsidiary of China UnionPay, announced on Wednesday that UnionPay cards issued overseas now fully support binding with Alipay and WeChat Pay. Starting Wednesday, overseas visitors to China can download the Alipay or WeChat App, link their UnionPay cards issued abroad, and enjoy seamless QR code payments with zero transaction fees within China for a limited promotional period.
Wrapping up with a quick look at the stock market
Chinese stocks fell on Wednesday with the benchmark Shanghai Composite down 0.1 percent the Shenzhen Component slid 0.35 percent. Hong Kong’s Hang Seng index tumbled 2.2 percent and the TECH index dropped 2.5 percent.
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Imagine this: During the congested morning rush hour, you casually hop in a "flying taxi" to work, then enjoy a freshly brewed, drone-delivered coffee at the office, isn’t it like a scene in sci-fi movies?
It may soon become a reality in China, with different types of seemingly futuristic drones delivering packages and takeaway food, work commutes using winged taxis and sightseeing helicopters as a hobby, bolstered by a suite of supportive policies.
Little known before, the low altitude sky is growing increasingly busy, setting the stage for the rise of the low altitude economy and a trillion-yuan market scale, which is gearing up for a "take-off."
China recently issued its first production license for electric vertical take-off and landing (eVTOL) aircraft, further solidifying its position in the global race to broaden commercial applications and win market share in the up-and-coming tech-driven sector.
The EH216-S, an unmanned eVTOL aircraft capable of transporting passengers, received a production certificate from the Civil Aviation Administration of China (CAAC) on April 10, according to the aircraft's Guangzhou-based manufacturer EHang. The craft obtained its type and standard airworthiness certificates - both required for commercial operations - from the CAAC last year.
The licensure marks a breakthrough in China's multi-pronged effort to bolster what it calls the “low altitude economy", a wide range of industries related to manned and unmanned vehicles operating below an altitude of 1,000 meters.
The low altitude economy was included as a strategic emerging industry at the country's annual central economic work conference in 2023 and written into this year's government work report as a new growth engine.
The newer and more open low altitude arena, driven by wide adoption of eVTOL aircraft and unmanned aerial vehicles, thus presents a clear path for China to become a world leader in the industry.
New growth engine
While still in its early stages, the low altitude economy has become a consensus among the government, industry, and enterprises as a new engine for economic growth.
The sector grew by 33.8 percent year on year in 2023 to 506 billion yuan (US$70 billion) and is expected to surpass 1 trillion yuan by 2026, according to a report released by a research institute under the Ministry of Industry and Information Technology (MIIT) earlier this month.
In particular, the scale of China's eVTOL industry reached 980 million yuan in 2023 - a year-on-year increase of 77.3 percent - and is projected to reach 9.5 billion yuan in value by 2026. China is expected to account for about 25 to 30 percent of the global eVTOL market in 2030.
A guideline for the general aviation industry released last month showed Beijing aimed to jump-start equipment supply and innovation by 2027, turning aviation into a trillion-yuan market and driving force for low altitude economic growth by 2030.
Han Jun, deputy head of the CAAC, said the low-altitude economy has a long industrial chain and wide applications in the industrial, agricultural, and service sectors. He said the CAAC seeks to simplify application and approval procedures for low altitude flight plans.
According to CAAC data, there were 689 general aviation firms in China as of the end of 2023, with 3,173 general aviation aircraft registered and 451 general aviation airports established.
"The low altitude economy is a frontier fiercely contested among major global economies," according to a low altitude economy development white paper published last month by International Digital Economy Academy in Shenzhen.
The low altitude economy could contribute between 3 trillion yuan (US$422 billion) and 5 trillion yuan to China's economy by 2025, the white paper said.
It added that with its innate digital economic DNA, the low altitude economy is also poised to fully capitalize on the dividends brought about by the development of information technology, digitization and intelligent technologies.
"From an investment perspective, the construction of low altitude infrastructure is poised to drive effective investments with investment-led economic growth as traditional infrastructure investments face growth bottlenecks," the white paper said.
China is also keen for companies to continue making leaps in flying vehicle technology and last year announced a “green aviation” development plan, including for eVTOL. Important measures include setting up economic demonstration zones and test bases for low-flying aircraft. The plan includes the construction of infrastructure to integrate flying vehicles into urban transport and the daily commute.
Vertical mobility, a new-quality productive force in transportation, is building up in China thanks to multiple advantages. The homegrown C919 jetliner provided the local aviation chains with more knowledge about aircraft engineering, safety, and airworthiness. The Beidou navigation and 5G network revolutionized management in low altitude airspace.
Furthermore, companies like JD.com, SF Express, Meituan, ZT Express, Cainiao, and China Post are increasing their efforts to develop large-scale logistics drones, thereby building an airway logistics network.
Plus, China's technical capacity accumulated in the hardware and telecom sectors has laid a foundation for the industry's fast growth. The country's prosperous electric vehicle manufacturing brought about rich know-how in high-density batteries, high-reliability motors, electronic control, and autonomous driving.
Farasis Energy, a Chinese battery cell manufacturer, has delivered ternary lithium soft-pack batteries for electric airplane makers. The power batteries have a maximum cruising range of 250 km in a single trip and can realize more than 10,000 cycles.
At Auto Shanghai 2023, battery giant CATL displayed a high-density condensed matter battery and revealed its plan to develop manned electric aircraft jointly with collaborators.
Chengdu-based Aerofugia Tech, a subsidiary of China's EV giant Geely Auto, has received its first purchase order of 100 eVTOLs from Sino Jet, a Chinese business aviation management firm. In February, U.S. Aviation Week listed the flying car maker among the top 10 eVTOL developers in the world.
Cities rush to unlock potential
While 2024 has been considered the inaugural year for the development of this sector, provinces and cities across China have accelerated its layout, aiming to gain a competitive edge in the emerging industry.
Approximately 20 provinces and cities across the country have prioritized the development of the low altitude economy in 2024, leading to implementation of favorable policies and regulations, attractive funding and subsidies, infrastructure support and suitable sites for eVTOL operations, and paving the way for establishing a sustainable low altitude ecosystem.
In 2021, East China’s Anhui Province received authorization to lead the way in low altitude airspace management reforms, becoming the first province in the Yangtze River Delta to undertake such initiatives.
EHang entered into a strategic cooperation agreement with the municipal government of Hefei, Anhui Province, in October 2023 for joint development of a low-altitude service ecosystem, which includes a financial support fund of US$100 million by the city government.
The aviation authorities in southwest China's Sichuan Province have streamlined the drone trial flight procedure. Previously, drone enterprises were required to apply for approval seven working days in advance. Now, they can be green-lit with notifications one hour before takeoff.
Since Sichuan kicked off a low altitude pilot project at the end of 2018, more than 630,000 safe flights with roughly 180,000 hours have been recorded in an airspace extending to 7,800 square km across the province.
The CAAC will also support enterprises in carrying out drone logistics distribution pilot projects in provinces including Jiangxi, Guangdong, Shaanxi, and Sichuan.
In the Greater Bay Area, where some of the biggest eVTOL firms are based and has emerged as the world's largest aviation market, local governments are racing to get a head start in the new territory.
Shenzhen, the Chinese city that is home to leading civilian drone maker DJI Technology, released the country's first regulations for the industry around the low altitude economy to support its further development, well-positioning itself to lead China’s foray into the low altitude economy.
The regulations, which have taken effect on Feb. 1, have 61 provisions on infrastructure, flight services, industry applications, technology innovation, and security management. The provisions are designed to guide capital into the industry through direct investment, finance leases, and other methods.
Shenzhen has already issued policies to support the low altitude economy. In December 2023, it rolled out a policy to award up to 20 million yuan every year to companies starting new low altitude logistics and delivery routes in the city.
With up to 1,500 enterprises related to the low altitude economy chain, the value of civilian drones made in Shenzhen reached almost 75 billion yuan in 2022, accounting for 70 percent of the country's total.
Shenzhen is set to build more than 600 takeoff and landing platforms for low-flying aircraft and open over 220 inner-city UAV routes by 2025.
By the end of 2023, China had roughly 2,000 UAVs design or manufacturing enterprises and over 1.2 million registered UAVs. According to the CAAC, these drones flew more than 23 million hours last year, up by 11.8 percent compared with 2022.
According to the National Bureau of Statistics, the manufacturing of intelligent UAVs grew by 18.2 percent from January to February this year.
As unmanned technology and network scale dramatically bring down costs, drones could account for one-third of same-day package deliveries by 2040, suggests a report from L.E.K Consulting.
Neighboring Guangzhou has also actively participated in low altitude economic development initiatives, hosting conferences, forums, and seminars. The city released a set of measures and detailed policies to promote the high-quality development of the low altitude economy, including a subsidy of up to 30 million yuan for eligible low altitude industry projects, in an effort to forge a multibillion-dollar industry cluster.
To boost the development of the low altitude economy industry, Guangzhou will also launch the first unmanned aerial tourist sightseeing route, with more than 10 stations set up across three routes.
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China saw a boom during last week’s Qingming Festival, also known as Tomb-Sweeping Day, recording 119 million domestic passenger trips during the three-day holiday, up 11.5 percent from the same period in 2019, marked by bustling tourist attractions and surging consumption. Official data also showed domestic revenue during the period totaled 53.95 billion yuan (US$7.6 billion), up 12.7 percent from the same period in 2019.
But the hustle and bustle actually started a few days earlier, especially between Hong Kong and Shenzhen, which have witnessed record trips of Hongkongers to “go north” as they opted for shopping and entertainment on the mainland after the city emerged from the prolonged pandemic.
Between the SAR's 4-day Easter holidays, around 2.07 million inbound and 2.19 million outbound travelers passed through Hong Kong's land, sea and air border control points — 40 percent more than during the same holiday last year. Among those who left the city for vacations, over 80 percent headed for the Chinese mainland.
The main pull for them is cheaper goods and services, as well as a wider array of dining options. Convenient transportation options make these getaways easy.
Hong Kong tour agencies said that they had noticed a surge in the popularity of mainland destinations. EGL Tours said the number of residents who joined the company’s cross-border tours tripled compared with last Easter. The most sought-after mainland destinations included bay area cities such as Foshan, Dongguan and Huizhou, while Hunan, Sichuan, Yunnan, Beijing and Shanghai, among others, had also gained in popularity.
As delightfully showcased on their social media accounts, Hong Kong residents have discovered that bubble tea in mainland offer greater diversity, the service is notably more courteous, and the restaurant cuisines reflect a more authentic representation of their origins.
Meanwhile, the Zhuhai port of the Hong Kong-Zhuhai-Macao Bridge (HZMB), the world's longest bridge-and-tunnel sea crossing, also saw over 19,000 inbound and outbound vehicles last Monday, marking a record high since its opening, according to the border inspection station of the bridge.
During the 10-day holiday period from March 28 to April 6, cross-border vehicles using the bridge hit 170,000, with over a million passengers, 145 percent and 168 percent higher than that of 2023, respectively, marking historic highs. Inbound visitors from Hong Kong and Macao SARs accounted for 68 percent, a 25 percent surge from last year. Zhuhai port expects another new record of tourists influx in the coming Labor Day holiday, which will span from May 1 to 5.
One-day tour has become more and more common among residents in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), as the "one-hour living circle" has been realized. One of the facilitation measures is the Quota-free Scheme for Hong Kong Private Cars Traveling to Guangdong via the bridge, effective from July 1, 2023, under which private cars will be exempted from paying custom duties. The northbound travel program has been made available half a year earlier for Macao residents.
China unveiled the outline development plan for the GBA in February 2019, vowing to build the GBA into a vibrant world-class city cluster, a globally influential international innovation and technology hub, and a quality living circle for living, work and travel.
Over the past few years, the central government has adopted a series of concrete measures to make it more convenient for residents from Hong Kong and Macao to study, work or live in the Chinese mainland.
What’s the allure to “go north”?
Since the Chinese mainland reopened its borders in January last year, more Hong Kong residents are spending their holidays or weekends in neighboring mainland cities like Shenzhen.
Tired of high costs, poor service and limited choices at home, Hongkongers are going to Shenzhen to buy groceries, go out for meals and discover new bubble tea shops. All it takes is a short bus or subway trip across the border to the mainland.
On social media and in chat groups, hundreds of thousands of Hongkongers talk about new food offerings in Shenzhen, and share tips about where to find popular dinning places and hottest tourists spots. Tour operators that once focused on package tours to Japan and Thailand are now organizing buses to shopping centers and stores including Sam’s Club and Costco in Shenzhen.
The neighboring city of Hong Kong has become increasingly popular among Hong Kong residents as they seek a wider range of recreational activities and more budget-friendly leisure options.
“Many Hongkongers are heading to the mainland to ‘play,’” wrote an user on Xiaohongshu, a lifestyle-oriented social media platform in China. “Compared with Hong Kong, prices in the mainland are cheaper, and the food is delicious … It’s been difficult to buy high-speed rail tickets less than a week in advance.”
"One's spending in Hong Kong could easily cover an entire family's expenses in Shenzhen," exclaimed another social media post. “In the SAR, a proper dinner typically sets one back about HK$1,000, but in Shenzhen, the same amount can fetch a rejuvenating massage, an equally satisfying dinner, multiple servings of refreshing lemon tea, and perhaps even a comfortable hotel room,” it wrote.
Shenzhen, ranked third in GDP among mainland cities, has never been synonymous with affordability for mainlanders. However, Hong Kong remains among the world's most expensive cities to live in. When considering the significantly higher cost of living in densely populated Hong Kong, Shenzhen emerges as a remarkably cost-effective destination for consumption.
Shenzhen is also actively courting such spenders. It has opened more shopping centers since 2020, including MiX C in Lo Wu, Zhongzhou Wan in Futian and Houhai Harbour in Nanshan, integrating technology, art, youth culture, cuisine and other concepts.
The city is also offering online consumption vouchers along with kiosks to make currency exchanges a snap, QR codes on display help users download mobile payment applications, with free Wi-fi too. It has also become much easier to link Chinese online services WeChat and AliPay with offshore bank accounts.
Payment platform AlipayHK revealed that the number of transactions by Hong Kong users in the second quarter more than tripled from the first three months of the year, keeping Shenzhen in the top spot for spending by users.
The most compelling incentive, however, is perhaps the city's proximity to Hong Kong. The fastest train route, from West Kowloon to Futian, one of Shenzhen's affluent districts, takes a mere 14 minutes.
Besides, there’s the weaker yuan, which is down 1.7 percent to the U.S. dollar last year, whereas the Hong Kong dollar is pegged to the strong greenback.
As one of China's fastest-growing and most prosperous cities, Shenzhen has much more to offer. Beyond its reputation for continuous innovation and novelty, the city features a plethora of shopping districts and markets, catering to a diverse range of interests from electronics to fashion. Furthermore, its stricter municipal regulations ensure a heightened sense of safety and cleanliness, enhancing the overall experience for Hong Kong visitors.
And the trend is probably going to be a long-term thing. UBS estimates that Hong Kong residents’ spending in the mainland amounted to about 10 percent of the city’s retail sales by late 2023.
Hong Kong’s plan to woo back consumers
While the “go north” trend is beneficial to cross-border integration, it does not bode well for many local businesses in Hong Kong during a weaker-than-expected economic recovery.
The exodus, of course, provides a welcome boost to the travel industry. But it is hardly good news for shops and restaurants, as it is estimated that the food and beverage industry suffered up to a 30 percent decline in business during the Easter holiday.
Coincidentally, some outlets closed for good as the financial year ended, further reinforcing the impression that the trend to go north has taken a heavy toll on local businesses.
Meanwhile, with greater local competition in the form of Hainan’s status as a duty-free shopping and resort destination, which recorded total offshore duty-free sales of 43.8 billion yuan in 2023, Hong Kong’s reputation as a luxury shopping mecca is under threat.
Data from Hong Kong’s Tourism Board showed that spending by overnight visitors to Hong Kong plunged by nearly 40 percent in 2023 and is expected to fall further this year. Per capita spending hit HK$9,700 in the first quarter, but steadily declined to HK$6,100 by the end of the year, while per capita duty-free spending in Hainan last year was 6,478 yuan (HK$7,015).
Starry Lee, the city's sole delegate to the National People's Congress Standing Committee (NPCSC), has proposed raising the tax allowance for tourists from the current 5,000 yuan to 30,000 yuan and increasing the tax-free shopping quota for mainland visitors, while the city’s Federation of Trade Unions president Stanley Ng suggested that the duty-free shopping limit for mainland tourists should be raised further to 50,000 yuan.
Local malls are also putting up a fight to attract foot traffic. Some of Hong Kong’s large shopping centers, including Harbor City in Tsim Sha Tsui and Times Square in Causeway Bay, adopted motorist-friendly policies to drive footfall, with a queue of vehicles waiting outside the former at about lunch time.
Harbor City, Hong Kong’s largest shopping centre with more than 2,000 car park spaces, offered five hours a day of free parking and up to 10 hours if customers spend at the mall or restaurants, a promotion unseen since 2003.
And of course, the SAR government did not sit in idle at a time of changing travel and spending patterns, as well as fiercer competitions.
It earmarked HK$1.09 billion to develop the city’s tourism in this year’s budget and believed the extra funding would produce short-term economic growth.
A breakdown of the money showed HK$389 million would go towards diversifying tourism experiences, including HK$354 million that would be spent on revamping the city’s daily “Symphony of Lights” show along Victoria Harbor. The other HK$35 million has been earmarked to support ongoing promotions that showcase Hong Kong’s various neighborhoods and offer in-depth cultural tours, including seasonal festivals and events, exploration of the city’s outskirts and “citywalks”.
The majority of the funds, about HK$971 million, is set to go to the Hong Kong Tourism Board, supporting promotional and development projects over the next three financial years.
Another HK$304 million in the Tourism Board’s funds will go to supporting large-scale international events, while HK$176 million is being set aside to tap into new market sources and promotion opportunities, such as the mainland Chinese cities of Xi’an and Qingdao.
Since the start of 2024, rich mega events line-up in the city is already in the rolling. From the firework display during the Lunar New Year at the Victoria Harbor, to the LIV Golf tournament, then came Art March, during which art lovers from around the world converge on the city for the renowned Art Basel and a rich series of other events. Meanwhile, more than 1,000 people descended on the arts hub in West Kowloon for the International Cultural Summit, along with the announcement of landmark exhibition deals involving top overseas museums and galleries.
Also taking the stage are the Milken Institute's inaugural Global Investors' Symposium, which attracted some 550 top executives from a broad range of industries, and the Asian debut of pop-culture festival ComplexCon as well as the Hong Kong Rugby Sevens.
Mega events are good ways to boost the economy and the city's profile. It is said that every 1.5 million tourists can contribute to a 0.1 percentage point of growth in GDP.
The Tourism Board forecast 46 million people would visit the city in 2024, 35 percent higher than last year.
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China is taking the absolute centre stage this week.
Executives of multinationals, representatives from international organizations and foreign institutions, as well as world-renowned scholars have flocked to the country, attending the ongoing Boao Forum for Asia Annual Conference 2024 and the China Development Forum (CDF) 2024 that concluded on Monday, offering insights into China's development and its global impact.
This year's CDF drew more than 110 international guests, including the heads of the World Bank and the IMF, as well as executives of many Fortune 500 companies. Most remarkably, of the more than 80 business executives listed by the CDF, over 30 - or about 40 percent - are from the US. Apple CEO Tim Cook, Cristiano Amon of Qualcomm, Sanjay Mehrotra of Micron Technology, Lisa Su of Advanced Micro Devices, Darren Woods of ExxonMobil and Rajesh Subramaniam of FedEx were all on hand.
New growth drivers present new opportunities
During the past week, from the CDF to the Boao Forum, as well as a special session of the "Invest in China" Summit held by the Ministry of Commerce, a series of back-to-back events underscored China's commitment to expanding high-level opening-up and its willingness to welcome more foreign companies to invest in the country.
At the CDF on Sunday, Chinese Premier Li Qiang told global business executives that China welcomed foreign investment and was taking steps to improve its business environment.
Chinese Commerce Minister Wang Wentao also met with global business leaders including Apple’s Cook, Qualcomm’s Amon and Visa’s Ryan McInerney during the two-day forum.
China is accelerating the development of innovation-led new quality productive forces and has broad prospects in high-tech fields such as artificial intelligence and cloud computing, which means great opportunities for enterprises from all over the world, said the Chinese commerce minister.
The increasing attention China is paying to innovation and sustainable development has provided a world-class business environment for multinational corporations’ growth in the country, which makes AstraZeneca feel confident about the future, the European pharmaceutical giant’s CEO Pascal Soriot said at the CDF.
AstraZeneca inked memorandums of understanding on strategic cooperation with the government of Beijing’s Daxing district and high-quality local companies during the CDF to explore the collaborative business models on vaccines, Soriot noted. The firm recently announced it would build its fifth global strategic center in Shanghai.
As China saw its economy begin the year on a solid note and press ahead with policies to maintain sound development, multinationals are ready to take the pulse of the Chinese market, as well as growth drivers generated from innovation.
China’s gross domestic product growth target of 5 percent is achievable, Roland Busch, president and CEO of German conglomerate Siemens, told reporters during the forum. China is not only Siemens’ largest market in terms of application of industrial technologies but also one of its most innovative frontier markets, he added.
Also, in a closely watched trip to China, Apple’s Tim Cook notably did not mince words when talking about the critical role China plays for the US tech giant.
"I love China and the people," Cook said in Beijing on Sunday when asked whether he enjoyed his trip to China.
Cook said Apple remains committed to long-term development in China and will continue to increase investment in the supply chain, research and development, and sales in the country. He also said he was thrilled to be back in China.
Cook arrived in China on March 20 to visit Apple’s headquarters in Shanghai and meet suppliers before the opening of the company’s second-largest store in the world in the eastern Chinese city.
Lately, the State Council, the country's cabinet, announced 24 specific pro-foreign investment policies, including targeted measures to expand market access, enhance appeal to foreign investment, foster a level playing field, facilitate the flow of innovation factors, as well as better align domestic rules with high-standard international economic and trade rules.
This came amid a drop in foreign direct investment in China in the first two months. FDI came in at 215.09 billion yuan ($29.75 billion) in the period, falling almost 20 percent year-on-year, while the number of newly established foreign-invested enterprises in China reached 7,160, up nearly 35 percent year-on-year in the same period, , data from the Ministry of Commerce showed.
In terms of scale, China's actual use of FDI reached a record high of 268.44 billion yuan during the January-February period last year. Although the figure fell this year, it still is the third-highest in the past decade, said the head of the ministry's department of foreign investment administration in an online statement.
From a structural perspective, China's high-tech industry saw the establishment of 1,865 new foreign-invested companies in the first two months, up 32 percent year-on-year. The actual use of FDI in this sector was 71.44 billion yuan, accounting for 33 percent of the country's total, up 1.2 percentage points compared to the same period of 2023.
At this year's CDF, Zheng Shanjie, chairman of the country’s National Development and Reform Commission, said mutual benefits and win-win results to various market entities including foreign companies will emerge as China is building a modern industrial system supported by the advanced manufacturing sector that provide large new market demand, investment opportunities, and collaborative projects.
Speaking on Tuesday at the Invest in China Summit 2024 in Beijing, Vice-President Han Zheng vowed to create more new business opportunities for foreign companies as China continues to explore and unleash market demand.
Ling Ji, vice-minister of commerce and China's deputy international trade representative, said the country will further shorten the negative list for foreign investment access and create a level playing field for domestic and foreign businesses.
"The government will provide more precise policy support to attract investment in areas such as research and development centers, advanced manufacturing, green and low-carbon development and the digital economy," said Ling, adding that these policy measures will create favorable conditions for overseas businesses to participate in the development of China's new quality productive forces.
Market openness attract global institutions
Thanks to China' concrete action toward opening-up, many global financial institutions have stepped up their presence in the Chinese market this year despite the complex and volatile international environment, representing a vote of confidence in the prospects of the Chinese economy and eyeing more opportunities brought about by the country's high-level opening-up.
Standard Chartered Securities (China) Ltd (SCSCL) - the first newly established wholly foreign-owned securities company in China - officially opened for business in Beijing recently.
Global leading financial institutions, including Neuberger Berman and Fidelity International, have announced moves to increase their registered capital or set up branches in China recently. On February 26, the Shanghai operations of three world-leading international financial institutions - AllianceBernstein Fund Management Co Ltd, Amundi Fintech (Shanghai) Company Limited, and KKR Investment Management (Shanghai) Co Ltd - held a collective opening ceremony in Shanghai.
In January, Chinese authorities said that 10 more foreign-funded institutions had been approved as lead underwriters or underwriters of debt financing instruments for non-financial enterprises.
The expansion of a growing number of international financial institutions in China not only highlights the country's firm commitment to opening up its finance industry to international players, but also underscores great interest among these institutions in China's massive financial market and the huge potential it represents.
According to Wind data, the inflow of northbound capital– money invested from the Hong Kong SAR into the Chinese mainland through stock connect programs – stood at 60.7 billion yuan in February, the highest in about a year. Between February 1 and March 25, northbound capital inflows reached approximately 83 billion yuan.
Overseas institutions also increased their holdings of Chinese interbank bonds in February, official data has showed.
By the end of last month, bonds in China's interbank market held by overseas institutions reached 3.95 trillion yuan (about 556.3 billion U.S. dollars), said a report released by the People's Bank of China Shanghai Head Office. The figure also showed a rise of 80 billion yuan from the end of January.
Over recent years, China has rolled out a series of reform and opening-up measures in the financial sector. Of milestone significance in the reform of China's capital market was China rolling out its across-the-board registration-based IPO system in February 2023.
In October 2023, the top-level Central Financial Work Conference held in Beijing stressed that it is imperative to accelerate the building of a nation with a strong financial sector, vowing to promote high-quality development of the financial sector.
Meanwhile, China has been steadily promoting high-level opening-up in the financial sector, with more than 50 measures introduced, including allowing international investors to invest in the country's capital market via more channels and lifting ownership caps for foreign institutions for securities, futures and funds.
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There’s a gold rush in China.
But unlike the past where middle-aged Chinese were purchasing the gold metal, it’s the young who are now showing a growing appetite for this precious, yellow metal — albeit in bean form.
Smaller than a fingertip and often shaped like lucky symbols like ingots or koi fish, gold beans are quickly gaining popularity among China’s Gen Z. Weighing roughly one gram and priced between 400 and 600 yuan, they offer an affordable entry point for buyers. Many purchase one or two pieces monthly, likening the cost to their regular milk tea expenses.
To many young people, these little glittering nuggets signify more than mere savings — they’re a viable long-term investment. Traditionally, China’s middle-aged and elderly were the primary consumers of gold, but now Gen Z is gravitating towards these diminutive gold products.
On social media platforms, young Chinese are even chronicling their journey of slowly filling small glass bottles with gold beans. While some bottles have just a few beans at the bottom, others are almost full, with enthusiasts frequently sharing their experiences. The hashtag “gold beans” on Sina Weibo has garnered over one million views and over 20,000 notes with topics ranging from collection strategy to store recommendations and vouchers, and how to turn their collected beans into decorative accessories being the hottest searches.
Buying gold beans isn’t without its own perils. Experts have noted that many of those buying gold beans are being duped with fakes. Nikos Kavalis, managing director at the London-based consultancy Metals Focus Ltd. has also warned people from buying gold beans. Kavalis said that it made no sense to invest in gold beans because their price is often 10 to 30 percent higher than the commodity’s spot price. Investors would be better served by parking money in gold exchange-traded funds(ETFs).
At the same time, the rally in gold continues with prices hitting an all-time high on Thursday — and there’s room for it to rise more as central banks continue to purchase bullion in record amounts.
Spot gold is currently trading at above US$2,200 per ounce, which analysts said could rise to US$2,300 per ounce in the second half of 2024, especially against the backdrop of expectations that the U.S. Federal Reserve could cut rates in the second half.
Gold back in favor with Gen Z
In the not-too-distant past, gold symbolized the taste of the older generations, but it is now a statement of Gen Z's identity that represents both personal style and cultural loyalty.
In a 2023 report on the jewelry and accessories industry, China’s leading e-commerce platforms Tmall and Taobao revealed that the primary consumers of gold jewelry are those born after the 1990s. And in 2022, an insight report by consultancy firm Mob Data found that Gen Z’s inclination to purchase gold surged from 16 percent in 2016 to 59 percent in 2021 — marking the highest spending potential among all age groups.
The rise of the “guochao” or “China chic” trend, which celebrates Chinese identity, coupled with the increasing value of gold, has created significant market opportunities in the gold jewelry market in China, which was valued at 410 billion yuan (US$57 billion) in 2022, according to the Gems and Jewelry Trade Association of China. The market has grown about 12 percent compared with the pre-pandemic level in 2019 and 66 percent compared with 2012.
Domestic jewelry brands have begun collaborating with popular franchises in order to tap younger customer interest. In 2020, Luk Fook Jewelry collaborated with Chinese video game Nezha, and Chow Sang Sang Jewelry launched a joint series with the Forbidden City.
Shandong Gold Group said it has been actively engaged in exchanges and cooperation with universities, inheritors of intangible cultural heritages, and cultural and art institutions, to better explore the integration of traditional culture with innovation in gold jewelry designs and techniques, in order to inject vitality into the gold industry.
Launching sub-lines or sub-brands is also a smart way to get in front of younger customers. In 2016, Chow Tai Fook launched the trendy jewelry brand Monologue, and in 2017 launched the brand So In Love, which targets the luxury wedding market; and, in 2019, Chow Sang Sang launched the fashion concept brand Minty Green.
Chow Tai Fook has also leveraged social media to adapt to this new interest, managing director Kent Wong said. A recent survey of 5,000 Chinese consumers aged between 18 and 40 showed that more than 90 percent prefer to buy jewelry with symbolic meaning related to Chinese culture. According to the survey, carried out by market research company Ipsos for Chow Tai Fook, around two thirds of respondents were interested in buying gold jewelry.
“Unlike traditional consumers who focus on gold purity and price, young people are increasingly prioritizing the overall purchasing experience, along with the craftsmanship of the jewelry and the narratives behind it,” Wong said.
Fashionable and lightweight gold jewelry has gained significant favor among consumers, contributing to the overall increase in gold jewelry consumption, said the China Gold Association.
Young Chinese aged between 25 and 34 have become the main force of gold consumption, with their proportion at 59 percent in 2023. In the future, consumers under the age of 25 will become new major gold buyers, the association predicted.
What’s driving the gold rush?
With the dramatic rise in international gold prices, many Chinese investors are looking with interest at the yellow metal, an investment where risks and opportunities coexist.
Consumption of gold, whose appeal had once waned as Chinese consumers favored diamonds and other gems, has remained robust during the Spring Festival holiday despite elevated prices.
As the world's largest precious metals market geared up for the Chinese New Year celebrations this year, gold jewelry and the Year of the Dragon gold bars have emerged as the most popular products, according to the China Gold Association.
Boosted by a series of policies aimed at stimulating consumption, the domestic consumer market has recovered steadily, with gold and silver jewelry emerging as the fastest-growing categories among various retail segments through last year, it said.
Gold jewelry processing and retail enterprises in China have also continuously innovated in the design of gold products, driving the increased demand for gold jewelry. Gold bars and coins with relatively lower premiums have also been favored by consumers seeking physical gold investments, said the association.
In 2023, the country's gold consumption rose 8.78 percent year-on-year to 1,089.69 metric tons, according to data from the association. Of the total, gold jewelry consumption hit 706.48 tons, a year-on-year increase of 7.97 percent, while gold bars and coins touched 299.6 tons, up 15.7 percent year-on-year. Gold production, meanwhile, rose 0.84 percent year-on-year to 375.15 tons, it said.
Gold has long been recognized as a valuable financial hedge. A study by the World Gold Council (WGC) reveals that, over the past three decades, gold has yielded an annualized return of 5.8 percent. This eclipses mainstream assets like cash and bonds during the same time period. And during five of the past seven economic downturns, gold has thrived, aiding investors in mitigating overall portfolio losses.
Gold has increased by more than 600 percent since the start of the millennium, but adjusted for inflation, it remains below the peak of US$850 reached in January 1980, which is equivalent to more than US$3,000 in today’s currency.
As the global economy faces increasing challenges and financial market volatility intensifies, the hedging demand for gold is clearly on the rise.
China is the leading driver for both consumer demand and central bank gold purchases, and the country’s not likely to slow down.
According to data from the WGC, China overtook India to become the world’s largest gold jewelry buyer in 2023. This gold-buying spree continued to stay strong for 16 consecutive months in February 2024, as the People's Bank of China added roughly 390,000 ounces of the key metal, according to government data. In total, China's central bank now holds 72.58 million ounces of gold, or roughly 2,257 tons.
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Chinese EV makers are starting 2024 with yet another round of bitter price war.
The competition among automakers in China that started in early 2023 has shown no signs of abating. Particularly in the new-energy vehicle sector, both traditional and emerging players keep cutting prices or launching limited-time promotions, tactics that analysts anticipate will persist throughout the year.
Auto giant BYD fired the first shot in this round of the price war after the Spring Festival holidays, introducing new versions of two models that are 20,000 yuan cheaper than the previous versions. US-based Tesla followed suit by launching limited-time discounts of up to 34,600 yuan for buyers.
BYD, the crown jewel among Chinese carmakers, cut the price of its cheapest car, the Seagull, by 5%. That follows the launch of BYD's Yuan Plus crossover—known as the Atto 3 in overseas markets—with a starting price of 119,800 yuan, 12% lower than its predecessor.
The Shenzhen-based company has priced another model under the 100,000 yuan threshold on Wednesday. The updated fully electric e2 model will start at 89,800 yuan, 12.6% less than the previous price of 102,800 yuan.
Price cuts over the past three weeks pushed the basic editions of the four models – the e2, Qin Plus DM-i plug-in hybrid, Dolphin and Chaser 05 – below 100,000 yuan.
The Warren Buffett-backed BYD isn't the only company resorting to discounts.XPeng Motors, one of the smart EV startups, announced that all models of its G6 series will be discounted by 20,000 yuan until March 31, with prices starting at 189,900 yuan after the discount.
Huawei-backed AITO then launched limited-time promotions for its M5 series. Nine carmakers, including Geely, SAIC Volkswagen, Rising Auto and Chery, have announced price reductions or limited-time promotions.
Tesla, which triggered last year's fierce price wars in China, has also rolled out incentives for March. The US carmaker is offering customers an insurance subsidy if they buy the company's existing inventory of Model 3 and Model Y cars.
The recent price war in the passenger vehicle market is fundamentally driven by the replacement of old technologies with new ones, and the transition from traditional fuel vehicles to NEVs, said Cui Dongshu, secretary-general of the China Passenger Car Association(CPCA).
"As a new market order emerges, intense competition between old and new manufacturers ensues, and this process is expected to persist for several years until a new industry landscape takes shape," Cui said.
In the rapid growth expected in the coming years, 2024 is expected to be a pivotal year for NEV producers to establish a solid footing in the market, Cui said.
China's NEV industry started early and has developed rapidly. With more than 100 manufacturers in the market, the competition is fierce. Top players are leveraging price wars to squeeze out smaller firms with limited innovation and funding, according to Zhang Xiang, director of the Digital Automotive International Cooperation Research Center of the World Digital Economy Forum.
The price war will persist throughout the year, Zhang said, noting that 2024 will be very significant for the players as governments at all levels roll out policies to promote vehicle consumption.
Tough choice amid weaker sales
China’s vehicle sales fell sharply in February.Retail sales of passenger cars in China declined to 1.1 million units, down 21% from a year earlier and 46% from January, according to the CPCA.
The association attributed the sharp decline to lower demand ahead of the Lunar New Year and some consumers bringing forward purchases to the start of the year. Consumers are also holding back after the latest round of price cuts as competition stiffens in China’s market, the CPCA said.
Retail sales of new-energy cars, which include electric vehicles and plug-in hybrids, fell 12% to 388,000 units. Exports of NEVs edged 0.1% higher to 79,000 units but fell 20% from the previous month.
Deliveries of EVs in China have slowed at the start of this year compared to the final quarter of last year, with drops hitting brands like Nio, Li Auto, Xpeng and BYD.
Front-runner BYD's deliveriesin February slumped nearly 40% month on month to 122,311 units, the lowest since May 2022.The company delivered 3.02 million units in 2023, a year-on-year increase of 62.3%.
Tesla's sales in China fell 19% year-on-year in February. Tesla sold 60,365 China-made vehicles last month, the lowest amount the company has sold in China since December 2022.
Fitch Ratings warned last November that EV sales growth could slow to 20% in China this year, from 37% recorded in 2023, due to economic uncertainties and intensifying competition.
China has the world's largest EV market.The sector is highly competitive due to the number of brands that operate in the country. Some EV makers have turned to price wars to increase sales. But discounts may have an unintended effect on consumers, who are now holding off on purchases in hope of getting a further discount.
Then there's the possibility that after years of strong growth and investment, the Chinese EV market may now be producing more cars than could be sold domestically. Chinese carmakers are now looking overseas for growth opportunities, yet a flood of cheap Chinese EVs could trigger retaliation in markets like the US and Europe. China, too, is warning of overcapacity in the domestic EV sector.
Chinese government has acknowledged overcapacity and underused factories, and is pushing automakers to expand overseas. Analysts say that trend could lead to oversupply at home and abroad.
Automakers in China are projected to add capacity for five million cars between 2023 and 2025, most of which are EVs, according to an estimate by Bernstein Research. EV sales in China are expected to grow by around 3.7 million during this period, it said.
Bernstein expects China’s EV market to see continued demand growth of about 25% year-on-year while becoming increasingly competitive amid “ongoing pricing pressure.”
A subsidies-driven boom in past years helped China sell more EVs than Europe and the US combined. The sales surge created a wave of investment into homegrown automakers that have become the envy of the global industry.
But the central government withdrew EV-purchase subsidies for consumers at the start of last year, sending growth down to 21% for 2023 from 74% a year earlier. In comparison, EV sales in 2023 grew 47% in the US and 37% in Europe, according to industry analysts.
The slowdown has fueled a fierce price war in China embroiling dozens of EV startups and foreign players such as Tesla. Many Chinese EV makers burned through cash to chase a share of the growing market. Many are yet to turn a profit despite rising sales, leaving some at risk of going bust or needing injections of capital.
Global ambitions
Chinese EV makers that enjoyed years of explosive growth now face a slowdown in domestic demand, spurring them to push overseas and challenge global auto giants already struggling with a transition to battery-powered cars.
BYD, which has ousted Tesla as the top global EV seller, has ambitious plans to increase sales overseas in the coming years, including buying ships to transport cars to Europe.
Its first foreign factory making passenger EVs began delivering cars this year, from Uzbekistan, and a second in Thailand starts deliveries in July. It plans to open two more factoriesin Brazil and Hungaryin the coming years, and is weighing setting up a plant in Mexico from which it would consider exporting to the US.
Last year, more than one million domestically made EVs were shipped from China as it became the world’s biggest auto exporter, to countries such as Australia and Thailand. That total included vehicles from Tesla and Polestar as well as Chinese-owned brands including BYD, MG and Nio.
In January, NEV exports performed strongly, particularly in Southeast Asian and European markets, which reflected the strength of China's industry chain and produced growth in both the domestic market and exports, according to the CPCA.
During the tone-setting Central Economic Work Conference held in Beijing in December 2023, Chinese leaders stressed that consumption of products, including NEVs and electronic products, should be stimulated.
At China’s highly anticipated “Two Sessions” meeting last week, Beijing said its efforts to boost the new energy sector by various measures — including the reduction or exemption of purchase tax for EVs, supporting construction and other infrastructure measures —contributed to a 37.9% increase in sales of NEVs in 2023.
China’s commerce ministry this month also encouraged its EV makers to expand overseas, such as by tying up with foreign partners for research, logistics and supply chains. Chinese auto suppliers will get credit from banks to support the push.
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China seeks to achieve a GDP growth rate of around 5 percent for 2024, the latest signal that the world's second-largest economy is committed to high-quality development despite uncertainties at home and abroad.
The projected goal, which remains unchanged from the previous year's growth target, is one of the key development objectives unveiled in the government work report delivered by Premier Li Qiang to the national legislature, which began its annual session Tuesday.
But the premier acknowledged that matching that same growth target that the leadership had set a year earlier—when the country was buoyed by optimism after the lifting of three years of Covid-era restrictions—would be an uphill climb.
"Achieving this year's targets will not be easy, so we need to maintain policy focus, work harder, and mobilize the concerted efforts of all sides," Li said.
A pragmatic goal
In general, the growth target of around 5 percent is considered prudent, appropriate and pragmatically positive by public opinion.
To achieve the objectives of the "14th Five-Year Plan" and to double the GDP by 2035 compared to 2020, the compound annual growth rate must be at least 4.7 percent over the next 15 years. Setting a GDP growth target of "around 5 percent" allows for reasonable and moderate progress, sustained momentum, emphasis on quality, stabilization of expectations, and fortification of confidence, experts noted.
This growth target is 0.4 percentage points and 0.5 percentage points higher respectively than the previous expectations of the International Monetary Fund (IMF) and the World Bank for China's economic growth this year, showcasing the economic resilience and potential of the Chinese economy.
The significance of the 5 percent growth target holds a special meaning for the Chinese people too. China's economy is transitioning from a period of high-speed growth to medium-high-speed growth, entering a phase of high-quality development.
While the growth rate may not be as high as before, the optimization of structure, the transformation of driving forces, and the robust development of new quality productive forces provide limitless possibilities for the Chinese economy.
The nation's economy is set for a good start to the new year. China’s foreign trade expanded 8.7 percent year-on-year to 6.61 trillion yuan in the first two months of 2024, official data showed on Thursday.
China is confident that it can sustain the sound fundamentals of foreign trade, with exports climbing the value chain and the import market presenting greater opportunities amid the complex global economic environment and uncertainties, Commerce Minister Wang Wentao said on Wednesday.
Positive signs have emerged as China's foreign trade sector maintained its growth momentum in the first two months of the year, Wang said at a news conference during the annual session of the country's top legislature. Many enterprises are venturing abroad to participate in trade shows and expand their market presence, he added.
Meanwhile, global fund managers have also shown their optimism in China's long-term economic growth.
Outflows from Chinese equities slowed into the end of February and regional active managers started adding growth and tech stocks. They come as China ramps up measures to boostconfidencein its economy, with mainland stockssnappinga six-month streak of foreign outflows.
Northbound capital－overseas capital buying into the A-share market via the stock connect programs linking Shanghai and Shenzhen with Hong Kong－reported a net inflow of over60.74 billion yuan in February.
The figure not only hit the highest monthly value in the past 13 months, but even more than for all of 2023.
Morgan Stanleyrecently reported that a shift away from Chinese equities by global long-term investors has taken a pause, with some funds getting less bearish.The China equity strategy team of Goldman Sachs Research Department also pointed out in a recent report that effective corporate governance reform may help the Chinese stock market attract foreign capital flow back.
The latest buzzword
At this year’s“Two Sessions”, the development of new quality productive forces has become the latest catchphrase.
In the government work report, there was a notable emphasis on accelerating the development of new quality productive forces as part of efforts to modernize China's industrial system. This strategy is seen as key to maintaining and enhancing China's quality growth, both now and in the future.
In September last year, new quality productive forces theory was initiated to promote China's high-quality development.
Marked by innovation, new quality productive forces are advanced productivity in essence. These forces represent a departure from traditional economic growth models, aligning with China's new development philosophy which prioritizes innovation and sustainability. They encompass high-tech, efficient, and high-quality productivity methods.
China, after years of rapid growth, is shifting toward an economy characterized by high-quality development and industrial upgrading.
By fostering new quality productive forces, China hopes to transform traditional industries, making them more advanced, intelligent, and environmentally friendly. This transition is vital for improving productivity, efficiency, and global competitiveness.
The impact of new quality productive forces on China's economic structure is already evident. According to the National Bureau of Statistics, there has been significant year-on-year growth in sectors like new energy vehicles, solar cell production, and service robots. China's global standing in research and development investment and innovation indices further underscores the country's commitment to these new forces.
Looking to the future, these new forces are expected to drive growth in emerging sectors. The rapid adoption of technologies like artificial intelligence and blockchain demonstrates this trend. The government plans to spearhead development in future industries such as quantum technology and life sciences, while establishing zones dedicated to these cutting-edge sectors.
New quality productive forces are poised to become a major driver of China's economy, playing a crucial role in China's vision of becoming a great modern socialist country.
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Starbucks has long got a trouble. Now it’s official.
Luckin Coffee became China’s dominant coffee chain last year, outpacing the nation’s previous leader Starbucks Corp in annual sales for the first time.
The Xiamen-based company posted quarterly net revenue of 7.06 billion yuan (US$980 million), representing an increase of 91% from a year ago in a growing and increasingly competitive China market.
The latest revenue number in the three months through December brings Luckin’s total sales in 2023 to 24.86 billion yuan (US$3.45 billion), surpassing Starbucks’ comparable annual sales of US$3.16billion in China, making it the biggest coffee chain in the Asian nation.
The surge in Luckin’s saleslast year was partly driven by its rapid expansion.More than 8,000 new store opened last year, with over 16,200 stores located in China by the end of 2023.
Experts attributed Luckin Coffee's success to its industrialized process, exceptional marketing strategies, and innovative capabilities. Chinese market research firm iiMedia pointed out that Luckin's triumph over Starbucks is a testament to its deep understanding of the Chinese market and consumer preferences.
Luckin’s CEO Guo Jinyi commented during a Friday earnings call that while competition in China's coffee industry is intensifying, the market landscape is far from fully developed. He highlighted the accelerated development of China's coffee market and predicted fiercer competition as more brands enter the fray.
China’s coffee market is experiencing rapid growth, overtaking the US as the world's largest branded coffee shop market by outlets. The surge is being driven by increasing consumption and presents significant opportunities for both domestic and international coffee brands.
Luckin Coffee's innovative approach to catering to Chinese consumers' tastes has been a key factor in its success. Its collaboration with Kweichow Moutai to launch an alcohol-infused coffee in September 2023 was a hit, with more than 5.42 million cups of Moutai latte sold on its first day. This innovation set a new sales record for the company and showcased its ability to blend traditional Chinese elements with modern coffee culture.
Overtaking Starbucks in China
In the booming local coffee shop market, it is the big Chinese chains that are growing the most.It has been confirmed by figures for 2023, which mark the leadership in China of Luckin Coffee, which has overtaken Starbucks for the first time in sales, as well as in the number of its own establishments in the territory.
In the face of the Chinese people's new passion for coffee, which in just a few years has made it the world's largest market, the growth recorded by the brand in the last twelve months has been impetuous: sales have increased by 87% to reach 24.9 billion yuan, with profits of 3 billion yuan, more than doubled compared to 2022.
All this while Starbucks in the last quarter of 2023 saw its revenues in China drop by 12.5%.Starbucks reported total revenue of $3.05 billion in China for fiscal 2023 that ended October 1, according to a CNN calculation based on the company’s quarterly results.
In contrast to Luckin’s aggressive expansion, Starbucks has expanded at a relatively modest pace, with a China store count of nearly 7,000 through December.That number was up 14.5% from a year earlier.Globally, Starbucks is still by far the largest coffee chain, with 38,586 stores worldwide.
Starbucks is clearly feeling the heat.
While Luckin created buzz last year with Moutai latte, the US coffee giant recently rolled out a pork-flavored latte in China for the Chinese New Year season that started on February 10.
Starbucks' Reserve Roastery in Shanghai announced the pork-infused offering in a post on its verifiedWeibo microblog accounton February 5, promoting the beverage as a coffee "integrated with traditional New Year customs."
The limited edition beverage, whose name translates into "Abundant Year Savory Latte," is pictured with a slice of skewered pork perched on top of the mug. Its official English name is the "Lucky Savory Latte.”
The drink is priced at 68 yuan (US$9.45) and is offered at around 25 Starbucks Reserve stores around the country.Other Starbucks' new Spring Festival-inspired drinks include rice flavored macchiato and black sesame latte.
The recent innovation on Starbucks' menu is prompting discussion on social media. But over the long term, the company must prioritize the development of a flagship item capable of capturing consumers' enduring attentionthrough a differentiation strategy, such as the coconut-flavored latte, which has swiftly risen as a top seller for Luckin since its introduction, analysts noted.
Starbucks is looking to grow its store base by 13% this year in China and operate 9,000 stores in the country by 2025. For its part, Starbucks is adding more locally relevant beverages to its Chinese locations. It is also trying to add more food options to foster expansion and is looking to expand delivery.
China, once a tea-drinking nation, has become a global coffee industry powerhouse. Data from the International Coffee Organization last year showed that coffee consumption in the country grew 15% in the year ended in September.
According to market research firm Mintel's estimates, total sales of on-premises coffee are expected to reach 74.1 billion yuan in 2023, up 29.5% year-on-year, and will continue growing with a compound annual growth rate (CAGR) of 24.5% over 2023-28.
Much of this demand is driven by the younger generation. As many as 36% of coffee consumers in the country were between 25 and 34 years old, and 30% were between 35 and 44 years old, according to a2021 surveyby Daxue Consulting, a Chinese market research firm.
Luckin’s got a bigger headache
Founded in 2017, Luckin initially rose to prominence by undercutting Starbucks’ prices, as it focuses on catering to young people, withmostly takeout boothsand cashless payments. Its beverages are about 30% cheaper than those offered by Starbucks.
Its bare bones stores usually offer only the most basic services, which has allowed the company to expand rapidly at a lower cost. It also requires consumers to use mobile phones to place orders, enabling them to collect extensive costumer data.
However,Cotti Coffee, founded by the same duo behind Luckin, decided to take the competition even further.
Cottistrategically positioned its stores near Luckin outlets and began charging1 yuan lessfor the same drink. Last year, Cotti launched a campaign to lower latte prices to9.9 yuan, prompting Luckin to match that price and commit to maintaining it for two years.
Cotti later slashed latte prices again to an even more enticing8.8 yuan.This aggressive low-price strategy paid off: in less than a year since its founding, Cotti has opened over 5,800 stores, selling an average of more than 400 cups of coffee per day per store.
The marketing battle of selling coffee for "8.8 yuan" and "9.9 yuan" has been ongoing for over half a year, completely transforming the landscape of China's coffee industry.
By digging deeper into Luckin’s seemingly extraordinary profit growth, there’s a catch.
In the three months ended in December, Luckin’s profit margin dropped 10.3% compared to the previous quarter due to low-price competition with rival Cotti having no sign of abating.
The Chinese chain recorded a 3.9% profit margin, also a 7.6% decrease from a year earlier, which the company’s CEO Guo Jinyi attributed to seasonal factors and that decline aligns with “the objective industry trends” in the earnings call.
Earlier this month, many customers found Luckin quietly narrowed its 9.9 yuanspecial offer that previously applied to all drinks in its stores to only eight standard beverages, nearly nine months after the coffee chain launched the price-cut promotion to celebrate hitting the milestone of 10,000 stores in China in June.
With the campaign “exceeding expectations,” Guo committed to continuing the offer for at least two more years when the company released its earnings report in August.However, the company took a dent in profit margin by a drop of 5.5% to 13.4% in the third quarter last year.
While Luckin rolls back on discounts, Cotti is doubling down on the price war.
On February 26, Cotti Coffee announced the launch of anunlimited 9.9 yuan offer, which will last for three months, as the number of stores worldwide reaches 7,000.
During a recent interview, Li Yingbo, chief strategy officer of Cotti Coffee, said thepromotion will continue subsidizing stores, with the maximum subsidy for a single cup reaching 14.5 yuan. He expects that the total subsidy amount will reach 300 million yuan.
The jostling over coffee prices captures an emerging trend among Chinese consumers who are price conscious. The coffee price battle isn’t just about beans and brews—it’s a reflection of larger economic shifts in Chinaand the quest for differentiation in the coffee industry. And while the aroma of freshly brewed coffee fills the air, consumers are carefully counting their yuanwhile enjoying their daily cup of joe.
But some Chinese businesses see an opportunity in the new frugal ways of consumers.Mixue Ice Cream & Tea, a Chinese tea chain known for its iced coffee and bubble tea drinks that sell for less than $1, has opened 36,000 stores by the end of last year.
Pinduoduo, a discount shopping website, said revenue grew 63 percent in the first half of 2023 from a year earlier. The company’s growth rate is surpassing that of Alibaba and JD.com, China’s two-biggest e-commerce companies.
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For the Chinese people, the eternal theme of the Spring Festival, or Chinese New Year, remains family reunion, yet an increasing number of Chinese are choosing to integrate travel and movie-watching into their holiday traditions.
The eight-day holiday saw a record number of people go on trips, more holiday goods purchases, and more quality family time spent in doing leisure activities. The growing spending power of Chinese consumers, combined with government policies to support shopping, tourism and cultural events during the holiday, will definitely contribute to sustaining China's economic growth this year, according to government officials and market analysts.
Tourism
China's tourism market boomed during the holiday, with indicators such as the number of trips reaching a new high.
Data from the Ministry of Culture and Tourism shows that 474 million domestic tourism trips were made during the Spring Festival holiday, marking a 34.3 percent increase from the same period last year and an increase of 19 percent compared to the pre-pandemic level in 2019. Domestic tourists spent about 632.69 billion yuan in total, up 7.7 percent from the same period in 2019.
Railway passenger trip data is a leading measure of the country's Spring Festival holiday festivities, which feature the largest population migration in a year.
On Feb. 17, the last day of the eight-day holiday, nearly 16.07 million railway trips were recorded, smashing the single-day passenger trips record in the Spring Festival travel rush period for four days in a row, according to data from the China State Railway Group, the national railway operator. Chinese railways reported 99.46 million passenger trips in total for the holiday.
Air travel also experienced a significant uptick, with data from VariFlight, a China-based civil aviation data service provider, indicating sustained high volumes of passengers from the first to the sixth day of the Chinese New Year. Predominant destinations include first- and second-tier central cities as well as popular tourist hubs.
Notably, scenic attractions nationwide witnessed notable increases in visitor numbers. Statistics reveal that China's major cultural and tourism sites have welcomed 123 million tourists as of last Wednesday, reflecting a robust 22.8 percent surge compared to the same period in 2023.
A distinct trend during the Spring Festival holiday is the cross-country travel phenomenon, where individuals from southern regions venture northward in pursuit of ice and snow, while northerners seek refuge from the cold by heading south to warmer climates.
The robust travel activity observed during the Spring Festival holiday sets a promising tone for the tourism industry in 2024. Projections from the China Tourism Academy indicate that Chinese tourists are poised to embark on over 6 billion domestic trips this year, with the combined tally of inbound and outbound international travelers expected to surpass 260 million, showcasing continued growth and vitality in the tourism sector.
Film market
During the Spring Festival holiday, watching movies is an increasingly popular activity for families and friends in China to celebrate their reunion, a trend that has contributed to the vibrancy of the country's film market in 2024.
Statistics from the China Film Administration, the nation's top industry regulator, showed that during the eight-day holiday period, the country grossed a whopping 8.02 billion yuan from 163 million tickets, surging 18.47 percent and 26.36 percent, respectively, compared with the same period last year.
This surge in revenue during the festival is a testament to the broader recovery that China's film industry has experienced, particularly starting from 2023, with total box office revenue surpassing 54.9 billion yuan and nearly 1.3 billion tickets sold.
Data shows that the enthusiasm for movie-going is not limited to major cities. Residents of third- and fourth-tier cities have become major contributors to cinema consumption, accounting for more than half of the total box office revenue, at 54 percent, the highest in five years. Moreover, the trend of family viewership has seen growth, with groups of three or more increasing from less than 20 percent last year to 27 percent.
The diversity of this year's Spring Festival film lineup has also contributed to the booming market. Nine movies were released, primarily spanning the comedy and animation genres, catering to various audience segments.
While there were none of the blockbuster hits in hard science fiction and costume fantasy seen in recent years, 2024's lineup broke records in the pre-sale stage for Spring Festival films over the past three years, becoming the quickest pre-sale box office to surpass 100 million.
Among them, two have set off a social media buzz, with state agencies even joining the discussion which addresses topics such as weight loss, self-love and legal justice.
Directed, written and starring Jia Ling, a representative of the new generation of female Chinese directors, YOLO (“you only live once” or Re La Gun Tang in Chinese) is about an overweight woman, Leying, who loses weight through boxing training while finding herself and learning to love herself through the sport. The comedy film was the box-office champion with a take of 2.7 billion yuan.
While adapted from the Japanese film 100 Yen Love, the Chinese version is exceptional for Jia’s physical transformation – for the movie she lost more than 50kg in a year to portray the rebirth of her character.
Jia’s weight loss has been discussed more widely on social media than the film. But some top reviews on Douban said the film did not try to portray “losing weight”, but rather how a person could change their life through achieving a dream. The picture's focus on "female strength" has made it both a domestic blockbuster and a rising star in the overseas market as Sony Pictures recently acquired the film's international distribution rights.
Another film sparking discussion during the holiday period is Article 20 directed by Zhang Yimou, a prestigious and award-winning director in China. Zhang’s film tackles a more controversial topic and features three semi-fictitious cases and Article 20 of China’s Criminal Law that delves into the complex and sometimes controversial legal concept of justifiable self-defense.
The film, featuring a prosecutor as the protagonist, narrates the tale of a middle-aged man aiming to make a final push in his career who unexpectedly finds himself embroiled in a highly contentious case. It explores realistic themes from the everyday person's viewpoint, underscoring the justice and humanity within the law.
The line from the film, "What you are dealing with is not just a case, but other people's lives," shows the dual nature of a prosecutor's work and has struck a chord with many viewers.
Luo Xiang, a renowned professor of criminal law at China University of Political Science and Law, said in a recent comment about the film that the public and judicial officers should avoid taking a "godlike" perspective or adopting a rational but armchair stance. Instead, they should consider the situation in which the defender was involved, empathize with the defender's position, and refrain from making excessive demands on the defender.
Consumption
In terms of the scale of the Spring Festival consumer market, according to consumer insight released by Meituan on February 15, the lifestyle service industry achieved a strong start with a year-on-year growth of 36 percent in daily consumption during the Spring Festival holiday, an increase of over 155 percent compared to the same period in 2019.
China Unicom's Smart Footprint data shows that customer flow in key commercial districts across the country increased by 73 percent compared to the same period last year since a week before the Spring Festival. This fully demonstrates the strong consumption demand and enormous consumption potential of Chinese residents.
The Ministry of Commerce, together with relevant authorities, jointly organized the online Spring Festival Shopping Festival. This is the first of the 12 key events of the 2024 "Consumer Promotion Year", aiming to stimulate the Spring Festival consumer market and better meet the needs of the people during the holiday. Since its launch, online retail sales have reached nearly 800 billion yuan, an increase of nearly 9 percent compared to the same period last year.
Various regions in China, including Guangxi, Sichuan, Hunan, and Heilongjiang have seized new opportunities for "Silk Road e-commerce" development, promoting the nationwide online sales of high-quality and distinctive products from ASEAN, Central Asia, and other countries.
With the rapid development of China's economy and the upgrading of consumption, the Spring Festival, the most important traditional festival of China, has evolved into an important window for observing and analyzing the trends and characteristics of the Chinese consumer market. It encompasses a series of new features such as consumption upgrading, innovative consumption patterns, and optimized consumption structure, which have a profound influence on promoting high-quality economic development in China.
As one of the "three drivers" of economic growth, the stability and sustainability of consumption directly affect the speed and quality of China's economic growth. This is even more prominent in the current complex and volatile global economy, highlighting the significance of driving domestic demand.
Different from the Western dragon, the Chinese dragon symbolizes good luck and prosperity in traditional Chinese culture. Robust consumption during the festival is encouraging and illustrative of the increasingly important role that consumption plays in the country's economic growth. This positive trend marks a solid start for the world's second-largest economy as it begins the new year.
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