Property market and youth unemployment weigh on China’s economy
China Customs Authority, Beijing, 2024 Oct. 14th
According to figures from the Beijing customs authority, exports from the world’s second largest economy in September rose by 2.4 percent compared to the previous year. Imports increased by 0.3 percent. The figures were below the government’s self-imposed targets. In response, Beijing announced a comprehensive economic stimulus package last week.
The crisis in the housing sector in particular has contributed to sluggish consumption recently. Many consumers are holding on to their money rather than spending it. In addition, many people are looking for work. According to official figures, the latest unemployment rate for the 16-24 age group rose to 18.8 percent.
China’s central bank cuts key interest rate MLF from 2.3 to 2.0 percent
People’s Bank of China (PBoC), Beijing, 2024 Sept. 25th
China’s central bank has significantly eased its monetary policy to support the economy. The one-year interest rate of the medium-term lending facility (MLF) was lowered from 2.3 percent to 2.0 percent, as announced by the People’s Bank of China (PBoC) in Beijing. The biggest cut in the MLF since it was introduced to control market interest rates in 2016 is part of a comprehensive programme to restore confidence in the Chinese economy. China effectively lags behind this year’s growth target of around five percent. A real estate crisis has been weighing on economic performance for some time. Not least because of this, consumption is also weakening.
As part of the planned stimulus measures, banks will be required to hold less cash than before. The minimum rate for this will be reduced by 0.5 percentage points, said the governor of the authority, Pan Gongsheng, in Beijing. As a result, the financial market will have an additional one trillion yuan (around 140 billion US dollars) of liquidity at its disposal. In addition, the quota for the minimum down payment for a second home loan is to fall from 25 to 15 percent.
Germany’s foreign trade in 2020
German Federal Statistical Office, 2021 Feb. 22nd
Even in the Corona crisis, China remains Germany’s most important trading partner. The trading volume in 2020 was EUR 212.2 billion. While exports to China slightly fell by 0.1 percent to EUR 95.9 billion year-on-year, imports rose by 3.0 percent to EUR 116.3 billion despite the pandemic, resulting in an import surplus of EUR 20.4 billion.
The US remained the most important buyer of German goods, with exports there falling by 12.5 percent to EUR 103.8 billion within a year. China and France follow as major export destinations. With EUR 36.1 billion the US business amounts for the highest German export surplus with a single country.
November 2020 presents China’s largest trade surplus in history
General Administration of Customs of China: www.customs.gov.cn, 2020 Dec. 7th
Less than a year after the outbreak of the corona virus, China achieved the largest trade surplus in its history. On dollar basis, Chinese exports rose 21 percent in November year-on-year. Because imports only increased by 4.5 percent, the overall surplus soared to a record number of US$ 75.4 billion. Total exports reached US$ 268 billion, with US$ 166 billion (up 24 percent) being electronic goods. The demand for products that enable people to work from home, such as monitors, cameras and headphones, is regarded as the driving force behind this development. The commodity groups lamps and medical equipment show the largest increases in exports.
While many other countries are still restricted by anti-desease lockdowns, China officially declared the coronavirus pandemic under control as early as in March. China’s factories have been running at full speed again for more than half a year.
The United States represent the largest single market for Chinese exporters. In November, exports to the US reached US$ 51.9 billion while imports from the US amount to US$ 14.6 billion (up 33 percent). In spite of president Trump’s aim to repair bilateral trade relations, the surplus gained 52 percent year-on-year to US$ 37.3 billion. America levies hundreds of billions of dollars in punitive tariffs on roughly half of Chinese exports.
In November, exports to 27-nation European Union went up 8.6 percent year-on-year reaching US$ 37.5 billion. Imports of European goods climbed 4.5 percent to US$ 26.2 billion, resulting in a trade surplus of US$ 11.3 billion (up 20%).
Decoupling from Chinese economy not a topic for European companies
European Chamber of Commerce in Beijing, 2020 June 15th
As a central measure in the wake of the coronavirus crisis the Chinese leadership is systematically strengthening state-owned enterprises in order to quickly create jobs. The measure produces distortions of competition and market barriers from which private companies suffer. This is felt by around two thirds of all European companies in China. As a result of the annual corporate sentiment survey, it is nevertheless clear that only eleven percent of all companies based in China are considering a withdrawal from the country.
“There were openings in some sectors, but ultimately we cannot yet speak of an open economy”, comments Charlotte Roule, vice president of the EU Chamber of Commerce. A comprehensive investment agreement has been negotiated for seven years. President Xi Jinping’s signature on such an agreement was planned as the culmination of the EU-China summit scheduled for September. However, this summit is postponed indefinitely.
Foreign trade between Germany and China collapses
German Asia-Pacific Business Association (OAV), 2020 May 29th
Germany’s bilateral trade with China decreased in the first quarter of 2020 by a total of 6.8 percent to EUR 47.3 billion (2019: EUR 50.8 billion). As a result of the measures against the spread of the coronavirus, German exports lost 8.9 percent in February and 9.8 percent in March. German imports from the People’s Republic sank by 5.5 percent (EUR -1.5 billion) in the first three months.
Germany’s entire trade volume with the Asia-Pacific region decreased by 2.9 percent to a total of EUR 101.2 billion (2019: EUR 104.2 billion).
Corporate Social Credit System (SCS)
Delegations of German Industry & Commerce (AHK) in China, 2020 Feb. 21st
SCS can be seen as a prime example of the digital penetration of corporate and – at a later stage – personal affairs. China intends to implement the SCS nationwide by the end of 2020. All domestic and foreign companies registered in China will have to adapt to new regulatory measures. Once the SCS is fully operative, the National Development and Reform Commission (NDRC) will hold a credit record of each company. An example is illustrated below.
