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ECONOMY

By Zhao Runhua and Matthew Walsh / Sep 10, 2019 06:23 PM / Economy

Photo: VCG

Photo: VCG

A top Chinese agricultural research institute has edged closer to a vaccine for deadly African swine fever that has ravaged the country’s pork industry.

Researchers at the Chinese Academy of Agricultural Sciences announced Tuesday that a potential vaccine developed by its Harbin-based veterinary science research institute has completed lab safety and efficiency tests and now awaits biosafety tests at the Ministry of Agriculture and Rural Affairs with a view to launching clinical trials in the near future.

As of July, African swine fever, which currently has no reliable vaccine or cure, had resulted in the culling of more than 1 million pigs in China and roiled the world’s largest pork market. Pork prices in China in August surged 46.7% year-on-year and helped to sustain a 17-month high in consumer inflation.

Last Monday, the ministry said that the government had approved no commercial vaccines to combat African swine fever and that the ministry itself had not yet given the go-ahead to any clinical trials.

Contact reporter Zhao Runhua (runhuazhao@caixin.com)

Related: Agriculture Ministry Rejects Claimed Swine Fever Vaccine Fix

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ECONOMY

By Bloomberg / Sep 10, 2019 04:38 AM / Economy

Photo: VCG

Photo: VCG

Chinese auto sales fell for the 14th time in 15 months, extending what’s already been a historically prolonged slump in the world’s largest car market.

Sales of sedans, sport utility vehicles, minivans and multipurpose vehicles in August fell 9.9% from a year earlier to 1.59 million units, the China Passenger Car Association said Monday.

Automakers reeling from the industry’s longest downturn in three decades continue to face headwinds as economic growth slows and trade tensions with the U.S. persist. To help stimulate demand, China has rolled out a series of supportive measures to encourage consumption — the latest coming last month when the government issued guidelines to loosen car-purchase restrictions.

But the slide continues, battering carmakers’ earnings. Top Chinese SUV maker Great Wall Motor Co. reported that first-half profit tumbled 59%, and the country’s biggest automaker — SAIC Motor Corp. — recently predicted its first annual sales decline in at least 14 years. Billionaire Li Shufu’s Geely Automobile Holdings Ltd. recorded a sales drop of 19% in August.

Separately, Indian car sales tumbled 41% — the most on record — in August amid a prolonged slump. In the U.S., which was experiencing its own downturn, automakers posted a much-needed rebound last month — though deliveries were helped by the inclusion of the Labor Day weekend in August.


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By Tanner Brown / Sep 02, 2019 10:27 AM / Economy

Photo: VCG

Photo: VCG

After shrinking for two straight months, China’s manufacturing activity expanded in August, as factory output grew at its fastest clip in five months, a Caixin survey showed Monday.

Read the full story here.

By Tanner Brown / Sep 02, 2019 09:17 AM / Economy

Photo: VCG

Photo: VCG

As the Chinese proverb says: The moon waxes only to wane, and water surges only to overflow.

After nearly 10 years of steady expansion, the world economy faces growing concerns of a looming recession. There are plenty of reasons to worry as major economies including those of China, Britain and Germany are struggling with downward pressures or entering a contraction, underlining mounting uncertainties in a world rattled by growing protectionism and mounting trade barriers.

Analysts say the question is not whether there will be another recession, but when.

Find out what the details tell us here, in our in-depth read.
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By Zhao Runhua / Aug 30, 2019 01:54 PM / Economy

Photo: VCG

Photo: VCG

China’s population of internet users hit a record high in the first half of 2019, with the vast majority of them primarily using their phones to get online, a new report shows.

The total number of Chinese netizens grew by 26 million from the end of 2018 to 854 million by mid-2019, with 847 million using mobile internet, according to industry tracker the China Internet Network Information Center.

During this period, 686 million people in China browsed news online, 639 million shopped online, 421 million ordered food-delivery services online, 759 million watched videos, and 339 million used ride-hailing services, according to the report.

One factor contributing to the continued rise in internet service take-up has been the country’s push for network operators to roll out fast and cheap internet, according to the report. The report said each Chinese internet user consumed on average 7.2GB data per month during the first half of 2019, about 120% the global average. 

The report provided no information on 5G internet usage in China.

Related: No 4G Network Slowing to Give Way to 5G, Ministry Says

Contact reporter Runhua Zhao (runhuazhao@caixin.com)

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By Liu Yanfei, Wen Simin and Thomas Zhang / Aug 29, 2019 06:14 PM / Economy

Photo: VCG

Photo: VCG

Hong Kong is on the verge of recession. Government data released on Aug. 16 showed that in the second quarter, the city’s GDP grew only 0.5% more than for the same period last year — its slowest increase in nearly a decade. It was also down 0.4% on the previous quarter.

Many fear that ongoing protests since June are not only affecting the retail and travel industries, but damaging Hong Kong’s image as a global financial center. Carrie Lam, Hong Kong’s chief executive, has told reporters that the fallout from the unrest is worse than the damage caused by SARS and past financial crises.

But even before the protests, the trade war between China and the U.S. was battering Hong Kong’s economy. Orders were falling. For the first half of 2019, Hong Kong’s goods exports and imports dropped 3.6% and 4.5% year-on-year respectively. The value of goods exported to the mainland fell 6% year-on-year, while those exported to the U.S. fell 11.1%.

At the same time, the city has struggled to transition to an economy based on science, technology and innovation, falling behind its mainland neighbor Shenzhen.

Read the full story on Caixin Global later today.

Contact editor Yang Ge (geyang@caixin.com)

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By Zhang Yu and Guo Yingzhe / Aug 28, 2019 04:28 PM / Economy

Photo: VCG

Photo: VCG

China’s overall stock of debt as a share of GDP continued to climb in the second quarter of this year, albeit at a slower pace amid the ongoing economic slowdown.

The overall leverage ratio, which measures the nation’s outstanding debt in the real economy against nominal GDP, increased to 249.5% at the end of the second quarter, up 0.7 percentage points from 248.8% a quarter earlier, according to a report released Tuesday by two government-backed research institutes — the National Institution for Finance & Development (NIFD), and the Institute of Economics of the Chinese Academy of Social Sciences. The growth in the ratio in the second quarter was lower than the increase of 5.1 percentage points in the first quarter.

The rapid growth in the debt-to-GDP ratio in the first quarter was due in part to a shift in the focus of government policy from deleveraging to stabilizing economic growth, some analysts said.

“Over the second quarter the momentum of excessive leverage growth has been under control,” Chang Xin, a researcher at the NIFD, said at a conference in Beijing on Tuesday.

China’s GDP grew 6.2% year-on-year in the second quarter of this year, the slowest pace in nearly three decades, down from a 6.4% rise in the previous quarter.

Read the full story on Caixin Global later today.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com)

Related: China Sees Setback in Efforts to Keep Debt in Check

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By Tanner Brown / Aug 26, 2019 11:43 AM / Economy

Photo: IC Photo

Photo: IC Photo

Under Chinese law, individuals who provide personal guarantees for business-related borrowings retain liability even when their companies go bankrupt. In the 1986 Enterprise Bankruptcy Law, China set up a system for businesses to seek debt relief through restructuring and bankruptcy proceedings. However, there is no way for individuals to obtain legal relief from unaffordable debts due to the absence of personal bankruptcy law.

A bankruptcy system for individuals could provide protection for entrepreneurs who are honest but unlucky and allow them to make fresh start. It could also ensure that creditors are fairly compensated and create as a standard market-exit mechanism.

Read the full story here.

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By Peng Qinqin and Guo Yingzhe / Aug 19, 2019 04:33 PM / Economy

Photo: IC Photo

Photo: IC Photo

China’s lending interest rate reform may bring greater benefits to larger borrowers, economists say.

The People’s Bank of China (PBOC) said Saturday in a statement that it would improve the formation mechanism of national loan prime rates (LPRs), which are based on the interest rates that specific commercial banks charge their most creditworthy borrowers, and replace its benchmark lending rates with the LPRs as a new reference for commercial banks’ new lending.

The new national LPRs are set to be launched on Tuesday and will be based on the LPRs used by 18 commercial banks. The banks will decide their own LPRs by adding integer multiples of 0.05 percentage points to the interest rates of open market operations, chiefly the medium-term lending facility (MLF), a kind of policy lending that the PBOC created to manage liquidity in the financial system.

The PBOC said that the move aims to make LPRs a more market-oriented mechanism and break the implicit floor on lending rates so as to lower borrowing costs in the real economy.

“The new LPR regime and the PBOC quasi-policy rate cuts could favor big state-owned borrowers while delivering few benefits to small and medium-sized enterprises,” economists at Nomura International (Hong Kong) Ltd. said in note.

Read the full story on Caixin Global later today.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com)

Related: China Adds Detail to Long-Awaited Interest Rate Reform Plan

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By Yue Yue, Wu Yujian and Thomas Zhang / Aug 13, 2019 01:27 PM / Economy

Photo: IC Photo

Photo: IC Photo

It’s one thing when China announces policies to further open its financial market, but it’s quite another to fully implement those policies under which foreign firms can operate with confidence and trust.

Last month, China unveiled a set of 11 measures to further open up its financial services sector. But the reaction overseas has been mixed.

Over the years, foreign financial institutions have had it rough in China. In order to operate in the country, they were often required to partner with a local firm. But differing views between Chinese and overseas firms, and constant infighting among senior management mean that few foreign institutions have achieved their expected success.

Data security has also become a major concern in recent years. A staffer at an overseas financial institution told Caixin that they understand they must comport with China’s Cybersecurity Law, which requires all data and information collected in China to be physically stored in China. But this could pose issues when they try to share such data with their colleagues outside of China.

Read the full story on Caixin Global later today.

Related: JPMorgan Takes Majority Control of China Mutual Fund Joint Venture

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By Isabelle Li / Aug 09, 2019 05:32 PM / Economy

Photo: VCG

Photo: VCG

China’s economic growth is slowing, but the e-commerce sector apparently hasn’t got the message.

The country’s online retail market posted strong year-on-year growth of 17.8% in the first six months of 2019, 2.5% faster than the figure for the first quarter alone, the Ministry of Commerce said Thursday.

Online retailers recorded sales of 4.82 trillion yuan ($683 billion) in the first half of the year. Physical goods raked in 3.82 trillion yuan, a rise of 21.6% compared to the same period last year, powering nearly half of the total growth in the country’s consumer retail market, according to a statement on the Ministry’s website.

Cross-border and rural online shopping also grew above the overall rate at more than 20%, according to the Ministry.

Contact reporter Isabelle Li (liyi@caixin.com)

Related: Record E-Commerce Sales Boost Chinese Home Appliance Market: Report

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By Liu Jiefei / Aug 09, 2019 10:18 AM / Economy

Photo: IC Photo

Photo: IC Photo

The country’s producer price index (PPI) dropped 0.3% year-on-year in July, official data showed Friday, marking the first decline since August 2016, when the index fell 0.8%.

The PPI, which tracks the prices of goods circulated among manufacturers and mining companies, posted zero year-on-year growth in June.

The consumer price index (CPI) rose 2.8% year-on-year in July, up from 2.7% in the month before and marking the highest level since February 2018, according to data from the National Bureau of Statistics.

The CPI measures the prices of a select basket of consumer goods and services.

Read the full story on Caixin Global later today.

Contact Reporter Liu Jiefei (jiefeiliu@caixin.com)


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By Guo Yingzhe and Peng Qinqin / Aug 08, 2019 01:12 PM / Economy

Photo: VCG

Photo: VCG

China’s central bank set the midpoint of the yuan’s daily trading range at 7.0039 to the U.S. dollar Thursday, the first time it has set the rate above the psychologically important 7-to-the-dollar mark since 2008.

The move comes after the onshore and offshore yuan weakened past the 7-to-the-dollar level during trading in the past three days. It is likely to amplify ongoing trade tensions with the United States, which also deepened last Thursday after President Donald Trump threatened in a tweet to impose new tariffs on China.

The People’s Bank of China (PBOC) said that the recent yuan depreciation has been mainly caused by fluctuations in the international currency market against the backdrop of a changing global economic landscape and inflamed trade frictions.

On Monday, the U.S. Department of the Treasury blamed China for competitive devaluation and branded the country a currency manipulator. The next day, the PBOC called the U.S. move an act of protectionism that seriously violates international rules.

Read the full story on Caixin Global later today.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com)

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By Guo Yingzhe / Aug 06, 2019 02:44 PM / Economy

Photo: IC Photo

Photo: IC Photo

China’s central bank said Tuesday that it will sell yuan-dominated bills worth 30 billion yuan ($4.26 billion) in Hong Kong next week, which is seen as the latest move to stabilize the yuan as it weakened to an 11-year low on Monday amid escalating trade tensions.

The issuance of central bank bills can help absorb yuan funds in the offshore market and thus reduce the amount of yuan commercial banks have available to lend. This helps push up short-term interest rates and the cost of shorting the yuan.

On Monday, the U.S. Department of the Treasury named China a currency manipulator for the first time in more than two decades, after the yuan — both offshore and onshore — weakened past the psychologically important 7-per-dollar mark.

The plunge in the Chinese currency was partly due to its daily reference rate, which the People’s Bank of China (PBOC) set at 6.9225 per dollar for Monday, the weakest since December.

A weakened yuan could increase China’s export price competitiveness. But PBOC Governor Yi Gang said Monday that China won’t use the yuan’s exchange rate “as an instrument in dealing with trade disputes or other external disruptions.”

The renewed flare-up between the world’s two largest economies came as U.S. President Donald Trump threatened in a tweet on Thursday to impose an additional 10% tariff on another $300 billion of Chinese goods.

Read the full story on Caixin Global later today.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com)

Related: U.S. Labels China Currency Manipulator as Trade War Escalates

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By Timmy Shen and Peng Qinqin / Aug 05, 2019 02:30 PM / Economy

Photo: IC Photo

Photo: IC Photo

The Chinese yuan on Monday tumbled beyond 7 per dollar, the weakest in over a decade, as trade tensions between Beijing and Washington heat up.

The yuan — both offshore and onshore — broke through the key psychological barrier of 7 per dollar in morning trade on Monday, after China’s central bank set the currency’s daily reference rate at 6.9225 per dollar, the weakest since December. The onshore yuan depreciated beyond 7 per dollar soon after trading began at 9:30 a.m., a record low since April 2008.

Analysts said that the depreciation is linked to recent intensified trade frictions. U.S. President Donald Trump threatened on Thursday that the U.S. would impose an additional 10% tariff on an additional $300 billion of Chinese goods, beginning Sept. 1. Beijing also pledged to fight back if Washington goes ahead with the plan.

The People’s Bank of China said in a statement on Monday that the depreciation was affected by unilateralism, trade protectionism measures and the U.S.’ expected imposition of increased tariffs on Chinese goods.

“It will be harder for the government to defend the currency given the additional tariffs which could weigh on exports and add depreciation pressure to the currency,” Goldman Sachs analysts said in a Sunday note.

Read the full story later today on Caixin Global.

Contact reporter Timmy Shen (hongmingshen@caixin.com)

Related: Trump Expands China Trade War to Cover Additional $300 Billion

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By Tanner Brown / Aug 05, 2019 10:02 AM / Economy

China’s services sector expanded at the slowest pace in five months in July amid softening growth in new business placed with services providers, a Caixin survey showed Monday.

Read the full details here.

By Du Caicai and Ren Qiuyu / Jul 30, 2019 12:24 PM / Economy

Photo: VCG

Photo: VCG

Pig stocks are dwindling and pork prices are rising as China grapples with the effects of the African swine fever outbreak that officials say has so far resulted in the culling of more than 1 million pigs.

Li Shuilong, the president of the China Meat Association, estimates from public data that the country’s total pork production may decline by 15% to 20% in 2019 — a drop of 8 to 10 million tons.

Meanwhile, domestic pork prices continue to soar. A June monthly analysis said that “due to a continuous decline in pig stocks, pork supply has decreased and prices have maintained an upward trend.” Prices have continued to rise in July.

In June, the market price of pork rose 3.7% from the previous month and 29.2% year-on-year to 25.62 yuan ($3.72) per kilogram. The price of live pigs also rose 6.4% from the previous month and 40.8% year-on-year to 15.94 yuan per kilogram. And the price of piglets jumped even more, up 4.4% from the previous month and up 65.7% year-on-year to 39.77 yuan per kilogram.

Both the central government and provincial authorities are working to stabilize pork production and supply, according to a recent video conference held by the Ministry for Agricultural and Rural Affairs.

Contact reporter Ren Qiuyu (qiuyuren@caixin.com)

Related: In Depth: How Secrecy and Loopholes Fueled China’s Swine Fever Crisis

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By Wu Hongyuran, Peng Qinqin and Lin Jinbing / Jul 24, 2019 03:06 PM / Economy

China’s current interest rates are at a proper level and are approaching a comfort level, Chinese central bank Governor Yi Gang told Caixin in an interview in Beijing last week, in response to speculation on whether the country will follow suit if the U.S. Federal Reserve cuts interest rates.

China didn’t follow a string of interest rate hikes by the Fed last year, and if the Fed cuts interest rates in the future, China will still make a decision based on its own situation, Yi said.

“A rate cut is chiefly to respond to the risk of deflation, but now China’s (consumer) price trend is moderate,” he said.

The consumer price index, which measures the prices of a select basket of consumer goods and services, rose 2.7% year-on-year in June, unchanged from growth in the previous month, according to data from the National Bureau of Statistics.

Read the full story on Caixin Global later today.

Contact reporter Lin Jinbing (jinbinglin@caixin.com)

Related: Pricey Pork, Fruit Keep Consumer Inflation High

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By Yue Yue and Liu Jiefei / Jul 22, 2019 02:39 PM / Economy

Photo: IC Photo

Photo: IC Photo

Foreign asset managers will be allowed to be the controlling shareholder in wealth management joint ventures they set up with Chinese financial institutions, according to a series of measures on further opening up the country’s financial sector released Saturday.

Foreign financial institutions will also be allowed to apply for the Type-A lead bond underwriter license in the interbank market, according to the measures. This will allow them to underwrite all debt financing tools in the interbank market, a notice published on the People’s Bank of China’s website Saturday explains. Foreign institutions have previously only been allowed to be the lead underwriter for corporate panda bonds — yuan-dominated bonds that are issued by foreign non-financial institutions in China.

It’s hard for existing companies to meet the needs of China’s fast-growing asset-management market, a spokesperson at the China Banking and Insurance Regulatory Commission said Saturday. Allowing foreign institutions to control wealth management companies will help the sector’s development, the spokesperson said.

Contact reporter Liu Jiefei (jiefeiliu@caixin.com)

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By Wen Simin and Timmy Shen / Jul 19, 2019 03:34 PM / Economy

Photo: VCG

Photo: VCG

Vietnam’s container throughput surpassed Hong Kong’s in the first half of this year, possibly in part due to trade diversion amid the trade war between China and the U.S.

In the first half of 2019, Hong Kong saw a container throughput of 9.06 million twenty-foot equivalent units (TEUs), down 8.1% year-on-year, according to government data from the Hong Kong Maritime and Port Board.

In the same period, Vietnam recorded 9.1 million TEUs in container throughput, up 3% year-on-year, official data from the Vietnam Maritime Administration show.

“As tit-for-tat tariff hikes between the US and China increase, so does the cost of importing from each other,” Nomura economists said in a report. “However, there is a silver lining: the two countries diverting imports away from each other potentially benefits industries in different economies.”

“Vietnam is by far the largest beneficiary,” they said, adding that orders due to trade diversion were worth nearly 8% of the country’s gross domestic product in the year through the first quarter of this year.

Read the full story later on Caixin Global.

Contact reporter Timmy Shen (hongmingshen@caixin.com)

Related: China’s Exports and Imports Drop in June in Wake of New U.S. Tariffs

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