All provincial-level areas in China report double-digit GDP growth in Q1
May-04-2021 By : fcccadmin
All of China’s provincial-level areas, except the Tibet Autonomous Region, which has yet to report its figures, recorded double-digit GDP growth of more than 12% in the first quarter. The robust growth rates across the country further underscored a full-fledged recovery of the Chinese economy from the Covid-19 pandemic, with most industries returning to or exceeding pre-pandemic levels. However, the growth pace may slow to normal levels in the second half of the year, an economist warned. Among the 30 provinces, autonomous regions and municipalities that have released their growth figures, eight provinces recorded growth above the national average of 18.3%, led by Hubei province, the province hit hardest by the Covid-19 virus in 2020. Hubei’s GDP grew 58.3% in the quarter. Tibet is also expected to post double-digit growth.
Based on a two-year average, Hainan province was first with a 7% growth, driven by new services and retail sectors. Hainan was followed by Guizhou, Jiangxi and Jiangsu provinces. The double-digit growth rates are mostly due to an extremely low base last year, according to Tian Yun, Vice Director of the Beijing Economic Operation Association. With the effective containment of the pandemic, conditions in many industries, including manufacturing, retail and catering, have returned to levels that are near to or exceed pre-pandemic figures. “In the first quarter, there was a fast recovery not only on the supply side, but also in domestic demand, driving up manufacturing as well as retail and catering,” Tian said.
In Guangdong, the contribution of whole-sale, retail, lodging and catering to local GDP growth rose by 51.3% compared to last year. Foreign trade in several provinces drove accelerated economic growth in the first quarter. In Hubei, foreign trade surged 88.1% to CNY117.46 billion. Shandong’s foreign trade grew by almost 39%, and Guangdong’s bonded imports and exports grew by 27.8%. However, Tian warned that growth might peak in the first half of this year and then gradually slow from the third quarter, as domestic and overseas demand stabilizes, the Global Times reports.
Wu Chaoming, Chief Economist at Chasing Securities, however added that northern and northeastern provinces have been lagging in their recovery as their economies are heavily reliant on traditional industries, leaving them in an inferior position in the ongoing recovery led by high-tech industries. “The export-driven recovery in industrial output has been a key pillar of China’s economic recovery since the second quarter of last year. This is partly why coastal provinces like Guangdong, Jiangsu and Zhejiang are doing better than the nationwide level in spite of their large economic scale,” Wu added. Guangdong had the largest economic scale of all regions in the first quarter with CNY2.71 trillion worth of gross regional output, up 18.6% year-on-year. The gross regional output of seven other provinces – Jiangsu, Shandong, Zhejiang, Henan, Sichuan, Fujian and Hunan – also exceeded CNY1 trillion in the first quarter.
Profits of China’s major industrial firms maintained fast expansion in the first quarter this year as the Chinese economy continued its recovery and enterprises’ production and sales further restored growth. Industrial firms with an annual business turnover of at least CNY20 million raked in CNY1.83 trillion in combined profits during the first three months, surging 137% year-on-year, according to the National Bureau of Statistics (NBS). The figure rose 50.2% compared with the same period in 2019. The fast expansion also put average first-quarter growth for 2020 and 2021 at 22.6% compared to the 2019 level. In March alone, profits of major industrial firms jumped 92.3% year-on-year to CNY711.18 billion. Previous data showed that China’s value-added industrial output went up 24.5% year-on-year in the first quarter, laying a sound foundation for the improvement of enterprises’ profitability. Profits in almost all industrial sectors increased during the period compared to a year ago, with nearly 40% of sectors doubling their profits. A total of 30 industrial sectors logged increases in profits compared with the first quarter of 2019. Auto manufacturing profits skyrocketed 843%, and profits from computer, communication and electronic equipment manufacturing rose by 141%.
China’s use of foreign capital rose by 43.8% year-on-year to USD44.86 billion in the first quarter of this year, according to the Ministry of Commerce (MOFCOM).
This overview is based on reporting by the China Daily, Shanghai Daily and Global Times.
Campaign to boost consumption to be launched
Apr-27-2021 By : fcccadmin
China plans to launch the National Consumption Promotion Month, the annual campaign jointly organized by the Ministry of Commerce (MOFCOM) and other ministry-level departments on May 1. Simultaneously, Shanghai will launch its May 5 shopping festival while promotions are set to be rolled out in multiple regions including Beijing and Chongqing. China’s third annual national online shopping festival will also kick off, featuring premium domestic products, famous items from Silk Road e-commerce partner countries, as well as online services in the catering, tourism, culture and sports sectors.
The Ministry said the campaign aims to “further vitalize market entities, boost consumer market sentiment and fully meet people’s consumption demand for a better life”. Previously the campaign used to be held in the second half of the year. It will also include a wider range of events and activities in different places across the country, to promote consumption of various products and services online as well as offline. Some programs will last throughout the year. Officials and experts said that while China’s consumption market is recovering quickly from the impact of Covid-19, the campaign will provide new impetus to the dual-circulation development paradigm, in which the domestic market is the mainstay and the domestic and foreign markets reinforce each other. “The promotional campaign has its eyes on the expansion of domestic demand and is expected to further enhance the vitality of market players, unleash the potential of consumption, accelerate market recovery, and improve consumption quality,” said MOFCOM Spokesman Gao Feng.
China’s retail sales of consumer goods reached CNY10.52 trillion during the first quarter, up 33.9% year-on-year. That also was an increase of 8.5% compared with the same period in 2019, and a rise of 1.86% compared with the fourth quarter of last year.
But consumption is not well balanced between different industries, business forms, products and regions, and people’s demand has not been fully met. The campaign will feature various offline activities and events, such as auto shows, brand exhibitions and shopping carnivals. In addition, online sales and promotions will be held for various products and services across a wide range of sectors, including catering, tourism, sports and education, with new business forms such as live streaming e-commerce and customized production being widely adopted to meet consumers’ diversified demands. From May 7 to 10, the first China International Consumer Products Expo will be held in Haikou, Hainan province. Bai Ming, Deputy Director of International Market Research at the Chinese Academy of International Trade and Economic Cooperation, said that expanded consumption will be better utilized as a strategic basis for Chinese economic growth. According to Li Xuesong, Deputy Director of the Institute of Industrial Economics at the Chinese Academy of Social Sciences, consumption did not recover as well investment and exports.
China should accelerate Covid-19 vaccinations to speed up the recovery of consumption, especially consumption in the services sector, said Li. He also suggested to inject more vitality into the infrastructure and manufacturing sectors, lower interest rates to better support the real economy and thus improve employment, and enhance income distribution among industries and regions to increase people’s incomes to further unleash consumption potential.
China also plans to promote the digital economy as an important engine for economic growth and further deepen its integration with the real economy, said Huang Kunming, Director of the Publicity Department of the Chinese Communist Party at the opening ceremony of the fourth Digital China Summit in Fuzhou, capital of Fujian province. He added that efforts should be made to strengthen innovation in science and technology to provide strategic support for China’s further opening-up. He also called for the development of smart cities and digital villages to provide more convenient and efficient digital services. A report reviewing the country’s digital development in 2020 was released at the summit by the Cyberspace Administration of China, highlighting China’s achievements in sectors such as 5G networks, big data, communications and artificial intelligence (AI). Currently, the overall level of China’s digital economy ranks second in the world, the report said. Steady progress has been made in the integration of the internet with manufacturing, and China’s centrally administered State-owned enterprises are accelerating the development of digital industry, and have set up more than 60 industrial internet platforms, said Hao Peng, Director of the State-owned Assets Supervision and Administration Commission (SASAC).
This overview is based on reporting by the China Daily, Shanghai Daily and Global Times.
China’s Q1 GDP up 18.3%, FDI up 39.9% year-on-year
Apr-20-2021 By : fcccadmin
China’s GDP grew by 18.3% year-on-year in the first quarter of 2021 to CNY24.9 trillion, the fastest in three decades, with key economic indicators all expanding at over 20%, setting an encouraging start for the year. The data provide an indication of the strength of China’s economic recovery, which has been retaking lost ground since the second half of 2020. The country is likely to record the highest growth among major economies and make the greatest contribution to the global economy in the first quarter, analysts noted. Looking ahead, China’s economy is forecast to keep a stable growth, but may enter “unchartered waters” in the second half of the year as geopolitical tensions keep developing and the marginal effect of global economic recovery has weakened.
Some analysts are upbeat about China’s GDP which might increase by double-digits in the second quarter. For the whole year, the growth rate could reach 9%, analysts said, well above the government-set goal of “above 6%”.
In the first three months of 2020, the Chinese economy contracted by 6.8% due to the coronavirus lockdown. In the first quarter of this year, retail sales soared 33.9%, fixed-asset investment (FAI) jumped 25.6%, and industrial production gained over 24.5%, data released by the National Bureau of Statistics (NBS) showed. In March alone, retail sales jumped 34.2% year-on-year, with the growth rate quickening 0.4 percentage points from the first two months. Industry observers said the data underscores a broadened recovery momentum, particularly in March, which marks a watershed in consumption from “divergent recovery” to “going full swing.” “The pace of the economic recovery in the second and following quarters would rely more on the recovery of the service sector,” Fidelity International said in a note. Building on the momentum, China will continue to make the biggest contribution to the global economy, serving as an engine of growth for the world. Its gap with the U.S. is expected to further narrow. In 2020, China’s economic volume represented about 70% that of the U.S., the Global Times reports.
After surpassing the U.S. as the world’s biggest recipient of foreign direct investment (FDI) in 2020, China continues to see rapid growth in foreign investment this year, as confidence in the country’ growth prospects and opening-up further improves. The Ministry of Commerce (MOFCOM) reported that the first quarter of 2021 saw the country’s actual use of foreign investment hitting CNY302.47 billion, up 39.9% year-on-year. “Compared with the same period in 2019, the country’s actual use of foreign investment during the first quarter saw an increase of 24.8%,” Ministry Spokesman Gao Feng said. In U.S. dollar terms, China’s actual use of foreign capital in the first quarter reached USD44.86 billion, up 43.8% year-on-year. Moreover, 10,263 foreign-invested enterprises (FIEs) were established during the period, up 47.8% year-on-year. The figure was 6.7% higher than in the same period in 2019. Zhang Fei, Associate Director of the Institute of Foreign Investment of the Chinese Academy of International Trade and Economic Cooperation, said the data demonstrates the upward momentum of China’s use of foreign capital, considering the number of newly established foreign-invested enterprises and the amount of foreign investment have both swelled significantly no matter how they are compared with the same period last year or in 2019.
“Foreign companies have generally enjoyed high-level profit growth in the China market, which boosted their confidence to keep investing in China, thanks to continuously enhanced negative lists, the ever-improving business environment, and the efforts by local governments at different levels to serve foreign investment projects,” Zhang said. Inflows of foreign capital into high-tech industries, especially high-tech services, keep growing quickly, while sources of foreign investment also expand. Actual use of foreign capital in the services sector rose 51.5% year-on-year to CNY237.79 billion during the first quarter. The high-tech sector’s actual use of foreign capital expanded 32.1% on a yearly basis. The year-on-year growth in high-tech services was 43.9% and in high-tech manufacturing sectors 2.5%. As for the investment sources, inflows of foreign capital from countries participating in the Belt and Road Initiative (BRI) increased by 58.2%, from members of the Association of Southeast Asian Nations (ASEAN) by 60% and from nations of the European Union by 7.5% on a yearly basis in the first quarter.
The total imports and exports of goods surged 29.2% year-on-year in the first quarter to CNY8.47 trillion. Exports jumped 38.7% from a year earlier and imports climbed 19.3% in yuan terms. The trade surplus expanded 690.6% to CNY759.29 billion. In March alone, China’s exports in dollar terms soared 30.6% in March from a year earlier while imports jumped 38.1%.
China-U.S. trade increased by a striking 61.3% in yuan terms in the first quarter of this year to reach CNY1.08 trillion. This growth outpaced all of China’s other major trading partners including Japan, the EU, and ASEAN. The U.S. trade deficit with China reached CNY472 billion in the first quarter. China’s trade with the EU and ASEAN economies rose 36.4% and 26.1% in the first quarter.
This overview is based on reporting by the China Daily, Shanghai Daily and Global Times.
Chinese cities competing to build manufacturing clusters
By : fcccadmin
A friendly competition is unfolding among major Chinese cities for building up advanced manufacturing clusters. This refers to a large number of companies and institutions in proximity that carry out mutual cooperation and exchanges. It is considered to be an advanced form of industrial division of labor and is part of China’s push to pursue high-quality development of manufacturing, experts said. China’s 14th Five Year Plan (2021-25) highlights efforts to cultivate advanced manufacturing clusters and to promote the development of key industries including integrated circuits, aerospace, marine engineering equipment, robots, advanced rail transit equipment, advanced power equipment, engineering machinery and medical equipment. Cheng Nan, Director of the Planning Institute at the China Center for Information Industry Development, a Beijing-based think tank, said that previously a large number of industrial parks relied on transportation and geographical convenience, abundant resources, policy dividends and other factors to bring about cost advantages, which have attracted enterprises to concentrate on specific areas. But such approaches are just an expansion of scale.
“The advanced manufacturing clusters, however, are based not just on physical proximity among industrial enterprises, but on deeper cooperation among companies to promote the development of local economies,” Cheng said. The Ministry of Industry and Information Technology (MIIT) recently published a list of advanced manufacturing clusters after fierce competition among cities across the nation. A total of 21 cities in nine provinces and municipalities made it onto the list, which is known as the “national manufacturing team”, with some cities hosting more than one site. Jiangsu and Guangdong, two provinces traditionally known for their manufacturing strength, have six industrial clusters each on the list, followed by Zhejiang province with three clusters.
Experts said the competition is designed to select leaders in different industries to build advanced manufacturing clusters and participate in global competition and cooperation on behalf of China to become “world champions” in their respective areas. Cheng said the competition considers both qualitative and quantitative factors and the list is a result of a comprehensive evaluation.
Cities across China have made major efforts for the competition. As early as 2019, Changsha, capital of Hunan province, established a special working group to promote the development of a construction machinery industry cluster in the city. The working group brought in leading construction machinery companies such as Sany Group, Zoomlion and China Railway Construction Heavy Industry and they worked together to achieve breakthroughs in 22 key technologies such as high-performance engines. Their total research and development (R&D) investment increased from CNY5.26 billion in 2018 to CNY8.25 billion in 2019. In the end, Changsha was on the “national manufacturing team” list, but no manufacturing clusters in the Beijing-Tianjin-Hebei region and northeast China made the list.
He Ying, Director of the Institute of Technology and Standards of the China Center for Information Industry Development, said more efforts are needed in North China to build an innovation-friendly environment. Beijing ranks third in its innovation capacity in China, but neighboring Tianjin and Hebei province are further behind, which kept the Beijing-Tianjin-Hebei region off the list, He said. The Planning Department at MIIT plans to further improve top-level design for the development of advanced manufacturing clusters, accelerate the strengthening of the industrial chains, optimize the layout of manufacturing innovation centers and cultivate a group of global competitively large enterprises and specialized small and medium-sized enterprises. Nanjing, capital of Jiangsu province, aims to increase the output value of its new smart power grid equipment cluster to more than CNY400 billion by 2025. Zhuzhou, a city known for its railway equipment manufacturing in Hunan province, proposed to build a world-class advanced rail equipment cluster with an annual output of more than CNY200 billion by 2025. A world-class intelligent equipment industrial cluster with an output value of more than CNY1 trillion by 2025 will be developed in the Guangzhou-Shenzhen-Foshan-Dongguan area. The Shenzhen municipal government also said it will support the construction of key projects for the Shenzhen-Guangzhou high-end medical device cluster.
Building clusters will help increase the proportion of the manufacturing industry in China’s GDP, which has gradually declined since 2015. Currently, manufacturing output only accounts for about 27% of China’s GDP, the China Daily reports.
Growth of central regions to be promoted
Apr-06-2021 By : fcccadmin
The Political Bureau of the Communist Party of China has issued a directive to promote the growth of the country’s central region. It urged the region to develop a modern industry system underpinned by an advanced manufacturing sector, strive for green development, work toward high-quality opening-up, and enable more coordinated growth between urban and rural areas. It was the latest move from the nation’s top leadership to empower the growth of the region, which comprises Anhui, Henan, Jiangxi, Shanxi, Hunan and Hubei provinces. Chen Weidong, Director of the Research Institute of the Bank of China (BOC), said the Politburo meeting further clarified the direction of the central region in future economic growth, with the region being an important pillar to sustain the nation’s medium-high growth rate.
The central region’s share of overall national GDP has risen from 18.8% in 2005 to 22.2% in 2019. The Covid-19 pandemic, which hit the central region hard last year, and Hubei province in particular, took its toll on the region’s growth last year. According to the National Bureau of Statistics (NBS), the central region’s economy expanded 1.3% year-on-year, which was below the national average of 2.2%. “With the pandemic effectively put under control, the trend for the region’s economic upgrading, transformation and quick growth will not be altered. It will continue to be an important regional powerhouse for China’s economic growth,” Chen said.
China first outlined a road map to spur the growth of the central region in a policy document jointly issued in 2006 by the CPC Central Committee and the State Council. The National Development and Reform Commission (NDRC) issued a five-year blueprint to promote the rise of the central region in 2016, which made clear its strategic orientation as a center for advanced manufacturing, a key area for the new type of urbanization, the core area for the development of modern agriculture, the demonstration zone for ecological civilization, and an important sup?port area for all-around opening up. Promoting the development of the central region is also aimed at narrowing the gap between different areas and building a national unified market. The region’s population, which accounts for 26.6% of the national total, means it will be an important part of the overall domestic market.
The BOC’s Chen Weidong added that the rise of the central region will help build a new growth engine and offer a strong impetus to the “dual circulation” development paradigm, in which the domestic market is the mainstay and the domestic and foreign markets reinforce each other. Tommy Wu, Economist at Oxford Economics, said that “as production costs increase in the coastal regions, more enterprises will be willing to move part of their operations inland to take advantage of lower production costs. But these regions need to equip themselves first, with the right infrastructure to capitalize on this future trend. Modernizing infrastructure and logistic systems is the right formula. For China to advance from a middle-income country toward a high-income country, no regions should be left behind.”
China is expected to maintain a neutral monetary policy in the second quarter, as stronger investment will lead to a solid economic recovery, while also implementing additional risk-controls. With consumption continuing to recover and exports remaining strong, the economy is expected to maintain robust GDP growth in the second quarter. Investment in the manufacturing industry may rebound, following a recovery of industrial profit growth, according to analysts. A senior official from the People’s Bank of China (PBOC) stressed the importance of boosting lending to the manufacturing sector. Measures will guide financial institutions to raise medi?um to long-term loans and maintain reasonable growth of credit to manufacturers, especially hightech firms, said Zou Lan, Director of the central bank’s Financial Market Department. China’s manufacturing purchasing managers index (PMI) increased to a stronger-than-expected 51.9 in March, up from 50.6 in February. Some indicators of inflationary pressure, especially producer price inflation, are on the rise due to a global boom in commodity prices and the domestic anti-pollution measures in northern China, said Lu Ting, Chief China Economist at Nomura Securities.
PBOC Governor Yi Gang pledged that China will continue to conduct a “normal” monetary policy and maintain its consist?ency, stability and sustainability. “China still has space in terms of providing liquidity and moderating interest rates,” Yi said, adding that the monetary policy should strike a good balance between supporting growth and preventing risks. The broad money supply M2 is growing at 10% currently, and the pace is in line with nominal GDP growth. “We are projecting strong growth this year at over 8%, and it is on the back of containing the pandemic and seeing the manufacturing sector recovering very quickly,” International Monetary Fund Managing Director Kristalina Georgieva said last week. With the swift economic recovery that has returned to the pre-pandemic level, policymakers may turn their attention to controlling potential risks, especially to rein in property sector bubbles and constrain the rise of government debt, analysts said, as reported by the China Daily. China’s consumption during the three-day Qingming Festival holidays – including tourism and the cinema box office – is approaching, or even surpassing that of 2019, as Chinese rushed to consume after the country lifted restrictions on people’s movements, the Global Times added.
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