This episode covers China’s manufacturing and services activity data in October; inhalable COVID-19 vaccines in Shanghai as a booster; the updated Catalogue of Encouraged Industries for Foreign Investment, with comments from Mr Xu Zhonghua, chair of the Energy Working Group; and industrial profits data from the first nine months of this year. In addition, the September/October 2022 edition of EURObiz on invisible market access barriers, which is available to download here, is introduced.
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NBS PMI releases (in Chinese):
Inhalable vaccines in Shanghai:
Updated catalogue for industries to spur foreign investment (in Chinese):
NBS release on industrial profits (in Chinese):
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MARIANN: Hello and welcome to China Shortcuts,
ROBBIE: the European Chamber’s weekly catchup about the Chinese business landscape.
MARIANN: According to China’s National Bureau of Statistics, manufacturing and services activity both shrank in October, as stringent measures were used again in many parts of the country to stop the spread of COVID-19.
ROBBIE: The official purchasing manager’s indices or PMI fell below the 50-point mark that separates growth and contraction. Manufacturing activity declined to the weakest level since June, with 10 out of the 21 surveyed industries contracting in October. The breakdown according to company size showed that while large companies still maintained expansion, albeit at a slower pace than in September, the activity of SMEs declined further below the 50-point mark. Supply and demand contracted almost equally, and companies continued trimming their staffing levels. The construction sector remained relatively upbeat, although its expansion also slowed significantly from the previous month. The contraction of the services sector, however, accelerated due to a sharp decline in the catering, tourism and retail industries.
MARIANN: As the first city in China, Shanghai started administering an inhalable COVID-19 vaccine as a booster for already vaccinated residents.
ROBBIE: The inhalable vaccines are offered to adults who completed their full vaccination cycle more than 6 months ago. China started its booster campaign in October 2021, however, efforts at vaccinating the population have since dwindled. As of the beginning of September, 64 per cent of people living on the Chinese mainland received three shots of either of the domestically developed vaccines. Since the bulk of the population has not been exposed to the virus, there has been no opportunity to develop natural immunity. The Chinese CDC recently made an appeal for increasing the vaccination rate and rolling out a second booster dose. A renewed vaccination drive would be key for a safe exit strategy from the pandemic.
MARIANN: China has released an updated catalogue of industries to spur foreign investment, especially in the areas of advanced manufacturing and integrated services.
ROBBIE: The revised catalogue that was jointly released by the National Development and Reform Commission and the Ministry of Commerce contains 1474 items, over 200 more than the previous list issued in 2020. The new or revised items cover sectors related to China’s ambitions of high-quality growth, for instance autonomous driving and aviation equipment manufacturing. There is a clear emphasis on green energy transition as well, with technologies and services for low-carbon solutions, energy and water conservation and recycling of waste from new energy production listed as well.
MARIANN: China’s large industrial firms saw their profits fall at a faster pace in the first 9 months of 2022.
ROBBIE: According to the National Bureau of Statistics, industrial profits declined 2.3 per cent from last year in the January to September period. Industrial firms face challenges in their attempt at reversing this trend, as falling profits coincide with rising costs and weak demand. However, while profits in manufacturing declined, those in the mining sector increased sharply due to high commodity prices.
MARIANN: It has been four decades since China’s reform and opening era began, but European Chamber member companies still regularly report encountering difficulties in gaining access to the Chinese market.
ROBBIE: Read the September/October edition of the Chamber’s bimonthly magazine, EURObiz to find out more on invisible market barriers and their impact on the business environment in China.
ROBBIE: Thanks for listening. Tune in again next week.
MARIANN: In the meantime, find useful links in the episode notes.