This episode covers China’s easing of its pandemic control measures; manufacturing and services activity data in December; and Rhodium Group’s prediction of China’s 2022 gross domestic product growth rate and 2023’s growth prospects. Join the Chamber’s national webinar on 9th January on US export controls and their impact on businesses.
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December PMI (in Chinese):
Rhodium Group report ‘Now for the Hard Part: China’s Growth in 2023 and Beyond’:
Chamber event: US Export Controls and Their Impact on European Business in ChinRUI:
European Chamber membership:
RUI: Hello and welcome to China Shortcuts,
MARIANN: the European Chamber’s weekly catchup about the Chinese business landscape.
RUI: As 2022 was coming to an end, Chinese authorities made a series of announcements about easing China’s pandemic control measures.
MARIANN: The National Health Commission announced that starting from the 8th of January, China will downgrade COVID-19 management from Class A to Class B. Inbound international travelers to China will no longer be required to quarantine and will only have to show a 48 hour negative PCR test result to board flights to the country. Disease control measures targeting imported cargo will also be lifted. In addition, China will resume outbound tourism and the issuance of passports for Chinese nationals, and also announced it intends to optimise visa applications for foreign nationals who plan to travel to China for the purposes of work, study, business or family reunions.
RUI: According to China’s National Bureau of Statistics, Chinese manufacturing and services activity shrank to the lowest level in almost three years in December, after an abrupt change in the country’s COVID-19 containment policies led to a huge surge in infections.
MARIANN: The official purchasing managers’ indices or PMI showed that manufacturing activity continued to shrink for the third consecutive month, falling to the lowest level since China first introduced COVID-19 containment measures in February 2020. In December, manufacturing production fell at a sharper rate than new orders, as companies struggled to keep staffing levels stable amid a rise of COVID infections. Suppliers’ average delivery times also significantly suffered as a result. As for non-manufacturing, the construction sector’s expansion continued to slow down, while services activity shrank further, with 15 out of 21 surveyed industries contracting in December. Among the worst hit were retail, road transport, accommodation and catering services providers. One positive was a spike in business activity for the aviation industry, with the volume of domestic and international flights recovering significantly following the optimisation of China’s pandemic measures and the upcoming Spring Festival.
RUI: In a new report, released on the 29th of December, the Rhodium Group predicted that China’s 2022 GDP growth lagged far behind the government’s 5.5 per cent target.
MARIANN: The New York-based think tank estimated China achieved a full-year GDP growth of about 2.5 per cent, while stressing that its real economic performance was likely even weaker. The report cites the property sector’s continued slowdown and the adverse effects of extended COVID-lockdowns, coupled with a sudden lifting of pandemic control measures, as the major factors undermining China’s lacklustre economic performance. For the year ahead, the Rhodium Group predicts weaker investments and external demand, with the latter causing China’s export growth to slow. The report suggests that by lowering expectations for 2023 China could go a long way towards re-establishing its credibility and justifying necessary policies along the way.
RUI: For many policymakers, economic sanctions have become the tool of choice for handling geopolitical challenges. The United States imposed its heaviest-to-date export controls on advanced electronics destined for China in October 2022, which further heightened tensions between the two major markets. Managing US export control requirements has since increasingly become a part of day-to-day business operations for multinational companies.
MARIANN: On the 9th of January, the European Chamber will host an exclusive online event to help its members better understand the developments following the US sanctions and their impact on European business in China, as well as on global industrial and supply chains.
RUI: If you are interested in our exclusive events, but you or your company are not one of our members yet, visit our website to find out more about our membership and its many advantages.
MARIANN: Thanks for listening. Tune in again next week.
RUI: In the meantime, find useful links in the episode notes.