This episode contains manufacturing activity in April; the direction of China’s economy in the first quarter of 2023 outlined in a third-party report; signals from April Politburo meeting on China’s economy; and foreign trade data in April. From the Chamber side, recent high-level engagements with key interlocutors were introduced.
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Official April PMI (in Chinese):
Caixin China General Manufacturing PMI, April:
China Pathfinder: Q1 2023 Update (Rhodium Group, Atlantic Council):
Politburo meeting on 28th April:
April foreign trade data:
European Chamber meetings with Chinese government interlocutors:
RUI: Hello and welcome to China Shortcuts,
RUI: Official and private survey data both showed that after a rebound in the first quarter, China’s manufacturing activity shrank again in April.
MARIANN: The official purchasing managers’ index, or PMI, that focusses more on larger, state-owned companies, signalled a contraction in manufacturing activity for the first time this year. China’s National Bureau of Statistics pointed at insufficient demand in April and a relatively strong recovery in the first quarter as the reasons behind the month-on-month drop in activity. The Caixin General Manufacturing PMI showed a similar picture, identifying weak domestic demand as the main factor weighing on the sector’s performance. Despite some worrying signs about the sustainability of China’s economic recovery, surveyed manufacturers were highly optimistic that demand would pick up and propel growth in the year ahead.
RUI: According to the latest update to the Rhodium Group’s and the Atlantic Council’s joint initiative, China Pathfinder, in the first quarter of 2023, China’s economic system showed signs that it is moving away from market economy norms.
MARIANN: The report pointed out that while China made pledges to promote foreign investment, there was no meaningful shift in policy to ease concerns about the direction of China’s economy. First quarter economic indices have shown a positive momentum in areas such as service sector activity and consumption, but the damage inflicted by almost three years of strict pandemic controls on income growth, employment and business confidence is expected to last. The report also noted that recent cases in which investigations have been instigated on foreign consultancies, due diligence providers and others is further eroding business confidence. At the same time, long-term structural problems are predicted to continue weighing on growth, with geopolitical tensions further dampening the outlook.
RUI: On 28th April, the Politburo, China’s top decision-making body, held its monthly meeting, with discussions focussing on the economy.
MARIANN: The meeting sent mixed signals: while the importance of attracting foreign investment was emphasised, policymakers also called for efforts to consolidate the foundation of self-reliance and strength in science and technology. It was also acknowledged at the meeting that China’s economic recovery is facing various headwinds, and the management of local government debt was mentioned among the areas where strengthened efforts are needed.
RUI: According to data released by the General Administration of Customs on 9th May, China’s foreign trade continued its lopsided recovery in April, with the value of exports expanding, while the value of imports dropped sharply.
MARIANN: In dollar terms, the value of exports grew at the second fastest pace year-on-year since last July, expanding for the second month in a row. Meanwhile, the value of imports continued its decline, which was uninterrupted for the past half a year. The rate of contraction was the second fastest this year, exceeding analysts’ expectations. The dataset also revealed, that in the first four months of 2023, China’s exports to and imports from the European Union, its second largest trade partner, both expanded in yuan-denominated terms. The value of China’s exports to the EU was almost twice that of its imports from the bloc during this period, according to China’s customs authorities.
RUI: As part of its efforts to maintain fruitful engagement with key interlocutors, the European Chamber held several meetings across China in recent weeks.
MARIANN: In late April, Chamber President Joerg Wuttke and other Chamber representatives met Shanghai vice mayor Hua Yuan, and discussed recent developments in EU-China trade and investment, among other areas of common interest.
RUI: In Shenyang, a Chamber delegation led by President Wuttke met Provincial Party Secretary Hao Peng and Liaoning Governor Li Lecheng. The two parties exchanged views on broader topics such as EU-China economic and trade relations, as well as on topics related to the business environment in Liaoning and Shenyang.
MARIANN: Thanks for listening. Tune in again next week.
RUI: In the meantime, please find useful links in the episode notes.