This episode covers China’s producer and consumer prices indexes in May; a European Council on Foreign Relations report on where European member states’ stand in a potential US-China conflict; installed capacity of non-fossil fuel energy sources in China; and a new series of measures on reducing costs for companies. From the Chamber side, join the launch of the Business Confidence Survey 2023 on 21st June to find out how business assess the operating conditions in China.
May PPI and CPI (in Chinese)
ECFR opinion poll
Installed capacity of non-fossil fuel power generation in China
NDRC notice on cost reduction measures for businesses (in Chinese)
Chamber event: Launch of the Business Confidence Survey 2023
RUI: Hello and welcome to China Shortcuts,
RUI: China’s producer price index fell at the fastest rate in over seven years in May year-on-year amid weak global and domestic demand.
MARIANN: The prices factories charge wholesalers dropped 4.6 per cent from the same period last year. The National Bureau of Statistics attributed the decline in prices partly to a relatively high base of comparison from last year, but added that prices also fell month-on-month and pointed to an overall decrease in international commodity prices.
Meanwhile, consumer prices rose at a subdued pace and slightly below expectations. The rate of increase has stayed below one per cent for the third consecutive month in May, well below the government’s target of 3 per cent growth in prices for 2023.
RUI: On 7th June, the European Council on Foreign Relations released a report that found that Europeans would prefer to remain neutral in a potential US-China conflict and mostly view China as a necessary partner.
MARIANN: The report built on the findings of an opinion poll conducted in April across 11 European member states. The majority of respondents in every surveyed member state would want their respective countries to stay neutral in the case the US and China enter into a conflict over Taiwan. While the findings showed that to varying degrees, Europeans recognise some risks in China’s economic presence in Europe, they see more benefits from strategic cooperation.
RUI: According to the National Development and Reform Commission, the installed capacity of non-fossil fuel energy sources has exceeded half of the total power generation capacity in China.
MARIANN: In a speech delivered on 12th June, Yang Yinkai, the Commission’s deputy director said non-fossil fuel energy sources, such as wind, solar and hydro power already account for 50.9 per cent of China’s total installed capacity. However, China still primarily relies on fossil fuels for power generation, with coal accounting for more than 56 per cent of total consumption in 2022. More recent data from the National Energy Administration shows some progress, as electricity generation from renewable sources increased more than 11 per cent year-on-year in the first quarter of 2023.
RUI: On 13th June, the National Development and Reform Commission released a notice detailing a series of measures on reducing costs for companies.
MARIANN: The measures are primarily directed at small businesses and certain key industries, including those considered high-tech. The notice listed tax reduction and exemption policies, as well as steps to lower loan interest rates among the measures that are aimed at boosting market confidence. It also called for the standardisation of the bidding and government procurement system, and efforts to break down unreasonable restrictions and barriers set up for enterprises of different ownership structures, including foreign-invested enterprises.
RUI: Since China ended its ‘zero-COVID’ strategy, Chinese officials have been on a charm offensive in an attempt to restore the country’s allure as an investment destination. However, more will need to be done if China is to successfully reverse the deterioration of business sentiment that has taken place over the past three years.
MARIANN: European companies have already begun shifting investments overseas and faced with growing risks and a more volatile operating environment, many have adjusted their business models. There is now an increased focus on making operations more durable—for example, through localisation or diversification of supply chains.
RUI: Join the launch of the Chamber’s Business Confidence Survey 2023 on 21st June, to find out how European businesses assess the operating conditions in China. European Chamber president Jens Eskelund will present the key findings of this year’s survey, and the chairs of the Chamber’s six regional chapters will each give details about the picture seen on the ground in their respective localities.
MARIANN: Thanks for listening. Tune in again next week. RUI: In the meantime, please find useful links in the episode notes.