This episode contains the European Council conclusions on the EU’s relations with China; the newly adopted Law on Foreign Relations of the People’s Republic of China; the official purchasing managers’ index (PMI) and the Caixin China General Manufacturing PMI in June. From the Chamber side, join the next session in the Insight China series on 13th July to hear from Professors Daniel A. Bell and Yao Yang on the influence of Confucianism on modern Chinese politics.
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European Council conclusions on China, 30 June 2023:
The Law on Foreign Relations of the People’s Republic of China:
Official PMI June (in Chinese):
Caixin China General Manufacturing PMI
Chamber event: Insight China | Why Confucianism Matters for Modern Politics in China?
RUI: Hello and welcome to China Shortcuts,
RUI: At a summit held in Brussels on 30th June, leaders of the European Union’s member states agreed that they would pursue de-risking but not decoupling from China.
MARIANN: In a press release issued about the European Council’s conclusions on China, it was reaffirmed that the EU will continue to approach China simultaneously as “a partner, a competitor and a systemic rival”. The EU clarified that it would de-risk and diversify in areas where it is deemed necessary, as its goal is to reduce critical dependencies and vulnerabilities in its economy. However, the bloc also highlighted its willingness to continue its trade and economic partnership with China as well as its engagements with the country aimed at finding solutions for global challenges, such as climate change.
RUI: On 28th June, the Standing Committee of China’s legislative body, the National People’s Congress, adopted a new law that is aimed at codifying the development of the country’s foreign relations.
MARIANN: According to the official communication about the new Foreign Relations Law, it is intended to provide a basic legal framework for developing foreign relations and for applying Chinese law to the regulation of foreign relations, in order to guard China against any perceived threat to its national sovereignty, security and development interests. Both this law and the updated anti-espionage law that came into force on 1st July contain references to the broader concept of ‘national security’, however, foreign businesses do not have clarity on what is officially considered a national secret. Laws that are vaguely worded and broad in scope present compliance challenges, and can also result in discretionary implementation, which is not conducive to attracting foreign investment or rebuilding business confidence among the foreign business community in China. The European Chamber is therefore continuing to advocate for greater transparency and for Chinese legislation to be clearly and narrowly defined.
RUI: Data released by China’s statistics bureau on 30th June showed that manufacturing activity declined for the third consecutive month in June, while the expansion of services activity softened to the lowest rate this year.
MARIANN: The official manufacturing purchasing managers’ index stood at 49 points in June, which was slightly up from May, but still under the 50-point benchmark separating growth from contraction. The breakdown of the data indicated that activity at large manufacturing companies expanded last month, after continued stagnation in May. However, that of small- and medium sized companies remained in decline, with the rate of contraction accelerating even further at small-sized companies. While production bounced back in June, demand was still weak, improving only slightly from the previous month. The subindex for employment suggested that manufacturing companies increased the pace of job cuts in June, and their outlook for the year ahead was slightly less optimistic than in May.
Non-manufacturing activity expanded for the sixth month in a row in June, however, at the softest pace during this period. Activity in the construction sector was still stronger than in services. The employment subindex dropped to the lowest level since January, with the number of job opportunities in the non-manufacturing sector decreasing for the fourth consecutive month.
RUI: The Caixin China General Manufacturing PMI, released on 3rd July, showed a slightly different picture from the official data, with the discrepancy primarily due to the different sample size of the two surveys.
MARIANN: The Caixin data indicated that manufacturing activity expanded for the second month in a row in June, but at a slightly lower rate than in May. Growth in production and new orders were both mild in June, and concerns over relatively sluggish market conditions led to waning optimism about the 12-month outlook.
RUI: As a European Chamber flagship event series, Insight China brings together distinguished experts from academia, industry and global organisations to provide a comprehensive understanding of the economic, political and diplomatic issues that have emerged during China’s ongoing social and economic transformation.
MARIANN: The next session in the Insight China series will feature Daniel A. Bell, author of the autobiographical chronicle the Dean of Shandong, and Professor Yao Yang, Dean of the National School of Development at Peking University, who will share their insights on the influence of Confucianism on modern Chinese politics.
RUI: Join us online or in person in Beijing on 13th July to find out how the revival of Confucianism in China over the last three decades is expected to shape the country’s future.
MARIANN: Thanks for listening. Tune in again next week.
RUI: In the meantime, please find useful links in the episode notes.