This episode contains segments on China’s new policy incentives to encourage domestic consumption; on China’s official manufacturing PMI that contracted in July amid weak demand with the employment subindex dropping to the lowest level since January; on profits at larger industrial firms in China that dropped 16.8 per cent in the first half of 2023 compared the same period last year; and on Italy confirming its intention to leave China’s Belt and Road Initiative. From the Chamber side: join the European Chamber’s Cybersecurity Conference 2023 on 8th August to hear industry experts’ insights on the future of China’s data flow security landscape and possible solutions for all relevant parties.
NDRC rolls out new measures to encourage consumption
China Official Manufacturing and Services PMI (in Chinese)
China Industrial Profits July (in Chinese)
July Italian defence minister confirms Italy’s intention to dissolve Belt and Road agreement (in Italian)
European Chamber event: Beyond Cybersecurity Conference 2023
XINHE: Hello and welcome to China Shortcuts,
XINHE: On 1st August, China’s National Reform and Development Commission announced new policy incentives to encourage domestic consumption.
MARIANN: The 20 new measures primarily focus on stabilising the sales of big-ticket items, such as new energy vehicles and home appliances, as well as consumption in the services sector. They also include requirements for authorities to provide support for first-time homebuyers and to those intending to upgrade their housing conditions. While supply-side support can go some way to help boosting consumption, addressing structural issues on the demand side could have a fundamental impact on rebuilding consumer confidence.
XINHE: China’s official manufacturing purchasing managers’ index or PMI contracted for the fourth consecutive month in July amid weak demand.
MARIANN: Data published by the National Bureau of Statistics on 31st July showed that the manufacturing PMI continued to edge up for the third month in a row, however, it remained under the 50-point benchmark separating growth from contraction. While production expanded among surveyed manufacturing firms, new orders were still declining, albeit at a slower rate than in the previous three months. The employment subindex dropped to the lowest level since January, with manufacturing companies decreasing their staffing levels for the fifth month in a row.
The non-manufacturing PMI, which combines services and construction activity, was still in expansion territory at 51.5 points in July. However, the index dropped to the lowest level this year following a four-month-long weakening from a peak recorded in March. This led to a steeper fall in the construction sector, with services faring slightly better in July. The subindex for new orders fell to the lowest level since last December, indicating contraction for the third successive month. Following the weaker growth in activity, employment levels shrank in the non-manufacturing sector too.
XINHE: Profits at larger industrial firms in China dropped 16.8 per cent in the first half of 2023, compared the same period last year, with the rate of decline slowing from the reading of the January-May period.
MARIANN: Out of the 41 sectors surveyed by China’s statistics bureau, 29 recorded a year-on-year fall in profits in the first six months of the year. Among those that saw their profits rise in the first half were the electricity and heating production and supply sectors, as well as certain equipment manufacturers and the automotive industry. The largest dip in profits was recorded among state-owned enterprises, followed by equity-owned companies, who, nevertheless, produced the most profits in actual figures. In June alone, industrial profits dropped 8.3 per cent from a year ago, with the rate of decline slowing from May.
XINHE: Italian defense minister Guido Crosetto confirmed the Italian government’s intention to leave China’s Belt and Road Initiative, which Italy joined as the first G7 country in 2019.
MARIANN: In an interview with the Italian newspaper Corriere Della Sera, published on 30th July, Crosetto stressed that Italy wants to find a way to dissolve its agreement with China without any damage to the bilateral relations. As for the reason behind the decision on Italy’s exit from China’s global infrastructure programme, he noted that since the agreement was signed, Italy’s trade deficit with China only increased.
XINHE: China’s Cybersecurity Law, and particularly its cross-border data transfer requirements, pose a number of challenges for companies operating in the country. The Measures for Security Assessment of Data Exports came into force on 1st September 2022, to guide and assist data handlers about standardising and reporting security assessments for data export.
MARIANN: Understanding the latest data policies on cross-border data transfers, data authentication and data sharing are crucial for companies to revise their regional cybersecurity policies and practices in a way that ensures compliance with relevant regulations.
XINHE: Join the European Chamber’s Cybersecurity Conference 2023 in Shanghai on 8th August to hear expert insights on the future of data flow in China. Professionals from law and consulting firms, industry and data processors will also offer possible compliance solutions.
MARIANN: Thanks for listening. Tune in again next week.
XINHE: In the meantime, please find useful links in the episode notes.