This episode contains segments on China’s slowing decline in exports and imports in August; on a moderate increase in consumer prices that worked towards easing deflation worries and on a slight improvement in the performance of SMEs in August. From the Chamber’s side: the European Chamber will publish its European Business in China Position Paper 2023/2024 on 20th September, detailing the challenges faced by European companies operating in China and providing more than 1,000 constructive recommendations to the Chinese Government on how they can be resolved.
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China August foreign trade data (in Chinese)
China official price indices, August (in Chinese)
SME development index, August
European Chamber Position Papre 2023/2024 launch
XINHE: Hello and welcome to China Shortcuts,
XINHE: China’s foreign trade continued its downward trend in August, but the rate of decline in exports and imports narrowed from the previous month.
MARIANN: According to China’s customs authorities, in US dollar terms, the total value of Chinese exports dropped 8.8 per cent year-on-year. This was less severe than the 14.5 per cent contraction recorded in July, and also milder than analysts’ forecasts. The fall in the value of imports slowed down too, but was still significant at 7.3 per cent and indicating a persistent downward trend that already lasted ten months so far. China’s trade surplus stood at 68 billion US dollars in August, which was the lowest level recorded in the past three months.
XINHE: Prices of consumer goods in China edged up in August, easing worries over deflation, while the drop in producer prices slowed down compared to rate recorded in July.
MARIANN: Consumer prices increased 0.1 per cent year-on-year in August, primarily due to a rise in the prices of services, especially those related to tourism. Meanwhile, food prices continued to drop at the same pace as seen in July. The prices producers charge for their goods at the factory gate fell for the eleventh consecutive month. However, at 3 per cent, the rate of decrease was the lowest recorded since March. On a month-on-month basis producer prices rose 0.2 per cent due to an improvement in demand for goods in certain sectors and an increase in international crude oil prices.
XINHE: The latest survey conducted by the China Association of Small and Medium Enterprises indicated that the performance of SMEs in China has been improving for the third month in a row in August.
MARIANN: The SME development index, which was generated based on the results of a survey among 3000 small-and medium enterprises in China stood at 89.4 points in August. This was still below the 100-point critical value of prosperity, but slightly above the July data. The association conducting the survey highlighted that while the upward trend of the past three months is a positive sign, SMEs are still faced by challenges, including external economic uncertainties and high corporate costs.
XINHE: China’s decision to reopen its borders on 8th January 2023 was a welcome surprise and many believed that a swift economic rebound would follow. The political will in China also seemed to finally match businesses’ expectations for increased opening of the economy. However, as the year has progressed, many areas of China’s economy failed to perform as hoped.
MARIANN: although official announcements aimed at improving the business environment have been released, so has a slew of national security-focused legislation, which has deepened uncertainty and raised compliance risks. This has sent mixed messages to the business community, leaving many companies questioning what kind of relationship China wants to have with them.
XINHE: On 20th September, the European Chamber will publish its European Business in China Position Paper 2023/2024. The report details the challenges faced by European companies operating in China and provides more than 1,000 constructive recommendations to the Chinese Government on how they can be resolved. It provides a blueprint for attracting and retaining foreign investment in China, while also addressing many of the structural issues that are hindering the country’s economic development.
MARIANN: Thanks for listening. Tune in again next week.
XINHE: In the meantime, please find useful links in the episode notes.