This episode contains segments on a draft regulation issued by the Cyberspace Administration of China; on manufacturing and services activity in China in September; on the key findings of a joint report by the Rhodium Group and the Atlantic Council on China’s economic reform progress and on China’s Q3 SME Development Index. From the Chamber’s side: join us on 19th October in Nanjing or online to hear experts’ insights on ESG in the China market and find out their recommendations for designing a fitting strategy both for their ESG compliance and for asserting their intellectual property rights in the context of ESG.
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CAC’s draft regulation on cross-border data flows
China official PMI (September)
Rhodium Group/Atlantic Council’s GeoEconomics Center China Pathfinder 2022
Q3 SME Development Index
European Chamber event: Managing ESG in China: new compliance trends and IP considerations
KALINA: Hello and welcome to China Shortcuts,
KALINA: On 28th September, the Cyberspace Administration of China issued a call for comments on a draft regulation aimed at standardising and promoting cross-border data flows.
MARIANN: The draft regulation relieves companies of some of the difficulties with cross-border data transfer and personal information protection partly by specifying a list of exemptions to relevant obligations and partly by providing more clarity on how data handlers can verify what is qualified by authorities as ‘important data’. The release of the draft is seen as a signal from the Chinese Government that it is listening to businesses’ concerns and is ready to take steps to address them, which is a positive. The European Chamber will continue its engagements with the relevant authorities to provide constructive recommendations for the optimisation of the data regulations.
KALINA: According to the National Bureau of Statistics, manufacturing activity in China expanded again in September, ending a contraction streak that lasted for five consecutive months.
MARIANN: The official manufacturing purchasing manager’s index or PMI stood slightly above the 50-point benchmark separating growth from contraction. A growth in activity was registered in 11 out of the 21 surveyed sectors. Subindexes showed that supply and demand both expanded at a slightly faster pace than in August. A breakdown of the data according to company size indicated that while the growth in activity accelerated at larger manufacturing firms, the subindexes for small and medium size companies still remained below the 50-point benchmark.
The official non-manufacturing PMI picked up further in September, with services and construction activity both expanding faster than in August.
KALINA: According to the Rhodium Group’s and the Atlantic Council’s joint initiative, China Pathfinder, China’s annual economic benchmarks indicated that in 2022 the country made some progress on reform. However, without a change in course, China’s economic growth is bound to slow further.
MARIANN: Key findings of the report indicated that while China has made significant progress in the openness of its trade, and to some extent of its financial system too, in other areas, such as market competition and innovation, it moved farther away from market norms. The report argued that Chinese policymakers should change trajectory in order to break away from the trend of economic slowdown. As examples of recommended positive changes they listed abandoning the practice of setting a GDP target, and rebalancing fiscal burdens to alleviate some pressure on local governments.
KALINA: The performance of small and medium-sized enterprises in China improved slightly in the third quarter of 2023, according to a survey among 3000 SMEs from eight major industries.
MARIANN: Data from the China Association of Small and Medium Enterprises’ survey indicated that while activity increased, the SME development index still remained below 100-point critical value of prosperity. The association conducting the survey highlighted that while SMEs in a number of sectors were able to reverse a previous downward trend, the recovery in activity is still lacking solid foundations.
The European Chamber’s Business Confidence Survey 2023 showed that SMEs were substantially impacted by pandemic-related containment measures in 2022, with 36 per cent reporting y-o-y decreases in their bottom lines. In comparison, only 11 per cent of large European companies with over 1000 employees reported that their revenues decreased in 2022.
KALINA: With ever-comprehensive policy guidelines and developing new trends, ESG has become a hot topic in China that companies, big or small, cannot afford to ignore.
MARIANN: A comprehensive ESG strategy that takes into account the newest reporting requirements and trends while also meeting not only the sustainability targets but also profit margins of companies is a must.
KALINA: Join us on 19th October in Nanjing or online to hear experts’ insights on ESG in the China market and find out their recommendations for designing a fitting strategy both for their ESG compliance and for asserting their intellectual property rights in the context of ESG.
MARIANN: Thanks for listening. Tune in again next week.
KALINA: In the meantime, please find useful links in the episode notes.