This episode contains segments on China’s actual use of foreign investment in the first three quarters of 2023; on the newly announced export control on graphite; on China’s economic recovery showing signs of improvement in September and on the State Councils’ planned inspection into issues inhibiting the country’s swift economic rebound. From the Chamber’s side: at this year’s Carbon Neutrality Conference, on 30th October in Shanghai, participants will discuss the complexities of China’s journey towards a green future, while providing actionable insights and innovative solutions for sustainable business.
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MOFCOM on China’s Q3 FDI data (in Chinese)
Export control to be imposed on graphite (in Chinese)
September macroeconomic data (in Chinese)
State Council to inspect a host of issues impeding economic development
European Chamber event: 2023 Carbon Neutrality Conference
XINHE: Hello and welcome to China Shortcuts,
XINHE: In the first three quarters of 2023, China’s actual use of foreign investment decreased 8.4 per cent year-on-year, sinking slightly under RMB 920 billion.
MARIANN: In a written statement posted on its website, China’s Ministry of Commerce argued that the drop in FDI was in line with weak global economic recovery. It highlighted that in the first nine months of 2022, the actual use of FDI in China reached a record high, surging above RMB 1 trillion for the first time, therefore, even after a drop this year, the number was still relatively high compared to a historic average. The statement also pointed out that the structure of foreign investment has been changing, as for instance the amount of foreign capital injected into the manufacturing sector has been increasing. At the opening ceremony of the third Belt and Road Forum, held in Beijing on 18th October, Chinese President Xi Jinping announced the abolishment of any restrictions on foreign investment in China’s manufacturing sector.
XINHE: Starting from 1st December, China is imposing export controls on a three types of graphite materials and products made of these materials.
MARIANN: According to an announcement jointly issued by China’s Ministry of Commerce and the General Administration of Customs on 20th October, only holders of special permits will be allowed to export the listed materials. Among other industrial applications, graphite is used for making carbon fibre and electrodes.
The announcement came only a few days after the US further tightened its curbs on the export of AI chips and equipment used in semiconductor manufacturing to China.
XINHE: Official macroeconomic data from September indicated an improvement in China’s economic recovery.
MARIANN: Industrial production at larger firms increased 4.5 per cent year-on-year in September. Growth was recorded in 26 of the 41 surveyed sectors. Retail sales were up 5.5. per cent compared to the same period last year, expanding at the fastest pace since May. The rate of growth in sales of products and catering sales both inched up compared to August. Surveyed urban unemployment shrank to 5 per cent, which was the lowest level recorded in almost two years.
XINHE: China’s State Council will launch an inspection into issues inhibiting the country’s swift economic rebound, including problems related to the development of the private economy and the expansion of domestic demand.
MARIANN: In a statement issued on 23rd October, the State Council said it would initiate an investigation in sixteen cities and provinces of China and asked the public to provide information on related problems. For instance, among the issues impeding the development of private enterprises the statement listed arbitrary fines and the abuse of other punishment measures, the lack of uniformity in local standards and discriminatory treatment that favours state-owned firms.
The International Monetary Fund’s 2023 report on China identified the advancement of the public sector as a key factor weakening China’s productivity growth. The IMF’s report also highlights that, as state-owned enterprises tend to be less productive than their privately-owned counterparts, their continued prioritisation might further increase the productivity gap between China and advanced economies.
XINHE: As part of its 30/60 carbon neutrality goals, China set a goal for renewable energy to exceed fossil fuel capacity by 2025, a target that has already been reached two years ahead of schedule. Renewable energy sources, as China defines them, now make up over half of the country’s power capacity.
MARIANN: However, China’s energy consumption mix remains heavily reliant on fossil fuels, with China’s coal usage exceeding the rest of the world combined in 2022. With climate change-induced power shortages and extreme weather conditions becoming more frequent, the path towards carbon neutrality will be crucial for China to maintain its competitiveness as a global manufacturing powerhouse.
XINHE: Join us on 30th October in Shanghai at this year’s Carbon Neutrality Conference, where participants will discuss the complexities of China’s journey towards a green future, while providing actionable insights and innovative solutions for sustainable business.
MARIANN: Thanks for listening. Tune in again next week.
XINHE: In the meantime, please find useful links in the episode notes.