This episode contains segments on the total value of China’s exports and imports in November; on the 24th EU-China Summit; on China’s producer and consumer prices in November; on the annual Central Economic Work Conference held in Beijing and on key takeaways from the European Chamber’s Annual Conference held on 12th December.
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China’s foreign trade data, November
24th EU-China Summit
China price indices, November
Central Economic Work Conference
LEXIE: Hello and welcome to China Shortcuts,
LEXIE: China’s exports bounced back after six consecutive months of decline, while imports dropped slightly again in November after a short-lived increase the previous month.
MARIANN: According to customs data released on 7th December, the total value of China’s exports climbed 0.5 per cent year-on-year. At the same time, the value of imports shrank 0.6 per cent, with the unexpected surge in October that broke an eleven-month-long decline failing to change the overall trend.
As China’s economic recovery is facing severe challenges, falling back on exports presents an obvious way to reignite economic growth. However, overreliance on supply-side policies comes with risks, as these have been a contributor to both the significant trade imbalances China has accumulated with the European Union, and overcapacity in some industries¾something European politicians cite among the key grievances in its relationship with China.
LEXIE: On 7th December, the European Union and China held their 24th summit in Beijing. European Commission President Ursula von der Leyen and European Council President Charles Michel held meetings with Chinese President Xi Jinping and Chinese Premier Li Qiang.
MARIANN: The summit was held in person for the first time since the outbreak of the global COVID-19 pandemic, providing a platform for a candid exchange on hot-button trade and political issues. For instance, EU representatives raised the issue of the imbalance in the bilateral trade relationship – highlighting the trade deficit and issues with Chinese overcapacity and reiterating the importance of progress in addressing issues related to market access barriers and a lack of a level-playing field for European companies in China. The Chinese side raised the EU probe on Chinese electric vehicle exports and urged the EU to be prudent when introducing restrictive economic and trade policies. Both sides reaffirmed their commitment to not ‘decouple’, with the EU side reiterating that de-risking is aimed at reducing critical dependencies.
The European Chamber remains committed to supporting a constructive bilateral EU-China relationship and is continuing to provide on-the-ground feedback to EU counterparts in preparation for upcoming exchanges between the two sides, as it had done prior to the summit.
LEXIE: The year-on-year fall in China’s producer and consumer prices both picked up speed in November, heightening concerns over deflation.
MARIANN: The prices producers charge their buyers dropped 3 per cent compared to the same period last year. China’s statistics bureau attributed this primarily to factors including a decrease in international oil prices and a weakening market demand for certain industrial products.
The fall in consumer prices was more moderate at 0.5 per cent and explained mainly with the drop in energy prices.
LEXIE: China’s leaders convened in Beijing on 11th and 12th December to outline the targets for the country’s economic work in 2024 at the annual Central Economic Work Conference.
MARIANN: Some of the challenges that China’s economic recovery is facing, such as lacklustre consumer demand and overcapacity in some sectors, were acknowledged during the conference. However, the meeting struck a positive tone overall, with China’s leaders expressing confidence about the long-term prospects for the country’s economy. Some of the priorities set out for 2024 were to strengthen the focus on sci-tech innovation, take further efforts to boost domestic demand and expand high-standard opening up.
LEXIE: The European Chamber held its Annual Conference on the 12th December in Beijing focusing on the theme of Regaining Economic Momentum in an Environment of De-risking.
MARIANN: Some of the key takeaways from panel discussions at the event were that some challenges European businesses were facing in China throughout 2023 look set to stay in 2024. These include uncertainties over the country’s economic rebound and future growth, and a lack of clarity on what kind of relationship China wants to have with foreign businesses due to mixed messaging from the Chinese government. While panellists attributed some of the issues, such as the drop in consumer confidence, to the lingering impact of the COVID-19 pandemic and related restrictions, others were seen to be largely stemming from China’s increasing focus on national security and its push for self-reliance in various areas.
LEXIE: Among reasons for optimism for the year ahead, speakers mentioned some positive signals from the Chinese Government for foreign businesses, including the State Council’s 24 points for optimising the business environment and a recent letter released by China’s Ministry of Commerce expressing an intent to eliminate differentiated treatment of foreign-invested enterprises. In addition, as the EU’s de-risking strategy is described as precise and expected to be narrow in scope, it still leaves room for bilateral cooperation in areas where cooperation can be fruitful for both sides.
MARIANN: Thanks for listening. Tune in again next week.
LEXIE: In the meantime, please find useful links in the episode notes.