This episode contains segments on the latest forecasts by the IMF and the OECD for China’s GDP growth; on the State Council’s new, temporary regulations for carbon emmission trading and on the Rhodium Group’s note on the lack of clarity on China’s economic policymaking. From the Chamber’s side: a Chamber delegation led by President Eskelund met with Zhao Shitong, assistant minister of the International Department of the Communist Party of China; and a reminder for all our eligible members to complete the Business Confidence Survey 2024 before it closes on 9th February.
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IMF 2023 Article IV Consultation report on China
OECD Economic Outlook, Interim Report February 2024
New carbon emissions trading regulations
Rhodium Group note on China’s policy ambiguity
European Chamber meeting with IDCPC
Business Confidence Survey 2024 closing soon
KALINA: Hello and welcome to China ShortCuts,
MARIANN: In a fresh report published on 2nd February, the IMF highlighted continued weakness in the property sector and muted demand for China’s exports as the major factors hindering the country’s economy in 2024. For the medium term, the IMF projects that growth will slow further due to structural issues, such as low productivity and an ageing population. The report also underlined that while growth is expected to weaken, inflation is likely to increase over the coming year. However, the organisation stressed that China’s economy faces a very uncertain outlook, primarily due to the future trajectories of the real-estate sector and local government debt. It also listed a further weakening of external demand and heightened geopolitical tensions among additional risks, while suggesting that Chinese policymakers could take steps to improve confidence and create momentum for a rebound in private investment.
KALINA: On 5th February, the Organisation for Economic Cooperation and Development released its report on the interim economic outlook for 2024, projecting that China’s GDP growth will slow to 4.7 per cent in 2024, and to 4.2 per cent in 2025.
MARIANN: In its analysis, the OECD also cited the contraction of the property sector and weak consumption growth as the key challenges for China’s economy. As for global GDP, the OECD expects growth of 2.9 per cent in 2024, recovering to 3 per cent in 2025.
KALINA: On 4th February, China’s State Council released a set of new, temporary regulations for carbon emission trading.
MARIANN: The regulations, which will take effect on 1st May, aim to strengthen the legal framework for China’s national carbon market, and replace the existing, ministerial-level rules which were put in place in 2021. The new rules also clarify the division of duties related to the supervision and management of carbon emission trading and set out stricter penalties for non-compliance.
KALINA: In a note published on 2nd February, the Rhodium Group warned that markets are waiting for Chinese policymakers to take tangible action to address a growing number of economic challenges.
MARIANN: The note highlights that while in the past, economic technocrats would have concrete plans to manage challenges, market confidence is now being eroded due to a lack of clarity on economic policymaking. The Washington-based think tank stressed that by leaving issues such as local government debt unresolved, there is a growing risk that local government investment will slow further, which in turn will hinder economic growth. Other challenges highlighted in the note include subdued household consumption and persistent capital outflow, which the Rhodium Group expects to be a long-term issue for China’s financial system.
KALINA: On 29th January, a European Chamber delegation led by President Jens Eskelund met with Zhao Shitong, assistant minister of the International Department of the Communist Party of China, and exchanged views on EU-China relations, the broader geopolitical context, supply chain resilience and the business environment for foreign companies in China.
MARIANN: Senior representatives from the European Chamber introduced operational issues faced by the Chamber’s member companies in several sectors, including automotive, energy, environment and green technology and information and communication technology.
KALINA: Every year, the European Chamber conducts its Business Confidence Survey to provide a comprehensive analysis of China’s business environment.
MARIANN: This year, the online survey officially opened on 15th January, and the primary contacts of all eligible member companies were sent a link and unique access code.
KALINA: If you received a code but haven’t completed the survey yet, please make sure to do so before 9th February. Filling in the survey will add your company’s voice to the Chamber’s advocacy messaging for the year ahead. Additionally, by completing the survey, you will have the chance of winning one out of three amazing prizes: a stay at the Conrad Hotel in Shenyang, or one of two camping sets. All information received from members will be anonymised and remain strictly confidential. The results will be published in May and presented to Chinese and European officials, media and other organisations.
MARIANN: Thanks for listening, and don’t forget to tune in again after the Chinese New Year holiday!
KALINA: In the meantime, please find useful links in the episode notes. We wish you a peaceful holiday and a happy and prosperous Year of the Dragon!