This episode contains segments on:
- President Xi’s visit to Europe;
- Labour Day outbound tourism;
- April manufacturing purchasing manager’s index;
- Industrial profits in the first quarter of 2024;
- Politburo’s measures to stimulate the economy;
Also, listeners are invited to join the Business Confidence Survey 2024 launch online on 10th May to find out how European companies perceive the business environment in China.
Contact:
We’d love to hear your feedback. Contact us at website@europeanchamber.com.cn.
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Read more:
President Xi’s visit to Europe (France, Serbia, Hungary), French government strategic industry contract on electric vehicles
https://www.mfa.gov.cn/eng/zxxx_662805/202405/t20240507_11293738.html
https://ec.europa.eu/commission/presscorner/detail/en/statement_24_2464
Labour Day tourism recovery
https://cn.chinadaily.com.cn/a/202405/02/WS6632df3da3109f7860ddc011.html?ivk_sa=1023197a
April Manufacturing PMI, Statistics Bureau and Caixin
https://www.stats.gov.cn/sj/zxfb/202404/t20240430_1955162.html
https://pmi.caixin.com/upload/CN_Manufacturing_ENG_2404_PR.pdf
Statistics Bureau reports industrial profits increase year on year in the first quarter of 2024, but fell year on year in March
https://www.stats.gov.cn/sj/zxfb/202404/t20240427_1955093.html
Politburo’s measures to stimulate the economy, setting date for third plenum
https://english.news.cn/20240430/1fb81d6afc8943e5985bb6c66c923804/c.html
European Chamber event: BCS 2024 launch
Transcript:
RUI: Hello and welcome to China ShortCuts,
MARIANN: the European Chamber’s weekly catchup on China’s business landscape.
RUI: China’s president Xi Jinping started his five-day trip to Europe on 5th May. During the trip, he is scheduled to visit leaders in France, Hungary and Serbia.
MARIANN: President Xi met with French President Emmanuel Macron and European Commission President Ursula von der Leyen on 6th May in Paris. During the meeting, President von der Leyen explained the EU’s motives behind de-risking, highlighting that the main goal of this strategy is to improve supply chain resilience by tackling excessive dependencies. She highlighted the need for reciprocal market access and called on the Chinese Government to address overcapacity in China’s manufacturing sector.
RUI: In September 2023, the European Commission launched a probe into electric vehicle imports from China. The probe is expected to conclude in the second half of this year. A day before Xi’s visit, French Finance Minister Bruno Le Maire signed a “strategic sector contract”, committing France to significantly increasing sales of EVs by 2027. Le Maire also said BYD and other Chinese automotive manufacturers were welcome to build factories in France.
(MUSIC)
RUI: Chinese outbound tourism showed signs of recovery during the five-day Labour Day holiday.
MARIANN: China Daily reported that overseas flight bookings on 1st May were 20% higher than 2019. While destinations in Asia saw the most recovery since before the pandemic, European destinations were close behind. Outbound trips from China to Spain, Croatia, Ireland, Hungary and the United Kingdom increased by over 10% from the same period in 2019. Mobile payment operator Alipay also reported a 77% increase in outbound payments during the holiday compared to last year.
(MUSIC)
RUI: China’s official manufacturing purchasing manager’s index (or PMI) indicated an increase in manufacturing activity during April, according to data released by the National Bureau of Statistics.
MARIANN: This was the second month in a row that manufacturing activity expanded, after contracting from October 2023 to February 2024. Subindices for production and new orders all surpassed the 50-point benchmark separating growth from contraction. However, the subindex for employment stayed under the 50-point benchmark for over a year, signalling that manufacturers have been continuing to reduce their staffing levels.
A private survey conducted by Caixin and S&P Global also showed growth in manufacturing activity, expanding at the fastest rate recorded in 14 months. The discrepancy between the two sets of data is primarily due to the different sample size of the two surveys.
RUI: Profits of larger industrial firms in China increased by 4.3% year-on-year in the first quarter of 2024.
MARIANN: Data released by China’s Statistics Bureau on 27th April revealed that while profits in the first quarter increased from the same period last year, March profits fell year-on-year. A breakdown of the data indicated that profits of electronics and automotive manufacturers had increased year-on-year in the first quarter by 82.5% and 32%, respectively. Coal producers’ profits fell by 33.5% year-on-year in the first quarter.
(MUSIC)
RUI: The Political Bureau of the CPC Central Committee, or the Politburo, China’s 24-member main decision-making body, met on the 30th of April to discuss China’s current economic situation.
MARIANN: In the meeting, members highlighted ongoing economic challenges, including insufficient demand and high operational costs. The members proposed several fiscal and monetary policies to improve the business environment, including issuing ultra-long-term bonds and adjusting interest rates and reserve requirement ratios. Measures to boost consumer demand were also addressed in the meeting, including initiating trade-ins of consumer goods and stimulating private investment.
A key outcome of the meeting was that the third plenary session of the CPC Central Committee was set for July 2024. This session, which is typically scheduled for the year after the appointment of a new central committee, has historically focused on broad-scale economic reforms. The session was expected to be held in late 2023 but was postponed without explanation.
(MUSIC)
RUI: Instead of the strong economic rebound that businesses had hoped for, China’s re-opening in 2023 brought more uncertainties for European firms operating in the country. Deeper structural issues like sluggish demand, high levels of local government debt, and continued challenges in the real estate sector, continue to weigh on both domestic and foreign companies’ prospects in China.
MARIANN: With optimism over the near- and medium-term outlook fading, some companies have already started to re-evaluate their engagement with the Chinese market. Some strategies that multinationals are pursuing, including cost-cutting and toning down expansion plans, could potentially add to China’s economic woes and set a negative cycle in motion. If China is to rebuild investor confidence, it needs to urgently address the regulatory and market access barriers preventing European companies from contributing fully to its economy.
RUI: Join us on 10th May online or in person in Beijing for the official launch of the Business Confidence Survey 2024 to find out how European companies perceive the business environment in China. European Chamber president Jens Eskelund will present the key findings of the survey. Following this, the chairs of the Chamber’s six regional chapters will provide an overview of business confidence among European companies in their respective localities.
(MUSIC)
MARIANN: Thanks for listening, and don’t forget to tune in again next week.
RUI: In the meantime, please find useful links in the episode notes.