This episode contains segments on:

• State Administration of Foreign Exchange circular on optimising the administration of foreign exchange business;
• US Treasury Secretary Yellen’s visit to China;
• SME development index in the first quarter of 2024;
• Qingming Festival holiday domestic tourism data.

From the Chamber’s side, on 9^th April, a delegation met with Ana Gallego Torres, Director-General of the European Commission’s Directorate-General for Justice and Consumers in Hangzhou.

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Read more:

SAFE circular on further optimising the Administration of Foreign Exchange Business

https://www.safe.gov.cn/safe/2024/0407/24204.html

US Treasury Secretary’s visit to China

https://english.www.gov.cn/news/202404/07/content_WS661266efc6d0868f4e8e5d21.html

2024 Q1 SME Development Index (China Association of Small and Medium Enterprises)

https://www.yicai.com/news/102058003.html

Qingming Festival holiday domestic tourism data (MCT)

https://www.mct.gov.cn/whzx/whyw/202404/t20240406_952075.htm

Transcript:

RUI: Hello and welcome to China ShortCuts,

MARIANN: the European Chamber’s weekly catchup on China’s business landscape.

(MUSIC)

RUI: On 7^th April, the State Administration of Foreign Exchange released a circular including six new measures aimed at optimising the administration of foreign exchange business.

MARIANN: The registration process for firms engaged in foreign currency trade will be simplified, as companies will be able to register directly through the bank handling their foreign exchange business, without having to have their registration approved by the State Administration of Foreign Exchange. Small and micro cross-border e-commerce enterprises may even be exempted from registration. The new measures will take effect on 1^st June, and will also facilitate trade settlement and payment procedures for companies operating in areas under special customs supervision.

RUI: Commenting on the new measures is Mario Huang Yu, chair of the Chamber’s Banking and Securities Sub-working Group.

Mario Huang Yu: The new measure will take effect from 1st of June and will facilitate foreign trade business and settlement and related payment process. Overall, the new measure aims to encourage and facilitate foreign trade business between China and the rest of the world. Especially it aims to simplify the procedure for newly-founded trading companies.

(MUSIC)

RUI: US Treasury Secretary Janet Yellen held a series of meetings with Chinese top officials and business representatives during her four-day visit to China, and concluded that the US-China bilateral relationship is “on stronger footing” than a year ago.

MARIANN: While emphasising that the US does not seek to decouple from China, Secretary Yellen expressed concerns over the potential spillover effect that some of China’s macroeconomic challenges, such as weak household consumption and industrial overcapacity could have on both the American and the global economy. The Chinese side pushed back on allegations that government support is disproportionately provided to certain industrial sectors, including new energy, resulting in underpriced Chinese exports. Chinese Premier Li Qiang called on the US side to view the issue objectively, and emphasised the positive contributions that the Chinese new energy industry could provide for global decarbonisation efforts.

The European Chamber has also warned that China’s supply-side policies have been a contributor to the significant trade imbalances the country has accumulated with both the EU and the US. A step in the right direction would be if Chinese policymakers shifted their focus to providing support for the demand side, which could also help provide some momentum for China’s economic recovery.

(MUSIC)

RUI: The performance of small and medium-sized enterprises in China improved somewhat in the first quarter of 2024, with the SME development index reaching the highest level recorded since the first quarter of last year.

MARIANN: According to findings from a survey among 3,000 SMEs from eight major industries, while activity strengthened compared to the previous three quarters, the SME development index still remained below the 100-point critical value of prosperity. The China Association of Small and Medium Enterprises, which conducted the survey, attributed the uptick in part to an acceleration in production after the Chinese New Year holiday as well as to the positive impact of some of the policy announcements at the Two Sessions. Surveyed companies’ market expectations, business confidence and willingness to invest all showed improvements from the previous quarter. However, as costs and competitive pressure both increased, even as SMEs reported higher revenues, a rise in profits did not follow. Consequently, the subindex for efficiency remained at a historically low level, falling further compared to the previous quarter in five of the eight surveyed industries.    

(MUSIC)

RUI: According to China’s Ministry of Culture and Tourism, domestic tourism during the three-day long Qingming or Tomb Sweeping Festival holiday surpassed pre-pandemic levels.

MARIANN: In the three days between 4^th and 6^th April, the number of domestic trips reached 119 million, which was 11.5 per cent higher than during the same period in 2019. Domestic tourists spent almost 54 billion yuan, up close to 13 per cent from the 2019 Qingming Festival holiday.

(MUSIC)

RUI: On 9^th April, a European Chamber delegation led by Carlo d’Andrea, Chamber vice president and chair of the Shanghai Chapter, met with Ana Gallego Torres, Director-General of the European Commission’s Directorate-General for Justice and Consumers in Hangzhou.

MARIANN: The European Chamber’s delegates gave an overview of the business environment in China for European companies. The discussion primarily focussed on key issues related to corporate sustainability due diligence, cross-border data transfer and product safety. Representatives of six industries gave an update of recent regulatory developments in these areas and provided tangible examples of the improvements as well as the challenges that these developments have prompted.

(MUSIC)

RUI: Thanks for listening, and don’t forget to tune in again next week.

MARIANN: In the meantime, please find useful links in the episode notes.