This episode contains segments on:
- The State Council’s 2024-2025 Action Plan for Energy Conservation and Carbon Reduction;
- May’s Official Purchasing Managers’ Index (PMI) and the Caixin China General Manufacturing PMI;
- The International Monetary Fund’s revised economic growth projection for China.
Also, European Business Organisation’s Worldwide Network released its Position Paper on the European Union’s new Corporate Sustainability Due Diligence Directive, which is available to download.
Contact:
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Read more:
State Council’s 2024-2025 Action Plan for Energy Conservation and Carbon Reduction
https://www.gov.cn/zhengce/zhengceku/202405/content_6954323.htm
China official PMIs, May (NBS)
https://www.stats.gov.cn/sj/zxfb/202405/t20240530_1956234.html
Caixin China General Manufacturing PMI
https://www.pmi.spglobal.com/Public/Home/PressRelease/5094520663264f78b8f832c93c36efa4
IMF Staff Completes 2024 Article IV Mission to the People’s Republic of China
European Chamber event: From Legislation to Action: Implementing CSRD/CS3D In Your Business
Transcript:
RUI: Hello and welcome to China ShortCuts,
MARIANN: the European Chamber’s weekly catchup on China’s business landscape.
RUI: This episode was recoded on 5th June 2024.
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RUI: On 29th May, China’s State Council released an action plan, setting specific targets for reducing energy consumption and carbon dioxide emissions by about 2.5 per cent per unit of GDP in 2024, and 3.9 per cent in 2025.
MARIANN: The action plan also listed targets for the proportion of non-fossil energy use, which is to reach 18.9 per cent of the total energy consumption this year, and 20 per cent in 2025. The State Council described ten major actions focusing on specific, key sectors, including petrochemicals, construction and transportation. The plan also called for advancing green energy development and enhancing the grid’s capacity to absorb renewable energy.
The European Chamber’s Business Confidence Survey 2024 found that even though the majority of European companies operating in China are also pursuing carbon neutrality, they face barriers that could prevent them from both meeting their corporate pledges and contributing fully to China’s decarbonisation goals. More than 80 per cent of respondents reported that they are decarbonising their energy use as the primary means of achieving carbon neutrality, making access to green energy an imperative. However, two fifths ranked limited access to renewable energy as the key challenge they face in their decarbonisation efforts, highlighting it as an area where urgent improvement is needed.
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RUI: Manufacturing activity in China contracted again in May, after only two consecutive months of expansion, according to data released by the National Bureau of Statistics on 31st May.
MARIANN: The official manufacturing purchasing managers’ index, or PMI, stood at 49.5 points in May. A reading below 50 points indicates contraction. A breakdown of the headline data by company size revealed that large manufacturing companies were able to expand activity in May, with the rate of expansion even accelerating from the previous month. At the same time, activity contracted at small- and medium size manufacturing firms.
Subindices showed that while production still increased, demand dropped, and manufacturing companies were still lowering their staffing levels in May.
The non-manufacturing PMI stayed above the 50-point benchmark for the 17th consecutive month in May, and decreased only slightly compared to April. The drop was triggered by a deceleration in the expansion of activity in the construction sector. Services activity, meanwhile, grew at a faster pace than in the previous month.
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RUI: A private survey conducted by Caixin and S&P Global showed there has been growth in manufacturing activity due to improving business conditions. The discrepancy with the official data from the statistics bureau is primarily due to the different sample size of the two surveys.
MARIANN: The Caixin manufacturing PMI rose to 51.7 points in May, which was the highest rate of growth recorded in the past 23 months. Production increased at the fastest pace since June 2022 as domestic and foreign demand both expanded. Stronger demand was partly attributed to heightened interest for new products. Surveyed manufacturers reported increased cost pressures, as input price inflation rose to a seven-month high in May.
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RUI: In a statement released on 28th May, the International Monetary Fund revised its projection for China’s economic growth for 2024 and 2025, raising both by 0.4 percentage points from the forecasts issued in April.
MARIANN: According to the new projection, China’s GDP growth is set to reach 5 per cent this year, and 4.5 per cent next year. The upward revisions were attributed to strong economic indicators in the first quarter and recent policy measures, including those promoting high-quality growth by supporting innovation, and others aimed at mitigating property and local government risks. The IMF’s expectation for the medium-term, however, is that growth would decelerate to 3.3 per cent by 2029 as a consequence of the country’s ageing population and relatively slow productivity growth.
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RUI: On 24th May, the European Council formally adopted the corporate sustainability due diligence directive—or CSDDD—which will come into effect 20 days after its publication in the EU’s official journal. The directive will require large companies to establish due diligence processes in order to ensure their entire operations—both up and downstream—are in line with EU human rights and environmental standards.
MARIANN: On 3rd June, the European Business Organisation’s Worldwide Network released its Position Paper on the new directive. The European Chamber took the lead role in drafting the paper, which contains 18 recommendations on how to effectively implement the CSDDD and create clear pathways for compliance by working closely with companies and governments in thirds markets.
RUI: The Chamber will organise events both offline and online where experts and industry players will share their insights on the CSDDD’s implications for business and provide useful tips on what actions your company should take to comply with the new directive. Stay tuned for more.
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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.