This episode contains segments on:
- Politburo meeting on H2 economic work and measures to boost consumption;
- Official and Caixin China Purchasing Managers’ Index in July; and
- Five-year action plan to increase urbanisation.
The July/August edition of the Chamber’s bimonthly magazine, EURObiz, is available to download from the Chamber’s website.
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Read more:
CCP Politburo meeting on H2 economic work and measures to boost consumption
https://english.news.cn/20240731/799445438259465d8b4e64e1dd463f3a/c.html
https://english.news.cn/20240725/6179a8562e7a42cfa4e072a1164ce901/c.html
China official PMI, July (NBS)
https://www.stats.gov.cn/sj/zxfb/202407/t20240731_1955901.html
Caixin China Manufacturing and Services PMI, July
https://www.pmi.spglobal.com/Public/Home/PressRelease/81823e7f64204b7ba2ef1c803cacbefb
https://www.pmi.spglobal.com/Public/Home/PressRelease/7edab8209d2246279f622725025f6d51
State Council’s five-year action plan to increase urbanisation
https://english.www.gov.cn/policies/policywatch/202408/03/content_WS66ad8acfc6d0868f4e8e9b66.html
EURObiz Issue 81 (July/August 2024)
https://www.europeanchamber.com.cn/en/publication-eurobiz-magazine-2024
Transcript:
RUI: Hello and welcome to China ShortCuts,
MARIANN: the European Chamber’s weekly catchup on China’s business landscape.
RUI: This episode was recorded on 7th August 2024.
(MUSIC)
RUI: On 30th July, the Chinese Communist Party’s Politburo held a meeting focussing on the economic tasks for the second half of the year. The meeting, which was chaired by Chinese President Xi Jinping, emphasised the importance of boosting consumption.
MARIANN: The official readout from the meeting listed the lack of effective domestic demand and difficulties in transitioning from old growth drivers to new ones among the key issues casting a shadow over China’s development. The country’s top decision-makers called for economic policies that bring real benefits to the people. Some concrete areas they outlined included increasing incomes, and supporting consumption in areas such as cultural tourism, elderly care, childcare and domestic services.
RUI: So far, concrete measures intended to boost consumption mainly focussed on large-scale equipment upgrades and trade-ins of consumer goods. In July, the National Development and Reform Commission said that about 300 billion yuan worth of ultra-long special treasury bonds will be set aside for this programme. These bonds would come on top of a 20 billion yuan interest subsidy designated to support equipment renewals and technical upgrades via financial institutions.
(MUSIC)
RUI: China’s statistics bureau issued new data on the country’s manufacturing and services activity on 31st July. It showed that in July, factory activity contracted further from the previous two months. Services activity still grew, but at the slowest pace recorded since last November.
MARIANN: China’s official manufacturing purchasing managers’ index or PMI stood at 49.4 points in July. Readings below 50 points indicate contraction. July was the third month in a row that the manufacturing PMI stayed below the 50-point benchmark. Not only that, but it also sank to the lowest level recorded since February. One contributing factor to this was that demand dropped further from June.
The non-manufacturing PMI, which reflects construction and services activity, dropped to 50.2 points in July, following four subsequent months of slowing growth. This trend was also largely attributable to faltering demand, as subindices for new and ongoing orders both fell further below the 50-point benchmark in July. As a result, optimism over the one-year outlook also dropped sharply, and firms continued to reduce their headcounts.
(MUSIC)
RUI: Data from a private survey conducted by Caixin and S&P Global, released on 1st August, also showed a slump in China’s manufacturing sector in July.
MARIANN: The Caixin China General Manufacturing PMI dipped to 49.8 points in July. This marked the first time since last October that the Caixin index also sank under the 50-point benchmark. According to the survey’s findings, manufacturing production grew at the slowest pace in nine months, as new orders contracted for the first time for a year. Respondents to the survey highlighted weak domestic demand and clients reducing their budgets as key related challenges. A sectoral breakdown showed that new orders fell in the investments and intermediate goods segments. Demand for consumer goods, meanwhile, increased slightly.
The Caixin Services PMI showed an uptick in China’s service economy due to a solid increase in incoming new business.
(MUSIC)
RUI: On 31st July, the State Council released a five-year action plan, with the stated aim of helping more rural migrant workers to settle down in China’s cities.
MARIANN: The action plan sets out a target for the urbanisation rate of permanent residents to reach around 70 per cent within five years. At the end of 2023, this rate just exceeded 66 per cent. The plan outlined two key areas of focus. One is to increase the level of urbanisation in highly populated regions that currently have relatively low urbanisation rates. The other is to improve modern metropolitan areas in regions with high urbanisation rates.
(MUSIC)
RUI: This year will see several important elections taking place around the world. With elections having already taken place for the European Parliament and the French National Assembly, arguably the most globally influential contest—the US presidential election—will take place in November.
MARIANN: New policymakers potentially mean new challenges and opportunities for European companies operating in China.
RUI: The July/August edition of the Chamber’s bimonthly magazine, EURObiz explores how businesses might be impacted by political changes in their home markets. You can download the magazine for free from the Chamber’s website.
(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.