SwedCham China Insights for July 17 - July 21, 2023

Top news of the week:

China’s H1 GDP increased by 5.5%

July 17, 2023

In the first half of 2023, China's gross domestic product (GDP) increased by 5.5% compared to the same period last year, while the total retail sales of consumer goods grew by 8.2% year-on-year. The value added to the tertiary industry also saw a growth of 6.4% year-on-year. Multiple indicators indicate that China's economy continues to recover. Despite facing various risks and challenges, the long-term trends of China's economic development remain unchanged.

Li Qiang meets with John Kerry

July 18, 2023

On the morning of July 18, Li Qiang met with John Kerry, the US President's Special Envoy on Climate Change. Li Qiang said the world is facing serious challenges, and it is the responsibility of both China and the United States to strengthen coordination, build consensus and accelerate action. Kerry expressed the hope that this meeting could redefine the cooperation and ability of China and the United States to manage their differences.

Opinions on promoting the development and growth of the private economy

July 19, 2023

On July 19, the Central Committee of the Chinese Communist Party and the State Council issued the "Opinions on Promoting the Development and Growth of the Private Economy." The document puts forward a total of 31 measures in eight aspects, including overall requirements, continuous optimization of the business environment for the private economy, intensifying policy support for the private economy, strengthening legal protection for the private economy’s development, and promoting the healthy growth of private entrepreneurs. This release sends a policy signal that supports the development and growth of the private economy, boosting confidence among private enterprises.

China raises key parameter to facilitate cross-border financing

July 20, 2023

On July 20, China raised a key parameter in its macro-prudential management to expand companies' and financial institutions' cross-border funding sources, an official statement said. The macro-prudential adjustment parameter, a multiplier that decides the upper limit of outstanding cross-border financing available to an institution, has been revised from 1.25 to 1.5, according to a joint statement by the People's Bank of China and the State Administration of Foreign Exchange.

Xi Jinping meets with former U.S. Secretary of State Henry Kissinger

July 21, 2023

During the meeting on July 20, Xi Jinping emphasized that there have been significant changes in the international landscape. China and the United States can both achieve success and prosperity together, with the key being to adhere to the principles of mutual respect, peaceful coexistence, and win-win cooperation. China is willing to explore the right way for both sides to coexist and promote steady progress in China-U.S. relations. Kissinger stated that the principles established in the Shanghai Communique should be adhered to and recognized the extreme importance of the One-China principle for China, promoting the development of U.S.-China relations in a positive direction.

Insight of the week:

China and the United States are seeing much more frequent interactions in 2023 compared to the past three years. Since Secretary Blinken's visit to China a month ago, in the past weeks Janet Yellen, John Kerry, and Henry Kissinger have visited and met with their counterparts and were welcomed by the top leadership of China. Analysts see that after a series of tit-for-tat events, both China and the United States are creating favorable conditions for gradually "thawing" their relations through the restart of a new round of high-level interactions. This indicates that both sides practically need to ease the tension.

Both China and the US recognize the importance of resuming contact and managing risks. China is actively launching diplomatic initiatives in Asia, Europe, Latin America, and Africa, which has an impact on the global alliance system of the United States. On the other hand, the effectiveness of containment against China has not been as significant as expected, as bilateral trade between China and the United States reached a new high in 2022, with the U.S. trade deficit with China continuing to expand. Meanwhile, both countries are facing economic challenges and need a relatively favorable bilateral and international economic environment to further boost the domestic economy.

The increased high-level interactions between China and the United States help stabilize and manage the crisis in their relationship, enabling them to navigate the ongoing economic crisis. However, structurally speaking, analysts believe there remain significant contradictions and divergent views on the international order between the two countries. To what extent will the relatively eased tensions between the two countries help to stabilize the economy remain questioned.