SwedCham China Insights for the Week of January 22 - January 26 , 2024

Top news of the week:

China’s cement, coking sectors required to cut emissions

January 22, 2024

On January 19, China released plans to reduce pollution emissions from its cement and coking industries, part of its green development efforts.

China to take measures for the stable and healthy development of the capital market

January 23, 2024

On January 22, China’s State Council said that increased medium and long-term funds should be brought into the country’s capital market and the inherent stability of the market should be enhanced. The State Council’s executive meeting also called for crackdowns on illegal activities and more effective measures to stabilize the capital market and boost investors’ confidence.

China central bank acts to support markets, economy

January 24, 2024

The People’s Bank of China (PBOC) announced a series of monetary policy adjustments aimed at enhancing liquidity and promoting economic growth in the country. One of the key measures taken by the PBOC is a reduction in the reserve requirement ratio (RRR). The central bank will lower the RRR by 0.5 percentage point, effective from February 5, 2024, thereby freeing up 1 trillion yuan (US$139.45 billion) to the market.

China and Singapore reach agreement on mutual visa-free entry

January 25, 2024

China and Singapore have reached an agreement on granting visa-free entry for citizens from respective countries for stays up to 30 days, starting on February 9.

Chinese FM to meet U.S. national security advisor Sullivan in Bangkok

January 26, 2024

Chinese Foreign Minister Wang Yi held a new round of meetings with U.S. National Security Advisor Jake Sullivan in Bangkok, Thailand, Chinese foreign ministry spokesperson Wang Wenbin announced on January 26. Wang also paid a visit to Thailand from January 26 to 29, at the invitation of Parnpree Bahiddha-Nukara, Thai deputy prime minister and minister of foreign affairs.

Insight of the week:

The economic recovery in China has encountered challenges, and some difficulties that require resolution persist. Shanghai, mainland China’s economic locomotive, did not achieve the 5.5% economic growth target for 2023. The city’s GDP expanded 5% to 4.72 trillion yuan last year, and the government vigorously promoted cost and budget control management. Expectations of weak economic growth and conservative business expansion plans have led to sluggish demand for office space in Beijing and Shanghai and falling rents. At the end of 2023, more than one-fifth of grade A office buildings in Beijing were vacant, the highest vacancy rate in nearly 13 years, according to data from British real estate services company Savills Plc. In Shanghai, office rents fell to the lowest in almost a decade last quarter, and they may decline further this year due to a growing supply pipeline, according to Colliers International Group. At the same time, China’s stock market has been rough going since February 2021, when they hit their most recent peak. Over the past three years, about US$6 trillion has been wiped off the value of Chinese stocks. The Hang Seng index has crashed 10% so far this year alone, while the Shanghai Composite and Shenzhen Component indexes are down 7% and 10% respectively.

The authority has been taking measures to boost economic and restore investors’ confidence. Premier Li Qiang ordered officials to take “forceful and effective measures” to stabilize the markets on January 22. At the same day, China’s central government released an implementation plan for Pudong New Area’s pilot comprehensive reform between 2023 and 2027. Under a new five-year plan, Pudong New Area is to be given greater autonomy to push ahead with deep reform and high-level opening-up. Amid unsuccessful attempts to boost languishing birth rates, China has unveiled plans to reorient a significant part of its massive economy around its aging population. The current silver economy stands at around 7 trillion yuan (US$982 billion), about 6% of China’s total GDP, but it’s projected to grow to 30 trillion yuan (US$4.2 trillion) by 2035, or about 10% of total GDP by then, according to the State Council. Moreover, foreign investors now can hold 100% of shares in a banking or insurance institution in China. The business scope for foreign institutions is now equivalent to that of their Chinese counterparts, according to Xiao Yuanqi, the deputy head of the National Financial Regulatory Administration. He also emphasized that China’s financial sector will continue to enhance its openness.