SwedCham China Insights for the Week of January 29 - February 2 , 2024

Top news of the week:

China vows to support the development of future industries

January 29, 2024

China will support the technological innovation, industrial cultivation and safety governance of future industries, according to a government guideline. A batch of incubators and pilot zones of future industries should be built by 2025, while breakthroughs should be achieved in about a hundred core technologies in key fields, according to the guideline released by seven ministries and agencies.

China continues to boost pollution management; good air quality days up to 85.5 percent in 2023

January 30, 2024

A spokesperson for the Ministry of Ecology and Environment stated on January 30 that the national rate of good air quality days reached 85.5 percent in 2023. It was 86.8 percent after excluding days with abnormally high dust concentrations, surpassing the annual target by 0.6 percentage points and increasing by 3.5 percentage points compared to 2019.

China unveils new property support measures

January 31, 2024

A state-backed property project in China has received the first development loan under a so-called whitelist mechanism and two more major cities have eased home-buying curbs. At a meeting held on January 30, China's top financial regulator vowed to accelerate the implementation of a coordinated mechanism for urban real estate financing and will urge financial institutions to firmly support subsidized housing.

China and U.S. hold high-level talks on the fentanyl crisis

February 1, 2024

China and the United States have launched a joint anti-narcotics group to curb the production and trade of the highly addictive opioid fentanyl in the first sign of cooperation between the superpowers since bilateral relations soured. The talks began on January 30 after a US delegation led by Deputy Homeland Security Adviser Jen Daskal arrived in Beijing for the first joint meeting.

China's manufacturing PMI up in January

February 2, 2024

The purchasing managers’ index (PMI) for China's manufacturing sector came in at 49.2 in January 2024, up from 49 in December last year, official data showed.

Insight of the week:

China will maintain fiscal expansion this year to spur an economic recovery, Vice Finance Minister Wang Dongwei said on February 1. The government will “increase the intensity of fiscal macroeconomic adjustments, implement a proactive fiscal policy to consolidate and enhance the positive trend of economic recovery,” Wang said at a press conference. The authorities will “maintain a necessary intensity in fiscal spending” this year and keep a certain amount of transfer payments to local governments, Wang said. Fiscal policy will focus on seven areas including accelerating the construction of a modernized industrial system, expanding domestic demand, increasing investment in education, and supporting employment. The ministry will make good use of funds raised from Treasury bonds, issue a certain scale of local government special-purpose bonds and appropriately increase the scale of central government budget-based investment this year. The government will use fiscal subsidies, loan interest subsidies and tax incentives to support tech innovation and advanced manufacturing, he said.

China’s fiscal revenue rose 6.4% in 2023, picking up significantly from a 0.6% increase in COVID-hit 2022, while fiscal spending rose 5.4% in 2023, slowing from a 6.1% rise in 2022, Wang said, adding revenues will pick up further this year.

Some analysts believe that China's fiscal policy in 2024 will be more positively expansionary. They hold the point that to balance promoting growth and preventing risks, local infrastructure investment this year will likely rely largely on local government special-purpose bond funds, central fiscal support and policy-based financial instruments.