SwedCham China Insights for the Week of July 10 - July 14 , 2023

Top news of the week:

China unveils first regulation on private investment funds

July 10, 2023

China published a regulation on July 9 concerning the supervision and administration of private equity funds. It aims to encourage the standardized and healthy development of the private equity fund industry, better protect legitimate rights and interests of investors, and encourage the private equity industry to serve the real economy and promote scientific and technological innovation. The market welcomes this normative regulatory regime.

China strengthens the management of self-media

July 11, 2023

The Cyberspace Administration of China has issued a notice on strengthening the management of self-media, emphasizing the need to enhance the responsibility of website and platform management for information content, establish a normalized management system and mechanism, and promote the formation of a healthy online public opinion environment. The notice requires social media platforms and websites to strengthen the management of "self-media" and proposes 13 measures.

People's Bank of China releases "semi-annual report" on financial data

July 12, 2023

As of the end of June, RMB loans increased by 3.05 trillion yuan, with a year-on-year increase of 229.6 billion yuan. The increment of social financing scale in June was 4.22 trillion yuan, 2.67 trillion yuan more than that in the previous month but 985.9 billion yuan less than that in the same period last year. The broad money supply (M2) reached 287.3 trillion yuan, representing a year-on-year growth of 11.3%, which is 0.3 and 0.1 percentage points lower than that at the end of the previous month and the same period last year, respectively.

General Administration of Custom releases imports and exports data

July 13, 2023

According to customs data, the total value of goods traded in China's import and export in the first half of 2023 reached 20.1 trillion yuan, marking a 2.1% year-on-year growth and surpassing 20 trillion yuan for the first time in history. Specifically, exports amounted to 11.46 trillion yuan, showing a 3.7% growth compared to the same period last year, while imports totaled 8.64 trillion yuan, decreasing by 0.1% year-on-year.

PBOC says China had no prospects for deflation

July 14, 2023

Liu Guoqiang, Deputy Governor of the People's Bank of China, emphasized that China's M2 and economy are experiencing sustained growth, dispelling deflation. He anticipates a further weakening of the CPI in July but expects a gradual increase from August onwards. The price level will experience a decrease followed by a subsequent rise throughout the year, with a target of nearing 1% by year-end.

Insight of the week:

The data from PBOC shows that the CPI recorded zero inflation in June, the first time in over two and a half years, while the PPI declined by 5.4% year-on-year, a significant drop in seven and a half years. Many international media outlets and observers have expressed concerns about deflation prospects in China. The zero inflation in CPI and continuous decline in PPI reflect a slowdown in post-pandemic economic recovery, with Chinese producers facing falling commodity prices and weak domestic and international demand.

In response, PBOC stated that the fundamental outlook of China's economy for long-term growth remains unchanged. The current challenges are considered normal in the process of post-pandemic economic recovery. PBOC explained there are clear signs of financial data rebounding. The service consumption continues to recover, and foreign trade exports and private enterprise operations still show resilience. PBOC also emphasized that China has not experienced deflation and no deflation risk in the future. He expects that the CPI will gradually rise after August. The price level is anticipated to initially decrease and then rise to approach 1% by the end of the year.