This report offers information on commercial, political and economic developments in China.
MARCH 2023
POLITICS, SOCIETY, BUSINESS
POLITICS
Two Sessions: Li Qiang formally announced as new China Premier
Summary: The annual parliamentary meeting in Beijing was concluded with the expected declaration of 63-year-old Li Qiang as China’s new head of the State Council, the operational structure of China’s government. Li Qiang has made boosting the economy his key priority.
Source: BBC
United States adds 37 Chinese companies to blacklist
Summary: The US government is adding 37 Chinese entities to its trade blacklist for reasons such as contributing to Russia’s army, supplying equipment to China’s military, and facilitating or engaging in human rights abuses in Myanmar and China.
Source: Reuters
Netherlands to restrict semiconductor exports to China
Summary: The Dutch government plans to restrict exports of semiconductor technology to China as a national security precaution. Urged on by Washington, the decision is the first prohibitive move towards China by the Netherlands.
Source: Reuters
SOCIETY
PCR tests cancelled for incoming travelers
Summary: Starting March 1st, travelers from many countries will no longer be required to provide negative PCR test results before flying. Instead, eligible travelers flying directly to China can take an antigen test within 48 hours before boarding.
Source: Channel News Asia
China declares “decisive victory” over pandemic
Summary: Health authorities have declared a “decisive victory” over Covid-19 after in ending the controversial zero-Covid policy. Official data suggests that 80,000 Chinese citizens have died from the virus. Observers claim that the death toll is much higher, and the real mortality rate could be more than 1.5 million people.
Source: The Guardian
Chinese consumer sales rising
Summary: China‘s consumer market has been steadily recovering in 2023. The world’s top consumer and luxury goods companies are reporting a sales surge for all major categories, a sign that China’s economy is building up steam again after the pandemic.
Source: Reuters
BUSINESS
Ant Group will use huge loan to strengthen ESG profile
Summary: Ant Group, a subsidiary of Alibaba, converted a syndicated credit facility into a $6.5 billion loan at the end of 2022. The fintech company plans to use the capital to bolster its environmental, social, and corporate governance objectives including cutting carbon and hiring underprivileged workers.
Source: Bloomberg
Chinese brands expand in Russia’s sanctions-hit economy
Summary: Western sanctions imposed on Russia during the Ukraine war have created an opportunity for Chinese carmakers and electronics to expand their market share in the country. Chinese manufactures such as Chery automobile, Great Wall Motor, Geely Automobile, and smartphone giant Xiaomi Group have seen significant sales surge in Russia for 2022, surpassing iPhones and Hyundai.
Source: CNN
Temu storming ahead in U.S. market
Summary: Chinese budget shopping app Temu got its Super Bowl ad debut with a commercial encouraging consumers to “shop like a billionaire.” since its launch last year, Temu has become one of the most downloaded apps in the U.S. market, surpassing Amazon and Walmart.
Source: South China Morning Post
ECONOMIC GROWTH
QUICK TAKE
Just before the NPC ‘Two Sessions’ meeting took off, China’s central government announced that it has set the 2023 GDP growth target at 5%. Observers view this target to be realistic and matching expectations.
KEY ECONOMIC INDICATORS
MARCH 2023
QUICK TAKE
- China’s annual inflation rate rises to 2.1% in January, slightly under the market forecast. On month-to month basis, consumer prices grew 0.8% in January, the largest rise in 2 years.
- The official purchasing managers index (PMI) or China’s manufacturing sector, surged to 52.6 in February from 50.1 in January, giving investors hope that China’s fast recovery will offset the global slowdown.
Partnership with China
In 2008, former PM Anders Fogh Rasmussen initiated Denmark’s strategic partnership with China. Since then, he has done a full U-turn and is now using his Alliance of Democracies forum to urge Danish companies to leave China, and the Danish government to change its political course towards China. He does this with the utopian hope that tiny Denmark can put China in its place on issues such as Taiwan.
Fortunately, the world is more pragmatic than politicians in the autumn of their career. US-China trade totaled $690 billion in 2022, the highest level on record. Growing trade has a range of positive effects on the balance of power and on the proliferation of a peaceful world.
China and the West remain increasingly dependent on each other’s economies. At the same time, trade also means coexistence. In dealing with the Chinese, the West has the opportunity to influence China through dialogue, joint projects, and exchange of ideology. The alternative is isolation and thus poorer exploitation of resources across the globe – in addition to the potential threat of further strife in the world. It is naïve to believe that China’s course can be changed by terminating cooperation and dialogue, and by threatening to get involved in what China considers to be its internal affairs.
Commentary by Peter Trampe
Peter is CEO of Etradan and was previously the Chairman of the Danish Chamber of Commerce in China.
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