2022 Economic Review - Holiday Spending - Qin Gang's Chats with Saudi, Dutch & Argentine FMs - COVID Situation
Here are the stories and pieces that I found noteworthy from the Tuesday, January 31, 2023, edition of the People’s Daily.
Page 1: The paper’s back to its full publication but it still remains light on newsworthy content. On the front page today is a review of China’s economic development in 2022. It says:
“In the past year, multiple unexpected factors, such as frequent outbreak of COVID-19, international geopolitical fluctuations, monetary policy shifts within major economies around the world, and extreme weather patterns had a repeated impact on the economy, increasing the complexity, severity and uncertainty of the development environment. The CPC Central Committee with comrade Xi Jinping at the core has profound insight into the overall situation at home and abroad, and clearly put forward the idea that ‘the epidemic situation should be prevented, the economy should be stabilised and development should be secured’, and always adhered to the principle of maintaining stability while striving for progress, leading China’s economy to move forward on the path of high-quality development. In the past year, China’s economy has faced the triple pressure of demand contraction, supply shock, and weakening expectations. The economy declined significantly in the early stage of the second quarter. The downward trend was reversed in the later half of the quarter. In the third quarter, the overall recovery was good. In the fourth quarter, the window was seized to promote the further stabilisation of the economy … Under the strong leadership of the Party Central Committee with Comrade Xi Jinping at the core, all localities and departments have efficiently coordinated epidemic prevention and control and economic and social development, various policies have been proactively implemented, and China’s economy has recovered and rebounded in a relatively short period of time, showing strong resilience and great potential. China’s 3% economic growth rate last year was faster than most major economies.” — (That bit about Q4 is such incredible spin on what was a miserable quarter) 过去一年，疫情散发多发、国际地缘政治波动、全球主要经济体货币政策转向、极端高温天气等多重超预期因素反复冲击，发展环境的复杂性、严峻性、不确定性上升。以习近平同志为核心的党中央深刻洞察国际国内大局大势，明确提出“疫情要防住、经济要稳住、发展要安全”，始终坚持稳字当头、稳中求进，引领中国经济大船沿着高质量发展航道破浪向前。过去一年，中国经济面临需求收缩、供给冲击、预期转弱三重压力。二季度前期经济明显下滑、后期扭转下滑态势，三季度总体恢复向好，四季度抓住窗口期推动经济进一步回稳向上……在以习近平同志为核心的党中央坚强领导下，各地区各部门高效统筹疫情防控和经济社会发展，各项政策靠前发力、主动作为，中国经济在较短时间内实现恢复回升，展现出强大韧性和巨大潜力。看速度，3%的经济增速快于多数主要经济体。
After this, we get some basic 2022 data to make the point that things are still good. You can see all the official numbers in my earlier coverage here.
This is useful:
In 2022, actual use of foreign capital in China’s manufacturing industry grew by 46.1%, an increase of 7.8 percentage points from the previous year, and the actual use of foreign capital in high-tech industries increased by 28.3%, an increase of 7.1 percentage points from the previous year. By the end of 2022, China had signed more than 200 BRI cooperation documents with 150 countries and 32 international organisations. 2022年，我国制造业实际使用外资增长46.1%，较上年提升7.8个百分点，高技术产业实际使用外资增长28.3%，较上年提升7.1个百分点。到2022年底，我国已与150个国家、32个国际组织签署200余份共建“一带一路”合作文件.
Next, there’s a report on China’s services trade value in 2022, which rose 12.9% year on year to 5.98 trillion yuan ($884 billion). Exports of services expanded 12.1% to around 2.85 trillion yuan, while imports totalled 3.13 trillion yuan, up 13.5%, resulting in a deficit of 275.7 billion yuan. Trade in knowledge-intensive services raked in 2.5 trillion yuan in 2022, up 7.8% year on year.
Although the below bit is not in the paper today, let’s look at some of the reports around holiday spending in China.
SCMP reports: “Trips taken during the seven-day period starting on January 21 hit 308 million, up 23 per cent compared with last year’s holiday, according to data from the Chinese Ministry of Culture and Tourism. That was 88.6 percent of the number recorded in 2019, before the pandemic began. Tourism revenue nationwide rose by 30 per cent compared with last year, reaching 375.8 billion yuan (US$55.4 billion) – 73 percent of what was seen in 2019.”
Xinhua reports: “China's movie box office revenue reached nearly 6.76 billion yuan (about 998.5 million U.S. dollars) during the 2023 Spring Festival holiday, making for the second-highest gross figures for the holiday to date, according to the China Film Administration.”
Finally, on Sunday, there was a report (English report) on the State Council’s executive meeting.
On consumption, the meeting said: “Noting the pressing challenge of lackluster demand, the meeting urged timely measures to promote an early recovery of consumption as the main economic driving force, steadfastly advance opening-up, and stabilize and upgrade foreign trade and investment. Consumption will be further boosted. Policies for supporting consumer service businesses and self-employed individuals and promoting the consumption of cars and other big-ticket items will be fully implemented. Various activities will be launched to stimulate consumption and facilitate the early recovery of contact-based service industries. Consumer loans will be increased as appropriate. The policy toolkit will be harnessed following a city-specific approach, to meet people's basic housing needs and the need for improved housing conditions and ensure the delivery of pre-sold homes. ‘Boosting consumption is a key step to expand domestic demand. We need to restore the structural role of consumption in the economy,’ Li said. ‘The greatest potential of the Chinese economy lies in the consumption by the 1.4 billion people’.”
On opening up, it said: “Policies concerning export rebates, credit loans and credit insurance, among others, will be earnestly implemented, and the RMB exchange rate will be kept generally stable at an adaptive, balanced level. Enterprises will be supported to further explore market opportunities by making full use of the Regional Comprehensive Economic Partnership (RCEP). Development of cross-border e-commerce and overseas warehouses will be further promoted. The competitiveness of foreign trade will be enhanced. Import will be expanded as appropriate. Active efforts will be made to attract foreign investment. The new Catalogue of Encouraged Industries for Foreign Investment will be put into effect at a faster pace. Local governments will be supported in attracting businesses and investment. The role of pilot free trade zones and other platforms will be better leveraged. Facilitative measures on cross-border travel will be earnestly implemented. Sustained efforts will be made to improve services for foreign-invested enterprises, and promote the earlier delivery of major projects.”
Finally, on platform economy development, it said: “The platform economy will be supported in pursuing sustained and sound development.”
Page 3: There’s a consolidated report on Foreign Minister Qin Gang’s conversations with his counterparts from Netherlands, Saudi Arabia and Argentina. I’ll look at each of these individually.
Xinhua’s report on the chat with Argentina’s Santiago Cafiero says: “China will, as always, support Argentina in safeguarding national sovereignty and territorial integrity, Qin said, adding that the two sides should promote high-quality Belt and Road cooperation. The Chinese FM noted that China's recent optimization and adjustment of pandemic prevention and control measures is a boon for enhancing communication and cooperation between China and other countries including Argentina. China supports Argentina in playing a greater role in international and regional affairs and supports Argentina to become a member of BRICS as early as possible, Qin said. He added that China stands ready to cooperate closely with Argentina within the framework of the United Nations and the Group of 20 to jointly promote the implementation of Global Development Initiative and Global Security Initiative, and promote the sustainable development of the China-CELAC Forum. Stressing that Argentina and China share similar vision of governing for the people, the Argentine FM said the two countries enjoy a brotherly relationship and bilateral cooperation has yielded fruitful results. Noting that Argentina will continue to firmly adhere to the one-China principle, Cafiero said Argentina is willing to carry out Belt and Road cooperation with China, actively promote the construction of the China-CELAC Forum, and jointly practice multilateralism.”
Xinhua’s report on the chat with Prince Faisal bin Farhan Al Saud says: “China highly appreciates Saudi Arabia's consistent and firm support on issues concerning China's core interests and stands ready to work with Saudi Arabia to uphold non-interference in internal affairs and other basic norms of international relations, Qin noted. He said the two sides should further expand cooperation in such areas as economy, trade, energy, infrastructure, investment, finance and high-tech, increase communication and coordination, make every effort to build a China-Arab community with a shared future in the new era, continuously strengthen the China-GCC strategic partnership and build a China-GCC free trade zone as soon as possible. China is ready to strengthen coordination and cooperation with Saudi Arabia in regional and international affairs, jointly promote regional peace and stability, and better safeguard the common interests of the vast developing countries, Qin said. Faisal said Saudi Arabia regards its relations with China as an important cornerstone of its foreign relations and is willing to work with China to implement the outcomes of the summits, take joint actions, deepen cooperation in various fields, promote further development of the comprehensive strategic partnership between Saudi Arabia and China, and safeguard the common interests of the two countries. Saudi Arabia fully adheres to the one-China principle and firmly opposes the politicization of human rights issues, Faisal said, noting that his country is ready to strengthen communication and coordination with China and jointly uphold the principle of non-interference in other countries' internal affairs.”
Xinhua’s report on the chat with Wopke Hoekstra says: “The defining feature of the China-Netherlands relationship is that it is open and practical, Qin said, adding that China is speeding up its efforts to promote high-quality development and high-level opening-up, which will bring greater opportunities to China-Netherlands cooperation. China, Qin said, stands ready to work with the Netherlands to strengthen cooperation in multilateral areas, support the 28th edition of the Conference of Parties (COP28) to the United Nations Framework Convention on Climate Change in achieving positive outcomes, maintain stability of the international industry chain and supply chain, and promote an open and orderly international trade environment rather than a fragmented and chaotic one.” —
Interesting phrasing given the recent reports about the Netherlands and Japan joining the US in restricting exports of chip manufacturing tools to China. The deal was apparently agreed upon on Friday. But the details remain unclear. WSJ reports:
“Under the agreement reached Friday, the Netherlands will bar ASML Holding NV, a Dutch maker of photolithography machines, from selling to China at least some immersion lithography machines, the most advanced kind of gear in the company’s deep ultraviolet lithography line. The equipment is essential to making cutting-edge chips. Japan will set similar limits on Nikon Corp., according to one of the people familiar with the discussions.”
This is what the Foreign Ministry’s Mao Ning said about these reports on Monday:
“The US has been abusing export controls, coercing and roping in countries to form small blocs designed to contain China, politicizing tech and trade issues and using them as a tool and weapon and bringing down market rules and the international economic and trade order, in order to hold on to its hegemony and serve its selfish agenda. China is firmly against this. Such practices serve no one’s interests. They destabilize global industrial and supply chains and have given rise to global concerns. Many from the business community believe that the abuse of export controls will create levels of disruption and affect efficiency and innovation. Anyone who attempts to block others’ way will only have his own path blocked. We will closely follow the developments and firmly defend our legitimate interests. Parties concerned need to act with prudence and approach this issue in light of their own long-term interests and the common interests of the international community.”
Anyway, the Xinhua report also says that they discussed the war in Ukraine and the “Japanese government's decision to discharge nuclear-contaminated water into the ocean. Both sides agreed that such an action concerns human health and the marine environment, on which they agreed to maintain communication.”
Page 4: There’s a report (related English report) on the press briefing by the State Council’s Joint Prevention and Control Mechanism. The key takeaways are:
The overall rate of COVID-19 infections during the Spring Festival, from January 21 to 27, has been low, and the cases were in steady decline in various places across China, as per NHC’s Mi Feng.
NHC’s Fu Wei said that the number of visits seeking treatment at fever clinics, general outpatient and emergency departments in township and community health centers – the grassroots medical and health institutions – were low. The number of people visiting fever clinics was the lowest on January 22, said Fu, adding that though it picked up later, there was still a 40 percent decrease than the number before the Chinese New Year, and a 94 percent decrease compared with the peak daily figure on December 23.
People seeking treatment at general outpatient and emergency departments totaled nearly 2.04 million on January 27, a decrease of nearly 30 percent from that of January 20, a day before the festival. The number is about 44 percent of the peak daily number on December 29.
Another official Mao Dezhi says that during the Spring Festival, a total of more than 3.8 million sinking cadres from all over the country went to the grassroots in rural areas to participate in epidemic prevention and control.
The report also adds that the BA.5.2 and BF.7 sub-variants remain the two dominant strains in China.
Of course, it is worth keeping in mind that data on people seeking treatment at fever clinics is not a substitute for actual infection rate. But since Chinese authorities are no longer counting actual cases, there’s no way to have an actual estimate of the toll that the virus is having across the country.
Page 7: There’s a report on the performance of SOEs in 2022. Xinhua says that SOEs raked in 82.6 trillion yuan (about 12.2 trillion U.S. dollars) in operating revenues in 2022, up 8.3 percent from a year ago, data from the Ministry of Finance shows. The combined profits of SOEs decreased 5.1 percent year on year to 4.31 trillion yuan last year, the ministry said. The SOEs saw their debt-to-asset ratio reach 64.4 percent as of the end of 2022, up 0.4 percentage points from the previous year, according to the ministry. The net profits of centrally-administered SOEs climbed 5 percent year on year to 1.9 trillion yuan in 2022, according to data from the State-owned Assets Supervision and Administration Commission of the State Council.
Page 16: There’s a report with comments from an unidentified MoFA spokesperson talking about the recent clashes in Jenin in the West Bank and the terrorist attack at the synagogue in Jerusalem.
“The spokesman said that China is highly concerned about the recent escalation of tension between Palestine and Israel, and is deeply saddened by the civilian casualties caused by the Palestine-Israel conflict. We condemn all terrorist attacks targeting civilians and oppose excessive use of force. The top priority at the moment is to do everything possible to cool down the situation. We call on all relevant parties, especially the Israeli side, to maintain calm and restraint, so as to prevent the situation from escalating or even getting out of control. The spokesman said that the Palestine-Israel conflict has been recurring fundamentally because the two-state solution has not been delivered and the Palestinian people have long been denied their legitimate aspiration of establishing an independent state, said the spokesperson. The international community needs to act with a stronger sense of urgency and create conditions for the resumption of talks between Palestine and Israel. China will continue to make unremitting efforts to promote a comprehensive, just and lasting settlement of the Palestine issue.” 发言人说，中方高度关注近来巴以紧张局势升级，对巴以冲突造成平民伤亡感到十分痛心，谴责一切针对平民的恐怖袭击，反对过度使用武力。当务之急是全力推动局势降温，呼吁有关各方，特别是以色列方面保持冷静和克制，避免局势螺旋升级甚至失控。发言人表示，巴以冲突反复上演，根源在于“两国方案”迄未落实，巴勒斯坦人民独立建国的合理诉求长期无法实现。国际社会应增强紧迫感，为推动巴以重启对话谈判创造条件。中方将继续为促进巴勒斯坦问题的全面公正持久解决而不懈努力.
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I have two recommendations today.
First, do read this lecture by former Singapore diplomat Bilahari Kausikan on great power competition and world order.
Second, do check out this Sinica podcast episode with Bert Hofman, titled “Is China's demography China's destiny?”