7/26/21-8/1/21 Weekly Reports: The Truth Of Economy In China

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1.Shanghai Vegetable Prices Rose, the Price of Live Pigs Slowed Down

According to the Shanghai price monitoring and cost survey team of the city’s 16 district farmers’ markets and supermarkets price monitoring: in mid-July, leafy vegetable prices rose faster, non-leafy vegetable prices stopped falling and turned up. mid-July, vegetable price index 132.7 points, up 1.0% YoY, down 16.4% YoY, two consecutive months of modest shock rise. According to the vegetable group data, the group’s current average daily vegetable trading volume of about 9,400 tons, the overall supply increased by about 17% compared with the first half.

Leafy vegetables: affected by hot weather, the city’s leafy vegetable prices continue to rise slightly trend, ten-day price index 170.3 points, up 1.4%, down 19.5% year-on-year, up 1.0 percentage points compared with the previous ten-day expansion. Among them, the price of chicken hair vegetables rose to the forefront, the ten-day average retail price (per 500 grams, the same below) 4.57 yuan, up 16.5%, down 5.4% year-on-year. Non-leafy vegetables: ten days price index 107.6 points, up 0.5%. The main monitoring species ring up or down; the fluctuations are within 6.4%.

In mid-July, the city’s meat, poultry, eggs, and fish and shrimp price index of 132.4 points and 147.3 points, down 0.5% and up 0.4%, down 23.4% and up 15.8%, respectively. Pork: The average retail price of live pigs, wholesale pork, and pork was 8.54 yuan, 10.28 yuan, and 21.57 yuan, up 2.8%, 0.7%, and down 1.0%, down 56.1%, 55.9%, and 37.9% year-on-year. Among them, the hog farm price continued to rise, the ring rate of increase narrowed by 9.2 percentage points compared with the previous decade, the retail price continued to fall, compared with the beginning of the year’s high cumulative decline of about 37%, the largest year-on-year decline in history.

2.Guangdong Building Materials Prices Rose

In the first half of 2021, the global raw material prices run strong, Guangdong Province, construction prices at the end of last year after the peak demand season, the market did not turn weak, most building materials prices to rise, including glass prices continued to climb, and is significant.

In the first half of 2021, the province’s regional river sand purchase price performance varies; the Pearl River Delta and East Guangdong prices rose, especially in the Pearl River Delta region. On the other hand, the price of northern and western Guangdong fell slightly. The overall increase in the purchase price of river sand in the province, the average price of (per cubic meter, the same below) 218 yuan, 2.91% higher than the ring (compared with the second half of 2020, the same below), a slight decrease of 0.37%. Among them, the purchase price in the Pearl River Delta and Guangdong East was 240 yuan, up 12.85% and 4.39%, respectively, and up 22.38% and 2.94%, respectively, year-on-year; the purchase price in Guangdong West and Guangdong North was 200 and 192 yuan, down 1.66% and 5.33%, respectively, and down 3.88% and 17.15%, respectively, year-on-year.

Sea sand prices rose sharply and significantly higher than the level of the same period last year. For example, in 2021, in the first half of the province’s Pearl River Delta region, sea sand (desalination treatment) prices rose, the average purchase price of 267 yuan per cubic meter, up 20.12% chain, up 21.44% year-on-year.

Glass prices rose month by month and rose significantly. For example, in 2021 first half, the province’s flat glass prices climbed month by month, rising continuously, with the average price of 55.35 yuan per square meter, up 33.82% ringgit, up 35.4% year-on-year. Among them, ordinary flat glass (5mm) and float flat glass (5mm) average $ 36.05 and $ 39.12 per square meter, up 23.08% and 16.08%, up 26.36% 28.09%, respectively.

3.Manufacturing PMI Falls Back in July

The National Bureau of Statistics Service Industry Survey Center and the China Federation of Logistics and Purchasing released data today showing that the manufacturing PMI was 50.4% in July, down 0.5 percentage points from the previous month. The Bank of Communications Financial Research Center reported that high-frequency data showed that industrial production has weakened in the ring since July, with year-on-year gains falling back; affected by local rain weather, the blast furnace start-up rate averaged 54.4% in July, a sharp drop of nearly 7 percentage points from June. Economic activity is expected to slow down since July, with the manufacturing PMI likely to decrease slightly to 50.5.

Nomura Securities also expects China’s key economic activity indicators to slow in July, considering multiple factors such as heavy rainfall and flooding in China, new crown outbreaks in individual provinces, and local government efforts to curb crude steel production.

CICC pointed out that the heavy precipitation in the Henan region in late July had a certain impact on local production, and the production of chemical and textile enterprises in Zhengzhou and Xinxiang areas was affected to a certain extent, and freight capacity dropped, with nearly 130,000 trucks out of 470,000 freight vehicles in Henan province. However, from the current announcements issued by listed companies, the precipitation will not substantially impact their annual operations.

3.CCP Central Bank: The Balance of Loans Invested in Projects with Carbon Emission Reduction Benefits Reached 9.37 Trillion Yuan

The People’s Bank of China released the second quarter of the financial institution’s loan investment statistics report shows that the balance of domestic and foreign currency green loans 13.92 trillion yuan, an increase of 26.5%, 1.9 percentage points higher than the end of the first quarter, 14.6 percentage points higher than the growth rate of various loans, an increase of 1.87 trillion yuan in the first half of the year. Among them, loans invested in projects with direct and indirect carbon emission reduction benefits amounted to 6.79 trillion and 2.58 trillion yuan, respectively, accounting for 67.3% of green loans.

By purpose, the balance of loans to green upgrade industries in infrastructure and clean energy industries were RMB 6.68 trillion and RMB 3.58 trillion, up 26.5% and 19.9%, respectively. By industry, the balance of green loans in the transportation, storage, and postal industry was 3.98 trillion yuan, an increase of 16.4% year-on-year and an increase of 329.5 billion yuan in the first half of the year; the balance of green loans in the electricity, heat, gas and water production and supply industry was 3.88 trillion yuan, an increase of 20.2% year-on-year and an increase of 355.4 billion yuan in the first half of the year.

5.Allianz Capital Management Became the First Wholly Foreign-Owned Management Company Approved by Communist China

On July 30, Allianz (China) Insurance Holdings Limited (hereinafter referred to as “Allianz China Insurance Holdings”) announced that Allianz Insurance Asset Management Company Limited (hereinafter referred to as “Allianz Asset Management”) had received the opening approval from China Banking Regulatory Commission (CBRC), becoming the first wholly foreign-owned insurance asset management company approved in China with a registered capital of RMB 100 million. Allianz Insurance Asset Management Co.

Sergio Balbinot, Director of Allianz Group and Chairman of Allianz (China) Insurance Holdings Limited, said: “We are honored that Allianz Capital Management is the first wholly foreign-owned insurance asset management company be approved for operation in China. Building on our existing insurance business, the approval of Allianz Capital Management will further enhance Allianz’s ability to provide a complete range of insurance and asset management products and services to the China market.”

Solmaz Altin, General Manager of Allianz China Insurance Holdings, said, “The establishment of Allianz Capital Management is a key step in Allianz China Insurance Holdings’ comprehensive development in the China market. In the future, Allianz Capital Management will rely on the leading global experience and rich resources of the Allianz Group to build the company into the most trusted provider of foreign-owned insurance asset management products and services, creating value for Chinese investors and clients.”

Allianz China Insurance Holdings is the first wholly foreign-owned insurance holding company invested by the Allianz Group in China. In December 2020, Allianz China Insurance Holdings was approved by the CBRC to increase its capital by RMB 1.2 billion. After the capital increase, Allianz China Insurance Holdings remains the single shareholder of Allianz China Insurance Holdings.

6.Onshore Renminbi Slightly Rises Against the US Dollar, Offshore Renminbi Shocks Lower

On July 30, the onshore RMB opened 10 points higher against the USD at 6.4638, while the offshore RMB shocked lower against the USD and lost the 6.46 mark. As of 9:50 am, the onshore and offshore RMB was at 6.4594 and 6.4630 against the USD, respectively. On the same day, the yuan’s mid-price against the dollar rose 340 basis points from the previous trading day to 6.4602.

7.Cai Esheng, Former Chairman of the Banking Regulatory Commission, Was Investigated

In the first half of 2021, the smart lock product price index narrowly oscillating, the overall trend of a small increase in the index from January 98.14 points, the index closed at 98.57 points in June, a cumulative increase of 0.44% in the first half of 021, the average output value of mu, the product local support rate index fell first and then rose. Specifically, in the first quarter, the key words of the property market “control” trend, the property market “off-season”, the Spring Festival holiday and the epidemic and other factors, commodity housing transactions continue to fall, resulting in a reduction in market demand for intelligent lock products, the average output value of mu, product local support rate index The index closed at 179.91 points and 115.36 points, down 8.12% and 11.91% respectively; in the second quarter, with the holding of the Wenzhou Smart Lock Exhibition and the continued promotion of the “6-18” e-commerce shopping promotion, multiple favorable factors superimposed to help the development of smart lock enterprises, the second quarter smart lock Industry output value rapid recovery, promote the average mu output value index, product local support rate index rose sharply, the index closed at 212.29 points, 125.10 points, where the average mu output value index rose strongly, up 18.00%, far more than the level of the second half of last year, is the main reason for the first half of the competitiveness index trend, while the product local support rate index showed a recovery, up 8.44%. However, up 8.44%, compared with the second half of last year, there is still a certain gap.

In the first half of 2020, the ODM order share index rose first and then fell. In the first and second quarter of this year, the index closed at 73.44 points, 67.70 points, the index as a whole to continue the lower level of the second half of last year, analysis, foreign chip shortages, and price increases has affected the delivery cycle of the replacement of domestic chips, smart industry, there is a “lack of core” problem, resulting in smart lock production costs ushered in a price increase peak ODM manufacturers are affected to a certain extent, resulting in the first half of the ODM order index after a small upward dip again.

8. Bohai Property and Casualty Insurance Was Listed as a Solvency Non-Compliant Company

Bohai Insurance disclosed its second-quarter solvency report on the official website of the China Insurance Association. As of the end of the second quarter of this year, the company’s comprehensive solvency ratio was 123.75%, just above the 100% regulatory red line. The report shows that the company’s comprehensive risk rating at the end of the first quarter was C. This is the second consecutive quarter that Bohai Insurance has had a comprehensive risk rating. According to the relevant regulatory requirements, the risk composite rating measures the size of an insurer’s overall solvency risk (including capitalizable risk and difficult to capitalize risk). It should not be lower than the B class. This means that Bohai Property and Casualty Insurance has been classified as a solvency non-compliant company for two consecutive quarters.

The report shows that in April this year, Tianjin CBIRC had issued a Financial Supervision Warning Letter to Bohai Property and Casualty Insurance, prompting Bohai Property and Casualty Insurance to report unfavorable developments in both the reserve for outstanding claims after reinsurance at the end of 2018 and 2019, with a greater risk of reserve provisioning, and requiring Bohai Property and Casualty Insurance to report an analysis report and rectification plan to the regulatory authorities.

9.Corn Prices May Welcome a Surge

Shandong corn prices rebound speed up, most enterprises back to 2700 yuan, and Hebei Shandong and many other places traders reflect, at present to grain more, the price of a day up three or four points are normal! And a few days ago, singing short corn to continue to fall analysts, the wind vane shifted, began to have bullish corn prices, and even “bold” corn will welcome another surge, 3000 yuan/ton may be the bottom of the new North China.

Shandong enterprises to return to the purchase price of 2900-3000 yuan/ton is not a difficult task. However, the current downstream demand for deep processing enterprises is not good, do not forget that in the second half of the year, there are three “hard.”

1, the current amount of pig replenishment is not positive, but the stockpile is also at an all-time high, according to the latest official data given, as of the end of June stockpile data of 439 million head, this data pork want to rise really hard, but the demand for feed is increasing daily

2, in the new grain before the market, the corn market surplus is not enough. However, the downstream starch sales are not good, from the double holiday is left about a month, enterprises quickly raise prices is also to stimulate the rise in starch prices, yesterday there is gossip declared that starting next Monday, enterprises to join forces to promote the rise in starch prices.

3, this year’s autumn corn listing time is generally late, North China by the impact of the delayed wheat harvest, while the northeast is affected by the weather, which means that the autumn grain listed at least two and a half months, or even three months, leaving a lot of time for corn, but these surplus grain for the market consumption, but completely insufficient

The overall supply of the domestic market is still tight; in addition to the generally high cost of traders to build a warehouse, traders still have certain expectations of the price!

10. SEC Suspends Chinese Stock Listings Across the Board

The U.S. Securities and Exchange Commission (SEC) has asked for more information from Chinese companies seeking to list in the U.S. before approving any plans to sell their shares. The SEC has said it will pay particular attention to Chinese companies structured as so-called variable interest entities (VIEs). Although they are based in China, these companies are set up as offshore shell companies – often in tax-friendly locations such as the Cayman Islands – to issue stock. In addition to lower taxes, companies that register their operations outside of China are often able to obtain IPO approval from U.S. regulators more quickly.

SEC Chairman Gensler said he wants more disclosure from these companies, explaining that investors won’t buy stock directly from companies based in China and more details about the shell company’s relationship with its parent company. He also wants more disclosure about the risks these companies face from future regulatory changes in the Chinese government and more detailed financial information. He also said he had asked the SEC staff to “conduct additional targeted reviews of applications from companies with significant operations in China.”

【G Translators- Financial Team】
Translator: Totoro

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