9/13/21-9/19/21 Weekly Reports: The Truth Of Economy In China

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1.Revenue from Stamp Duty on Securities Transactions in the First Eight Months Rose 39.5% Year-on-Year

The Ministry of Government released data yesterday showing that the national general public budget revenue from January to August was 150.88 billion yuan. Among them, stamp duty on securities transactions was 199 billion yuan, up 39.5% year-on-year. All significant taxes have maintained rapid growth. For example, the domestic value-added tax (VAT) collected about 4.5 trillion yuan in the first eight months, up 19.1% year-on-year, including a 24% increase in industrial and commercial VAT. However, looking at the monthly trend, fiscal revenue growth fell in August, with the national general public budget revenue increasing by 2.7% year-on-year in August.

The relevant person in charge of the Ministry of Finance said that the general public budget revenue growth fell in August, mainly by the same period in 2020, to improve the base and the epidemic, flooding, and other factors. However, data show that the first eight months of the national government funds budget revenue of 536.93 billion yuan, an increase of 14.2%. Although the local government funds of state-owned land-use rights transfer income 4,711 billion yuan, up 12.1% year-on-year, the growth rate slowed down from the previous value. From the expenditure side, the first eight months of the national general public budget expenditure is 15,537.1 billion yuan, up 3.6% year-on-year. As a result, the growth rate is higher than the previous value of 3.3%.

2.Central Bank Conducts 50 Billion Yuan 7-Day and 50 Billion Yuan 14-Day Reverse Repo Operations

The People’s Bank of China (PBOC) announced on September 18 that to maintain stable liquidity at the end of the season; the PBOC conducted a 7-day and 14-day reverse repo operation of 50 billion yuan each by way of interest rate bidding. The 7-day winning rate was 2.20%, and the 14-day winning rate was 2.35%. There is no reverse repo expiration today, so the net input for the day is 100 billion yuan.

Before the Mid-Autumn Festival, the funding surface turned tight, and the short-end interest rates rose across the board. The Shanghai Interbank Offered Rate (Shibor) rose 0.3 basis points to 2.213% overnight, while the 7-day Shibor rose 16.4 basis points to 2.398%. The DR007 weighted average rate rose to 2.3998%, higher than the policy rate level in terms of repo rate performance. The 1-day Treasury reverse repo rate (GC001) on the SSE rose to 2.677%.

3.Communist China Seeks to Join CPTPP

Communist China has applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in a letter to New Zealand’s Trade Minister, announced on 16 June. If Communist China joins the agreement, it will make the world’s second-largest economy a key partner in its most significant free trade agreement. Members of the agreement account for more than 13 percent of the global economy. The Chinese Communist Party has repeatedly expressed its desire to join the CPTPP, and in March, Communist Chinese Premier Li Keqiang said Beijing would “actively consider joining. However, all 11 members of the CPTPP would need to agree to allow Communist China to join, and China’s current geopolitical and economic conflicts with Australia complicate the issue of Communist China joining the CPTPP.

Australia has a series of disputes with the Chinese government, including the Australian government’s criticism of China’s human rights record and geopolitical ambitions, and trade and economic issues. Tensions reached a boiling point after Australia called for an international investigation into the origin of the new coronavirus. In May, Communist  China suspended the Communist  China-Australia Strategic Economic Dialogue, which was set up to promote trade and advance talks. Before that, Australia canceled the “One Belt, One Road” agreement between Beijing and Victoria.

Since then, Communist China has imposed tariffs on Australian imports, including wine and barley. As a result, Australia has asked the World Trade Organization (WTO) to rule on the move. Nevertheless, last week, Communist China showed its ambition to lobby Australia’s parliament to support its membership in the CPTPP, saying in a submission that there is enormous potential for cooperation between the Chinese and Australian economies.

4.Hog Market Prices Continue to Decline, Selling a Pig Loss of Seven or Eight Hundred Yuan

Since this year, the domestic pig production capacity recovery momentum has been rapid. The latest data from the Ministry of Agriculture and Rural Affairs shows that the national breeding sow and pig stock at the end of July recovered to the level of the end of 2017, respectively, equivalent to achieving the recovery target six months ahead of schedule. The national hog market also saw a drop in volume and price as a result. In Sichuan, China’s significant pig production province, pig prices have fallen below the coastline, and pig farming continues to lose money. In Chongzhou City, Sichuan Fuqiang Village, Hu Hongqun operates a pig farm with an annual slaughter of 3,000 pigs; she told reporters that just ten days ago she just slaughtered 100 pigs, sold for 7 yuan per catty, a price that fell by half compared to February, compared to the same period last year fell by more than 60%. Data show that in the first half of this year, in Sichuan Province, pig prices continued to fall and fell below the break-even line, the third quarter of the low shock run, as of September 11, Sichuan Province, pig prices for 14.5 yuan per kilogram, a significant drop of 61.8%. From the national point of view, since June, the national pig farming has generally been in a loss state, and the federal pig farm (household) loss surface reached 52.5% in August.

5.TikTok Faces Two Privacy Investigations Involving Children’s Data in Ireland

TikTok, the short-video sharing app owned by Communist China’s ByteBeat, has had two investigations launched against the EU’s primary data privacy regulator’s platform concerning the processing of children’s data and the transfer of personal transfer data to Communist China. Ireland’s Data Protection Commission is permitted to issue fines of up to 4 percent of global revenue. Ireland is home to the regional headquarters of many of the world’s top Internet companies, making the commission the primary regulator of those companies in the EU. TikTok announced stricter privacy controls for teens in August, seeking to address criticism that it had failed to protect children from hidden ads and inappropriate content.

In a statement, the Data Protection Board said the first investigation concerned “the processing of personal data in the context of the platform settings for users under the age of 18, as well as age verification measures for users under the age of 13.

6.Himalaya Audio May Apply for Hong Kong IPO next Week

According to three sources with direct knowledge of the matter, China’s largest online audio platform Himalaya will apply for an initial public offering (IPO) in Hong Kong next week after abandoning plans for a U.S. listing. Himalaya announced Thursday that it would not move forward with a U.S. listing. Reuters reported in May that its original plan was to raise about $500 million for its U.S. IPO. Two of the sources said Himalaya would move forward with a Hong Kong listing and file its preliminary prospectus as early as the following Monday. All three sources declined to be named because the information has not been made public. The size of the listing has not yet been determined, according to the sources. But two of the sources said the company aims to raise more than the $500 million it originally planned to grow in a U.S. IPO. One of the sources said the company intends to list Hong Kong by the end of this year.

7.Evergrande’s Life Hangs in the Balance as International Investors Fear a Severe Collapse of the Chinese Communist Market

Problems have been snowballing for China Evergrande 3333.HK since May. With 2 trillion yuan ($305 billion) of debt on its back, Evergrande’s resources have been dwindling, its stock and bond prices have fallen nearly 80 percent, and it has $80 million in bonds due for interest payment next week. What happens next is unclear. Bankers say Evergrande is likely to be late on its repayments and enter a state of limbo where authorities will step in and sell some of its assets, but the situation could quickly get messy.

“We’ll have to see what happens,” said Sid Dahiya, formerly head of emerging corporate debt at abrdn, formerly known as Aberdeen Capital. The firm holds a small amount of Everest bonds. “They may be trading privately, but we don’t have any clarity or precedent to draw on, so it’s uncharted territory.”

Over two weeks ago, Evergrande warned that the company faced the risk of defaulting on its debt if it failed to raise cash. Since then, the company says its efforts have not made any progress. In the bigger picture, analysts say, if Evergrande does go down, it will tie up the knot and shatter the notion that some Chinese companies are too big to fail.

8.Communist China’s Fiscal Revenue up 18.4% Year-on-Year in the First Eight Months

The Ministry of Finance released data on the 17th, showing that in the first eight months of this year, the national general public budget revenue of 158.88 billion yuan, an increase of 18.4% year-on-year, fiscal revenue showed healthy growth. Data show that the central general public budget revenue of 704.67 billion yuan in the first eight months, an increase of 18.9%; local general public budget revenue of 796.21 billion yuan, an increase of 17.9%. National tax revenue of 129.627 billion yuan, up 19.8% year-on-year; non-tax revenue of 204.61 billion yuan, up 10.4% year-on-year.

From the perspective of significant tax revenue items, in the first eight months, the domestic value-added tax was 4,535.5 billion yuan, up 19.1% year-on-year; domestic consumption tax was 1,095.7 billion yuan, up 11.6% year-on-year; corporate income tax was 348.73 billion yuan, up 18.7% year-on-year; personal income tax was 939.7 billion yuan, up 23% year-on-year; VAT and consumption tax on imported goods was 120.22 billion yuan, up 25.9% year-on-year 25.9%; tariff of 198.1 billion yuan, up 19.8% year-on-year.

On the expenditure side, in the first eight months, the national general public budget expenditure was 15,537.1 billion yuan, increasing 3.6% year-on-year. Among them, the central general public budget expenditure of 2,050.2 billion yuan, down 3.6% year-on-year; local general public budget expenditure of 1,348.69 billion yuan, up 4.8% year-on-year. Education, health, and other vital expenses grew faster. National government fund budget revenue and expenditure, the first eight months, the federal government fund budget revenue of 536.93 billion yuan, an increase of 14.2%; national government fund budget expenditure of 5,921.3 billion yuan, down 7.3% year-on-year.

9.SFC Expands the Scope of Pilot Red-Chip Enterprises Listed in the Country

On September 17, the SFC said that, with the approval of the State Council, it now announces the “Announcement on Expanding the Pilot Scope of Red Chip Enterprises’ Domestic Listing,” effective from the date of publication. Furthermore, the SFC said that in order to implement the Notice of the General Office of the State Council on Forwarding Certain Opinions of the Securities Regulatory Commission on the Launch of the Pilot Program of Domestic Issuance of Shares or Depository Receipts by Innovative Enterprises (Guo Ban Fa [2018] No. 21, hereinafter referred to as the Notice), further enhance the inclusiveness of the capital market, support high-quality red-chip enterprises to issue securities for listing in the domestic capital market, help China’s high-tech industries and strategic emerging industries To further enhance the inclusiveness of the capital market, support high-quality red chip enterprises to issue securities listing in the domestic capital market, help China’s high-tech industries and strategic emerging industries to develop and grow, and promote high-quality economic development, the following announcement is made on matters related to the inclusion of red chip enterprises in the pilot and listing on the domestic main board, Science and Technology Venture Exchange Board and GEM:

First, in addition to the “Notice” clear Internet, big data, cloud computing, artificial intelligence, software, and integrated circuits, high-end equipment manufacturing, biomedical industries, belonging to a new generation of information technology, new energy, new materials, new energy vehicles, green, aerospace, marine equipment and other high-tech industries and strategic emerging industries of red chip enterprises, into the scope of the pilot.

Second, red-chip enterprises with national strategic significance apply for inclusion in the pilot, not subject to the industry above restrictions.

Third, red chip enterprises applying for inclusion in the pilot should comply with the “Notice” “pilot innovative enterprises to issue shares or depositary receipts in the territory and the implementation of the supervision of the listing” “on the innovation of pilot red chip enterprises in the domestic listing of the relevant arrangements for the announcement” and other conditions specified.

10. Ministry of Commerce: Further Relaxation of Foreign Market Access

The Ministry of Commerce spokesman Shuang Jue Ting said at a regular press conference on the 16th, the next step, the Ministry of Commerce will continue to do an excellent job of foreign investment, promote a higher level of openness to the outside world, further relax foreign market access, and increase service security for foreign enterprises and foreign projects.

The Ministry of Commerce website published on the same day, “on further work to promote consumption in the current business sector, the key work of the notice” pointed out that strengthen departmental communication and coordination, to enhance the promotion of bulk consumption key consumption, promote the release of rural consumption potential and other policies and measures have been introduced to implement. Furthermore, focus on the problematic points of blockage, study the introduction of new initiatives to promote consumption.

The actual use of foreign investment in the amount of faster growth. The latest data from the Ministry of Commerce show that from January to August, the exact amount of foreign investment used nationwide was RMB 758.05 billion, up 22.3% year-on-year (equivalent to USD 113.78 billion, up 27.8% year-on-year; excluding the banking, securities, and insurance sectors).

By【G Translators- Financial Team】
Translator: Totoro

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