2023 Calendar Week 33

Posted on August 14, 2023

1.     While China’s trade falls in July, year-to-date figures remains stable

In July, China’s imports and exports were USD 482.92 billion, down 13.6%. Exports were USD 281.76 billion, down 14.5%; imports were USD 201.16 billion, down 12.4%. The trade surplus was USD 80.6 billion, narrowing by 19.4%. In local currency terms, the results do look better.

In the first 7 months of 2023, China’s import and export value was USD 3.4 trillion, down 6.1%. Exports were USD 1.94 trillion, down 5%; imports were USD 1.46 trillion, down 7.6%. The trade surplus was USD 489.57 billion, up 3.5%.

In the first 7 months Exports to ASEAN grew, while imports from the EU and the U.S. increased. ASEAN was China’s largest trading partner, with a total trade value of CNY 3.59 trillion, up 2.8%, accounting for 15.3% of total foreign trade. The EU was the second-largest partner, with trade totaling CNY 3.22 trillion, down 0.1%, accounting for 13.7%. The U.S. was the third-largest partner, with trade at CNY 2.64 trillion, down 9.6%, accounting for 11.2%. The trade surplus with the U.S. was CNY 1.26 trillion, narrowing by 19.5%. Japan was the fourth-largest partner, with trade at CNY 1.27 trillion, down 5.8%, accounting for 5.4%. Trade with Belt and Road countries was CNY 8.06 trillion, up 7.4%.

The export mechanical and electrical products were CNY 7.83 trillion, up 4.4%, accounting for 58.1% of total exports. Of this, automatic data processing equipment and its parts were CNY 735.15 billion, down 19.8%; mobile phones were CNY 462.36 billion, down 6.5%; cars were CNY 383.73 billion, up 118.5%. Labor-intensive product exports were CNY 2.34 trillion, down 2.1%, accounting for 17.4%. Clothing and accessories were CNY 631.14 billion, down 2.1%; textiles were CNY 546.05 billion, down 5.7%; plastic products were CNY 403.24 billion, up 1.5%.

Once again, the automotive industry single-handedly boosted the export figures

2.     Huawei Reports CNY 310.9 Billion Revenue in H1 2023, up 3.1% despite US sanctions

On August 11, Huawei unveiled its financial results for the first half of 2023. In this period, the tech giant posted a sales revenue of CNY 310.9 billion, marking a 3.1% growth compared to the previous year, with a net profit margin standing at 15%. Huawei emphasized the robustness of its operations, noting that these figures met their expectations. Breakdown of the revenues for H1 2023 is as follows:

  • CNY167.2 billion from the ICT infrastructure segment.
  • CNY103.5 billion from the device segment.
  • CNY24.1 billion from their cloud computing venture.
  • CNY24.2 billion from the digital energy sector.
  • CNY1 billion from their smart car solutions.

Its worth mentioning that Huawei’s device business revenue increased by 2.17% year on year in the first half of 2023. In the second quarter of 2023, Huawei’s mobile phone market share increased by 76.1% year on year, ranking second in high-end mobile phone market share. As the pace of new product releases returned to normal, Huawei’s handset shipments continued to recover, with the largest year-on-year increase among major vendors in the second quarter. With the excellent performance of the new P60 series and the foldable Mate X3 series, Huawei maintained its second place in shipments in the $600+ premium handset market. Huawei shipped 7.4 million handsets in Q2, up 15.6 percent year-on-year and sequentially.

In the relatively small, but highly significant smart car solutions business, Huawei Intelligent Choice Vehicle business first pure electric coupe model will be the first to carry HarmonyOS 4, will be officially launched in 2023. It is believed that this new car will be in collaboration with Chery under the brand LUXEED.

Is Huawei already back on its feet after surviving all the sanctions that have come its way in the past years?

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Huawei logo

3.     Financial Constraints Tighten for Country Garden Amid Real Estate Vulnerabilities

Soon after Evergrande announced its severe insolvency, Country Garden’s two dollar-denominated bonds reported delayed interest payment on August 7th. The crisis at the flagship company has once again put pressure on the already vulnerable real estate ecosystem.

The principal of Country Garden’s two dollar bonds will not expire until 2026 and 2030. Even a small amount of interest could make the company uneasy. Actually, just a month ago, the market was full of news that Country Garden may not be able to persist. Country Garden has previously denied rumors. This process is nearly identical to Evergrande’s prior “explosion” where they consistently denied rumors and then ultimately experienced the event.

On August 10th, Country Garden Holdings released an announcement stating that due to the downturn in the real estate industry sales and anticipated net foreign exchange losses caused by currency fluctuations, its net loss for the first half of the year is estimated to be between CNY 450 billion and CNY 550 billion (~62-76 billion USD). According to the financial report, Country Garden has a public debt of CNY 93.7 billion due in 2023. This year is critical for Country Garden’s debt repayment. Initially, the account had limited cash, and if sales pick up this year, there might be some relief. However, the two primary channels of money – financing and sales – are severely constraining the company’s financial lifeline.

If Country Garden continues to fall after Evergrande’s collapse, will other major real estate companies also face a similar fate? China’s property market remains the biggest challenge for its economy and 2023 will be a matter of life and death for Chinese real estate companies.

4.     Inbound Tourism to Beijing and Shanghai Recovers to Just 29% and 33% of Pre-Pandemic Levels Respectively

Recently, according to the Beijing Bureau of Statistics, from January to June this year, Beijing received a cumulative total of 1.931 million inbound tourists (including those from Hong Kong, Macao, and Taiwan). Compared to the pre-pandemic year of 2019, when the inbound number was 6.6502 million, this only recovered to 29% of the pre-pandemic figures.

Shanghai’s situation is similar to Beijing’s. According to the Shanghai Bureau of Statistics, from January to June this year, the number of foreigners and people from Hong Kong, Macao, and Taiwan entering through Shanghai or other ports and then heading to Shanghai was 1.2415 million, less than one-third of the same period in 2019.

Among them, the number of foreign visitors to Shanghai was 756,200, less than one-fourth of the same period in 2019.

Looking at June alone, the number of foreign entries into Shanghai was less than 40% of that in 2019. This figure includes those who came for tourism, visiting relatives, friends, engaging in economic activities and attending conferences. It is evident that although the pandemic is a thing of the past, the absence of overseas visitors in Beijing and Shanghai, two major international gateway cities, is still quite noticeable.

The report on the statistical survey of travel agencies for the first quarter of 2023, released by the Ministry of Culture and Tourism, showed that the number of inbound tourists received by travel agencies in the first quarter of this year was only 52,000, while the number in the same period in 2019 was 3.7 million.

At Glopen we believe this is due to a couple of factors:

1.    Visa process is still quite long due to back log after COVID

2.    Flights to China are still limited and more expensive than per COVID

3.    Drastic evolvement of digital ecosystem in the past years made it more difficult for foreign travelers

4.    Negative political news and geopolitical relations

Hence at Glopen we have designed a travel program specifically to meet the needs of foreign travellers (especially first-time travellers to China).

Check out on our official website: https://gl-open.com/travel/

5.     In the first half of 2023, per capita expenditure on lottery tickets in China increased to CNY 194.

The State Ministry of Finance has released data indicating that from January to June 2023, the country sold CNY 273.899 billion worth of lottery tickets. This represents a year-on-year increase of CNY 91.836 billion and a growth of 50.4%.

Lottery sales in all provinces across the country increased compared to the same period of the previous year. Based on the resident population of each province in 2022, Beijing, Zhejiang, and Tianjin had the highest lottery ticket sales in the first half of the year, with per capita spending of CNY 332, 331, and 328, respectively.

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Expenditure on lottery per province

The increasing consumption of lottery tickets, despite the clear knowledge that purchasing them has negative returns, reveals that people’s belief in the possibility of becoming rich by labour is diminishing. More people are inclined to “gamble” through lottery tickets to try to get rich overnight based on their luck.


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