2023 Calendar Week 42/43

Posted on October 23, 2023

1.China releases preliminary GDP results for Q3 2023: 4.9% increase

Based on the foundational data and the methods of calculating Gross Domestic Product (GDP), preliminary calculations indicate that China’s GDP for the 3rd quarter of 2023 stands at 31.9992 trillion yuan. This indicates a 4.9% increase compared to the 3rd quarter of the previous year, with a growth of 5.2% over the first three quarters in 2023.

During the 3rd quarter, only the real estate industry experienced a recession, declining by 2.7%. Among all industries, the accommodation and catering sector saw the most robust growth, up 12.7%. The information transmission, software, and information technology services sector also surpassed a 10% growth rate, reaching 10.3%

preliminary GDP results for Q3 2023

2.China Stock Benchmark Falls Through Key Line of Defense

On 20th October, the Shanghai Composite Index, a leading indicator of the health of China’s equity markets, descended below the pivotal 3,000-point mark for the first time since October 2022. The benchmark index witnessed a swift decline from 3,080 points to 2,980 points within a 48-hour span, settling tentatively at approximately 2,983 points.

Despite the Chinese government’s unprecedented liquidity infusions into the economy, these measures proved insufficient to counteract the heightened selling momentum.

Industry analysts point to the protracted challenges in China’s real estate sector as a significant contributor to dampened investor confidence and risk appetite. Furthermore, surging bond yields on a global scale have imposed additional pressures on the Chinese equity market.

3.China recorded a total of 9.56 million births in 2022, a 10% drop compared to 2021

China had just 9.56 million births in 2022, according to a report published by the National Health Commission. It was the lowest figure since records began in 1949. The number of births in China tumbled 10% last year, a drop that comes despite a series of government efforts to support parents and amid increasing alarm about a demographic imbalance.

Nearly 40% of Chinese newborns last year were the second child of a married couple, while 15% were from families with three or more children, health authorities said.

The high costs of child care and education, growing unemployment, high real estate prices and a change in mindset have all helped to deter many young couples from having more than one child or even having children at all. To spur the country’s flagging birthrate, Beijing has been rolling out a raft of measures, such as efforts to increase child care as well as financial incentives. In May, President Xi Jinping presided over a meeting to study the topic.

The decline in births year after year has sparked speculation within the community about whether this trend will continue. According to a source, “This year’s maternal records have been mostly finalized, allowing for an estimate of the total number of births for the year. The conclusion is that this year may not even reach 8 million.” Qiao Jie, a member of the Chinese Academy of Engineering and head of Peking University’s medical department, predicts that the number of births in 2023 will be around 7-8 million.

4.Apple CEO Tim Cook visits Chengdu and showcases a photo he captured using his iPhone

On 16th October evening, Tim Cook, Apple’s CEO, took to Weibo to announce his visit to Chengdu. He also posted a photo of the Anshun Corridor Bridge captured using the iPhone 15 Pro Max. Mr Cook said he had visited Apple’s Taikoo Li store in Chengdu and met young players of the Honour OF Kings game. The online battle arena game published by Chinese tech giant Tencent is one of the world’s most-played mobile games.

Tim Cook’s Weibo

Tim’s visit comes at a time when sales of the new iPhone 15 in China are down significantly compared with previous models, US export controls on high-tech components are threatening the company’s supply chain and facing stiffer competition from local competitors such as Huawei

On 2 February this year, Apple unveiled their earnings report for the fourth quarter of 2022, marking their first quarterly revenue decline since 2019. Cook had previously anticipated that with China’s economy on the rise, Apple’s production and deliveries would gain from it, but the revenue of Apple has dropped for three consecutive quarters since then and it urgently needs to convince the consumers in its largest market.

5.WM Motor chairman Shen Hui’s has left Mainland China

On 16th October, it was reported that Shen Hui, the founder and chairman of the board of directors of WM Motor, left for the Munich Motor Show in Germany before transferring directly to New York, leaving behind almost 40 billion yuan in investments and debts, as well as wages owed to WM employees. Despite attempts to contact Shen Hui on the 16th, there has been no relevant response from him. A source close to Shen Hui has confirmed that he was not in China during the Spring Festival of 2023, and the company did not make any public appearances during that time. In addition, his family had previously relocated to the United States.

“WM Motor did not expand abroad, but its founder Shen Hui successfully went overseas”. An industry insider commented.

Whilst Shen Hui’s current location remains unknown, WM Motor is also experiencing a number of service disruptions. Several WM Motor vehicle owners have reported on social media that the system and mobile phone app are not functioning, and service has been temporarily suspended. Additionally, the mobile phone Bluetooth key is also not operational.

As the founder of WM Motor, Shen Hui experienced his own “moment of glory” in 2019 when WM Motor achieved an annual sales volume of 16,876 EVs, securing second place among the new EV brands. Furthermore, since the A round of financing, WM Motor has raised a total of nearly 40 billion yuan, surpassing the financing amount of Xpeng and Li Auto prior to their listing.

Three years later in 2022, however, WM Motor is no longer among the top 10 in the sales rankings of new EV brands, and the company has not taken part in the consolidated release of sales data by mainstream EV firms on the first day of each month.

In China’s highly competitive market, 18 OEMs have already left the market in 2023 alone, it is clear that WM Motor won’t be the last one.

6.Egypt issues Chinese yuan-denominated bonds for the first time, getting lower rates

Egypt has introduced its first-ever Chinese yuan-denominated bonds, known as “Panda bonds,” as it grapples with mounting foreign debt. The three-year bonds, valued at 3.5 billion yuan (approximately $479 million), come with a 3.5% interest rate, a rate which Egyptian officials highlight is lower than comparable dollar-denominated bonds.

Egypt’s finance minister, Mohamed Maait, stated that the country aims to diversify its financing avenues and mitigate debt costs amidst the current high-interest-rate scenario. Panda bonds, typically issued by non-Chinese entities in China, enable global players, including governments, to access capital from the Chinese market. Notably, Egypt is the first in the Middle East and North Africa to venture into Panda bonds, illustrating a broader global trend of reducing dollar dependency.

However, Egypt’s financial challenges persist. Following a prolonged borrowing phase, the nation is now grappling with increasing foreign loan repayments, turning to the IMF for assistance and facing wary global capital markets. Data reveals that Egypt has looming debts of $11.76 billion for the latter half of 2023 and $14.60 billion for the initial half of 2024.

In efforts to alleviate financial strain, Egypt recently secured a $1.3 billion currency exchange deal with the UAE and is contemplating further samurai bonds issuance, a Japanese counterpart to panda bonds.


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