Business
China Balance of Payments Deficit Risks Currency and Asset Crash
China’s falling savings rate coupled with increasing government directed investment rate threatens a balance of payments crisis that could crash currency and asset values.
China became the “factory to the world” and built incredible infrastructure over the last three decades based on the strength of individual savers who remembered the hard times of the Great Famine of 1958–1962 that starved to death 30 million people.
The world savings rate as a percentage of gross domestic product has averaged at about 25 percent since 1990, allowing about a 24 percent of GDP world investment rate. In comparison, China’s savings rate went from 37.4 percent of GDP in 1990 to 52.4 percent in 2008, allowing its investment rate to spike from 34.4 percent to 43.2 percent of GDP, according to consultancy Enodo Economics that closely tracks China money flows.
But over the last decade, China’s savings rate fell 7.2 percent to 45.2 percent, while the investment rate rose 1.6 percent to 44.8 percent. The slightly positive net savings rate of $56 billion might be sustainable, but China also suffered capital flight of $500 billion in 2015, $675 billion in 2016, $380 billion in 2017, before dropping to $22 billion last year.
Chinese leader for life Xi Jinping was successful in shriveling capital flight by running a ferocious anti-corruption drive that has netted up to 2.5 million officials at various levels, from ranged from what he referred to as the elite “tigers,” to the ordinary “flies.”
About two-thirds of Chinese savings are held in interest-bearing deposits at banks that loan the money out according to the “policy” dictates of the Communist Party leaders. The policy focus is to support state-owned enterprises that despite only representing 5 percent of industrial enterprises, receive 65 percent of bank loans, control $10.4 trillion of assets and dominate about 85 percent of the high-profit industries such as finance, power, energy, telecommunications and defense manufacturing.
But the before-tax profitability of the “factory to the world” fell from…
Business
China Dismantles Prominent Uyghur Business Landmark in Xinjiang – Shia Waves
The Chinese government demolished the Rebiya Kadeer Trade Center in Xinjiang, affecting Uyghur culture and commerce, prompting criticism from activists amid concerns over cultural erasure and human rights violations.
Demolition of a Cultural Landmark
The Chinese government recently demolished the Rebiya Kadeer Trade Center in Urumqi, Xinjiang, a vital hub for Uyghur culture and commerce, as reported by VOA. This center, once inhabited by more than 800 predominantly Uyghur-owned businesses, has been deserted since 2009. Authorities forcibly ordered local business owners to vacate the premises before proceeding with the demolition, which took place without any public notice.
Condemnation from Activists
Uyghur rights activists have condemned this demolition, perceiving it as part of China’s broader strategy to undermine Uyghur identity and heritage. The event has sparked heightened international concern regarding China’s policies in Xinjiang, which have been characterized by allegations of mass detentions and cultural suppression, prompting claims of crimes against humanity.
Rebiya Kadeer’s Response
Rebiya Kadeer, the center’s namesake and a notable Uyghur rights advocate, criticized the demolition as a deliberate attempt to erase her legacy. Kadeer, who has been living in exile in the U.S. since her release from imprisonment in 2005, continues to advocate for Uyghur rights. She has expressed that her family members have suffered persecution due to her activism, while the Chinese government has yet to comment on the legal ramifications of the demolition.
Source : China Demolishes Uyghur Business Landmark in Xinjiang – Shia Waves
Business
Yakult Unveils Restructuring Plans for Its China Operations | ESM Magazine
Yakult reorganized its China operations, dissolving the Shanghai subsidiary while opening a new branch. Manufacturing now consolidates at Wuxi and Tianjin plants, aiming for enhanced efficiency and growth.
Yakult’s Business Reorganisation in China
Yakult has announced a significant reorganisation of its operations in China, aiming to enhance competitiveness and sustainability. The company has dissolved its wholly-owned subsidiary, Shanghai Yakult, which previously managed manufacturing and sales functions. This strategic move is expected to streamline its operations in the Chinese market.
New Branch and Manufacturing Adjustments
Yakult’s head office in China has established a new branch in Shanghai, transferring the sales division from Shanghai Yakult to this location. As of December 6, the branch has started selling various products, including Yakult and its light variants. Meanwhile, the manufacturing plant in Shanghai has ceased operations, with production capacity now absorbed by the Wuxi and Tianjin plants to ensure efficient supply.
Commitment to Growth
The company remains steadfast in its dedication to the Chinese market and is optimistic about future growth. Yakult reassured stakeholders that the reorganisation will have minimal financial impact and aims to enhance efficiency. Founded in 2005 in Shanghai, Yakult China currently employs approximately 2,216 individuals, reinforcing its commitment to customer health and expanding operations.
Source : Yakult Announces Reorganisation Of China Business | ESM Magazine
Business
UAE-China Trade Set to Surpass $100 Billion This Year – Arabian Business
UAE and China aim to surpass $100 billion in trade this year, highlighting their growing economic partnership and mutual interests in various sectors, as reported by Arabian Business.
UAE-China Trade Growth
The UAE and China are on track to see their trade surpass $100 billion in 2023. This significant milestone underscores the strengthening economic ties between the two nations. The robust growth is attributed to various sectors, including technology, agriculture, and logistics.
Bilateral Initiatives
In recent years, both countries have launched several initiatives aimed at enhancing bilateral trade. These efforts are designed to facilitate smoother cross-border transactions and promote investments. The UAE’s strategic location as a regional hub complements China’s expanding market reach, benefiting both economies.
Economic Impact
This burgeoning trade relationship is expected to create more job opportunities and stimulate economic growth in both countries. As the cooperation deepens, stakeholders anticipate additional advancements that will further solidify UAE-China ties in the global market.
Source : UAE and China trade to pass $100bn this year – Arabian Business
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