China
China Isn’t Losing Its Manufacturing Competitiveness After All
It’s a raging debate in economics circles: Is China’s commanding position as the world’s low-wage factory floor eroding in the face of rising labor costs and a strengthening currency? Just a few days ago UBS economist Jonathan Anderson wrote that China is at a turning point in its dominance of labor intensive industries such as apparel and toys. He says China’s share of exports in items made by armies of low-wage workers has peaked and that places such as Vietnam, Bangladesh, Indonesia and Mexico are picking up pieces of those markets. Now comes the counterpoint. RBS’s top China economist Li Cui writes in a research note published Wednesday that “evidence of China losing out is still absent.” Her view is that China has been remarkably adaptive to rising labor costs and a strengthening currency. “One would have expected that labor intensive industries should have been hurt the most given their thin margins and relatively weak pricing power in the global market. However during this period China’s exports of light manufacturing products has risen to about one-third of the world markets (from 22% in 2005), dominating other regional competitors,” she writes. (For more background, the WSJ wrote about the topic back in July.) Ms. Cui offers three reasons for China’s enduring competitiveness in light manufacturing. China has moved up the value chain even within these labor intensive industries. Workers are more specialized and factories have more capital to create more complex products. She cites knitted shirts versus un-knitted shirts. The expansion of market share has come with productivity increases. And the rising demand from domestic markets is expanding the order sizes and economies of scale that factories can employ. Chinese producers have been able to pass some of the cost pressures to overseas markets. As for the future, she thinks the “made-in-China” label is not in trouble. “Past experience suggests that China has responded to rising unit labor cost through capital investment and product upgrades, which bodes well for continued adjustments in the future. The fast expanding domestic market gives producers an extra competitive edge to absorb the further rise in labor costs,” she writes. –Alex Frangos
It’s a raging debate in economics circles: Is China’s commanding position as the world’s low-wage factory floor eroding in the face of rising labor costs and a strengthening currency?
Just a few days ago UBS economist Jonathan Anderson wrote that China is at a turning point in its dominance of labor intensive industries such as apparel and toys. He says China’s share of exports in items made by armies of low-wage workers has peaked and that places such as Vietnam, Bangladesh, Indonesia and Mexico are picking up pieces of those markets.
Now comes the counterpoint.
RBS’s top China economist Li Cui writes in a research note published Wednesday that “evidence of China losing out is still absent.” Her view is that China has been remarkably adaptive to rising labor costs and a strengthening currency.
“One would have expected that labor intensive industries should have been hurt the most given their thin margins and relatively weak pricing power in the global market. However during this period China’s exports of light manufacturing products has risen to about one-third of the world markets (from 22% in 2005), dominating other regional competitors,” she writes.
(For more background, the WSJ wrote about the topic back in July.)
Ms. Cui offers three reasons for China’s enduring competitiveness in light manufacturing.
- China has moved up the value chain even within these labor intensive industries. Workers are more specialized and factories have more capital to create more complex products. She cites knitted shirts versus un-knitted shirts.
- The expansion of market share has come with productivity increases. And the rising demand from domestic markets is expanding the order sizes and economies of scale that factories can employ.
- Chinese producers have been able to pass some of the cost pressures to overseas markets.
As for the future, she thinks the “made-in-China” label is not in trouble.
“Past experience suggests that China has responded to rising unit labor cost through capital investment and product upgrades, which bodes well for continued adjustments in the future. The fast expanding domestic market gives producers an extra competitive edge to absorb the further rise in labor costs,” she writes.
–Alex Frangos
Annual inflows of foreign direct investment rose to nearly $108 billion in 2008.
In 2009, China announced that by 2020 it would reduce carbon intensity 40% from 2005 levels.
China is the world’s fastest-growing major economy, with an average growth rate of 10% for the past 30 years.
Available energy is insufficient to run at fully installed industrial capacity, and the transport system is inadequate to move sufficient quantities of such critical items as coal.
The two sectors have differed in many respects.
The technological level and quality standards of its industry as a whole are still fairly low, notwithstanding a marked change since 2000, spurred in part by foreign investment.
China’s ongoing economic transformation has had a profound impact not only on China but on the world.
The ministry made the announcements during a press conference held in Xiamen on the upcoming United Nations Conference on Trade and Development (UNCTAD) World Investment Forum and the 14th China International Fair for Investment and Trade.
In this period the average annual growth rate stood at more than 50 percent.
China is expected to have 200 million cars on the road by 2020, increasing pressure on energy security and the environment, government officials said yesterday.
China’s challenge in the early 21st century will be to balance its highly centralized political system with an increasingly decentralized economic system.
Agriculture is by far the leading occupation, involving over 50% of the population, although extensive rough, high terrain and large arid areas – especially in the west and north – limit cultivation to only about 10% of the land surface.
Except for the oasis farming in Xinjiang and Qinghai, some irrigated areas in Inner Mongolia and Gansu, and sheltered valleys in Tibet, agricultural production is restricted to the east.
China ranks first in world production of red meat (including beef, veal, mutton, lamb, and pork).
Offshore exploration has become important to meeting domestic needs; massive deposits off the coasts are believed to exceed all the world’s known oil reserves.
China’s leading export minerals are tungsten, antimony, tin, magnesium, molybdenum, mercury, manganese, barite, and salt.
Hydroelectric projects exist in provinces served by major rivers where near-surface coal is not abundant.
After the 1960s, the emphasis was on regional self-sufficiency, and many factories sprang up in rural areas.
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China Isn’t Losing Its Manufacturing Competitiveness After All
China
Ping-pong diplomacy: Australian table tennis players return to China, five decades after historic tour
Two original members of Australia’s 1971 ping-pong diplomacy team return to Beijing, celebrating 50 years of bilateral relations initiated by their historic visit, fostering enduring cultural and diplomatic ties.
This week, two of the original members of Australia’s 1971 “ping-pong diplomacy” team are returning to Beijing to mark the 50th anniversary of diplomatic relations between the two nations.
Half a century ago, few could foresee that a spur-of-the-moment, unscheduled visit by a young Australian sports team would lead to one of Australia’s most important – and sometimes turbulent – bilateral relations.
Only weeks after the team’s headline-making tour, Australia’s then opposition leader, Gough Whitlam, led a delegation to Beijing promising to open diplomatic relations “when elected”.
Whitlam delivered on that promise in 1972. Three weeks after taking office as Australia’s 21st prime minister, his government reached an agreement with the People’s Republic of China on the establishment of diplomatic relations. The following year, Australia’s first embassy in Beijing opened with the appointment of Stephen FitzGerald as the first ambassador.
As FitzGerald recounted on my podcast, The Ticket, this week:
The Chinese have a big love of sport, as do Australians. At one stage they used to talk about the three great balls. One was table tennis, one was basketball and one was volleyball.
Former coach Noel Shorter, former player Paul Pinkewich and former Australian ambassador to China Stephen FitzGerald.
Tracey Holmes
‘A crowd of 8,000 people’
The 1971 ping-pong tour wasn’t the first time sport was used as a diplomatic tool, but it was perhaps one of the most successful of the Cold War period, with long-term benefits.
After competing in the Table Tennis World Championships in Japan in late March 1971, Australian and American table tennis players were invited to travel to China by the country’s first premier, Zhou Enlai. A revolutionary who became one of China’s most revered statesmen, he advocated peaceful co-existence with the West and other nations.
The American team embarked on their tour first – setting the stage for then-President Richard Nixon’s famous visit to Beijing in 1972. The Australians made their trip to China a couple weeks later.
Read more:
50 years after Gough Whitlam established diplomatic relations with China, what has changed?
Paul Pinkewich had just turned 20 at the time of the visit, teammate Steve Knapp was only 18. Now in their 70s, they will return to Beijing for a function at the Australian embassy today and share a meal with some of the Chinese players they competed against.
Pinkewich is taking his table tennis paddle with him in case he can get in a few matches with his old rivals.
“We had three great matches in China. You know, we’re used to 20 to 50 people in Australia watching tournaments. Our first match in Canton, now Guangzhou, I think it was a crowd of 8,000 people,” he recalls.
“There’s this one table in the stadium and we went out there, we actually had a win. We won 5-4. It was fantastic.
“I think friendship was more important than competition.”
The Australians suffered a narrow defeat in the second match in Shanghai. The third and final match was played in the Chinese capital. At the May Day celebrations that followed, the team was invited to the Great Hall of the People to meet Zhou.
According to the Sun-Herald report from the journalist travelling with the team, the premier asked Knapp about his long hair and sideburns.
“Do you wear this hair because of your disagreement with society or because it is a style?”
Knapp replied, “It is the fashion.”
The Sun-Herald’s front-page story on the team’s visit.
Author provided
Pinkewich says he will never forget the sound of the crowds during the tour.
“Can you believe, one table in the middle of the Capital Stadium [in Beijing] with 18,000 spectators, and that was just an amazing experience. We got trounced 8-1 that night. But they always let the woman win.”
That woman was Anne Middleton, the other player on the 1971 tour, who has since passed away.
Leading the delegation were the then-president of Table Tennis Australia, John Jackson, who is now deceased, and coach Noel Shorter, who at 85 is not making this week’s commemorative trip.
Shorter remembers getting everything packed up from their coaching clinic in Tokyo with only four hours’ notice after being told there had been a change of plans and the team was heading later that day to China.
“At that time the [Australian] government was quite racial, as far as the Chinese were concerned, and they didn’t show any interest at all,” Shorter recalls.
“It’s funny. After the trip we were labelled as communists […] but we were interested in friendship first, competition second.”
Noel Shorter (left) shaking hands with Chinese Premier Zhou Enlai in 1971.
Noel Shorter
Why sport diplomacy matters
Beijing has continued to use sport as a diplomatic tool, including becoming the first city in the world to host both a summer and winter Olympic Games (Beijing in 2008 and 2022).
French educator Baron Pierre de Coubertin founded the International Olympic Committee in 1894, believing Olympics were a global event. “All people must be allowed in, without debate,” he said.
That ethos is facing major challenges today as a new global rift emerges between the West and autocratic regimes like Russia, China and others. A new term has also emerged in recent years – almost always applied by researchers in democratic nations – to describe undemocratic nations’ forays into global sport: sportswashing.
Viewed through today’s lens, China’s invitation to the Australian team five decades ago would most likely be reported as an attempt by the Communist Party to use sport to wash its image.
But without that young Australian sports team breaking down barriers by travelling to China, who knows how different Australia’s current economic and cultural landscape would be?
China’s current ambassador to Australia, Xiao Qian, has described the relationship between the two nations as “half a century of storms and sunshine”.
The Chinese ambassador to Australia, Xiao Qian, speaks to media at the embassy in Canberra.
Lukas Coch/AAP
His comments are included in a book published by the Chinese embassy, titled Fifty People Fifty Stories. It details the experiences of dozens of Australians who have at one time lived and worked in Beijing.
“The relationship between China and Australia has become more mature, stable and resilient,” Xiao writes. “Amity between people holds the key to sound relations between countries.”
At the heart of such amity, sport continues to play a significant role.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
China
European Business in China: Key Insights from the EU Chamber’s 2024/2025 Position Paper
The EU Chamber’s Position Paper 2024/2025 highlights challenges faced by European businesses in China, including economic slowdown and regulatory compliance. It offers recommendations for policy reform, bilateral cooperation, and emphasizes the need for consistent regulations to enhance investment attractiveness amidst uncertainty.
In our overview of the EU Chamber’s European Business in China Position Paper 2024/2025, we delve into the key challenges European businesses face amid China’s slow economic recovery and regulatory uncertainties. The Position Paper highlights significant issues, including economic slowdown, overcapacity, and regulatory compliance difficulties, while providing targeted recommendations for policy reform and enhanced bilateral cooperation. The report emphasizes the need for consistent policy implementation and clear regulatory guidelines, while advocating for proactive EU engagement and strategic adjustments by European companies to navigate the evolving market landscape effectively.
On September 11, 2024, the European Chamber released its annual European Business in China Position Paper 2024/2025 (the “Position Paper”), addressing the growing challenges faced by European companies operating in China.
Drawing on insights from over 1,700 member companies and 35 working groups, the Position Paper offers comprehensive recommendations to improve the business environment. It outlines the increasing difficulties European companies are encountering and proposes key areas for policy reform.
While European companies remain invested in China’s success, the growing risks associated with operating in the country are making it increasingly difficult to justify further investments.
Below we explore the key challenges European companies face and the EU Chamber’s recommendations for making China a more attractive destination for European investors.
In 2024, European companies are contending with a sluggish economic recovery in China. According to the Position Paper, China’s growth has hit historically low levels. The weaker-than-expected post-COVID rebound has significantly dampened business confidence, with the automotive sector, for example, experiencing reduced demand and slower sales compared to pre-pandemic times. This economic slowdown has made long-term investments and strategic planning more challenging.
China’s recent economic policies, including substantial investments in manufacturing and green technologies, have led to notable overcapacity. The Position Paper points to the solar panel industry as a prime example, where the surge in production has created a surplus that outstrips domestic demand.
| This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
Read the rest of the original article.
Business
Yutong, China’s Leading Electric Bus Manufacturer, Showcases New Technology Amidst Rising Exports
Yutong Bus launched a technology platform to enhance electric bus efficiency, increasing driving range by 10% and cutting costs by 20%, during Australia’s National Bus and Coach show.
Yutong Bus Introduces New Technology Platform
Yutong Bus, the largest electric-bus manufacturer globally, has launched a new technology platform aimed at enhancing driving ranges and reducing operational costs. This initiative comes as the company advances its position in a growing market driven by the decarbonization of public transport fleets worldwide.
Based in Zhengzhou, China, Yutong presented its platform during Australia’s National Bus and Coach show in Brisbane, highlighting four new electric buses. The platform combines software and hardware advancements to enhance the safety, reliability, and efficiency of its commercial electric vehicles.
In collaboration with battery partner CATL, Yutong plans to boost driving range by 10% while lowering operating costs by 20%. New batteries can fully charge in just 2.5 hours, while long-distance coaches can achieve a 50% charge during driver breaks in only 30 minutes.
Source : China’s world-leading electric-bus maker Yutong touts new tech as exports grow
- Ping-pong diplomacy: Australian table tennis players return to China, five decades after historic tour
- European Business in China: Key Insights from the EU Chamber’s 2024/2025 Position Paper
- Yutong, China’s Leading Electric Bus Manufacturer, Showcases New Technology Amidst Rising Exports
- Fosun in Negotiations to Sell Club Med Stake to CapitaLand of Singapore
- China Demonstrates Expertise in Influencing Global AI Governance
- View from The Hill: China-Australia relations head back to room temperature, with Albanese’s November visit
