China
China’s government is about to spend big on stimulus – can it turn around the country’s sluggish economy?
China faces an economic slowdown with deflation risks and rising unemployment. In response, the government introduced significant stimulus measures to revive growth, but uncertainty about outcomes remains.
China’s relentless economic growth used to be the marvel of the world. Oh, what a memory.
The past couple of years have seen China contend with an economic slowdown amid colliding crises, many of which make it internationally unique. Consumer prices have been approaching deflationary territory, there’s an oversupply of housing, and youth unemployment has soared.
Mounting pressure has forced the Chinese government to step in. Over the past month, Beijing has put forward a set of significant economic stimulus measures aimed at reviving China’s faltering economy.
According to a research note by Deutsche Bank, this stimulus could potentially become “the largest in history” in nominal terms. But there’s still a lot we don’t know. So what kinds of measures that are in this package so far, and has China been here before?
What’s in the package?
On September 24, Pan Gongsheng, governor of China’s central bank, unveiled the country’s boldest intervention to boost its economy since the pandemic.
The initiatives included reducing mortgage rates for existing homes and reducing the amount of cash commercial banks are required to hold in reserves. The latter is expected to inject about 1 trillion yuan (A$210 billion) into the financial market by letting the banks lend out more.
China has been grappling with an oversupply of housing and a property sector crisis.
Charles Bowman/Shutterstock
On top of this, 800 billion yuan (A$168 billion) was announced to strengthen China’s capital market.
This comprised a new 500 billion yuan (A$105 billion) monetary policy facility to help institutions more easily access funds to buy stocks, and a 300 billion yuan (A$63 billion) re-lending facility to help speed up sales of unsold housing.
Further signs of economic revitalisation became evident at a Politburo meeting of China’s top government officials, two days after this announcement.
Chinese President Xi Jinping stressed the urgency of economic revival. Xi even encouraged officials to “go bold in helping the economy” without having to fear the consequences.
That same day, seven government departments released a joint policy package to stabilise China’s 500 billion yuan (A$105 billion) dairy industry, which has been severely impacted by declining milk and beef prices since 2023.
A market rollercoaster
Initially, the market’s response was overwhelmingly positive. Perhaps too positive. In the last week of September, stock markets in Shanghai, Shenzhen, and Hong Kong saw their biggest weekly rise in 16 years.
On October 8, following China’s National Day holiday, turnover on the Shanghai and Shenzhen stock exchanges hit an unprecedented 3.43 trillion yuan (A$718 billion). However, expectations for further stimulus measures were met with disappointment.
China’s National Development and Reform Commission brought forward 100 billion yuan (A$21 billion) in spending from the 2025 budget. That wasn’t enough to sustain market optimism. On October 9, Chinese stocks saw their most severe drop in 27 years.
This downturn only worsened a few days later, when China’s Ministry of Finance hinted there was “ample room” to raise debts but did not specify any new stimulus measures.
China’s president has personally called on local governments to help stimulate the economy.
Andy Wong/AP
Still thin on the details
The market remains deeply uncertain about the future direction of China’s economic policies and what they might mean for the world. Hopes that more details might be released over the weekend were largely dashed.
Back in July, Chinese authorities asserted in their Third Plenary Session communique that China “must remain firmly committed” to achieving this year’s economic growth target of 5%. Compared to the country’s reform-era economic performance, that’s a modest goal.
But facing a persistently sluggish economic outlook, Xi later seemed to subtly shift the tone, changing the language from “remain firmly committed” to “strive to fulfill” in September.
Over the past decades, China has frequently employed massive-scale stimulus measures to revive its economy during downturns. These policies have been able to significantly rejuvenate the economy, though occasionally with some worrying side effects.
In response to the 2008 global financial crisis, China’s State Council released a 4 trillion yuan (A$837 billion) stimulus package. This successfully helped China stand firm through the crisis and was credited as a key stabiliser of the global economy.
But it also accumulated trillions of yuan in debt through local government financing and accelerated the rise of “shadow banking” – unregulated financial activities.
China also spent big on stimulating its economy in 2015, following stock market turbulence, and then again in the wake of the pandemic.
China employed large-scale stimulus measures following a stock market crash in 2015.
Shan he/AP
What should we expect?
What should we expect this time? How balanced or sustainable will any ensuing growth be?
We are still waiting on many of the details about the size and scope of the package, but any big increase in Chinese economic demand will likely have “spillover” effects.
As we’ve discussed, many of the measures announced to date will have their most immediate effect on borrowing, lending and liquidity in China’s stock markets.
That suggests we should watch for what’s called the “wealth effect” in economics. This is the theory that rising asset prices – such as for housing or shares – make people feel wealthier and therefore spend more.
If China’s big stimulus spend causes sustained increases in asset values, it could give rise to economic optimism. Chinese consumers – and investors – may become less anxious about the future.
From Australia’s point of view, that could see increases in demand in areas where our economies are interlinked – iron ore, tourism, education and manufactured food exports.
More broadly, Chinese demand could contribute to growth in other global economies, with a self-reinforcing effect on the world as a whole.
China’s economic performance has implications for the rest of the world.
Andy Wong/AP
Beware financialisation
On the other hand, China’s shift to depending more on volatile asset price rises in its capital markets to sustain growth could have destabilising effects. Where asset price increases benefit those at the “top end of town,” they can breed inequities and imbalances of their own.
China’s “Black Monday” stock market crash in 2015 raised alarm in Beijing. Partly reflecting a wariness of excess financialisation, Xi cautioned at the time that “housing is for living in, not for speculation”.
So far, China is still navigating its path towards a more sustainable development model, striving to strike a balance between sustaining economic growth and stabilising its domestic markets and political landscape. As for the outcome, it remains a profound uncertainty for us all – perhaps China itself included.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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
China
China Expands Nationwide Private Pension Scheme After Two-Year Pilot Program
China’s private pension scheme, previously piloted in 36 cities, will roll out nationwide on December 15, 2024, enabling workers to open tax-deferred accounts. The initiative aims to enhance retirement savings, address aging population challenges, and stimulate financial sector growth.
After a two-year pilot program, China has officially expanded its private pension scheme nationwide. Starting December 15, 2024, workers covered by urban employee basic pension insurance or urban-rural resident basic pension insurance across the country can participate in this supplementary pension scheme. This nationwide rollout represents a significant milestone in China’s efforts to build a comprehensive pension system, addressing the challenges of a rapidly aging population.
On December 12, 2024, the Ministry of Human Resources and Social Security, together with four other departments including the Ministry of Finance, the State Taxation Administration, the Financial Regulatory Administration, and the China Securities Regulatory Commission, announced the nationwide implementation of China’s private pension scheme effective December 15, 2024. The initiative extends eligibility to all workers enrolled in urban employee basic pension insurance or urban-rural resident basic pension insurance.
A notable development is the expansion of tax incentives for private pensions, previously limited to pilot cities, to a national scale. Participants can now enjoy these benefits across China, with government agencies collaborating to ensure seamless implementation and to encourage broad participation through these enhanced incentives.
China first introduced its private pension scheme in November 2022 as a pilot program covering 36 cities and regions, including major hubs like Beijing, Shanghai, Guangzhou, Xi’an, and Chengdu. Under the program, individuals were allowed to open tax-deferred private pension accounts, contributing up to RMB 12,000 (approximately $1,654) annually to invest in a range of retirement products such as bank deposits, mutual funds, commercial pension insurance, and wealth management products.
Read more about China’s private pension pilot program launched two years ago: China Officially Launches New Private Pension Scheme – Who Can Take Part?
The nationwide implementation underscores the Chinese government’s commitment to addressing demographic challenges and promoting economic resilience. By providing tax advantages and expanding access, the scheme aims to incentivize long-term savings and foster greater participation in personal retirement planning.
The reform is expected to catalyze growth in China’s financial and insurance sectors while offering individuals a reliable mechanism to enhance their retirement security.
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. |
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China
How a scandal over sanitary pads is shaping feminist activism in China
Chinese sanitary pad brands face scandal over misleading product quality and pH levels. Consumer outrage grows amid larger issues of women’s health neglect and activism for better standards linked to declining fertility rates.
A string of prominent sanitary pad brands in China have become embroiled in a scandal about the quality of their products. The controversy began in early November when consumers complained that that the advertised lengths of many sanitary pads were misleading.
Then, a few days later, customers discovered that many pads had pH levels similar to textiles such as curtains and tablecloths that do not come into frequent contact with skin, potentially causing irritation or harm to users.
The anger only intensified when ABC, one of the companies at the centre of the controversy, responded dismissively to concerned consumers. ABC emphasised that it was complying with national standards, and reportedly replied to a complaint with: “If you cannot accept it, then you can choose not to buy it”.
Chinese companies have since apologised for their sub-par products, and ABC has even said that it was “deeply sorry” for its “inappropriate” response. But for many women in China, this scandal is about more than just defective products. It is part of a troubling pattern in which women’s health and dignity is blatantly disregarded.
In 2022, Chinese women took to social media to advocate for sanitary pads to be sold on trains. Their demands were swiftly dismissed, with China Railway saying sanitary pads were “private items” that women should prepare for themselves in advance.
Some people on the internet echoed this sentiment, arguing that it was inappropriate and unhygienic to sell sanitary pads on trains. “You don’t want sanitary pads sold alongside food, do you?”, one wrote.
Remarks like this laid bare not only the stigma surrounding menstrual blood in China, where it is seen as polluting and shameful, but also the widespread ignorance among men about menstruation. This was again highlighted by one social media user who questioned absurdly: “Why can’t women just hold it in?” The recent scandal over poor quality sanitary pads is yet another chapter in this story.
The neglect of women’s basic needs in China has worsened with the government’s push for higher birth rates. China’s ruling Communist party began actively promoting higher birth rates in the mid-2010s after decades of limiting most families to one child. The push is driven primarily by the state’s concerns over an ageing population and a shrinking labour force.
This pro-natalist agenda, which has been bolstered by media campaigns urging women to prioritise marriage and motherhood, has pressured many to sacrifice their education and careers. In anticipation of having to provide paid maternity leave, employers also often discriminate in the processes of hiring and promotions.
Meanwhile, feminist advocacy faces censorship and suppression. This has included the shutdown of influential media platforms like Feminist Voices and the blocking of #MeToo-related hashtags. Activists have resorted to creative methods, such as using symbols like the “Rice Bunny” (a term that is pronounced “mi tu” in Chinese) emoji, to navigate strict surveillance and content filtering that targets discussions on gender equality.
Why the #RiceBunny hashtag has become China’s #MeToo.
Fighting for change
Women in China are now rallying for higher standards in the production and regulation of sanitary products. They are actively submitting comments via the government’s online platform for the public to provide feedback to standard setting officials.
On November 22, a representative from the organisation responsible for drafting the new standards stated that public feedback had been heard and will be considered in the process. However, this response is far from satisfactory. The same companies that produce sanitary pads in China are heavily involved in setting these standards.
Women’s active involvement in shaping the revision of national standards is reflective of a consistent strategy in which they use government-provided channels for political participation. Yet women in China have now also started to link the issue of low-quality sanitary products to broader societal challenges, including falling fertility rates.
In the 1970s, when China first implemented its one-child policy, over six children were born for every woman of childbearing age. This had dropped to an average of one-and-a-half by the 2000s. At the same time, there is a growing prevalence of infertility in China. A 2021 study published in The Lancet, a peer-reviewed medical journal, shows that China’s infertility rate rose from 12% in 2007 to 18% in 2020. One in every 5.6 Chinese couples of childbearing age faces challenges in conceiving a baby.
Throughout the recent sanitary pad scandal, hashtags such as #LowQualitySanitaryPadsCauseFemaleIntertility have spread across Chinese social media platforms such as Weibo. By aligning their grievances with national anxieties, feminist activists in China are strategically reframing their demands to align with state priorities.
Such an approach may, on the one hand, risk unintentionally reinforcing existing stereotypes about women and societal expectations. But it may also increase the likelihood of their concerns being addressed, as it presents better sanitary product standards as a critical public health and national concern rather than a “women’s issue” that can simply be dismissed.
Feminist activism in China looks to be growing in maturity. Narratives and strategies are now being carefully crafted to ensure maximum impact both in public and policy arenas.
This article is republished from The Conversation under a Creative Commons license. Read the original article.