Archive for ‘Economics’

18/03/2019

China’s crowded co-working industry turns to services amid funding crunch

HONG KONG/SHANGHAI (Reuters) – Co-working space operators in China are shifting their focus from ambitious expansion plans to services such as customising offices for clients, as rising vacancy rates and tighter financing slow their exponential growth of the past two years.

The strategy shift marks a turn of fortunes for the Chinese co-working industry, whose rapid expansion has helped operators such as Ucommune, MyDreamPlus and Kr Space raise hundreds of millions of dollars.

The combined area of co-working space in four first-tier cities in China surged by almost 60 percent between the end of 2017 and October last year, according to industry association China Real Estate Chamber of Commerce.

However, 40 percent of the co-working centres were more than half empty as of October and 40 co-working brands had shut in the first 10 months of 2018, it added.

“There’s a shake-out in the flexible office space,” said Paul Salnikow, global CEO of The Executive Centre, which entered China in 2001 and currently operates 45 premium flexible working centres in nine Chinese cities.

“Since November, we’ve seen operators in China walking away from centres, trying to give it back to the landlord. We’ve been offered furniture from some of these people, saying they’re trying to raise money.”

A common solution for firms appears to be diversification into services that require less capital investment, such as office design and management.

“Our focus this year is ‘management output’,” Mao Daqing, founder of Ucommune, one of the largest co-working space operators in China, told Reuters.

The company expected to partner with enterprise clients and open another 30 flexible working centres for them this year, providing design and management services, from 15 currently, he said. Ucommune’s own branded centres would add five to 10 more to the over 200 already in place.

U.S.-based WeWork started providing such services in China last year and also plans to grow the business.

One industry executive who declined to be identified told Reuters the asset-light model helped to shift rental costs to clients, boosting income.

LANDLORDS AT RISK

A survey of Chinese flexible working space operators by real estate consultancy CBRE in January found that around 68 percent planned to slow or halt expansion this year.

But the rise in vacancy rates and operators dropping out of the business could also spell trouble for Chinese office landlords, especially in major cities like Shanghai where co-working is more common than the rest of Asia-Pacific.“Co-working operators need to go further asset-light and slow one-off CAPEX investment to stay in operation,” said Virginia Huang, CBRE Greater China managing director of advisory and transaction services.

“What this means is landlords also share some risks of this industry, not only the operators.”

Terms of underwriting co-operating operators are also changing, with landlords bearing more costs and risks.

Stanley Ching, Citic Capital’s head of property, said operators were increasingly seeking fit-out subsidies and leasing on profit-sharing models with landlords, as they become more reluctant to pay high rents to secure space.

LaSalle Investment Management, which rents space to co-working operators in China, said picking the right operators and limiting exposure was crucial.

“They’re not recession-proof yet; they haven’t gone through a recession, we don’t know who’s going to survive or who’s not,” said Elysia Tse, LaSalle IM Asia Pacific head of research and strategy.

“So we’ll make sure our portfolio of co-working tenants is a small minority portion.”

One positive trend for co-working operators is the growth in demand from larger corporates amid China’s broader economic slowdown.

“As companies’ outlook on the economy turns conservative and they want to save office costs, they turn to co-working space which provides flexibility,” said Ucommune’s Mao.

“Our clients for office design service also increased for this reason.”

Source: Reuters

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13/03/2019

China’s coastal province Shandong unveils bln-dollar infrastructure plan

JINAN, March 13 (Xinhua) — Transport authorities in east China’s Shandong Province announced that it plans to invest 162.2 billion yuan (about 24.2 billion U.S. dollars) on roads, railways, ports and airports this year.

The investment is aimed at building an integrated infrastructure network in the province, said Jiang Cheng, head of the provincial transport department.

Last year, fixed asset investment in Shandong’s transportation sector reached 160 billion yuan, among which 115.8 billion yuan was spent on roads, highways and waterways, up 28 percent year on year.

This year, 61 percent of the investment will be on roads, Jiang said.

Shandong has set a target for its expressway mileage to reach 7,400 km by 2020. By the end of this year, the total will hit 6,400 km, he said.

More roads, bridges, and stations will be built in rural areas, he added.

About 10 railway projects are under construction in the province this year, with a total planned investment of 32 billion yuan (4.7 billion dollars). Upon completion, the province will be better connected with big cities such as Beijing, Shanghai and Tianjin.

Shandong had a permanent population of 100.4 million at the end of 2018. It is one of the most populous provinces in China. An improved infrastructure network will better meet economic and social needs.

Source: Xinhua

12/03/2019

Congress working committee meeting LIVE| ‘Unemployment highest in 45 years’: Rahul Gandhi at Gujarat rally

CWC meeting LIVE: Congress is launching its Lok Sabha election campaign from Ahmedabad in Gujarat, the home state of PM Narendra Modi and BJP president Amit Shah with a meeting of its top leaders, including Rahul Gandhi, Sonia Gandhi, Manmohan Singh.

The Congress is launching its Lok Sabha election campaign from Ahmedabad in Gujarat, the home state of Prime Minister Narendra Modi and BJP president Amit Shah with a meeting of its Congress Working Committee (CWC) and a public rally by its top leaders.

Congress president Rahul Gandhi, UPA chairperson Sonia Gandhi, former Prime Minister Manmohan Singh and party general secretaries, including Priyanka Gandhi, will be among the senior leaders of the party attending the meeting.

The Congress Working Committee, the highest decision-making arm of the party, would seek answers to failures and unfulfilled promises of the Modi government on governance, agrarian distress, economic issues, unemployment, national security and women’s safety, according to party leaders.

Hardik Patel, a prominent young leader of Patidars, who is leading a movement for reservation in jobs and education for their community, is likely to join Congress and contest the Lok Sabha elections on a party ticket, according to sources.

Source: Hindustan Times

10/03/2019

China’s wealthy families are turning to long holidays abroad as their efforts emigrate overseas are halted

  • Foreign lifestyle experiences are becoming more popular as citizens seek to escape pollution, food and medicine safety worries and authoritarian government controls
  • Citizens encountering more barriers to their dreams of travelling abroad, with severe limits on moving money overseas and restrictions on visiting foreign countries
Thailand, including the likes of Chiang Mai, the United States, Australia, Canada, New Zealand are popular destinations for Chinese families. Photo: Shutteratock
Thailand, including the likes of Chiang Mai, the United States, Australia, Canada, New Zealand are popular destinations for Chinese families. Photo: Shutteratock

Xu Zhangle and her husband and their two children are a typical middle-class couple from Shenzhen, and along with 60 other Chinese families, they are going on an extended holiday to Thailand in July, where they hope to enjoy an immigrant-like life experience.

The family have paid a travel agent around 50,000 yuan (US$7,473) for the stay in Chiang Mai in the mountainous north of the country, including transport, a three-week summer camp for their daughters at a local international school, rent for a serviced apartment and daily expenses.

Zhangle loves Chiang Mai’s relaxed lifestyle and easy atmosphere and wants to live as a local for a month or even longer, instead of having to rush through a short-term holiday.

“It would not be just [tourist] travelling but rather a life away from the mainland.” she said.

Recently, upper middle-class citizens have increased their efforts to safeguard their wealth and achieve more freedom by spending more time abroad.

They have invested considerable amounts of money in overseas properties and applied for long-stay visas, although many of their attempts have ended in failure.

Chinese citizens are encountering more barriers to their dreams of travelling abroad, with severe limits on moving money overseas and restrictions on visiting foreign countries.

Still, growing anxieties about air pollution, food and medicine safety and an increasingly authoritarian political climate are pushing middle class families to look for new ways to circumvent the obstacles so they can live outside China.

Among the options, there is growing demand for sojourns abroad of a month or more, to enjoy a foreign lifestyle for a brief period to make up for the fact that their emigration dreams may have stalled.

“I think this is becoming a trend. Chinese middle-class families are facing increasing difficulties to emigrate and own homes overseas. On the other hand, they still yearn for more freedom, for a better quality of life than what is found in first-tier cities in China.

They are eager to seek alternatives to give themselves and their children a global lifestyle,” said Cai Mingdong, founder of Zhejiang Newway, an online tour and education operator in Ningbo, south of Shanghai.

“First, the availability of multiple-entry tourist visas and the sharp drop in air ticket prices have made it convenient and practical to stay abroad for from a few weeks to up to three months each year.”

Blacklist labels millions of Chinese citizens and businesses untrustworthy

Now, many well-to-do Chinese middle class families can get a tourist visa for five or even 10 years that allows them to stay in a number of countries — including the United States, Australia, Canada, New Zealand and other Asian countries — for up to six months at a time.

“In 2011, a round-trip air ticket from Shanghai to New Zealand cost 14,000 yuan (US$2,000), but now is about 4,000 (US$598),” added Cai.

This opens up the possibility for many middle-class families who are not eligible to emigrate, to live abroad for short periods of time.

Many wealthy Chinese middle class families can get a tourist visa for five or even 10 years that allows them to stay in several countries including the United States, Australia, Canada, New Zealand and other Asian countries, for up to six months at a time. Photo: AP
Many wealthy Chinese middle class families can get a tourist visa for five or even 10 years that allows them to stay in several countries including the United States, Australia, Canada, New Zealand and other Asian countries, for up to six months at a time. Photo: AP

Chinese tourists made more than 140 million trips outside the country in 2018, a 13.5 per cent increase from the previous year, spending an estimated US$120 billion, according to the China Tourism Academy, an official research institute under the Ministry of Culture and Tourism.

“In [the Thai cities of] Bangkok and Chiang Mai, there are more and more Chinese who stay there to experience the local lifestyle, which is different from theirs in China. The life there is very different from that in China,” said Owen Zhu, who now lives in the Bangkok condo he bought last year.

“The freedom, culture and community are diversified. The quality of air, food and services are much higher than in first-tier cities in China, but the prices are more affordable.

“In Bangkok, in many international apartment complexes where foreigners live, the monthly rent for a one-bedroom [apartment] is about 2,000 (US$298) to 3,000 yuan.”

China’s richest regions are also home to the most blacklisted firms
A one-bedroom apartment in Shenzhen in southern China is twice as expensive, with rents continuing to rise rapidly.

There are global goods, and it is easy to socialise with different people from around the world,” Zhu added

“Many Chinese people around me, really, come to Thailand to live for a while and go back to China, but then come back again after a few months.”

Both Cai and Zhu said they discovered the new phenomenon among China’s middle class and decided it was a business opportunity.

Growing anxieties about air pollution, food and medicine safety and an increasingly authoritarian political climate are pushing middle class families to look for new ways to circumvent the obstacles so they can live outside China. Photo: AP
Growing anxieties about air pollution, food and medicine safety and an increasingly authoritarian political climate are pushing middle class families to look for new ways to circumvent the obstacles so they can live outside China. Photo: AP

Zhu is in the process of registering a company in Bangkok and plans to build an online platform to service the needs of Chinese citizens living abroad who do not own property or have immigration status, especially members of the LGBT community.

Cai said dozens of Chinese families in the Yangtze River Delta had paid him to send their children to schools in New Zealand or Europe for around three or four weeks in the middle of the school year, while the parents rent villas in the area, with New Zealand and Toronto in Canada among the most popular destinations.

Last year, Zheng Feng, a single mother and freelance writer from Beijing, rented a small villa in Australia for a month for them, a friend and their children to escape Beijing’s pollution and experience life overseas.

“To be honest, I don’t have enough money to invest in a property or a green card in Australia. But it’s very affordable for me and my son to pay about 30,000 yuan (US$4,484) to live abroad for one or two months.” Zheng said.

China says 2018 growth was worth more than Australia’s whole GDP

Zheng will join the Xu family in Chiang Mai later this year and she is also planning a similar trip to England next year.

Zheng’s friend, Alice Yu, invested in an American EB-5 investor visa a few years ago, and plans to make one or two month-long trips abroad each year until her family is finally able to move to the United States.

Demand for the EB-5 investor visa in China seems to be waning given heightened uncertainty about the future of the programme and US immigration law in general under US President Donald Trump.

Approval for the visa can now take up to 10 years, resulting in a huge backlog that has further dampened interest and led to a significant dip in investment inflows into the US from foreign individuals.

A one-bedroom apartment in Bangkok can cost around bout 2,000 (US$298) to 3,000 yuan a month. Photo: AFP
A one-bedroom apartment in Bangkok can cost around bout 2,000 (US$298) to 3,000 yuan a month. Photo: AFP

“Maybe it will soon become standard for a real Chinese middle-class family to have the time and money to enjoy a long stay at a countryside villa overseas,” said Yu.

“Regardless of whether we can get a long-term visa for the United States, I want my children grow up in a global lifestyle and with more freedom than just growing up on the mainland. So do all wealthy and middle class Chinese families, I think.”

Karen Gao’s son started studying at an international school in Chiang Mai in June, at the cost of about 70,000 yuan (US$10,462) a year, after she quit her job as a public relations manager in Shenzhen and moved to Thailand on a tourist visa.

For better or worse? China’s complicated employment explained

“A few months each year for good air, good food and no censorship and internet control, but cheaper living costs compared to Beijing, it sounds like a really good deal to go,” said Gao, who has now been offered a guardian visa to accompany her son, who has already been given a student visa.

“In Shenzhen, I wasn’t able to get him into school because I had no [local] residence permit.

“It would be the best choice for us because we feel so uncertain and worried about investing and living in the mainland.”

Last year, Gao, like thousands of other private investors mostly middle class people living in first-tier cities, suffered significant losses when their investments in hotels and inns in Dali, Yunnan province, were demolished amid the local government’s campaign to curb pollution and improve the environment around Lake Erhai.

“We were robbed by the officials without proper compensation,” Gao said.

Source: SCMP

10/03/2019

China central bank pledges more policy support as bank lending slides

BEIJING (Reuters) – China’s central bank on Sunday pledged to further support the slowing economy by spurring loans and lowering borrowing costs, following data that showed a sharp drop in February’s bank lending due to seasonal factors.

The central bank is widely expected to ease monetary policy further this year to encourage lending especially to small and private firms vital for growth and job creation.

The central bank’s “prudent” monetary policy will emphasize on counter-cyclical adjustments, said People’s Bank of China (PBOC) Governor Yi Gang, using a phrase that implies the need to fight an economic slowdown.

“The global economy still faces some downward pressure and China faces many risks and challenges in its economy and financial sector,” Yi said at a press conference on the sidelines of the country’s annual meeting of parliament.

There is still some room for the PBOC to cut reserve requirement ratios (RRRs), although the amount of room is less compared with a few years ago, Yi said.

Chinese banks made 885.8 billion yuan ($131.81 billion) in net new yuan loans in February, down sharply from a record 3.23 trillion yuan in January, when several other key credit gauges also picked up modestly in response to the central bank’s policy easing.

Yi said combined January-February new loans and total social financing (TSF), a broad measure of credit and liquidity in the economy, could paint a more accurate picture as they showed a rise of 374.8 billion yuan and 1.05 trillion yuan from a year earlier, respectively.

DEBT DEFAULTS

Analysts say China needs to revive weak credit growth to help head off a sharper economic slowdown this year, but investors are worried about a further jump in corporate debt and the risk to banks as they relax their lending standards.

Corporate bond defaults hit a record last year, while banks’ non-performing loan ratio notched a 10-year high.

Pan Gongsheng, a vice governor at the PBOC, told the same briefing that China will control the amount of bond defaults in 2019, using both legal and market means.

Pan conceded that bond defaults increased last year, but the level of defaults was not high compared with China’s average bad loan ratio.

Premier Li Keqiang told parliament on Tuesday that monetary policy would be “neither too tight nor too loose”. Li also pledged to push for market-based reforms to lower real interest rates.

Chinese policymakers have repeatedly vowed not to open the credit floodgates in an economy already saddled with piles of debt – a legacy of massive stimulus during the global financial crisis in 2008-09 and subsequent downturns.

Sources have told Reuters the central bank is not ready to cut benchmark interest rates just yet, but is likely to cut market-based rates.

Yi said the downward trend in TSF has been initially curbed and broad M2 money supply growth will be more or less in line with nominal gross domestic product growth in 2019, Yi added.

Central bank data showed growth of outstanding TSF, a rough gauge of broad credit conditions, slowed to 10.1 percent in February from January’s 10.4 percent, versus a record low of 9.8 percent in December.

M2 money supply grew 8.0 percent in February from a year earlier, missing forecasts, the central bank data showed. Yi said China’s macro leverage ratio, or the amount of debt relative to GDP, was at 249.4 percent at the end of 2018, a fall of 1.5 percentage points from a year earlier, Yi said.
Analysts note there is a time lag before a jump in lending will translate into growth, suggesting business conditions may get worse before they get better.
Most economists expect a rocky first half before conditions begin to stabilize around mid-year as support measures begin to have a greater impact.
China’s economic growth is expected to cool to around 6.2 percent this year, a 29-year low, according to Reuters polls.
Growth slowed to 6.6 percent last year, with domestic demand curbed by higher borrowing rates and tighter credit conditions and exporters hit by the escalating trade war with the United States.
Source: Reuters
09/03/2019

China to expand mixed ownership reform to more than 100 SOEs

BEIJING, March 9 (Xinhua) — China will expand the mixed ownership reform to more than 100 state-owned enterprises (SOEs), an official with the country’s state-asset regulator said Saturday.

“There will be more than 100 SOEs in the fourth batch of mixed ownership reform, which will be pushed ahead in key areas,” Xiao Yaqing, head of the State-owned Assets Supervision and Administration Commission of the State Council, said at a press conference on the sidelines of the annual legislative session.

Since 2016, China has selected 50 SOEs in three batches to conduct the pilot reform in fields including power, energy, civil aviation, telecommunications, and defence.

The first three batches have done a good job in exploring and experimenting with the means, equity ratio and governance structure of mixed ownership, Xiao said.

Next, China will create a sound environment for the reform so that enterprises of all kinds of ownership can realize integrated and common development, he added.

Source: Xinhua

09/03/2019

China exports saw biggest fall in three years in February

Men stand on a port in ChinaImage copyrightGETTY IMAGES

Chinese exports saw the steepest fall in three years in February, adding to worries about growth in the world’s second largest economy.

Official data show exports from China plunged 20.7% from a year earlier, as its trade war with the US took a toll.

Imports fell 5.2% and the figures sent Asia stock markets sharply lower.

Economists caution the data for the first two months of the year can be affected by the Lunar New Year holiday.

The fall in exports was far bigger than the 4.8% drop forecast in a Reuters poll of economists.

Imports also saw a sharper than expected fall of 5.2% year-on-year, the data showed.

Julian Evans-Pritchard, Senior China Economist at Capital Economics said even accounting for seasonal distortions, the figures were “downbeat”.

“Tariffs are weighing on shipments to the US,” he wrote in a research note.

The US and China have placed tariffs on billions of dollars worth of one another’s goods since July, casting a shadow over the global economy.

Even though officials have sounded more positive about negotiations with the US recently, failure to achieve a deal would see tariffs on $200bn (£152bn) of Chinese goods rise almost immediately and could see the US impose fresh tariffs.

Still, Mr Evans-Pritchard said “broader weakness in global demand means that, even if Trump and Xi finalise a trade deal soon, the outlook for exports remains gloomy.”

The data comes as Beijing this week unveiled $298bn worth of tax cuts to boost slowing growth.

Source: The BBC

08/03/2019

China Focus: China to ramp up efforts to provide better elderly care

BEIJING, March 7 (Xinhua) — As China is faced with a growing aging population, the government has pledged to provide better elderly care services and facilities for the silver-haired, and give a strong boost to domestic demand.

Elderly care remains high on the agenda in this year’s government work report, which said that significant steps would be taken to develop elderly care, especially community elderly care services.

The number of people in China aged 60 and above reached 250 million by the end of 2018, accounting for 17.9 percent of the country’s population.

“Growing demand will trigger greater market potential in China’s senior care industry,” said Tang Wenxiang, founder of Fullcheer Group, a major elderly care services provider based in Changsha, capital of central China’s Hunan Province.

Fullcheer Group has 50 branches in more than 10 provinces and cities with a total of 5,000 beds. Tang expects the number of his company’s beds to increase to 50,000 in five years.

“There is still a huge gap between the demand of China’s aging population and the number of elder care facilities,” Tang said.

The country will provide support to institutions offering services in the community like day care, rehabilitation care, and assisted meal services and outdoor fitness services using measures such as tax and fee cuts and exemptions, funding support, and lower charges for water, electricity, gas and heating, according to the government work report.

Tang said government’s measures to develop elderly care services greatly boosted the confidence of entrepreneurs who run businesses in the sector.

Developing the elderly care industry is good for improving people’s well-being and stimulating consumption, said Xu Hongcai, an economist with the China Center for International Economic Exchanges.

“Consumption on elderly care requires the supply of the elder care market, offered by both the government and the market,” he said.

A research report issued by Guolian Securities suggests that a string of policies have been carried out in China to encourage the participation of the social sector in the senior care industry, which will boost the country’s consumption in the health and medical sectors.

As China opens this sector, foreign firms such as France’s Orpea and Japan’s Nichii have tapped the elderly service market in China.

China still lacks leading players in the senior care market which includes nursing care, rehabilitation assistive devices and daily necessities for seniors, Tang said.

The long-term care insurance system will help increase the occupancy rate of some elderly services facilities given a number of elderly people can hardly afford the expenses, according to Tang.

Source: Xinhua

07/03/2019

Tibet has 667,000 people engaged in environmental protection

LHASA, March 6 (Xinhua) — To conserve the ecosystem while eradicating poverty, southwest China’s Tibet Autonomous Region hired 309,000 farmers and herders as forest rangers in 2018, bringing the total number of people engaged in environmental protection to 667,000.

Average annual subsidies in the jobs increased to 3,500 yuan (522 U.S. dollars), according to the regional department of ecology and environment.

Last year, Tibet invested 10.7 billion yuan in environmental protection funds, with 74,133 hectares of trees planted and forest coverage rising to 12.14 percent.

The region also invested 100 million yuan in enhancing the ecology along the upper reaches of the Yangtze, China’s longest river.

“Protecting the forests is equal to protecting our homeland,” said a local Tibetan forest ranger.

The implementation of a series of measures contributed to environmental protection, making Tibet one of the areas with the best ecological environment in the world, authorities said.

Source: Xinhua

07/03/2019

Chinese companies in Africa create great development opportunities

BEIJING, March 6 (Xinhua) — Chinese companies operating in Africa have created huge opportunities for the continent’s development, a senior political advisor said Wednesday at a press conference on the sidelines of the annual sessions of the top legislative and political advisory bodies.

There are more than 10,000 Chinese companies in Africa and over 90 percent of them are private businesses, said Nan Cunhui, a member of the Standing Committee of the Chinese People’s Political Consultative Conference National Committee, citing a recent survey.

These companies have built roads, railways, airports, ports and other infrastructure projects in Africa, addressing the bottleneck in development, said Nan, also a vice chairman of the All-China Federation of Industry and Commerce. They have also invested in green energy development, including photovoltaic power stations, to boost local power supply.

The Chinese companies have also brought advanced technologies, development concepts and management to the continent, Nan said.

Citing the operation of an industrial park in Egypt as an example, Nan said over 95 percent of the employees are locals who develop professional skills and gain managerial know-how through their work.

“Chinese companies in Africa have contributed a lot to the local economic development through infrastructure construction, job creation and tax payment,” Nan said. “I believe China-Africa cooperation will go from strength to strength.”

Source: Xinhua

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