While China’s coastal provinces and major cities are recovering from the COVID-19 pandemic, firms in its poorer western and central provinces are falling well behind in metrics such as output and sales revenue, a private survey showed yesterday.
The majority of firms are recovering far more slowly than those in wealthier areas around Beijing, Shanghai and Guangdong, a report from China Beige Book International (CBB) said.
While revenue and profits for the third quarter saw steep declines year-on-year across China, many interior provinces also saw output, domestic orders and sales prices falling from the second quarter as well, according to a quarterly survey of thousands of Chinese firms by the US-based consultancy.
Photo: Reuters
For instance, revenue increased 41 percent quarter-on-quarter for Shanghai and the wealthy eastern provinces of Zhejiang and Jiangsu, but fell by 10 percent in the more remote western regions of Tibet, Gansu, Qinghai and Xinjiang, it said.
“For the corporate elite — large firms and those based in the Big 3 coastal regions — the economy is accelerating... But the rest of China — most firms in most regions — are seeing a far more muted recovery,” CBB chief economist Derek Scissors said in comments issued with the survey.
Last month, China’s industrial output accelerated the most in eight months, while retail sales grew for the first time this year, suggesting the economic recovery is gathering pace as demand starts to improve more broadly from the COVID-19 crisis.
However, the retail recovery is unbalanced and spending on luxury goods, vehicles and electronics is leading the charge, rising faster than food, clothing and other essentials.
While the supply side of China’s economy has shown resilience, a strong and broad rebound in spending is needed for a more meaningful economic recovery. Even though the virus is under control, income and job losses due to the pandemic have made poorer Chinese unwilling or unable to increase spending, keeping a lid on the rebound.
“Higher-income households have probably built up savings, because of the forced reduction in consumption during lockdown, and could now be ready for a spending spree. It is lower-income households that face a longer slog of normalizing their finances,” Gavekal Dragonomics (龍洲經訊) analyst He Wei (何暐) said in a recent report.
The lopsided recovery can also be seen in the auto market.
Sales of luxury vehicles have recovered much quicker than regular ones, and are now almost one-fifth of all vehicles sold.
Regional divergences were also visible in credit, CBB said, with a far higher proportion of companies in the wealthy areas around Beijing, Shanghai and Guangdong accessing capital.
“Borrowing levels stayed flat or fell outright in 4 of 5 non-coastal regions,” CBB said in the report.
Additional reporting by Bloomberg
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said that its board of directors approved a proposal to subsidize employees’ purchases of TSMC shares by covering 15 percent of investments, the chipmaker’s latest effort to recruit and retain talent. Employees of TSMC and its fully owned subsidiaries would be allowed to allocate 15 to 20 percent of their monthly salary for share purchases, based on a company employee stock purchase plan, the chipmaker told the Taipei Times. The plan is to take effect in August or September, it said. The board also approved the distribution of a cash dividend of NT$2.75 per share for
This week’s undoing of the TerraUSD algorithmic stablecoin and its sister token, Luna, has ramifications for all of crypto. First, there is the immediate impact: The rapid collapse of a once-popular pair of cryptocurrencies sent a ripple effect across the industry, contributing to plummeting coin prices that wiped hundreds of billions of market value from the digital-asset market and stoked worries over the potential fragility of digital-asset ventures. Then there are the knock-on effects. In addition to delivering punishing losses to individual users and investment firms, the spectacular failure of a market darling like Terra threatens to have a cooling effect
PRODUCTION VALUE: The institute said production value of the foundry sector is expected to grow 28 percent this year after TSMC posted record revenue for April The Industrial Technology Research Institute (ITRI, 工研院) yesterday raised its growth forecast for Taiwan’s semiconductor industry, expecting production value to expand about 19.4 percent to NT$4.88 trillion (US$164.24 billion) this year, primarily aided by stronger growth from foundry companies amid a chip crunch. That means the output of Taiwan’s semiconductor industry would again outpace that of its global peers, which collectively are expected to grow 10.4 percent this year, ITRI said. The institute three months ago estimated that the production value of the nation’s semiconductor industry would grow 17.7 percent annually to NT$4.81 trillion this year, compared with NT$4.08 trillion last year. The
Formosa Plastics Corp (台灣塑膠), the flagship entity of Formosa Plastics Group (台塑集團), yesterday said that it would build a new manufacturing site in Texas at a cost of US$207 million. When completed, the plant would have an annual capacity of 100,000 tonnes of alpha olefins, which are used to make high-density polyethylene (HDPE), among other products, the company said. About 63,000 tonnes would be used by Formosa Plastics, while the remaining 37,000 tonnes would be sold on the international market, it said. The projected completion date of the plant is October 2025, and mass production is scheduled for December that year after a
RSS