CHINA BIWEEKLY - 三菱UFJフィナンシャル・グループ · Chinese, U.S. and French...

1 The Bank of Tokyo-Mitsubishi UFJ(China), Ltd. The Bank of Tokyo-Mitsubishi UFJ, Ltd.

BIWEEKLY DIGEST

[Economy] � October: CPI rises 1.9% and PPI increases 6.9% YoY � Main economic indicators for October show a slowdown in investment,

production and consumption

[Industry] � October auto sales rise 2.0% year-on-year (YoY), down 3.7 points

month-on-month (MoM) � “Singles Day” online sales promotion records an increase in sales of

approximately 40% YoY

[Trade/ Investment] � President Xi announces policies to further ease investment regulations at

China-U.S. summit � The statistics show a rise in exports and imports in October of 6.9% and

17.2% YOY, respectively � Ministry of Commerce releases its Report on the Situation of China’s Foreign

Trade (Autumn 2017)

[Finance/Exchange] � Foreign reserves increase for the ninth consecutive month in October � October cross-border RMB settlements � New RMB loans for October increase by RMB 11.9 billion YoY but fall RMB

606.8 billion MoM

December 4th 2017

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The Bank of Tokyo-Mitsubishi UFJ(China), Ltd., All rights reserved. Copyright 2017

CHINA BIWEEKLY

RMB Internationalization Business Promotion Office

Global Business Division

CHINA BIWEEKLY（December 4th 2017）


[Economy]

◆October: CPI rises 1.9% and PPI increases 6.9% YoY

The National Bureau of Statistics (NBS) of China announced on November 9 that the consumer price index (CPI) for October 2017 increased 1.9% year-on-year (YoY), up 0.3 percentage points from the previous month, marking the second highest growth rate since the beginning of this year.

By item, food fell 0.4% YoY (September: down 1.4% YoY), and non-food rose 2.4% YoY (September: up 2.4% YoY). Among food, while pork dropped 10.1% YoY (September: down 12.4% YoY), mutton jumped 10.2% YoY (September: up 6.2% YoY). Among non-food, medicine and healthcare rose 7.2% YoY

(September: up 7.6% YoY）, housing rose 2.8% YoY (September: up 2.8%YoY), and education and culture rose 2.3% YoY (September: up 2.3% YoY).

The producer price index (PPI) for October 2017 increased 6.9% YoY, unchanged from the previous month. By industry, smelting/processing of ferrous metals rose 30.8% YoY (September: up 31.5% YoY), smelting/processing of non-ferrous metals rose 20.0% YoY (September: up 20.2% YoY), coal mining/washing/processing rose 19.7% YoY (September: up 28.6% YoY), manufacturing of paper/paper products rose 16.6% YoY (September: up 13.8% YoY), and extraction of petroleum/natural gas rose 16.5% YoY (September: up 14.2% YoY), all continuing to show a high growth rate.

◆Main economic indicators for October show a slowdown in investment, production and

consumption

On November 14, the National Bureau of Statistics (NBS) announced the main economic indicators for October.

Investments in fixed assets for January-October increased 7.3% YoY, down 0.2 points from January-September.

Industrial production for October (value-added basis) rose 6.2% YoY (down 0.4 points from September). By product, new energy vehicles (up 92.7% YoY), industrial robots (up 63.7% YoY) and solar power generation (up 35.7% YoY) grew significantly.

Total retail sales of consumer goods for October increased 10.0% YoY, down 0.3 points from September.

The NBS stated that while the growth of investment, production and consumption slowed down, the nation’s economy is stable thanks to stable production demand, a favorable employment situation, price stability and growth in corporate earnings. In particular, the NBC underlined that the current management policies are effective as the national unemployment rate has been reduced to 5% or less, and the number of new employments for January-October was 11.91 million people, exceeding the goal of 11 million people for 2017.

(Note) Cumulative total from January

(Source) Prepared based on data published by NBS

7.3

5.8

0

4

8

12

16

20

24

28

2 3 4 5 6 7 8 91011122 3 4 5 6 7 8 91011122 3 4 5 6 7 8 910

2015 2016 2017

（%）

<Growth in fixed-asset investment>

Investment in fixed assets

Private investment

YoY(％)

(RMB Bn) 51,781.8 7.3

(RMB Bn) 18,988.1 10.9

(RMB Bn) 31,373.4 5.8

Primary industry (RMB Bn) 1,709.6 13.1

Secondary industry (RMB Bn) 19,353.3 2.7

Tertiary industry (RMB Bn) 30,718.9 10.0

Value-added industrial production** - - 6.2

Total retail sales of social consumables (RMB Bn) 3,424.1 10.0

Consumer price index (CPI) - - 1.9

Industrial producer price index (PPI) - - 6.9

Industrial producer purchase price - - 8.4

Export (USD Bn) 188.98 6.9

Import (USD Bn) 150.81 17.2

Trade balance (USD Bn) 38.17 -

By

indust

ry

*: Cumulative total for January-October

**: Of independently-accounted state-run companies and non-state-run companies

with annual sales of at least RMB 20 million

Source: Prepared based on data published by the NBS

＜Main Economic Indicators in October＞

Item Amount

State-owned sector

Private sector

Investment in fixed assets

(excl. investment by rural companies)*



[Industry]

◆October auto sales rise 2.0% year-on-year (YoY), down 3.7 points month-on-month (MoM)

The China Association of Automobile Manufacturers (CAAM) announced on November 10 that October auto sales rose 2.0% YoY to 2.704 million units, slowing from the growth rate of 5.7% YoY in September. Total sales from January to October increased 4.1% YoY to 22.927 million units, slowing from the growth rate of 4.5% YoY for January-September.

By type of vehicles in October, sales of passenger cars rose 0.4% YoY to 2.352 million units (September: up 3.3% YoY to 2.343 million units), and sales of commercial vehicles rose 14.8% YoY to 351,000 units (September: up 23.9% YoY to 367,000 units), showing a slowdown in both growth rates.

Among passenger cars, sedan cars fell 5.4% YoY to 1.107 million units (September: up 3.7% YoY to 1.161 million units), SUVs (sports utility vehicles) rose 13.9% to 1.021 million units (September: up 10.5% YoY to 971,000 units), and MPVs (multi-purpose vehicles) fell 18.1% to 190,000 units (September: down 25.1% YoY to 166,000 units), showing an increase in the SUV growth rate.

Turning to the sales shares in the Chinese passenger car market, Chinese automakers acquired 44.2% (September: 41.2%) with 1,039,000 units, German automakers 19.4% (September: 21.3%) with 457,000 units, Japanese automakers 15.7% (September: 17.0%) with 369,000 units, U.S. automakers 12.7% (September: 12.3%) with 300,000 units, South Korean automakers 5.2% (September: 5.3%) with 123,000 units and French automakers 2.1% (September: 2.0%) with 50,000 units. Chinese, U.S. and French automakers increased their market shares.

October sales of new energy vehicles jumped 106.7% YoY to 91,000 units (September: up 79.1% YoY to 78,000 units), of which sales of electric vehicles (EVs) rocketed up 95.8% YoY to 77,000 units (September: up 83.4% to 64,000 units). Cumulative January-October sales of new energy vehicles increased 45.4% YoY to 490,000 units (January-September: up 37.7% to 398,000 units, of which sales of EVs increased 55.9% YoY to 402,000 units (January-September: up 50.1% to 325,000 YoY).

(Note) Cumulative total of January and February for February data only


10.0

0

2

4

6

8

10

12

14

2 3 4 5 6 7 8 91011122 3 4 5 6 7 8 91011122 3 4 5 6 7 8 910

2015 2016 2017

（%）

<Growth in Retail Sales of Social

Consumables>

(Note) Cumulative total of January and February for February data only


6.2

0

2

4

6

8

10

12

2 3 4 5 6 7 8 91011122 3 4 5 6 7 8 91011122 3 4 5 6 7 8 910

2015 2016 2017

（%） <Growth in Industrial Production>



◆ “Singles Day” online sales promotion records an increase in sales of approximately 40% YoY

According to the report released by Chinese big data research firm Syntum on November 13, the total sales of 20 major EC companies (note) on November 11, an annual online sales promotion day, increased 43.5% YoY to RMB 253.97 billion, showing a significant growth. In terms of breakdown by product, home electronics accounted for the largest share of 20.2%, followed by cellular phones for 8.7%, cosmetics for 8.1%, and baby products for 3.6%.

Turning to the sales shares of the top 5 EC companies, Tmall (Alibaba Group) accounted for 66.2%, JD.com for 21.4%, Suning for 4.3%, Vipshop for 3.4% and Amazon for 2.0%, Tmall claiming an overwhelming share. Sales of Tmall on November 11 increased 39.2% YoY to RMB 168.2 billion, showing an increase in growth rate from 32.3% YoY of the previous year.

Regarding Tmall sales by brand, Apple (U.S.) had the largest sales, followed by local brands Midea Xiaomi, and the sales of each brand on November 11 exceeded RMB 2 billion.

Regarding Tmall’s sales of imported goods by country, the top five importer countries were Japan, U.S., Australia, Germany and South Korea, with Japan claiming the largest share.

The Alibaba group improved its capabilities to process a large amount of data by utilizing cloud technology, etc. and reached new record highs with approx. 330,000 transactions processed per second, and approx. 260,000 settlements processed per second.

(Note): Including Tmall, JD.com, Suning, Gome, Amazon, Vipshop, Jumei, M6go, Mia, Supumall, Guojimami, Muyingzhijia, Leyou, Kaola, Alibaba, DHgate, Aliexpress and etc.

[Trade/Investment]

◆President Xi announces policies to further ease investment regulations at China -U.S.

summit

The state-run Xinhua News Agency released on November 9 that President Xi Jinping announced policies to further ease investment regulations at a China-U.S. summit meeting held during U.S. President Donald Trump’s visit to China (November 8-10).

Specifically, for auto industry, trial measures to lift foreign ownership restrictions, which is currently up to 50%, for utility vehicle and new energy vehicle manufacturers will be taken, limited to pilot free trade zones (*), by June 2018, and tariffs on automobiles will be gradually reduced. Furthermore, foreign ownership restrictions in the financial sector, including the banking, securities, and life insurance industries, will be removed in stages.

In a press conference held on November 10, Vice Finance Minister Zhu Guangyao released the schedule for opening up China’s financial sector. (See the chart below)

This easing of restrictions is based on the principle that President Xi Jinping stated in the keynote speech at the previously held 19th National Congress of the Communist Party of China, to significantly ease the standards for market entry, and widen the opening of service industries to foreign business.

Existing restrictions 2017 2020 2022

Chinese banks, assets

management corporations

A single foreign invester: Up to 20%

Total foreign ownership of multiple

investors: Up to 25%

(Note: Currently, it is possible to establish a

bank wholly foreign-owned)Securities, fund management,

futures companiesUp to 49% Up to 51%

Life insurance companies Up to 51% Lift restrictions

(Source) Prepared based on the announcement by Vice Finance Minister Zhu Guangyao on Nov. 10

<Schedule for easing foreign ownership restrictions in the financial sector>

Lift restrictions

Lift restrictions

Up to 50%



All related departments are proceeding on to establish implementation policies and detailed rules consistent with the principle.

*A pilot free trade zone was first launched in Shanghai City in September 2013, followed by Tianjin City, Guangdong Province, and Fujian Province in April 2015 and Liaoning Province, Zhejiang Province, Henan Province, Hubei Province, Chongqing City, Sichuan Province, and Shaanxi Province established in April 2017, currently totaling 11 locations. These areas experimentally proceed with reform and opening, leveraging characteristics of each area.

◆The statistics show a rise in exports and imports in October of 6.9% and 17.2% YoY

According to the preliminary trade statistics (in USD) announced by the General Administration of Customs (GAC) on November 8, total exports and imports in October rose 11.2% YoY, (September: up 12.7% YoY) to USD 339.79 Bn, with exports up 6.9% YoY (September: up 8.1% YoY) to USD 188.98 Bn, and imports up 17.2% YoY (September: 18.7% YoY) to USD 150.81 Bn. Both maintained a steady growth, though their growth rates are smaller than those in the previous month.

The cumulative amount of total exports and imports for January-October increased 11.6% YoY (January-September: up 11.7% YoY) to USD 3.30722 Tn, with exports up 7.4% YoY (January-September: up 7.5% YoY) to USD 1.82099 Tn, and imports up 17.2% YoY (January-September: up 17.3% YoY) to USD 1.48622 Tn.

Regarding China’s trade with Japan for January-October, exports to Japan rose 4.8% YoY (January-September: up 4.7% YoY) and imports from Japan rose 14.8% YoY (January-September: up 15.0% YoY), the rate of growth for exports increasing slightly from the previous month.

Turning to exports by product (in RMB) for January-October, electronic/mechanical products accounted for 57.7% of the total and continued to be the leading export item. Its growth rate of exports was 12.4% YoY, exceeding the growth rate of 7.4% for the total exports. Of this item, exports rose significantly for automobiles with a 28.7% YoY increase, PCs and related components with a 19.7% YoY increase, ships with a 10.8% YoY increase, and mobile devices with an 8.3% increase.

◆Ministry of Commerce releases its Report on the Situation of China’s Foreign Trade (Autumn

2017)

On November 6, the Ministry of Commerce and the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce jointly released the Report on the Situation of China’s Foreign Trade (Autumn 2017) (hereinafter referred to as “the report”). The report reviewed the situation of China’s foreign trade in the first three quarters of 2017 and provided an outlook for foreign trade through the full year of 2017 and for 2018.

The total amount of imports and exports for January-September 2017 was USD 2.97 Tn (up 11.7% YoY), among which exports amounted to USD 1.63 Tn (up 7.5% YoY), imports amounted to USD 1.34 Tn (up 17.3% YoY), and trade surplus amounted to USD 295.6 Bn. The report mentioned that recovery of foreign demand with the resurgence of the world economy and increase in the import volume and import price of resource products contributed to the increase in overall import volume and amount, resulting in a strong showing for both imports and exports.

Regarding the full year of 2017, the report predicted that a steady trend will be maintained, though the fact that the growth rate in the fourth quarter of 2016 was high may influence the growth for the fourth quarter of 2017, which is to be compared with the fourth quarter of 2016.

(Bn of USD)

Country/

region

Total exports

& imports

(Jan.-Oct.)

YoYExports

(Jan.-Oct.)YoY

Imports

(Jan.-Oct.)YoY

U.S. 470.6 12.8% 346.8 11.2% 123.8 17.4%

Japan 245.4 10.1% 111.0 4.8% 134.4 14.8%

South Korea 225.9 11.4% 83.4 11.2% 142.4 11.6%

Hong Kong 222.5 ▲ 7.5% 216.5 ▲ 3.9% 6.0 ▲ 60.8%

Taiwan 159.1 11.1% 35.2 8.1% 123.9 12.0%

Germany 136.4 10.1% 57.6 7.8% 78.8 11.8%

Australia 111.6 28.8% 32.9 9.1% 78.7 39.4%

Vietnam 93.9 21.5% 56.4 16.3% 37.5 30.1%

Malaysia 77.2 12.4% 33.2 11.8% 44.0 12.9%

Brazil 72.8 28.9% 23.4 33.7% 49.4 26.8%

(Source) Prepared based on data published by the General Administration of Customs

<Imports/exports and growth rate by country/region

for Jan.-Oct. 2017 (Top 10)>



As for 2018, the report said that while China’s foreign trade environment and conditions will stay generally favorable as the global economy steadily recovers and China’s economy grows smoothly, there are uncertainties such as growing trade protectionism and increased pressure on business due to

rise in domestic costs、and China’s foreign trade in 2018 faces both new opportunities and many difficulties and challenges.

The report also mentioned that the first China International Import Expo, which was announced by President Xi Jinping at the Belt and Road Forum in May, will be held in Shanghai in November 2018. The Expo is an important project for China to open up its market to the world, and suggests a shift in a trade policy from one that is export-focused to a focus on balance. China will import more than USD 8 Tn worth of products and services in the next five years, and this will offer a substantial business opportunities to the world.

The Expo is scheduled to be held from November 5, 2018 to November 10, 2018 at the National Exhibition and Convention Center in Shanghai. Currently, preparation is underway, such as launching a new specialized department and sending invitations to more than 200 companies, etc., and a countdown ceremony to celebrate one year before the event was held on November 5. It is estimated that there will be exhibitors from more than 100 countries and regions.

[Finance/ Exchange]

◆Foreign reserves increase for the ninth consecutive month in October

The People’s Bank of China (PBoC) announced on November 7 that the country’s foreign reserves in October increased for the ninth consecutive month, up USD 0.7 Bn from the previous month to USD 3.1092 Tn, but the rate of increase decreased significantly from the USD 16.98 Bn month-on-month increase in September.

PBoC pointed out that decrease in USD value of assets due to depreciation of other currencies against USD led to the decrease in the rate of increase for foreign reserves in October. Meanwhile, PBoC commented that cross-border transfers of funds continue to be stable, supply and demand of foreign currencies is balanced, and the scale of foreign reserves is maintaining stability.

◆October cross-border RMB settlements

The People's Bank of China (PBoC) announced on November 13 that the amount of cross-border RMB settlements in October stood at RMB 318.6 billion for ordinary items, of which RMB 246.8 billion came from trade of goods and RMB 71.8 billion from trade in services. The amount was RMB 126.3 Bn for direct investment items, of which RMB 97.0 Bn came from inward foreign direct investment and RMB 29.3 Bn from outward foreign direct investment.



◆New RMB loans for October increase RMB 11.9 billion YoY, but fall RMB 606.8 billion MoM

The PBoC announced on November 13 that new RMB loans for October increased RMB 11.9 billion YoY to RMB 663.2 billion, but fell RMB 606.8 billion MoM.

Total social financing(*), which shows the amount of liquidity supplied to the real economy, grew RMB 152.2 billion YoY to RMB 1.4 trillion, down RMB 780 billion MoM.

Money supply (M2) as of the end of October rose 8.8% YoY (up 9.2% YoY as of the end of September)to RMB 165.34 trillion. The rate of increase fell 0.4 points from the end of September, when the rate increased for the first time in 11 months.

(*) Total social financing = RMB loans + Foreign currency loans + Entrusted loans + Trust loans + Bank acceptance bills + Corporate bonds + Non-financial companies' equity financing + Compensations made by insurance companies + Investment

properties + Other

CHINA BIWEEKLY - 三菱UFJフィナンシャル・グループ · Chinese, U.S. and French...

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