Hello from China Charts. We are a pair of finance professionals with boots on the ground in China, each with 10 years of experience in the country. This is The Brief, a collection of charts from the past week on China’s economy and what we find interesting.

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Contents:

1. Work Life

2. Property sales

3. Ex-Finance Minister’s comments

4. Positive sign on global trade?

5. Supply chain disruptions

6. Anniversary of the Nanjing massacre

I. Work Life

Chinese workers work more hours than their peers in Germany, Japan and the U.S.

Unsurprisingly, Chinese workers under-30 are least likely to say work is “very important”.

Our upcoming Long View piece dives into employee/worker views in China.

II. Property Sales

Property sales continue slowdown trend versus 2020 and 2019 levels, 5th straight month of year-over-year contraction. Compare to 6-months of decline in Auto sales from prior issue.

III. Ex-Finance Minister, Luo Jiwei’s comments

Insufficient negativity in Chinese stats

“There are insufficient figures reflecting negative changes” in the economy, Lou said, adding the one-sided data make it harder to assess the government’s current judgment on the “triple forces” overshadowing the economy. “In contrast, the U.S. has both positive and negative numbers.” (Bloomberg)

A key meeting of top leaders this week said China’s growth next year will be weighed down by a “triple” whammy of contracting demand, a supply shock, and weakening expectations. However, none of those are visible in the statistical indicators, which have all been “very good,” Lou Jiwei, a former minister of finance, said at an online event Saturday. (Caixin Global)

US playing “negative sum” game

Regarding geopolitics, China-U.S. tensions can be resolved relatively easily, but relations can also be very unpredictable. The most unpredictable is the U.S.’ China policy because it is illogical. In the midst of the coronavirus pandemic, and the final phase of the 2020 presidential election season, the U.S. side has politicized all areas of the China-U.S. relationship. The U.S.’ thinking is to play a “negative-sum game,” in which the winning player is the one who loses less. In my opinion, China and the U.S. must be rational to avoid unnecessary friction.

In the long run, globalization is inevitable and driven by capital. Countries should make structural reforms to resolve the problems of globalization, such as the worsening income gap and the shift of job opportunities. The decoupling of the U.S. and China will cause both countries to lose, but won’t be achieved anyway. I believe the China-U.S. relationship will eventually get back to normal after some short-term turbulence. (Caixin)

See out past Long View “Is the world deglobalising?” for more on globalization.

IV. Positive sign on global trade?

We (optimistically?) take this as a sign of trade representatives no longer talking past each other. Recognition of structural global trade issues, as opposed to domestic ones Luo Jiwei mentions above, is a major milestone in our opinion.

V. Supply Chain disruptions

We recommend this piece by Law & Liberty that goes into detail on the supply chain issues.

The system itself is overstressed. It is being asked to perform beyond its capacity with extreme constraints on space, equipment, and labor.

The Supply Chain also consists of legs and nodes. Legs are where the goods move. There are only four legs—ocean, air, rail, and rubber (trucks). The nodes are the static, handover points—factories, warehouses, ports, etc.

When the containers are transported the way they are planned to move, costs are manageable and predictable. When things stop moving, costs go up. Every party pays a higher price when things stop moving. This is done to incentivize all parties involved to keep the goods moving.

What happened in 2020 was that the industry as a whole reduced capacity and shut down at the beginning of the pandemic. When the massive demand hit, the industry hadn’t started back up, and the capacity was already gone. Our bite of steak was huge, but effectively our mouth and throat were much smaller.

The Solution:

Unfortunately, the only way the Supply Chain will normalize is when demand finally tapers off. Until then, we as an industry will continue to play catch up.

Read the full piece for more.

VI. Remembering the Nanjing massacre

Today marks the anniversary of the Nanjing massacre. JingDong and Taobao have both switched their app color schemes to black in remembrance, complete with a landing page with a candle. Read more about the Nanjing Massacre here (wikipedia).

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Sincerely,
China Charts Team