Welcome to the 94th edition of Trade War.
China’s population growth slows fast with fewer babies born, marriages dropping, and the working age population expected to fall by 8.9 million between 2020 and 2025.
Xi economics advisor Liu He signals continued real estate crackdown. Private firms are shamed for pretending to be SOEs. And the IMF reports China’s economic recovery is “unbalanced and momentum is slowing.”
CEO Jamie Dimon regrets quip about JP Morgan outlasting the CCP. And China bull Ray Dalio to open new fund.
China’s tumbling birth rate
The latest data on births reveals a dramatic slowdown in China’s population growth, reports Bloomberg News.
China’s birth rate fell to a new low last year, with 8.5 births per 1,000 people, the lowest since 1978, data from the National Bureau of Statistics shows.
“The government didn’t give reasons for the tumbling birth rate, but the new figures confirm population growth in the world’s No. 2 economy is slowing dramatically, with some demographers estimating it could start falling as soon as this year,” reports the financial news service.
The number of babies born in 2021 may fall below the 12 million of last year, according to one health commission official.
China’s 8.14 million marriages at 17-year low
Last year, there were 8.14 million marriages in China, the seventh consecutive year of falling numbers and the lowest level in 17 years, reports Sixth Tone.
Population facing ‘dire reality’
China’s population is facing a ‘dire reality', report the South China Morning Post’s He Huifeng and Luna Sun.
12 million babies were born last year compared to 14.65 million in 2019, with the pandemic contributing to the decline, according to researchers at Renmin University in Beijing.
“The number of Chinese newborns dropped by 45 per cent in the last two months of 2020 compared to the final year of the notorious one-child policy five years earlier… as the coronavirus particularly dampened the willingness of women under 30 to give birth,” the Post reports, citing the research.
The end to the one-child policy in 2015 led to a two-year rise in births but that has been followed by declines. The average size of Chinese families fell from 4.41 people in 1982 to 3.44 in 2000 and is now at 2.62 members.
“Despite economic development and existing stimulus to encourage childbirth, the momentum of second-child births has been waning and the untapped potential is nearly used up,” the research paper said. (China moved to a three-child policy earlier this year.)
“China’s pro-natalist measures are not urgent nor comprehensive enough for the dire reality,” Huang Wenzheng, a demographer at the Center for China and Globalization, told the Hong Kong-based paper.
“Consistent falls in the number of births in some regions in China of more than 10 per cent this year have prompted further concerns of a deepening population crisis,” reports the SCMP.
8.9 million vanishing workers
Meanwhile, China’s working age population is about to start shrinking fast. In the five years ending in 2025, it will fall by about 8.9 million, tweets economist Stefan Legge.
“After that, each 5-year period is forecasted to show a loss of 20 to 60 million people. The demography challenge could hardly be bigger.”
Elderly care pilots launched
China announced plans to roll out pilot programs next year to better serve China’s fast-growing elderly population, reports Reuters.
Of China’s 31 provinces, regions, and centrally-administered cities, 15 will start pilot programs for elder health care in 2022, with plans to have a nationwide rollout the following year, the National Health Commission announced.
The pilots will oversee an increase in medical establishments that serve the aged, by changing some hospitals into dedicated elderly institutions and supporting the creation of chains of care centers by non-government organizations, reports the news service.
The plan also calls for increasing the number of professionals who specialize in elderly care, expanding home visits, and adjusting the the pricing system for medical care.
China’s population of those 65 or older grew from 8.87 percent in 2010 to 13.5 percent in 2020, reports Reuters. “A diminishing pool of working adults will also hamper China's ability to provide and pay for high-quality services for older people.”
Private firms rapped for being ‘fake SOEs’
Beijing has issued a list of hundreds of private companies pretending to be state-owned, reports Caixin’s Guo Yingzhe.
“Those [353] companies and their subsidiaries are fake SOEs and have no affiliation or equity relationship with central government-supervised SOEs, nor any investment, cooperation or business relationship,” says a recent statement (Chinese) by the State-owned Assets Supervision and Administration Commission (SASAC). “All their behaviors are irrelevant to the central SOEs.”
Housing is [still] for living in, not for speculation
Xi advisor Liu He has repeated the mantra that “housing is for living in, not for speculation,“ reports Bloomberg News’ Tom Hancock.
“Vice Premier Liu He, China’s top economic policy official, vowed to stick to curbs on the housing market under the slogan of “houses are for living in, not for speculation,” in an article [Chinese] published by the ruling Communist Party’s flagship newspaper, the People’s Daily,” reports Bloomberg.
Officials must “focus on stabilizing land prices, house prices, and stabilize expectations,” to “solve household’s housing problems and promote the healthy development of real-estate companies,” Liu wrote in the commentary on China’s economy and the recent Party resolution on history.
China’s recovery “unbalanced and momentum is slowing”
“China’s recovery is well advanced, but is unbalanced and momentum is slowing, even as downside risks are accumulating,” writes the IMF in a press release.
“The Chinese economy continues its recovery, but momentum is slowing. The slowdown is attributed to the rapid withdrawal of policy support and the lagging recovery of consumption amid recurrent COVID-19 outbreaks and lockdown measures,” the IMF writes.
“Recent power outages and a slowdown in real estate investment related to the ongoing policy effort to reduce leverage in the property sector are also weighing on growth. Regulatory tightening targeting technology sectors, while aimed at strengthening competition and data governance, has increased policy uncertainty.”
The IMF’s forecast of 8 percent growth this year and 5.6 percent in 2022 could be challenged by short-term risks including “pandemic uncertainty, consumption weakness, and elevated financial vulnerabilities.” Meanwhile, longer term China’s economy faces pressures from “declining productivity growth, increased decoupling pressures, and a shrinking workforce.”
To ensure high-quality growth, Beijing should continue opening its domestic markets and reforming its state enterprises, while “ensuring competitive neutrality with private firms.” In addition green investments and strengthened social welfare protections are needed, writes the IMF.
JP Morgan will outlast the CCP ... or not
After joking that JP Morgan will outlast the Chinese Communist Party, CEO Jamie Dimon has apologized for his quip, tweets Bloomberg News’ Peter Martin.
"I regret and should not have made that comment," Dimon said in a statement Wednesday.
Speaking earlier at the Boston College Chief Executives Club, Dimon mentioned a “joke” he made during a recent visit to Hong Kong: “The Communist Party is celebrating its 100th year. So is JPMorgan. And I’ll make you a bet we last longer.”
In the same speech, Dimon also pointed out that American per capita gross domestic product is roughly four times higher than China’s and “our demographics are better.”
“If you opened up the doors of America, a billion people come here,” Dimon said. “If you open the doors of China, how many people do you think would go there? And so people should be a little careful when they think that China is ascendant that way.”
In August, Beijing granted JP Morgan the right to have a fully-owned securities firm in China.
Ray Dalio to launch China fund
Famed China bull Ray Dalio will launch a new China fund, reports CNBC’s Evelyn Cheng.
The local subsidiary in China of hedge fund Bridgewater Associates plans to raise over 3 billion yuan ($468.8 million), according to a report (Chinese) in the Securities Times.
Following Beijing’s regulatory crackdown, Dalio in late July encouraged global investors to keep their money in China, reports Cheng.
US-China trade deal disappointment
China’s purchases of U.S. goods continues to slow despite earlier trade deal pledges, reports Bloomberg News.
China bought $9.5 billion of manufactured, agricultural and energy goods in October, with a total of $210.4 billion purchased since the deal was signed in January 2020, Bloomberg reports.
“Last month’s procurement was the slowest pace in a year, with China now having reached only 56% of the two-year target of $378.4 billion,” reports the financial news service. “The trade targets expire at the end of next month, although it includes a sentence that both sides expect the increase in purchases to continue in “2022 through 2025.”
The recent virtual Xi-Biden meeting “didn’t provide much clarity on trade,” reports Bloomberg. “U.S. officials said the topic of trade and restrictions on technology exports didn’t dominate the conversation.”
Notable/In Depth
Research results “reveal a large gender gap in homeownership: only about one-quarter of couples listed the wife as an owner…whereas about 92% listed the husband,” write Peking University’s Jia Yu and Singapore Management University sociologist Cheng Cheng, in the Chinese Sociological Review.
“Given the stratifying effects of homeownership, our findings of the unequal distribution of homeownership between husbands and wives underscore how family dynamics reproduce gender inequality.“
‘Digital natives’ are transforming China, writes Brookings Institution senior fellow Cheng Li, in this adapted excerpt from his new book “China’s Youth: Increasing Diversity amid Persistent Inequality.”
"The massive generational cohort born in China in the 1990s, totaling about 175 million people, has fundamentally changed the country’s social structure, social space, and social connections."
Eighty-four percent of U.S. voters hope to see tensions with China lowered, according to a Morning Consult poll held just before the recent Xi-Biden meeting.
“Voters care more about resolving economic issues than addressing military tensions over Taiwan and human rights concerns in Xinjiang and Hong Kong.”
Only seven percent of Taiwanese voters support outright independence, with 40.8 percent in favor of maintaining the status quo while moving towards independence, reveals a new poll. Meanwhile, just 1.8 percent want unification now.
The China Association of Performing Arts has issued a blacklist of 88 Chinese online celebrities “whose return to the entertainment circles has now become highly unlikely,” tweets Manya Koetse, editor-in-chief of “What’s on Weibo.”
Montana at dusk
Here’s a picture taken just before dusk in the hills outside Missoula, Montana.