Where is Xi and where are the youth jobless numbers?

Editor-in-Chief

• In June, the unemployment rate for 16- to 24-year-olds in urban areas — a stat that China began reporting in 2018 — hit a record level of 21.3%.
• Official figures published today showed China’s overall unemployment rate had risen to 5.3% in July from 5.2% a month earlier, the first increase since February.

The announcement comes after a wave of bad economic news, including sharp falls in trade and foreign direct investment (FDI), sluggish growth in consumer spending, and a liquidity crisis in the property sector.

• The announcement elicited derision on Chinese social media, with some users on Weibo accusing the government of “burying its head in the sand.”

This is the latest in a series of moves to restrict the flow of economic data that is making it harder to do business in China. Here are all the details.

Barry van Wyk

China’s electricity consumption is up: In the first seven months of the year, it neared 5.2 trillion kilowatt-hours (kWh), up 5.2% year on year. In July, the country consumed 888.8 billion kWh, up 6.5% year on year.

The People’s Bank of China (PBOC) unexpectedly cut a benchmark interest rate today by the biggest margin since the start of the COVID pandemic in 2020. One-year loans, or medium-term lending facility (MLF), will be reduced by 15 points to 2.5%, the second reduction since June. A short-term policy rate was also cut by 10 basis points.

China and India began their 19th round of talks over their contested border yesterday, in the latest attempt to ease a three-year standoff along the de-facto Line of Actual Control (LAC) in the Himalayas that separates the two countries.

The military-level dialogue comes just a week before Xí Jìnpíng 习近平 and Indian Prime Minister Narendra Modi are set to meet in-person in South Africa for the annual BRICS summit on August 22-24. Xi is also expected to visit New Delhi for the Group of 20 (G20) summit next month.

Hong Kong’s population rebounded this year, with the mid-year population hitting nearly 7.5 million people, up 152,000 (2.1%) compared to a year ago, according to data released today by the city’s Census and Statistics Department. The uptick was largely attributed to the lift in strict pandemic restrictions since the second half of 2022, a government spokesperson said, with many Hong Kong residents able to return home after being stranded abroad during the COVID pandemic.

Taiwan Vice President William Lai (賴清德 Lài Qīngdé), the leading candidate in next year’s presidential election, stopped in New York on his way to Paraguay. Bloomberg today published an interview recorded in late July in which he says he has no plans to change the island’s formal name, but reiterated that Taiwan is “not subordinate” to China.

Chinese state media: Today is China’s first National Ecology Day (全国生态日 quánguó shēngtài rì) and this is celebrated by Xinhua with a piece on “important instructions” on the occasion from Xi Jinping, and by the People’s Daily with “the story of General Secretary Xi Jinping leading the construction of ecological civilization.”

• China launched a wind power concession in 2003 to encourage Chinese companies to compete in the renewables space. In 2005, new rules required that all of China’s new wind turbines be built with at least 70% domestically-produced equipment.
• Chinese manufacturers started out by copying Western turbines, acquiring Western technology, or by forming partnerships with Western manufacturers.
• By 2022, 98% of China’s wind market was held by 10 Chinese companies.

But Western and Chinese wind power companies remain highly interdependent, and they now have to weather punishing import duties and supply chain bottlenecks.

• China is a dominant player in the production of key elements used in turbine manufacturing, including Glass Fiber Reinforced Polymer (GFRP), castings, slewing ring bearings, and the rare earth elements used in the permanent magnets of direct-drive turbines.
• Production of sophisticated roller bearings, on the other hand, is based almost entirely in the West.

Decoupling in wind power is just not going to happen, and this is why.

Barry van Wyk

• The most popular modern Chinese word for wilderness is huāngyě 荒野. But the term shānshuǐ 山水, used throughout China’s ancient poetry and art, predates it, and refers to a Chinese wild that is connected with spiritual well being, where there is no schism between individuals and nature.
• China is the world’s fourth most biodiverse nation. It has more large carnivore species than any country on earth, equivalent to that of the entire African continent.

The wilderness is part of ancient Chinese heritage, but many modern Chinese tourists still prefer the beaten path, the mountains and lakes found in guide books. Why don’t more people, inside and outside the country, know just how wild China is?

• The ignorance has two sources, according to Song Mingwei, former editor-in-chief of China’s largest outdoors magazine: culture and geography. “Forty years ago, people’s perception of western China was that it was an incredibly remote and even a dangerous place,” Song says.
• But in the last decade, Chinese people’s wilderness awareness has grown at a rate present-day state economic planners would envy. Unfortunately, the wild’s growing popularity has also threatened it.

Kyle Obermann tackles these and other issues in this first of a series of articles on China’s wilderness.

Kyle Obermann

• Where is Xí Jìnpíng 习近平? Phil Cunningham watches China’s primetime news program on state broadcaster CCTV every night and writes caustic commentary about the personality cult around China’s leader that makes up most of the news. For some reason, Xi has not appeared on the show in more than two weeks, and it makes for a refreshing change.
• Wargaming a Taiwan invasion scenario: This week on the Sinica Podcast, host Kaiser welcomes back Lyle Goldstein, director for China engagement at the think tank Defense Priorities and previously a professor at the U.S. Naval War College. You can wait for the general podcast release on Thursday, or you can get the ad-free, subscriber-only version.

Below are links from our NewsBase to other noteworthy reports published in the last 24 hours from and about China.

BUSINESS AND TECHNOLOGY:

Economic gloom
China’s economy shows no bright spots in July, calls for stronger action to ease property woes and boost spending / SCMP (paywall)
“China’s across-the-board weakening of its economy in July, particularly the further decline of private investment and a deepening property crisis, displayed ‘no bright spots’ but only ‘downside surprises,’ serving the latest wake-up call for Beijing’s policymakers.”
China slashes rates, suspends youth jobless data as economy signals sharper downturn / WSJ (paywall)
“Chinese officials said they would stop reporting the country’s youth unemployment rate after months of spiraling increases, depriving investors, economists and businesses of another key data point on the declining health of the world’s second-largest economy.”
China’s economic — and social — contract is fraying / WSJ (paywall)
“The economic news out of China this summer has been, in a word, grim. But the headline figures, as bad as they are, may be hinting at a more fundamental issue: Beijing has failed to convince households that their financial future is secure in the post-COVID era.”
China’s worsening economy is hurting corporate America / WSJ (paywall)
“China’s deepening economic slump is damaging the fortunes of big American companies deeply rooted there, with some growing increasingly pessimistic that the country’s long-awaited post pandemic boom will materialize.”

Stock market gloom
Stock market today: Wall St. futures follow global markets lower after more weak data from China / AP
“Wall Street is sliding before Tuesday’s opening bell following yet more troublesome economic signals from China.”

Economic boom?
China’s power use up 5.2% in first 7 months / China.org.cn
China’s electricity consumption, a key barometer of economic activity, registered steady growth in the first seven months of 2023, official data showed on Monday. During the period, China’s power consumption neared 5.2 trillion kilowatt-hours, up 5.2% from a year ago, the National Energy Administration said…In July alone, the country’s power consumption rose 6.5% year on year to 888.8 billion kilowatt-hours, according to the administration.

Youth unemployment
China skips giving update on surging youth unemployment as economic slump deepens / AP
“China’s government skipped giving an update on a politically sensitive spike in unemployment among young people as official data Tuesday showed an economic slump deepened in July.”
China stops reporting youth unemployment as economic pressures mount / FT (paywall)
Did China’s youth jobless rate really hit 46.5%? / Nikkei Asia (paywall)
“As if the record-breaking 21.3% unemployment rate for urban youth in June’s official survey wasn’t disturbing enough, a scholar digging into the data provided a more shocking stat: Fully 46.5% of China’s 16- to 24-year-olds were neither employed nor in school in March.”
China suspends report on youth unemployment, which was at a record high / NYT (paywall)
The missing data in China’s rising unemployment / Caixin (paywall)

U.S.-China tech war
China’s hi-tech manufacturing reaches ‘tipping point’ amid US curbs as output growth slows to record low / SCMP (paywall)
“Output from China’s hi-tech manufacturing sector dropped in July, as analysts warned a weak position in the tech war with the United States could drag on the overall economic recovery.”

Electric vehicles
Tesla assures Chinese drivers their data is stored locally / Nikkei Asia (paywall)
“Tesla on Monday sought to assure drivers in China that their data is managed in the country, pointing to a local data center that stores information generated by its electric vehicles sold here.”
Chinese airport lifts Tesla ban after sentry mode clarification / Sixth Tone
“The ban stemmed from concerns over the sophisticated cameras in Tesla vehicles. The car maker has since clarified that video footage cannot be viewed by owners or Tesla and all data is stored within China.”

AI
Xiaomi joins AI model fray with upgrade to smartphone voice assistant / Caixin (paywall)
“Xiaomi Corp. has been developing and testing its new artificial intelligence (AI) model on its mobile devices as the smartphone maker seeks to get ahead in the race to develop the technology used to power tools like ChatGPT.”

Real estate and property development
China real estate slump deepens with 8.5% investment drop / Nikkei Asia (paywall)
“Chinese data released on Tuesday shows a steep decline in real estate investment in the first seven months of the year, as developers’ sales dropped and cash availability decreased.”

Tencent
Tencent Music’s quarterly revenue rises as more Chinese users pay for music / Reuters
“China’s Tencent Music Entertainment Group, said on Tuesday second-quarter revenue rose 5.5% from a year ago, driven by growth in paying users on its Spotify-like music streaming platform and a recovery in the advertising market.”

SCIENCE, HEALTH, AND ENVIRONMENT:

Fertility
China’s fertility rate drops to record low 1.09 in 2022- state media / Reuters
“China’s fertility rate is estimated to have dropped to a record low of 1.09 in 2022, the National Business Daily said on Tuesday, a figure likely to rattle authorities as they try to boost the country’s declining number of new births.”

POLITICS AND FOREIGN AFFAIRS:

Diplomacy and local democracy
London teaches Beijing a lesson in democracy / Bloomberg (paywall)
“Farewell, China’s ‘super embassy.’ The historic site of the former Royal Mint opposite the Tower of London won’t be playing host to the largest foreign mission in the UK, at least anytime soon, after Beijing missed a deadline last week to appeal the rejection of its application by elected local representatives.”

The Communist Party, elite politics, and government
Purges don’t move policy in China / Foreign Policy (paywall)
“The removal of Qín Gāng 秦刚 from his post as China’s foreign minister after a weeks-long disappearance fostered a few zesty rumors. Talk of affairs, conspiracies, and corruption has bounced around the net even as other policymakers have been replaced. But whatever sparked Qin’s fall, the impact on Chinese foreign policy and governance will be insignificant — as many of the purges party rule tends to invite are.”

Hong Kong
Hong Kong’s population climbs to 7.5 million, near 2019 level / Reuters
“Hong Kong’s population rose 2.1% from the middle of last year to June this year, provisional government figures showed on Tuesday, marking the first significant uptick since a downward trend began in 2020 due to stringent COVID-19 measures.”
Hong Kong population rises to 7.5 million, boosted by border reopening and new talent schemes / SCMP (paywall)

Taiwan
Taiwan presidential frontrunner says no plans to change island’s formal name / Reuters
“The leading candidate to be Taiwan’s new president, Vice President William Lai (賴清德 Lài Qīngdé), said in an interview on Tuesday that he has no plans to change the island’s formal name, but reiterated that Taiwan is ‘not subordinate’ to China.”
Taiwanese presidential frontrunner talks China and chips: transcript / Bloomberg (paywall)
“Exclusive interview with Taiwan’s Vice President [who says] ‘We must work to maintain the peaceful status quo.’”

The Philippines and Taiwan
Philippines sees risk of conflict over Taiwan as a ‘major concern’ / Reuters
“The Philippines seeks to bolster its ability to address threats while underlining the need to strengthen ties with allies while pursuing an independent foreign policy, under a six-year national security policy published on Tuesday.”

U.S.-China competition and tensions
New generation of leaders may be best hope for U.S.-China relations, says ex-Obama adviser / SCMP (paywall)
“The best hope for U.S.-China relations may be the emergence of a new generation of leaders who want to solve problems rather than settle past scores, a former adviser to Barack Obama has said.”
U.S. industry is getting its way on China / FT (paywall)
“Last week, officials briefing reporters on President Joe Biden’s long-awaited executive order restricting American investment in China used the words ‘narrow’ and ‘narrowly’ no fewer than 10 times in half an hour. They emphasized that new rules would reach just three ‘national security sensitive technologies’: advanced semiconductors, quantum computing and artificial intelligence.”

Germany
China fast encroaching on Germany’s share of EU markets — study / Reuters
“Chinese manufacturers are increasingly giving German manufacturers a run for their money in their home European Union market, especially in the field of advanced industrial goods where Germany is a leader.”

Niger
Chinese firm halts construction of hydroelectric dam in Niger after coup / Caixin (paywall)
“China Gezhouba Group Co. Ltd. (CGGC) has suspended construction on a multimillion-dollar hydroelectric dam in Niger, after a coup in the West African country triggered financial sanctions, cutting off key funding for the project, media reports said.”

SOCIETY AND CULTURE:

Education
Two years after tutoring crackdown, parents still find ways to feed their ‘gold-swallowing beasts’ / SCMP (paywall)
“Life after legal tutoring services for academic classes has resulted in China’s penny-pinching parents making an exception to secure their kids an intellectual edge.”

Livestreaming
China’s livestreaming attracts young hopefuls as competition grows / Reuters
“Only a few months after beginning her career as a livestream sales host in January, Zhang Jinyu, 28, a former model and blogger with a master’s degree in fashion management, had clocked hundreds of hours of broadcasting time working with brands such as YSL Beauty.”