Chinese Economics Thread

Rettam Stacf

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Registered Member
These two recent news (May 28 & June 1, respectively) on China's soybean purchase may be related.

China Securing Brazilian Soy With U.S. Trade Tensions Rising

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China orders state traders to stop buying American farm goods, threatening phase one trade deal
  • Bloomberg reported China paused purchases of some American farm goods including soybeans as Beijing evaluates the ongoing tensions with the US over Hong Kong
  • State-owned traders Cofco and Sinograin were ordered to suspend purchases, according to sources, throwing a new spanner in the works of the phase one deal
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Well it is not unexpected after flurry of threat and false accusation
There's no way Beijing can buy goods from the U.S. when receiving constant attacks from Trump," the person said.
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China tells state firms to halt purchases of major U.S. farm products: sources
Hallie Gu, Keith Zhai and Jing Xu
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June 1, 2020, 5:45 AM CDT

By Hallie Gu, Keith Zhai and Jing Xu
BEIJING/SINGAPORE (Reuters) - China has told state-owned firms to halt purchases of soybeans and pork from the United States, two people familiar with the matter said, after Washington said it would eliminate special treatment for Hong Kong to punish Beijing.
Large volume state purchases of U.S. corn and cotton have also been put on hold, one of the sources said.
China could expand the order to include additional U.S. farm goods if Washington took further action, the people said.

"China has asked main state firms to suspend large scale purchases of major U.S. farm products like soybeans and pork, in response to U.S. reaction to Hong Kong," the source said.
"Now we will watch and see what the U.S. does next."
U.S. President Donald Trump said on Friday he was directing his administration to begin the process of eliminating special treatment for Hong Kong, ranging from extradition treatment to export controls, in response to China's plans to impose new security legislation in the territory.
China is ready to halt imports of more agriculture products from the United States if Washington takes more action on Hong Kong, the sources said.

(GRAPHIC: Value of U.S. agriculture exports to China -
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Chinese importers have cancelled 10,000 to 20,000 tonnes of American pork shipments - equivalent to roughly one week's orders in recent months - following Trump's comments on Friday, the source said.
State purchases of bulk volumes of U.S. corn and cotton have also been suspended but the details were not clear.
In a worst case scenario, if Trump continues to target China, Beijing will have to scrap the Phase 1 trade deal, a second source familiar with the government plan said.

There's no way Beijing can buy goods from the U.S. when receiving constant attacks from Trump," the person said.


Junior Member
While China Caixin’s manufacturing PMI was 50.7 in May (39.8 for the U.S.), the service PMI was 55, indicating a strong rebound.
China leads world economic recovery

Analysts are surprised that a Caixin survey of service industries shows clear signs of expansion

China’s Caixin survey of service industries surprised analysts with a strong expansionary reading of 55 in May, against a consensus expectation of 47. Of the purchasing managers polled by Caixin, that is, 55% saw higher business volume during the month.

Similar surveys of service industries in the other major economies continue to show contraction.

Caixin’s manufacturing survey for China showed a positive reading of 50.7, while the comparable Markit PMI Index for the US in May came in at 39.8. The Caixin services reading reflects a broad sample of privately-owned business, and suggests that Chinese consumers are spending freely. By all indications, this is a grass-roots economic boom rather than an investment-driven expansion driven by state spending.

China’s stock market is the world’s best performer in US dollar terms among the world’s major venues.

The strongest performance in China’s stock market came from consumer staples, information technology and health care, reinforcing the impression that Chinese consumers are driving the recovery.

May retail sales data will be an important gauge. China’s retail sales as of April were down 7.5% year on year, vs. a 22% decline in the US.

Part of China’s resilience despite contracting Western economies stems from a reduction in its dependence on US exports. China’s exports to the US in nominal dollars are virtually flat over the past eight years, while exports to Asia have risen by 32%. As I reported May 20 (“The Asian Century Began in May 2020”), intra-Asian trade boomed during April as the major Asian economies went back to work.

Fiscal stimulus in China has been modest compared to most industrial countries. China’s central government probably will run a fiscal deficit of 3.6% of GDP, up from an earlier target of 2.8% of GDP. The US fiscal deficit by contrast will rise to nearly $4 trillion this year, or close to 20% of GDP. Compared to the $3 trillion in US emergency government spending and an additional $3 trillion in Federal Reserve quantitative easing, China’s fiscal plans are modest. The government plans to sell RMB 3.75 trillion (about US$525 billion) in special local government bonds to fund health care and other projects, and support an additional RMB 300 billion of loans to small and medium enterprises.

China has claimed virtually no new cases of Covid-19 infection since March. In a high-profile sweep, the entire 11 million population of the city of Wuhan was tested last month, and the authorities reported 200 previously undetected cases of asymptomatic Covid-19. According to Chinese authorities, there are only 72 active cases in the entire country. Some Western critics have challenged China’s reporting, and there is no way to verify or refute government data on the rate of new infections. Interviews with residents of major Chinese cities, though, suggest that conditions are not much different from those in Seoul, Taipei or Hong Kong, where infection rates are extremely low.
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Unfortunate. They were supposed to talk about trade iirc.
EU is just playing politics. While they do not want to meet Trump, they will also try to delay meeting with China until after the U.S. presidential election to avoid upsetting Trump further. In the meantime, literally planeloads of German executives are coming back to China at the moment:

German business charter flight arrives in Shanghai
SHANGHAI, June 4 (Xinhua) -- A charter flight carrying German company executives and their families arrived at Shanghai Pudong International Airport on Thursday.

The flight from the European nation carrying over 200 passengers was organized by the German Chamber of Commerce in China.

It was the first business charter flight carrying foreigners that landed in Shanghai in more than two months, indicating the resumption of foreign-related commercial activities in China after the COVID-19 epidemic has eased.

The passengers underwent medical checks before departure and will undergo a 14-day quarantine after arriving in China, according to the chamber.

There are more than 5,200 German companies in China, with over one million employees including German nationals.

Pan Hua, chief representative of the Hamburg Liaison Office China, told Xinhua that bringing German employees to China on a charter flight can help maintain the stability of global supply chains.

Last week, the first business charter flight organized by the chamber arrived in north China's port city of Tianjin.
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