American would call this "Cash for Clunkers". It's what you do when your industries are in the shit.
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American would call this "Cash for Clunkers". It's what you do when your industries are in the shit.
It seems China wants more tourists. Announced in December, I missed it at the time. More details in the link.
"The National Immigration Administration (NIA) announced today that it will fully relax and optimize the visa-free transit policy, which is effective immediately. The stay duration for foreign nationals eligible for visa-free transit has been extended from the previous 72 hours and 144 hours to 240 hours (10 days). Additionally, 21 ports of entry and exit have been added for visa-free transit individuals, further expanding the allowed areas for visa-free transit travelers. Individuals from 54 eligible countries, including Russia, Brazil, the United Kingdom, the United States of America, and Canada, traveling from China to a third country (region), can enter visa-free through any of the 60 open ports in 24 provinces (autonomous regions and municipalities), and stay within the allowed areas for visa-free transit travelers for no more than 240 hours."
China's visa-free transit policy fully relaxed and optimized
I might do my next UK trip via Shanghai.
Nearly 3 million Chinese restaurants, cafes shut down
China has seen nearly 3 million restaurants, cafes and other catering outlets shut down in the past year, according to industry website Hongcan, with many going bankrupt and even hugely popular chains slashing costs by shutting down hundreds of stores.
In early December, top Taiwanese chicken house Zhenghao Da Da went viral on Weibo after it announced it would shutter all its stores in China, starting with the flagship outlet in Shanghai’s New World City Plaza mall.
But the announcement was just “the tip of the iceberg,” according to a Jan. 21 analysis published on Hongcan’s website.
“‘Contraction’ and ‘stores closing’ were the new buzzwords for the catering industry in 2024,” the article said. “The negative news just kept on coming, and the sense of chill was overwhelming.”
The closures have been seen across all sectors of the industry, from fine dining to cafes, bakeries and hot pot chains to snacks and fast food.
Even high-end Western fine-dining outlets have been hit by bankruptcy, absconding owners and unpaid wages, “in an extremely embarrassing manner,” the article said, citing the closure of Beijing-based Michelin-starred Italian restaurant Opera BOMBANA, which shut down in April 2024 while still owing its staff wages and suppliers money.
L’Atelier 18, a French restaurant on the Bund in Shanghai with a three-Michelin-star chef shut down after only six months in operation, while Paul Pairet at Roodoodoo also shut its doors less than a year after its opening, according to a list of high-profile closures compiled by Redcan.
Tea shops hit hard
Snacks, baked goods and beverages have been equally hard hit, though, with milk tea store Taigai, Jixu Fresh Fruit Coffee and Thank You Tea all shuttering multiple stores through the year, the list showed.
Tea chain Cuonei Village slashed its stores from nearly 500 across more than 80 Chinese cities to less than 50 stores by early December, while Fu Xiaotao and Yuan Zhenzhen Milk Tea have dropped from more than 300 stores apiece to just a handful.
Diners who once piled the shrimp high at Xiamen’s fancy seafood buffet chain Haidinghui have been left out in the cold, while Japan’s Mos Burger exited the Chinese market, closing six outlets in June.
Hotpot chains Just Thai, Xianhezhuang and Panda Lao Zao have all slashed the number of their outlets.
The report cited “more rational” behavior from consumers, increasing global uncertainty and the “shrinking assets of the middle classes” as the driving force behind the mass closures.
Flagging economy to blame
A current affairs commentator from the eastern province of Zhejiang who gave only the surname Lu for fear of reprisals said the industry has been hit from all directions.
“On the demand side, there has been weak domestic economic recovery since the ending of pandemic restrictions,” Lu said. “The assets of the middle classes are shrinking, civil servants are owed wages, and a lot of ordinary people are unemployed.”
“This means consumption has become more rational and focused on value for money and demand more rigid, while high-end catering and internet celebrity restaurants have been hit hard,” he said. Internet celebrity restaurants are eateries that are popular online and attract customers through mass exposure.
A resident of the eastern city of Taizhou who gave only the surname Wang for fear of reprisals said the impact on the street is highly visible where he lives.
“A lot of restaurants in Taizhou have shut their doors, including a lot of long-established ones,” he said.
“Some that were open for only four or five years have also closed.”
The outlets that are still booming are those frequented by government officials and departments, according to Wang.
Online commentator Lao Zhou said the sector has also been hit by rising rents and prices for raw materials.
But mostly, it’s about the flagging economy.
“The closure of restaurants shows us that ordinary people have no money in their pockets,” Lao Zhou said. “Who’s going to go eat in a restaurant if they have no money?”
Access Denied
But they're all happy and rich surely?Quote:
“The closure of restaurants shows us that ordinary people have no money in their pockets,” Lao Zhou said. “Who’s going to go eat in a restaurant if they have no money?”
:rofl:
China pledges measures to boost dwindling foreign investment
China has said it will take steps to “stabilize” foreign investment amid plummeting investment inflows in recent years, but analysts say the measures announced Monday by Premier Li Qiang are unlikely to result in genuine policy changes.
Li told State Council executive meeting on Monday that “foreign enterprises play an important role in job creation, export stabilization and industrial upgrading,” state news agency Xinhua reported.
Foreign direct investment in China has weakened since the end of COVID-19 restrictions, and has been flagged as a key factor in Beijing’s push to kick-start flagging economic growth.
Li called for “more practical, effective measures to stabilize existing foreign investment and expand new investment,” the Xinhua report said.
The meeting called for a pilot program opening up the service sector to foreign investors and “encouraged foreign capital to undertake equity investment in China,” the agency reported.
Inbound foreign direct investment, or FDI, fell by 13.7% in 2023 to US$163 billion, according to statistics from the Ministry of Commerce, although the country remained the number four destination for investors in the world, according to the International Monetary Fund.
Investor confidence has been hit by “slower-than-expected economic recovery following COVID-19, lower prospects for long-term growth, capital controls, lack of policy predictability and regulatory transparency, and tensions in the U.S.-China relationship,” according to the U.S. State Department’s 2024 Investment Climate Statement.
The State Council meeting called for “domestic and foreign enterprises to be treated equally in government procurement, as well as the need to broaden financing channels for foreign enterprises,” Xinhua reported.
China is the 11th most restrictive economy out of 89 countries surveyed by the Organization for Economic Cooperation and Development, a ranking that reflects “longstanding prohibitions on investment in key sectors and unpredictable regulatory enforcement,” according to the State Department report.
“Obstacles include foreign ownership caps, requirements to form joint venture (JV) partnerships with local firms, industrial policies to develop indigenous capacity or technological self-sufficiency, licensing tied to localization requirements, and pressures to transfer technology as a prerequisite for gaining market access,” the report said.
‘Meetings are just slogans’
Analysts said Li will have a hard time turning that around, especially as President Xi Jinping has the last word on economic policy.
“All of Li Qiang’s State Council meetings are just slogans, because he’s not allowed to make changes to the broader policies laid down by Xi Jinping,” current affairs commentator Zheng Xuguang told RFA Mandarin in a recent interview.
He said Xi seems resistant to calls for him to relinquish top-down control of the economy, as late supreme leader Deng Xiaoping did from 1979, unleashing decades of breakneck economic growth.
“No one is even thinking about that now, and Xi Jinping seems to lack determination when it comes to solving [the problem of openness to foreign investment],” Zheng said.
Wang En-kuo, honorary president of the Taiwanese Business Association in the eastern city of Nanchang, said tariffs on exports to the United States are a major factor in turning away foreign investors from China.
“Everyone knows that these are just declarations, that won’t have any real effect,” Wang told RFA Mandarin in a recent interview. “That’s because China’s fundamental problems haven’t been solved.”
“For foreign-invested enterprises that produce in China for export, tariffs are the biggest consideration,” Wang said. “Export-oriented foreign investment will certainly consider looking for other locations where tariffs or production costs can be reduced.”
Even foreign-invested enterprises focused on the domestic Chinese market are facing severe competition from Chinese companies.
“If they can’t make a profit, they’ll have to leave,” Wang said.
Other destinations
And it’s not just foreign companies that are leaving.
South Korea’s Ministry of Trade, Industry and Energy has said Chinese companies are currently setting up in South Korea at the rate of one a day, according to a Feb. 10 report by BusinessKorea.
It cited the example of a semiconductor and display manufacturing company in Daejeon that was acquired by a Chinese company last year. While most of the company’s employees are still Korean, more than 90% of the shares are now controlled by Chinese capital, the report said, suggesting it was a form of “identity laundering” aimed at circumventing U.S. tariffs on Chinese-made goods.
According to Wang, the most popular destination for Chinese companies looking to relocate is currently Vietnam.
“Chinese exports to Vietnam grew by more than 25% year-on-year in the first three quarters of 2024, and almost all of [the orders] were from Chinese companies,” Wang said.
“The Chinese government is not worried about the departure of local companies, because even if these companies move abroad, they will still import raw materials from China.”
Zheng said Chinese companies have been relocating their production facilities, while still importing raw materials and spare parts from China.
“Companies may be able to avoid the 10% tariff by relocating to other countries, as [U.S. President] Trump’s tariffs haven’t hit those places yet,” he said. “But Trump’s policy is very clear: tariffs will be imposed on all countries.”
He said Vietnam is a salient example.
“Exports from Vietnam and Mexico have increased significantly, which is actually the effect of Chinese companies moving there,” Zheng said. “If Trump imposes tariffs across the board, then it’ll be pointless to relocate production facilities.”
China’s General Administration of Customs has said that Chinese exports to Vietnam will grow by nearly 18% in 2024 to a record high of US$162 billion, Bloomberg reported, while exports to Japan totaled US$152 billion during the same period.
Access Denied
Grab thyself a coffee.
Quote:
The Chinese government has promised new child care subsidies, increased wages and better paid leave to revive a slowing economy. That is on top of a $41bn discount programme for all sorts of things, from dishwashers and home decor to electric vehicles and smartwatches.
Beijing is going on a spending spree that will encourage Chinese people to crack open their wallets.
Simply put, they are not spending enough.
Monday brought some positive news. Official data said retail sales grew 4% in the first two months of 2025, a positive sign for consumption data. But, with a few exceptions like Shanghai aside, new and existing home prices continued to decline compared to last year.
While the US and other major powers have struggled with post-Covid inflation, China is experiencing the opposite: deflation - when the rate of inflation falls below zero, meaning that prices decrease. In China, prices fell for 18 months in a row in the past two years.
Prices dropping might sound like good news for consumers. But a persistent decline in consumption - a measure of what households buy - signals deeper economic trouble. When people stop spending, businesses cut prices to attract buyers. The more this happens, the less money they make, hiring slows, wages stagnate and economic momentum grinds to a halt.
That is a cycle China wants to avoid, given it's already battling sluggish growth in the wake of a prolonged crisis in the property market, steep government debt and unemployment.
The cause of low consumption is straightforward: Chinese consumers either don't have enough money or don't feel confident enough about their future to spend it.
But their reluctance comes at a critical moment. With the economy aiming to grow at 5% this year, boosting consumption is a top priority for President Xi Jinping. He is hoping that rising domestic consumption will absorb the blow US tariffs will inflict on Chinese exports.
So, will Beijing's plan work?
To tackle its ailing economy and weak domestic demand, Beijing wrapped up its annual National People's Congress last week with increased investment in social welfare programmes as part of its grand economic plan for 2025.
Then came this week's announcement with bigger promises, such as employment support plans, but scant details.
Some say it is a welcome move, with the caveat that China's leaders need to do more to step up support. Still, it signals Beijing's awareness of the changes needed for a stronger Chinese consumer market - higher wages, a stronger social safety net and policies that make people feel secure enough to spend rather than save.
A quarter of China's labour force is made up of low-paid migrant workers, who lack full access to urban social benefits. This makes them particularly vulnerable during periods of economic uncertainty, such as the Covid-19 pandemic.
Rising wages during the 2010s masked some of these problems, with average incomes growing by around 10% annually. But as wage growth slowed in the 2020s, savings once again became a lifeline.
The Chinese government, however, has been slow to expand social benefits, focusing instead on boosting consumption through short-term measures, such as trade-in programmes for household appliances and electronics. But that has not addressed a root problem, says Gerard DiPippo, a senior researcher at the Rand think tank: "Household incomes are lower, and savings are higher".
The near-collapse of the property market has also made Chinese consumers more risk-averse, leading them to cut back on spending.
"The property market matters not only for real economic activity but also for household sentiment, since Chinese households have invested so much of their wealth in their homes," Mr DiPippo says. "I don't think China's consumption will fully recover until it's clear that the property sector has bottomed out and therefore many households' primary assets are starting to recover."
Some analysts are encouraged by Beijing's seriousness in targeting longer-term challenges like falling birth rates as more young couples opt out of the costs of parenthood.
A 2024 study by Chinese think tank YuWa estimated that raising a child to adulthood in China costs 6.8 times the country's GDP per capita - among the highest in the world, compared to the US (4.1), Japan (4.3) and Germany (3.6).
These financial pressures have only reinforced a deeply ingrained saving culture. Even in a struggling economy, Chinese households managed to save 32% of their disposable income in 2024.
That's not too surprising in China, where consumption has never been particularly high. To put this in perspective, domestic consumption drives more than 80% of growth in the US and UK, and about 70% in India. China's share has typically ranged between 50% to 55% over the past decade.
But this wasn't really a problem - until now.
There was a time when Chinese shoppers joked about the irresistible allure of e-commerce deals, calling themselves "hand-choppers" - only chopping off their hands could stop them from hitting the checkout button.
As rising incomes fuelled their spending power, 11 November in China, or Double 11, came to be crowned as the world's busiest shopping day. Explosive sales pulled in over 410 billion yuan ($57bn; £44bn) in just 24 hours in 2019.
But the last one "was a dud," a Beijing-based coffee bean online seller told the BBC. "If anything, it caused more trouble than it was worth."
Chinese consumers have grown frugal since the pandemic, and this caution has persisted even after restrictions were lifted in late 2022.
That's the year Alibaba and JD.com stopped publishing their sales figures, a significant shift for companies that once headlined their record-breaking revenues. A source familiar with the matter told the BBC that Chinese authorities cautioned platforms against releasing numbers, fearing that underwhelming results could further dent consumer confidence.
The spending crunch has even hit high-end brands - last year, LVMH, Burberry and Richemont all reported sales declines in China, once a backbone of the global luxury market.
On RedNote, a Chinese social media app, posts tagged with "consumption downgrade" have racked up more than a billion views in recent months. Users are swapping tips on how to replace expensive purchases with budget-friendly alternatives. "Tiger Balm is the new coffee," said one user, while another quipped, "I apply perfume between my nose and lips now – saving it just for myself."
Even at its peak, China's consumer boom was never a match for its exports. Trade was also the focus of generous state-backed investment in highways, ports and special economic zones. China relied on low-wage workers and high household savings, which fuelled growth but left consumers with limited disposable income.
But now, as geopolitical uncertainties grow, countries are diversifying supply chains away from China, reducing reliance on Chinese exports. Local governments are burdened by debt, after years of borrowing heavily to invest, particularly in infrastructure.
Xi Jinping has already vowed "to make domestic demand the main driving force and stabilising anchor of growth". Caiyun Wang, a National People's Congress representative, said, "With a population of 1.4 billion, even a 1% rise in demand creates a market of 14 million people."
But there's a catch in Beijing's plan.
For consumption to drive growth, many analysts say, the Chinese Communist Party would have to restore the consumer confidence of a generation of Covid graduates that is struggling to own a home or find a job. It would also require triggering a cultural shift, from saving to spending.
"China's extraordinarily low consumption level is not an accident," according to Michael Pettis, a senior fellow at the Carnegie Endowment for International Peace. "It is fundamental to the country's economic growth model, around which three-four decades of political, financial, legal and business institutions in China have evolved. Changing this won't be easy."
The more households spend, the less there is in the pool of savings that China's state-controlled banks rely on to fund key industries - currently that includes AI and innovative tech that would give Beijing an edge over Washington, both economically and strategically.
That is why some analysts doubt that China's leaders want to create a consumer-driven economy.
"One way to think about this is that Beijing's primary goal is not to enhance the welfare of Chinese households, but rather the welfare of the Chinese nation," David Lubin, a research fellow at Chatham House wrote.
Shifting power from the state to the individual may not be what Beijing wants.
China's leaders did do that in the past, when they began trading with the world, encouraging businesses and inviting foreign investment. And it transformed their economy. But the question is whether Xi Jinping wants to do that again.
Why is China spending billions to get people to open their wallets?