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Reuters
an hour ago
- Business
- Reuters
Beneath China's resilient economy, a life of pay cuts and side hustles
BEIJING, July 16 (Reuters) - Chinese state firm employee Zhang Jinming makes up for a 24% cut to his salary by delivering food for three hours every night after work and on weekends - and hopes he can avoid awkward encounters with colleagues. "Being a part-time delivery person while working for a state-owned enterprise isn't exactly considered respectable," said Zhang, whose real estate firm pays him 4,200 yuan ($585) per month, down from 5,500 yuan. While China has supported economic growth by keeping its ports and factories humming, the lack of real demand has hit profits, in turn squeezing workers like Zhang through wage cuts and forcing them to moonlight. "There's just no other way," added the 30-year-old, who rides his scooter until 11.30 pm, making 60-70 yuan per evening. "The pay cut has put me under huge pressure. Many colleagues have resigned and I took over their workload." China's economy posted robust 5.2% growth in the second quarter, showing its export-heavy model has so far withstood U.S. tariffs. But beneath the headline resilience, cracks are widening. Contract and bill payment delays are rising, including among export champions like the autos and electronics industries and at utilities, whose owners, indebted local governments, have to run a tight shop while shoring up tariff-hit factories. Ferocious competition for a slice of external demand, hit by global trade tensions, is crimping industrial profits, fuelling factory-gate deflation even as export volumes climb. Workers bear the brunt of companies cutting costs. Falling profits and wages shrank tax revenues, pressuring state employers like Zhang's to cut costs as well. In pockets of the financial system, non-performing loans are surging as authorities push banks to lend more. For the most part, the lopsided nature of growth in the world's second-largest economy is a product of policies that favour exporters over consumers. Economists have long urged Beijing to redirect support to domestically focused sectors, such as education and healthcare, or boost household consumption - for instance, by bolstering welfare - or risk a slowdown in the second half of the year. Max Zenglein, Asia-Pacific senior economist at the Conference Board of Asia, describes China as a "dual-speed economy" with strong industry and weak consumption, noting the two are related. "Some of the economic challenges including low profitability and deflationary pressure are largely driven by continued capacity expansion in the manufacturing and technology sectors," said Zenglein. "What's unfolding now" in the trade war with the U.S. is "coming back home as a domestic issue." Frank Huang, a 28-year-old teacher in Chongzuo, a city of more than 2 million people near the Vietnam border, in the indebted Guangxi region, says his school has not paid him in two-to-three months, waiting for authorities to provide the funds. "I can only endure, I don't dare to quit," said Huang, who relies on parents when his 5,000 yuan paycheck doesn't arrive. "If I were married with a mortgage, car loan and child, the pressure would be unimaginable." Another teacher from Linquan, a rural county of 1.5 million in eastern China, said she is only receiving her basic 3,000 yuan monthly salary. The performance-based part of her pay, usually about 16%, "has been consistently delayed." "After I pay for gas, parking and property management fees, what's left isn't enough for groceries," said the teacher, who only gave her surname Yun for privacy reasons. "I feel like begging," added Yun. "If it weren't for my parents, I would starve." There is no data on payment delays in the government sector. But among industrial firms, arrears have grown quickly in sectors with a strong state presence, either through industrial policy or - like in utilities - through direct ownership. Arrears in the computer, communication and electronic equipment sector and in autos manufacturing - two priorities for China's economic planners - rose by 16.6% and 11.2%, respectively, in the year through May, faster than the 9% average across industries. Overdue payments were up 17.1% and 11.1% in the water and gas sectors. These figures suggest liquidity stress and are a side-effect of authorities prioritising output over demand, said Minxiong Liao, senior economist at Lombard APAC. "The result should be slower growth for these champion sectors," in the future, he said. With incomes under pressure, Beijing is struggling to meet its pledge to lift household consumption and worries are growing that persistent deflation will further damage the economy as consumers defer spending. Huang Tingting quit her waitress job last month after business at her restaurant - and most shops nearby - plummeted in April, at the height of U.S.-China trade tensions. Responding to plunging revenues, the restaurant owner asked staff to take four unpaid leave days every month. "I still have to pay rent and live my life," said the 20-year-old from the eastern Jiangsu province, an export powerhouse that's outpacing national growth, explaining why she quit. In the past, though, she could find another restaurant job in a day or two. This time, she's been unemployed since June. One recruiter told her a job she applied for had more than 10 other candidates. "The job market this year is worse than last year," said Huang. ($1 = 7.1799 Chinese yuan)
Reuters
an hour ago
- Business
- Reuters
Oil prices gain on demand expectations amid improving economy
BEIJING, July 16 (Reuters) - Oil prices rose on Wednesday on expectations of steady demand in the U.S. and China, the world's two largest oil users, amid an improving economic outlook. Brent crude futures rose 29 cents, or 0.42%, to $69 a barrel by 0105 GMT. U.S. West Texas Intermediate crude futures were up 40 cents, or 0.6%, at $66.92. That reversed two days of declines as the market downplayed the potential for supply disruptions after U.S. President Donald Trump threatened tariffs on purchases of Russian oil. Prices have seesawed in a fairly tight range as signs of steady demand from an increase in travel during the Northern Hemisphere summer has competed with concerns U.S. tariffs on its trading partners will slow economic growth and fuel consumption. However, major oil producers are pointing to improvement in economic growth for the second half of the year and Chinese data showed growth there remained consistent. "Strong seasonal demand is currently providing upward momentum to oil prices, as summer travel and industrial activity peak," LSEG analysts said in a note. "Increased gasoline consumption - especially in the U.S. during the Fourth of July holiday period - has signaled robust fuel demand, helping offset bearish pressures from rising inventories and tariff concerns." China data showed growth slowed in the second quarter, but not by as much as previously feared, in part because of frontloading to beat U.S. tariffs. That eased some concerns about the economy of the world's largest crude importer. The data also showed that China's crude oil throughput in June jumped 8.5% from a year earlier, indicating stronger fuel demand. That was the highest since September 2023, as state-owned refineries increased operations and saw a recovery in profit, consultants said. Additionally, the Organization of Petroleum Exporting Countries (OPEC) forecast in a monthly report on Tuesday that the global economy would do better in the second half of the year, boosting the oil demand outlook. India, China and Brazil are outperforming expectations while the U.S. and EU are recovering from last year, the report said.
Reuters
15 hours ago
- Business
- Reuters
China's Q2 smartphone shipments dropped by 4.0% Y/Y, says IDC
BEIJING, July 15 (Reuters) - China's smartphone shipments dropped by 4.0% Y/Y in the second quarter, the International Data Corporation (IDC) said on Tuesday. Apple's market share in China was at 13.9%, while Huawei's was at 18.1% in Q2, according to IDC. Huawei was the top vendor in the country in terms of market share, followed by vivo at 17.3%, OPPO at 15.5% and Xiaomi at 15.1% share, IDC said.
CNA
16 hours ago
- Automotive
- CNA
Chinese carmaker BYD launches smartphone-car connectivity feature
BEIJING :Chinese carmaker BYD said on Tuesday it had launched a smartphone-car connectivity feature across its lineup, compatible with phone brands including Huawei, Xiaomi, Oppo and Vivo.
Reuters
20 hours ago
- Business
- Reuters
China to promote renewal of urban villages, dilapidated houses
BEIJING, July 15 (Reuters) - China will steadily push forward with the improvement of urban villages and dilapidated houses, state news agency Xinhua reported on Tuesday, citing the first high-level urban planning meeting in a decade. The Central Urban Work Conference last met in 2015, when China launched a massive state-backed redevelopment of informal settlements, which helped boost the country's property market and fuelled a surge in housing prices. The meeting was held on Monday and Tuesday with President Xi Jinping giving a speech on the country's urban planning. "China's urbanisation is shifting from rapid growth to stable development, and urban development is shifting from a stage of large-scale expansion to a stage focused on improving the quality and efficiency of inventories," Xinhua said, citing the meeting. The world's second-biggest economy has limited room to repeat such a large housing stimulus as 2015, given the changed landscape of the property market - marked by a massive oversupply of housing and weak demand as a result of job and income insecurity amid ongoing trade tensions, analysts said. The property sector, which accounted for about a quarter of economic activity before it collapsed roughly four years ago, remains a drag on government efforts to achieve its annual growth target of "around 5%". China's new home prices fell at the fastest monthly pace in eight months in June, official data showed on Tuesday, adding to calls for additional market support.
