Latest news with #Chinaeconomy
New York Times
7 days ago
- Business
- New York Times
Doing Business in China Is Getting Harder, but Its Exports Are Hard to Resist
European companies, many of which have operated in China for decades, are finding it increasingly difficult to do business in the country, another sign of how China's weak domestic economy and opaque regulations are testing even longstanding multinational business ties. European automakers have been rapidly losing market share and face many political difficulties. Volkswagen agreed last December to sell its factory in northwestern China's Xinjiang region, where Beijing has repressed Muslim ethnic groups. European pharmaceutical and medical imaging equipment companies have found themselves locked out of much of the state-run health system. An extensive annual survey of businesses released on Wednesday by the European Chamber of Commerce in China found that nearly three-quarters said it was getting harder to operate in China. It was the fourth consecutive year that the survey showed deepening corporate pessimism. The proportion of European companies that plan to expand their operations in China has also fallen to a record low, with just 38 percent saying that they intend to do so this year. European investment has been important in bringing Western technology to China and in bringing Chinese products to world markets. The chamber, which has been gauging challenges companies face in China for a quarter century, represents the interests of some 1,700 companies, from industrial giants like VW to small businesses with a handful of employees who are cogs in global supply chains. The chamber's survey also unearthed a somewhat contradictory trend that could prove troublesome for President Trump's attempt to shield American manufacturing from China's exports with tariffs. Even as European businesses curb their own investments in China, some are also buying ever more components from Chinese companies. That makes their supply chains even more dependent on China. China has retaliated against Mr. Trump's tariffs by imposing its own tariffs on American goods. That has prompted a hunt by European companies in China for Chinese replacements for the few components they were still buying from the United States, said Jens Eskelund, the chamber's president. A broad fall in prices in China has made Chinese components too good a deal for many European companies to pass up. A recent weakening of China's currency against the euro has made Chinese components even more attractive. 'The one place where they actually get better components at a lower price than anywhere else in the world is here in China,' Mr. Eskelund said. Not only the United States, but the European Union and other countries have imposed tariffs lately in response to China's soaring exports of manufactured goods and tepid demand for imports. European companies that export from China to other markets had long feared possible trade barriers, but some were still caught off guard. 'That fear has turned into a nightmare for many at the moment,' said Klaus Zenkel, a businessman in Shenzhen who is a member of the chamber's South China chapter. Some companies have set up temporary assembly operations in other countries to bypass American tariffs, Mr. Zenkel said. They rent warehouses in places like Taiwan, do the final assembly of Chinese components in the warehouses and then ship the finished goods to the United States with customs declarations that no longer show the goods as coming from China. The Trump administration is trying to reduce these indirect shipments from China. Mr. Trump has threatened high tariffs against countries that run large trade surpluses with the United States. One category of business conditions has improved very markedly in China in the past year, according to the European chamber's survey. The share of European companies worried about rising wages has fallen steeply over the last several years, and these now rank among the least of their concerns. Labor costs had been rising along with China's surging housing prices. But that bubble burst in 2021, causing declines in construction that eliminated many jobs. In turn, flat or even falling wages have contributed to weak demand in China for everything from imported cosmetics to hotel rooms — resulting in broadly low prices, a potentially dangerous phenomenon known as deflation. 'By a wide margin, it is China's economic slowdown that is seen as having the greatest impact,' Mr. Eskelund said.
CNA
23-05-2025
- Business
- CNA
China lowers deposit rate ceilings to protect bank interest margins, sources say
BEIJING: China has lowered the ceilings on deposit rates, three banking sources with direct knowledge of the guidance said on Friday (May 23), as authorities seek to protect banks' profit margins and discourage savings. The interest rate self-regulatory body under China's central bank has lowered the upper limit of deposit rates banks can offer their clients, the sources said. The move came days after China cut benchmark lending rates and state banks reduced their baseline deposit rates. China's economy is suffering from weak consumption, a prolonged property crisis and a trade war with the United States, putting pressure on banks' profitability. "Banks' interest margins are under heavy pressure," one of the sources said. Every 10 basis-point (bp) cut in deposit rates could reduce overall borrowing costs by roughly 5 bps, the source added. Under the latest guidance, the ceilings for some banks' time deposit rates have been slashed by 30-40 bps, according to the sources. In contrast, China's major banks reduced baseline deposit rates by up to 25 basis points (bps) for some tenors on Tuesday. This reflects regulators' desire to prevent interest margins from shrinking further, as some banks compete heavily to build deposits by promising high returns. Amid the heated competition for deposits, reducing the rate ceilings can give some breathing space for banks already suffering from sliding margins, a source said. Commercial banks' net interest margin - a key profitability measure - dropped to a record low 1.43 per cent in the first quarter of this year, official data showed. The margins are expected to fall a further 10-15 bps this year, analysts at China International Capital Corp predicted.
Yahoo
22-05-2025
- Business
- Yahoo
Australian exporters upbeat on business outlook in China despite trade war, central bank says
SYDNEY (Reuters) -Australian exporters are upbeat on their business outlook in China as U.S. tariffs could enhance their competitive edge in Chinese markets, a top central bank official said on Thursday. In a speech in Sydney, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser said that during a recent trip to China he found confidence that Beijing would do what was needed to sustain economic growth. Hauser met a wide range of Chinese organisations and Australian exporters on the trip in early April, which just happened to follow the announcement of sky-high U.S. tariffs on the Asian giant that led to a collapse in bilateral trade. He heard a striking confidence that China was going into the trade war with a strong hand and detected little expectation that the Chinese currency would be devalued to help offset the impact of U.S. levies on prices there. In particular, he was struck by how upbeat Australian firms were about their business outlook in China. Firms in the steel and iron ore sector - Australia's largest export to China - saw few threats to the scale and cost advantages of Australian ore relative to other producers in the near term. "The recovery in sentiment in early 2025, and confidence that the authorities would 'do what it takes' to sustain the economy was part of it," said Hauser. "But there was also a sense that recent developments in trade policy could enhance their competitive position in Chinese markets." He noted that it was possible Australian firms could see more intense competition at home and overseas from Chinese businesses discounting trade diverted from U.S. markets. However, it was unclear how big the impact could be given there was limited overlap between the goods and services produced by China and Australia. The RBA has judged global trade developments would be disinflationary in net terms for Australia, one reason that it has opened the door to more policy easing after cutting interest rates by a quarter-point on Tuesday.
Reuters
19-05-2025
- Business
- Reuters
China's state banks will cut deposit rates on Tuesday, sources say
BEIJING, May 19 (Reuters) - China's major state banks will cut their deposit rates from Tuesday, three people with knowledge of the matter said, easing pressure on profitability as China reduces lending rates to boost a slowing economy. Banks including Industrial and Commercial Bank of China ( opens new tab, China Construction Bank ( opens new tab and Bank of China ( opens new tab will cut rates on some fixed-term deposits, said the sources, who declined to be named as they are not authorised to speak to media. The sources did not detail the scale of the rate cuts. The banks did not immediately reply to requests for comment. Chinese authorities announced a raft of stimulus measures earlier this month, including interest rate cuts and a major liquidity injection, as Beijing steps up efforts to soften the economic fallout from the trade war with the United States. People's Bank of China (PBOC) Governor Pan Gongsheng said a 10 basis point cut to the country's main seven-day reverse repo rate would lead to a reduction in the benchmark loan prime rate (LPR) of the same size. China is due to release its monthly LPR fixing at 0100 GMT. Reducing deposit rates would help banks lower their funding costs at a time when they are under pressure to support economic growth amid a property crisis, weak loan demand and record low interest margins.
