Latest news with #DavyJ.Wong
Epoch Times
01-05-2025
- Business
- Epoch Times
China Reduces Threshold for Tax Refunds for Foreign Tourists to Boost Consumption
The Chinese regime announced a lower minimum purchase amount on April 27 for tax refunds for foreign tourists and other measures to boost consumption amid a tariff war with the United States. Analysts are skeptical about their effect. China's Ministry of Commerce and five other departments issued the new policy, which lowered the threshold for tax refunds from 500 yuan ($69) to 200 yuan ($27.50). Foreign travelers who purchase tax-refundable items worth 200 yuan or more at the same eligible store on the same day are eligible to apply for what officials call the departure tax refund. At the same time, the limit for receiving the refund in cash was raised from 10,000 yuan ($1,375) to 20,000 yuan ($2,751), and there are no restrictions on refunds via bank transfer. The notice also included other measures to boost foreign tourist spending in China, such as expanding the coverage of tax refund shops and encouraging various regions to add tax refund shops in large shopping districts, pedestrian streets, tourist attractions, resorts, airports, passenger ports, hotels, and other such locations. Eligible travelers include foreigners or residents of Hong Kong, Macao, and Taiwan who have stayed in mainland China for no more than 183 consecutive days. Sheng Qiuping, the regime's vice minister of commerce, said at a press conference that last year, inbound consumption by overseas tourists accounted for about 0.5 percent of China's GDP, while the numbers in other major countries accounted for between 1 percent and 3 percent of GDP. Weak Local Consumption In recent years, China has been experiencing a trend of low consumption as Chinese shoppers are tightening their spending and choosing to buy cheaper products amid the sluggish economy. Related Stories 4/3/2025 1/21/2025 Beijing's social consumer goods retail sales in March were 104.9 billion yuan ($14.4 billion), a sharp drop of 9.9 percent compared with March last year, according to public data. In the first quarter, Beijing's consumer goods retail sales were 345.9 billion yuan ($47.57 billion), a decrease of 3.3 percent. Shanghai's retail sales of consumer goods in March were 128 billion yuan ($17.6 billion), a drop of 14.1 percent year-over-year. Retail sales in the first quarter fell slightly by 1.1 percent. The effect of the regime's measures on these trends will be negligible, U.S.-based economist Davy J. Wong told The Epoch Times on April 28. 'It may have a little effect in the short term, but the overall problem cannot be solved by such minor repairs. The downgrade in domestic consumption is caused by falling income, youth unemployment, and a decline in social confidence, and foreign tourists' consumption is a drop in the bucket.' An employee uses balloons to attract customers at a fashion retailer during a promotional sale at a shopping mall in Shenzhen, China's Guangdong Province, on Nov. 1, 2019. Andy Wong/AP Xu Zhen, a senior professional in China's capital market, told The Epoch Times on April 28, 'In 2024, 80 percent of overseas tourists [were] from Hong Kong, Macau, and Taiwan. The deterioration of China's economy has more or less impacted the economies of Hong Kong and Macau, and the spending power of these tourists is also limited.' He agreed that 'relying on the tax refund policy for overseas tourists to boost the economy is a drop in the bucket and is far from making up for the losses caused by consumption downgrades.' Wong added that the new measures are a contingency strategy to cope with the dual pressures of weak domestic demand and shrinking external demand, rather than a confident long-term open policy. 'On the surface, the measures seem to promote tourist shopping, but in essence, the regime hopes to use 'short-term, quick cash consumption' to offset the pressure of weak domestic economy and declining exports,' he said. The contribution of foreign tourist spending to China's GDP will be very limited, Wong said. 'China's security risks, visa reviews, and international image issues outweigh its shopping appeal, and lowering the tax refund threshold alone will not be enough to reverse the overall trend,' he said. 'What China really needs is to rebuild domestic consumer confidence and improve its external image, economic system, and rule of law, rather than just relying on tax rebates of a few hundred yuan to attract the world,' he said. Luo Ya and The Associated Press contributed to this report.
Epoch Times
25-04-2025
- Business
- Epoch Times
Export-Oriented Factories in China Suspend Production Amid US–China Tariff War
A major Chinese export manufacturing company with an 18-year history has recently suspended production due to the ongoing U.S.–China trade war, which is significantly affecting China's export-oriented industries. Dongguan Dehong Electrical Appliances Co. Ltd. (Dongguan Dehong), based in Dongguan city, Guangdong Province, issued a notice to all employees, relieving them from work for a month starting on April 11, according to Chinese media reports. The company cited suspended orders from clients and recent changes in the external economic environment, including U.S. tariff hikes, as the reasons. It said an update will be announced in a month, depending on the circumstances. During the month off, employees will receive their basic wages; if they choose to resign, the company will settle their wages immediately, the notice said. According to public data, Dongguan Dehong was established on March 30, 2007. It is a manufacturing enterprise engaged in research and development, manufacturing, and sales of household appliances. All of its products are sold to European countries and the United States. Dongguan Dehong is not the only factory in China that has suspended production indefinitely due to the U.S.–China tariff war. There have been reports on Chinese social media that foreign trade companies in Zhejiang, China's major exporting province, will halt production or operations and allow employees to take indefinite leave. Related Stories 4/24/2025 4/23/2025 This trend also appears to have extended to other major export cities and provinces, such as Suzhou in Jiangsu Province and Dongguan in Guangdong Province, signaling a challenging period for China's foreign trade. Mr. Fan, a former factory owner in Yiwu—Zhejiang's largest export hub, boasting the world's largest small commodities market—who did not give his full name due to fear of retaliation from the authorities, told the Chinese-language edition of The Epoch Times that 'now, all orders for export to the United States are gone.' 'The economic environment was already bad, and [the Chinese regime] has to keep retaliating against the United States [in tariff increases],' he said. 'All kinds of businesses in Yiwu have been affected. Many people are pessimistic and fearful about the Chinese economy.' Dongguan Dehong's suspension of production is representative in the industry, 'marking the beginning of a structural decline,' U.S.-based economist Davy J. Wong told The Epoch Times on April 22. He pointed out that 'Dongguan is not a big city in the general sense; however, it is one of the birthplaces of China's global original equipment manufacturer [OEM] and a leader for the entire Chinese OEM industry.' 'Dongguan is a labor-intensive city and a base for global exports,' he said. Now, even large factories like Dongguan Dehong can't hold on, which indicates that 'China's entire export manufacturing industry has begun to shrink,' he said. 'Small- and medium-sized Chinese private enterprises currently have no way out due to high tariffs and shrinking demand,' Wong added. However, Wong pointed out that these factories are suspending production, not filing for bankruptcy. 'They operate at a low frequency for self-preservation, and are at a half-dead state,' he said. Many of them are still registered open, but most of their employees have left, Wong said. 'They are not included in official statistics because they are not closed down for good,' he said. It indicates a semi-dormant state of the real economy in China, Wong said, adding that 'this kind of silent fall is the most terrifying because it has no sound and cannot be prevented.' Workers build smartphone chip component circuits at a factory in Dongguan city, Guangdong Province, China, on May 8, 2017. Nicolas Asforui/AFP/Getty Images Tariff War Impacts Wong said that the U.S.–China tariff war will reshape the global economic and political landscape. 'At present, the United States' goal is not merely to negotiate tariffs, but to establish a new supply chain with universal values, common beliefs, and a common legal system,' he said. 'If China can comply, then it can join. Otherwise, it may be marginalized.' The tariff war may lead to conflicts in areas unrelated to the economy, according to Sun Kuo-hsiang, a professor of international affairs and business at Nanhua University in Taiwan. 'As the tariff war continues, China may take non-economic countermeasures, such as increasing confrontations in the diplomatic, technological, or military fields, further escalating tensions,' Sun told The Epoch Times. However, Sun does not rule out the possibility that 'both sides will seek negotiations and compromises in the future to avoid causing greater damage to their own economies.' 'This could include reducing some tariffs, renegotiating trade deals, or negotiating under a multilateral framework,' he said. U.S. President Donald Trump told reporters on April 22 that the 145 percent tariff on Chinese goods will 'come down substantially, but it won't be zero.' 'Don't think that the Chinese regime will disintegrate if the economy can't hold up,' Wong said, noting that China's economy relies on adjustments in its three lifelines. 'First, although the residual value of real estate is very poor, it still brings in a small amount of cash flow,' he said. 'The second is that local government debts are constantly extended, with today's debt being pushed onto tomorrow and the day after tomorrow.' Residential buildings under construction by Chinese real estate developer Vanke in Hangzhou, Zhejiang Province, China, on March 15, 2024. STR/AFP via Getty Images The third is that 'while a large number of high value-added orders exported to the United States are being cut, the regime will replace them with relatively low value-added orders from Asia and Africa, while at the same time hoping to expand trade with Europe,' Wong said. 'These three lefeliines have all shrunk to a certain extent, but they will not collapse immediately, especially trade with Europe,' he said. Wong surmised that European countries do not want the United States to dominate, 'so they may secretly give China a break,' he said. However, the Chinese economy's problem is not external but internal, he said, noting that 'its mechanism is shrinking and lacks creativity.' Luo Ya and Fang Xiao contributed to this report.
