CiCM 31st October 2024

NEWS IN CHINA

Shanghai Introduces Measures to Strengthen SMEs Financing: Shanghai has introduced a comprehensive policy package to bolster financial support for small and medium-sized enterprises (SMEs) with the aim to fuel high-quality growth. The package consists of nine key initiatives focused on easing financial access for SMEs, said Tao Changsheng, deputy director of the Shanghai Municipal Financial Regulatory Bureau. The measures emphasize reinforcing existing policies, introducing new support mechanisms and enhancing coordination between financial supply and demand. Four of these nine initiatives focus on implementing national policies to stimulate high-quality economic growth through financing, including expanding loan renewal policies to cover all small businesses. Shanghai's goal is to achieve over 1 trillion yuan in loan renewals by 2024. The package encourages financial institutions to use tools such as relending, rediscounting, and innovation loans to increase SME credit. A coordination mechanism will facilitate connections between SMEs and financing sources through work groups which will directly gather funding needs from enterprises. The Shanghai SME financing guarantee fund will be increased to 120 billion yuan, with 5 billion allocated for tech innovation guarantees, while 1 billion yuan in rewards will be available for SME loans over 2024-2025. To streamline SME financing, Shanghai plans to develop an integrated financing service system by 2026, leveraging credit information to connect firms with financial resources. By late 2024, a financing service network covering all 16 districts and key industrial parks will be launched to offer integrated comprehensive financial services.

PLAN Conducts First-ever Dual Aircraft Carrier Formation Exercise: China’s aircraft carriers, Liaoning and Shandong, conducted their first dual-carrier exercise in South China Sea, as reported by the Chinese People’s Liberation Army (PLA) Navy. This joint exercise, part of Liaoning’s routine combat training in high-seas, aimed to boost the combat capabilities of both formations. Photos released by PLAN shows that the exercise also included 11 escort vessels such as destroyers, frigates and replenishment ships along with J-15 carrier-borne fighter jets. Conducted during Mid-autumn festival and national day holidays, the training spanned across the Yellow Sea, East China Sea and South China Sea, and included real-combat scenarios across multiple subjects. The exercise was more than a simple collaboration, with military experts noting that dual-carrier formations bring advanced capabilities for diverse and complex missions. According to military expert Song Zhongping, combining two carriers goes beyond doubling strength, as each carrier complements the other’s strengths. Differences in their escort vessels and aircraft load allow specialization, enhancing air defense, anti-submarine warfare and anti-ship operations. Wang Ya'nan, editor of Aerospace Knowledge magazine, suggested that future drills may include additional warships like amphibious assault ships, further bolstering China's maritime defense capabilities. The PLA currently operates two active carriers, Liaoning and Shandong, while its third, Fujian, featuring electromagnetic catapults, entered sea trials in May 2024.

China’s Manufacturing PMI Crosses 50 in October: China's manufacturing purchasing managers' index (PMI) rose to 50.1 in October, indicating a return to expansion from September’s 49.8, the National Bureau of Statistics (NBS) reported. This is significant as a PMI reading above 50 signals expansion, while below 50 indicates contraction. PMI has increased above 50 for the first time since May due to rapid growth in crucial sectors like basic raw materials, equipment manufacturing, high-tech manufacturing and consumer goods. According to NBS, October’s PMI increase marks the second consecutive month of manufacturing growth, with key indicators showing steady progress. The sub-index for production and business expectations reached 54.0, a 2-percentage point increase from September, reflecting higher business optimism amid strengthening economic drivers, according to NBS statistician Zhao Qinghe. Production continued to improve, with the production index at 52.0, up 0.8 percentage points from the previous month, while the new orders index also entered expansion territory at 50.0. The non-manufacturing PMI and composite PMI also rose above the 50-mark, reaching 50.2 and 50.8, respectively, in October.

Climate Action Report Calls for More Efforts by Chinese Companies to Reduce Emissions: Beijing-based Institute of Public and Environmental Affairs (IPE) released its annual CITI Evaluation and Corporate CATI Evaluation reports, detailing the green supply chain and climate action efforts, respectively, of Chinese and foreign companies. This year’s report shows significant progress in emissions reduction through green procurement, but emphasizes the need for more extensive collaboration in upstream supply chains. These reports encourage companies to disclose environmental data on emissions, biodiversity conservation, and plastic pollution, thereby driving supply chain emission reductions by integrating these issues in sustainable development strategies. Leading companies — such as Adidas, Apple, and Nike — have been ranked high in both indices, alongside key Chinese firms like Huawei and Lenovo. This year’s evaluation covered 780 companies across 23 industries, with 70 percent of them disclosing data on resource usage, pollutant emissions, and plastic waste. However, gaps remain, especially in managing and disclosing new pollutants. For example, industries heavily reliant on plastic packaging often lack transparent plastic-use data. The report also highlights an increase in companies disclosing Scope 1, 2 (own operations) and 3 (value chains) emissions, with many also setting ambitious reduction targets. Over 2,800 suppliers shared emissions data, while nearly 900 committed to reduce emissions further. Suppliers reduced emissions by 5.02 million tons, with rapid adoption of clean energy substitutes supporting decarbonisation of supply chains. IPE calls for enhanced data transparency, innovative green technologies and a stronger framework for supply chain responsibility, aiming to create a globally sustainable supply chain and bolster climate resilience.

China Launches Plan to Promote Nuclear Technology Application: China has set a goal for its nuclear technology application industry to achieve an annual direct economic output of 400 billion yuan (approximately 56 billion USD) by 2026. This target is outlined in an action plan jointly issued by the China Atomic Energy Authority, the National Development and Reform Commission and other agencies. The plan aims to advance the nuclear technology sector over the next three years, emphasizing its role in the broader high-quality development of China's nuclear industry and the transformation of its national economy. Key aspects of the plan include enhancing independent innovation and expanding the scope of nuclear technology applications. The next three years will focus on achieving breakthroughs in critical technologies, establishing innovation platforms, and nurturing new enterprises in nuclear technology. This expansion will emphasize applications in fields like medical diagnostics and treatment, agricultural breeding, food processing, safety and security.

SOCIAL MEDIA CHATTER IN CHINA

Students in China Supports a Street Vendor to Collect Money for His Wife’s Treatment: In China, a street food vendor named Hu Weiguang, affectionately known as “Uncle Flatbread”, recently received overwhelming support from local university students after his wife, Hu Guiyuan, was diagnosed with breast cancer in August. The 54-year-old vendor, who operates a popular flatbread stall near the Fujian University of Technology in Fuzhou, was struggling to manage his wife’s medical expenses. Moved by his situation, a student named Gao Ying shared Hu’s story on social media, encouraging others to support his business. The post quickly garnered attention, and students responded by lining up at his stall to buy his flatbreads. Recently, Hu and his 21-year-old son, Hu Jiaming, were met with lines stretching over 100 meters, as students queued to show solidarity and provide financial support for his family’s needs. The heartwarming story has resonated widely on Chinese social media, where Hu’s determination and the students’ compassion have touched many. This effort highlights how local communities can support and utilize social media to provide tangible assistance in times of need.

INDIA WATCH

Chinese Media Reports on Recent Capital Outflow in Indian Stock Market: Citing a Japanese media report, Chinese media also noted that India's stock market is facing pressures as capital outflows accelerate. It claimed that the capital outflow is largely caused due to investors shifting funds to China’s revitalizing market. According to the report, China's recent economic stimulus policies have drawn substantial global investment, leading to significant withdrawals from Indian stocks. By October end, India’s SENSEX had dropped about 5 percent since its record high in late September, with overseas investors selling a net 909.3 billion rupees (77 billion yuan) worth of Indian stocks—the largest monthly net outflow since 2002. The report cites Singapore’s DBS Bank prediction that Indian banks may underperform compared to Chinese stocks in the coming months. It also highlights that institutional funds are reallocating from India, South Korea, and Taiwan to China. The report argues that this trend reflects investor concerns over India's overvalued stocks and economic inflation, particularly in food prices. India’s consumer price index (CPI) rose by 5.49 percent in September, adding strain to the economy as per the report and reduced expectations of rate cuts, which had previously driven stock gains. Further, the report notes that amid these market conditions, some prominent Indian companies, like food delivery firm Swiggy, have cut valuation targets before they get listed, and recent IPOs, such as Hyundai Motors, saw sharp declines.

Prepared By

Omkar Bhole

Omkar Bhole is a Senior Research Associate at the Organisation for Research on China and Asia (ORCA). He has studied Chinese language up to HSK4 and completed Masters in China Studies from Somaiya University, Mumbai. He has previously worked as a Chinese language instructor in Mumbai and Pune. His research interests are India’s neighbourhood policy, China’s foreign policy in South Asia, economic transformation and current dynamics of Chinese economy and its domestic politics. He was previously associated with the Institute of Chinese Studies (ICS) and What China Reads. He has also presented papers at several conferences on China. Omkar is currently working on understanding China’s Digital Yuan initiative and its implications for the South Asian region including India. He can be reached at omkar.bhole@orcasia.org and @bhole_omkar on Twitter.