CiCM 8th-9th June 2024

NEWS IN CHINA

Gold Prices Drop 2% due to China's Purchase Pause: On June 8, 2024, global gold prices fell over 2% following stronger-than-expected employment growth in the US and a pause in gold purchases by China. Benchmark gold futures declined by 2.43%, settling at $2,332.85 per ounce. Analysts attribute this drop to the robust job growth in the US, which could prompt the Federal Reserve to delay interest rate cuts. Since gold does not yield interest, it becomes less attractive in such scenarios. Additionally, China's central bank halted its gold acquisitions in May after an 18-month buying streak, further dampening investor sentiment. Despite this recent drop, gold prices have risen approximately 15% this year. In China, the pause in gold purchases resulted in significant discounts in local gold stores, with some reducing prices by up to 70 yuan per gram. These discounts, combined with promotional events like the Dragon Boat Festival, led brands such as Lao Fengxiang, Zhou Dasheng, and China Gold to offer substantial discounts. However, the number of gold buyers remains low due to the off-season for gold consumption. The international drop in gold prices has been linked to both the cessation of China's gold purchases and market reactions to US economic data, influencing global investor behavior and pricing dynamics.
Solar Farms Drive China's Green Revolution: China's green energy revolution is receiving a significant boost from the world's largest solar photovoltaic power plant, situated on the Qinghai-Xizang Plateau. Spanning 4,000 acres in the Talatan Gobi Desert, this solar farm not only generates substantial electricity but also aids in poverty alleviation and ecological conservation. Local herders benefit from the ability to graze their sheep around the solar panels, where the sheep help maintain the area by eating the grass that grows there. Managed by Huanghe Hydropower Development Co., the solar farm has a power generation capacity of 8,430 megawatts, making it the largest in the world. It supports 91 energy enterprises, significantly contributing to Qinghai's green energy output. Since its inception in 2012, the solar base has transformed previously barren land into a thriving green area through extensive grass planting, which reduces wind erosion and improves soil moisture. The local economy has also seen improvements, with villagers earning income from jobs related to the solar farm. This project exemplifies how renewable energy can support sustainable development and enhance living standards in rural areas.
Dragon Boat Festival Boosts China's Tourism and Box Office: China is experiencing a surge in tourism and entertainment spending during the Dragon Boat Festival. The three-day holiday, which starts on the fifth day of the fifth month of the Chinese lunar calendar, sees a significant rise in short-distance travel and cultural activities. Popular destinations include theme parks and museums, with a notable increase in visits to Altay Prefecture in Xinjiang, spurred by the TV series "To the Wonder." China's railways are preparing for a travel rush, expecting 74 million railway trips during the holiday period, with a peak of 17 million trips on Saturday alone. This massive movement is supported by increased capacity and measures to ensure smooth travel. Additionally, the festival's box office revenues are experiencing significant growth. On the first day alone, box office earnings surpassed 124 million yuan (around $17.44 million). Top films include "I Don't Want to Be Friends with You," "Walk the Line," and "Gold or Shit," contributing to a vibrant entertainment scene during the holiday.
Boost in China's Real Estate Market Following New Policies: China's recent adjustments to real estate policies have invigorated the market. Measures such as lowering mortgage rates, reducing down payment requirements, and offering subsidies have spurred increased activity and sales. In cities like Nanjing, these changes have led to a significant rise in customer visits and transactions, with some areas seeing a 300% increase in visits. Similar trends are observed in Zhengzhou and Hefei, where trade-in policies and purchase incentives have boosted market sentiment. The policies aim to stabilize housing prices, enhance market fairness, and provide affordable options. Real estate transactions have surged, with second-hand housing transactions up by 31.1% year-on-year as of late May. New home sales have also seen substantial increases, reflecting a positive market response. The new policies are designed to support market recovery and promote long-term stability by encouraging genuine housing demand and balancing supply with demand. As urbanization progresses, these measures are expected to sustain growth in China's real estate market.
China Urges Cooperation and Fair Competition with EU: China's Ministry of Commerce has urged the European Union to resolve trade frictions through dialogue, advocating for win-win cooperation and fair competition. Chinese Commerce Minister Wang Wentao stressed that fair competition should focus on mutual improvement and adherence to international rules, rather than exclusion or undermining of competitors. He dismissed the EU's accusations of unfair competition against Chinese businesses as unfounded. Wang pointed out the detrimental effects of the EU's anti-subsidy investigation into Chinese electric vehicles on Sino-European cooperation. He urged the EU to abandon trade protectionism and prioritize collaboration. During a visit to a Chinese-Spanish joint venture in Barcelona, Wang expressed optimism about overcoming challenges and strengthening economic ties. China remains dedicated to fostering healthy competition and mutually beneficial trade relations with the EU.

SOCIAL MEDIA CHATTER

Xiaohongshu Transforms Hong Kong Tourism with Unique Experiences: Xiaohongshu, a popular Chinese social media platform, is revolutionizing tourism in Hong Kong by highlighting lesser-known spots and cultural experiences. Mainland Chinese tourists, guided by recommendations on the app, are exploring beyond traditional shopping destinations. Tourists are following these recommendations, venturing beyond traditional shopping areas. They're visiting hidden gems like a basketball court in Kennedy Town, offering a unique view of historic trams. The app, which boasts over 200 million monthly users, mainly born in the 1990s, promotes authentic experiences and community-driven travel. Tourists are also drawn to nostalgic locations from Hong Kong movies and TV shows, like the Yau Ma Tei Police Station, for photo opportunities. This trend aligns with Hong Kong's shift towards in-depth cultural tourism, as noted by the Travel Industry Council. The Hong Kong Tourism Board has collaborated with Xiaohongshu to create content that encourages visitors to discover the city's cultural heritage, leading to a significant increase in tourism-related posts on the platform.

INDIA WATCH

Modi's Third Term- Balancing Act for India's Economy: China’s Daily Economic News reported that Indian Prime Minister Modi was sworn in for his third term on June 9th. Although his National Democratic Alliance won the election, it didn't secure a clear majority, forcing Modi to collaborate with political allies, which could slow down decision-making. This uncertainty initially caused the Indian stock market to drop sharply, but it later rebounded as allies pledged support. The continuation of Modi's economic policies is significant from a Chinese perspective, as they are crucial for India's competitiveness on the global stage. India's focus on infrastructure, foreign investment, and manufacturing could position it both as a partner and a competitor to China. The challenge of job creation and the potential increase in welfare programs could strain India's economy, yet its recent economic growth highlights the country's potential. Foreign investment in India has dipped slightly due to election uncertainties, but developments under Modi's leadership could enhance trade between China and India. Many Chinese companies, especially in the tech sector, invest in India. The outcomes of Modi's policies will influence Chinese investors and business strategies, potentially affecting economic dynamics between the two nations.

Prepared By

Kriti Rai

Kriti is an undergraduate student at FLAME University pursuing Data Science and Economics. She is proficient in C++, Python, MySQL, and data visualisation tools such as Tableau. Her areas of interest lie in building predictive models and utilising machine learning to enhance decision-making and tackle real-world challenges.