| 1. As epidemic wanes, 72% of small and midsize businesses are back to work An average of 71.7% of small and midsize enterprises in China were back in business as of Tuesday, an increase of 42.1 percentage points from a month ago, according to the Ministry of Industry and Information Technology, reported Caixin. Most enterprises with specialized technologies and better innovative capacities in Hunan and Sichuan achieved nearly full resumption following weeks of widespread shutdowns to contain the Covid-19 virus, a ministry official said. Authorities will provide more support to industries with long business chains such as autos and electronics to drive a broader business recovery. About 50 large enterprises and more than 7,000 smaller suppliers will be picked for support, the official said. China is gradually relaxing restrictions to resume economic and social activities after nearly two months of lockdowns effectively contained the Covid-19 pandemic. However, outside China business is grinding to a halt in more countries as governments step up measures to contain the disease. |
2. Goldman Sachs and Morgan Stanley win control of Chinese ventures
Chinese regulators on Friday gave Goldman Sachs and Morgan Stanley permission to take majority control of their local securities joint ventures, a sign that China will continue to open its financial markets despite the disruption caused by the coronavirus outbreak, reported the Financial Times.
The Wall Street banks, two of the earliest foreign movers in China’s investment banking industry, will be allowed to increase their holdings in existing securities companies to 51 per cent, according to announcements from the banks.
Morgan Stanley holds a 49% stake in Morgan Stanley Huaxin Securities and Goldman holds 33% of Goldman Sachs Gao Hua Securities.
Todd Leland, co-president of Goldman in the Asia Pacific region excluding Japan, said the bank would continue to seek to take full control over the company. “We will be seeking to move towards 100% ownership at the earliest opportunity,” Leland said in a statement.
3. Sinopec expects lower 2020 refining runs as coronavirus hits demand
Asia’s top refiner China Petroleum Chemical Corp, or Sinopec, expects that its full-year 2020 refining runs will be lower than in 2019 because of a contraction in Chinese fuel demand caused by the coronavirus outbreak, reported Reuters.
The demand contraction will last for the first half of this year and lead to lower full-year demand but refined oil consumption is expected to return to normal in the third or fourth quarter, said Ling Yiqing, vice president of Sinopec, during an earnings call on Monday.
“Due to the impact of first and second quarter, our expectation of the full year consumption of oil products will be negative growth,” said Ling. “In terms of refining utilization rates in the full year 2020, due to the impacts of coronavirus outbreak and exports, our whole year number will be affected.”
Ling also said the spread of the coronavirus overseas will impact oil product exports, negatively affecting Sinopec’s oil refining in the second quarter. The company, which will trim 2020 capital expenditure by 2.5%, was making a detailed plan to reduce capex and would report this in April during first-quarter earnings, said Zhang Yuqing, chairman of Sinopec, on Monday.
4. Virus impact on fashion and luxury to be ‘worse than recession’
The hit to fashion and luxury sales from coronavirus is expected to be much harder than previously feared, as a decade of growth comes to a crushing halt, reported the Financial Times.
Revenues are expected to plunge between 25% and 35% this year as a direct result of store closures owing to coronavirus lockdowns, according to the Boston Consulting Group.
The impact on fashion and luxury — a category that includes apparel and accessories, watches and jewellery, and perfumes and cosmetics — is expected be more severe this year than the recession a decade ago, with total sales dropping between $450 billion to $650 billion from 2019 levels.
The outlook is far bleaker than the firm suggested in late February, when it estimated sales for the year would decline by about 15%. That was before the virus took hold in Europe and the US and was declared a pandemic. “This is worse than 2008,” said Sarah Willersdorf, head of luxury at BCG. “There’s zero doubt we’re going to have a definite V curve. The question is whether it moves into a U or an L.”
5. China’s GCL to build world’s biggest solar panel-making plant
GCL System Integration Technology Co. plans to build the world’s biggest solar-panel manufacturing plant, with capacity to meet half of global demand, reported Caixin.
The Chinese manufacturer plans to invest RMB 18 billion ($2.54 billion) to construct a facility in eastern Hefei province that will be able to produce 60 gigawatts of solar panels a year, GCL System said in a filing to the Shenzhen stock exchange on March 27.
The plant’s maximum output is double the 30 gigawatts of capacity installed in China in 2019, and would be able to supply to almost 51% of solar installations worldwide. The project will boost GCL System’s ability to produce panels more than nine-fold from 7.2 gigawatts, according to data from BloombergNEF. The world’s biggest solar-panel maker, JinkoSolar Holding Co,. has 16 gigawatts of capacity.
GCL System said it will spend RMB 5 billion on the first phase of the project, for 15 gigawatts of production capacity. Another three phases will be implemented later, with the timing based on sales and utilization of the facility, it said.
6. China’s Xi says countries need to join forces in protecting world economy
Chinese President Xi Jinping said countries should join forces in stopping the world from entering a recession due to the coronavirus outbreak, reported Reuters.
“The epidemic has hit global production and demand in every way, and countries need to leverage and coordinate their macro policies and prevent the world economy from falling into recession,” Xi said in remarks at an extraordinary summit of G20 world leaders on the COVID-19 pandemic held via video link.
“Fiscal and monetary policies must be implemented effectively, coordination of financial regulations must be strengthened, and (countries) have to work jointly to safeguard the stability of the global industrial supply chain.”
He also urged China’s fellow G20 member nations to cut tariffs, remove barriers and facilitate trade, Chinese state media reported. China will step up imports and increase foreign investment, while continuing to implement a pro-active fiscal policy and prudent monetary policy, Xi said.
7.China to ban most foreign arrivals in effort to block contagion’s spread
China will ban most foreigners from entering the country starting at midnight on Friday in an effort to block the spread of the coronavirus through imported cases, reported the South China Morning Post.
Entry visas issued to foreigners will be suspended as an “interim measure”, according to a statement late Thursday by the country’s foreign ministry.
“In view of the rapid spread of the new coronavirus epidemic worldwide, China has decided to temporarily suspend entry of foreigners with currently valid visas and residence permits in China,” the ministry said.
“This is an interim measure that China has to take in order to respond to the current epidemic situation, with reference to the practice of many countries,” it added. “The Chinese side will adjust the above measures according to the epidemic situation through separate announcements.”
8. Job openings in China fall over 30% amid coronavirus
Job openings in China for the first two months of this year dropped by more than 30% as the coronavirus epidemic severely disrupted economic activity, a new survey has found, reported Caixin.
A joint project between Peking University’s Guanghua School of Management and Zhaopin, one of China’s largest hiring platforms, the survey covered about 1 million companies in China across all economic sectors. While the results have not yet been officially published, survey organizer Lu Hai, a professor at Peking University, discussed the findings in an online seminar held Wednesday to discuss the coronavirus’s economic impact.
Lu did not reveal specific figures on the number of openings, but said the hardest-hit sectors included media, entertainment, sports and services, which all saw job openings fall more than 40% year-on-year in the first two months of 2020. They were trailed by the IT, telecom, and internet sectors, which saw new job listings drop by over 30%.
Smaller firms have been hit much harder than big companies. Firms with staff of more than 10,000 advertised 15% fewer job openings, compared to 40% for firms with less than 20 staff, and 30% for companies with staff between 20 and 99 employees, according to the survey.
9. China’s industrial firms post steepest fall in profits in a decade
Profits at China’s industrial firms slumped in the first two months of the year to their lowest in at least a decade, with the mining, manufacturing and power sectors all seeing sharp falls, as a virus epidemic battered China’s economy, reported Reuters.
Profits earned by Chinese industrial firms in the first two months dropped 38.3% from a year earlier to RMB 410.7 billion ($58.15 billion), worsening from a 6.3% fall seen in December last year, the National Bureau of Statistics (NBS) data showed. It marked the steepest decline in data going back to 2010.
The decline in profits points to lingering trouble for the manufacturing sector, which is wrestling with fallout from the health crisis that has severely hurt output and is expected to halve economic growth in the current quarter compared with the previous three months.
5. China’s larger than usual oil stockpile gets even larger as prices plummet
As oil prices have dropped to an 18-year low, China’s oil storage sector has seen demand soar as companies hoard the fossil fuel, reported Caixin.
Since March 7, the day after talks between oil-producers cartel OPEC and Russia collapsed and prices began to plummet, Chinese ports have added around 1.5 million tons of commercial crude oil to their stockpile, data from energy information provider OilChem China showed. That represents an increase of about 5%, bringing the total to 29.45 million tons.
“All of China’s coastal storage tanks and those near rivers are all booked, wherever they are in the country,” a manager at a Chinese oil storage company said. The same situation is playing out in South Korea also, he said, with virtually all tanks either already loaded with oil or booked to be filled soon. “Traders, refiner and suppliers are all flocking to find any available tanks.”
The spike in inventory came as the world’s oil-producing countries, led by Saudi Arabia, dramatically raised their output to win market share. This has seen China’s oil and oil product inventory, already larger than usual due to a number of flight cancellations since the start of February, grow even larger
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Compiled & Sourced by
Mr. Arvind Sinha
President 2018-2020
Global Textile Welfare Association
