Chinese consumer sentiment remains subdued.
(Photo: dpa)
Beijing There was several bad news for the Chinese economy on Wednesday. Not only did the National Statistics Office report poor economic data. In addition, several media reported that Chinese companies are threatened with new sanctions from Washington.
As the financial news agency Bloomberg reported, citing informed persons, the US government wants to tighten the sanctions against China’s leading chip manufacturer Semiconductor Manufacturing International (SMIC).
The National Security Council will hold a meeting on Thursday to discuss the possible changes, a report said. The company’s share then collapsed by more than six percent. SMIC is already blacklisted by the Department of Commerce. The US accuses the company of having ties to the Chinese military.
According to media reports, other Chinese companies are also threatened with new hardships from Washington. As the “Financial Times” reported, citing two informed persons, the US government wants to blacklist eight Chinese companies because of their involvement in the surveillance of the Muslim Uyghur minority.
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According to the report, one of the companies is SenseTime, which had already postponed its planned IPO due to other impending US sanctions. Facial recognition specialists Megvii and Cloudwalk Technology, drone manufacturer DJI, supercomputer manufacturer Dawning Information Industry, Yitu Technology, NetPosa Technologies and cybersecurity company Xiamen Meiya Pico have also fallen out of favor. According to the “Financial Times” report, the companies will be placed on the list of “Chinese companies in the military-industrial complex”.
The real estate industry in China is under pressure after massive financing problems.
(Photo: dpa)
American investors are prohibited from investing in these companies. According to the financial news agency Bloomberg, the companies mentioned were already on a separate black list that denied them access to American technologies.
But the bad news for the Chinese economy did not stop there on Wednesday. As the statistical authorities reported on the same day, the real estate market, which is so important for the world’s second largest economy, is still tumbling.
The prices for new homes fell by 0.3 percent in November compared to October – the largest decrease in more than six years. The turnover from the sale of new apartments collapsed by 16.3 percent.
The real estate sector, which with its related industries contributes around a quarter of China’s gross domestic product, has been in a deep crisis for several months.
Chinese real estate developers ran into financial difficulties after Chinese leaders announced stricter rules for borrowing in the heavily debt-financed industry in late 2020.
Retail in a weak phase
The crisis in the real estate sector also affected other areas of the Chinese economy. The sales in the retail sector increased by only 3.9 percent in comparison to the previous year in November, announced the National Statistics Office on Wednesday.
In October the plus was 4.9 percent. The volume of capital expenditures up to the end of November was 5.2 percent above the previous year’s level and thus somewhat lower than analysts expected.
The economic data in November were not good, said Iris Pang, chief economist for Greater China at ING Bank. One of the reasons for this was the strict Covid measures that the Chinese government had imposed.
China is pursuing a zero-case strategy in dealing with the pandemic. In the event of local outbreaks, local governments in China seal off entire blocks of houses, so residents are not allowed to leave their homes for days or weeks. In addition, there are always travel restrictions. This week, companies in east China’s Zhejiang Province had to shut down their production because new cases of infection had emerged in the region.
More: China’s government wants to take action against speculation in the real estate market.