東京三菱中国情報月報 12月号china biweekly(august 19th 2020） mufg bank (china), ltd. 2...

1 MUFG Bank (China), Ltd. The Bank of Mitsubishi UFJ, Ltd.

BIWEEKLY DIGEST

[Economy]

Chinese Economy Returns to Positive Growth in Q2 － [GDP] Year-on-Year (YoY) Growth Rate Bounces Back to Positive Territory by 3.2%

in Q2 from 6.8% Decline in Q1

－ [Production, Investment and Consumption] Three Months Consecutive Growth in

Production; Investment and Consumption Still Down but Show Further Improvement － [Employment] Slight Improvement Seen for Two Consecutive Months

－ [Trade] Positive Growth in Both Exports and Imports, ASEAN Becomes China’s

Largest Trade Partner － [Foreign Direct Investment/FDI] 3.7% Increase for Inward FDI and 0.4% Increase

for Outward FDI July Manufacturing PMI at 51.1, Up 0.2 points Month-on-Month (MoM)

World Bank Revises China’s Growth Rate in 2020 Upward to 1.6%, but Recovery Remains Uneven

CPC Central Committee to Hold Fifth Plenary Session in October to Formulate the Next

Five-Year Plan

[Industry]

June Housing Prices for 70 Medium- to Large-Sized Cities: More Cities See Prices Rising

Month-on-Month (MoM) with Sharper Rises in Regional cities Promotion of Industrial Internet Accelerated as Part of New Infrastructure Construction

Projects

[Trade/Investment]

China-Japan Regional Development Cooperation Model Zones: Details Announced for Shanghai and Tianjin

August 19th 2020

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CHINA BIWEEKLY

RMB Internationalization Business Promotion Office

Global Business Division

CHINA BIWEEKLY(August 19th 2020）


[Economy]

◆Chinese Economy Returns to Positive Growth in Q2

On July 16, the National Bureau of Statistics (NBS) released main economic indicators for the second quarter of 2020. The numbers indicate that China’s GDP recovered to positive growth in the second quarter, owing to production activities restarting as the spread of COVID-19 was brought under control in the country and to large financial assistance by the government, after it suffered negative growth in the first quarter due to the pandemic. Monthly economic indicators for June also showed signs of the economy getting better as a whole (Fig. 1). Growth in consumption and investment, however, are still in negative territory, and the pandemic has shown no sign of receding globally. Thus, inadequate domestic demand and falling foreign demand are expected to become the largest challenges for the Chinese economy in the future.

[GDP] Year-on-Year (YoY) Growth Rate Bounces Back to Positive Territory by 3.2% in Q2 from 6.8% Decline in Q1

China’s real GDP growth rate rose by 3.2% year-on-year (YoY) in the second quarter of 2020, turning to positive territory from the negative 6.8% YoY figure in the first quarter (Fig. 2). However, the real GDP growth rate for the first half of the year remained in negative territory, dropping 1.6% YoY.

Although the Chinese government presents its target for the annual GDP growth rate at the annual session of the National People’s Congress (NPC, the Chinese legislative body), this year the session was delayed to May, and the setting of the 2020 targets was also postponed. The World Bank’s and the IMF’s latest outlooks predict that China’s economy will grow YoY by 1.6% and 1.0% respectively.

Source: NBS

6.4 6.2

6.06.0

▲ 6.8

3.2

▲ 8▲ 7▲ 6▲ 5▲ 4▲ 3▲ 2▲ 1

0123456789

10111213

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2

08 09 10 11 12 13 14 15 16 17 18 19 20

（%）[Fig. 2] GDP Growth (Quarterly Basis)

YoY (%) YoY (%)

(Q1 2020) ▲6.8 (Q2 2020) 3.2

(RMB Bn) 19,919.4 ▲ 6.3 (RMB Bn) 281,603 ▲3.1

(RMB Bn) (Undisclosed) ▲ 1.9 (RMB Bn) (Undisclosed) 2.1

(RMB Bn) 11,223.2 ▲ 9.6 (RMB Bn) 157,867 ▲7.3

Primary (RMB Bn) 563.4 0.0 (RMB Bn) 8,296 3.8

Secondary (RMB Bn) 6,046.9 ▲ 11.8 (RMB Bn) 85,011 ▲8.3

Tertiary (RMB Bn) 13,309.1 ▲ 3.9 (RMB Bn) 188,296 ▲1.0

Industrial production (value added)** - - 4.4 - - 4.8

Total retail sales of consumer goods (RMB Bn) 3,197.3 ▲ 2.8 (RMB Bn) 33,526 ▲1.8

Consumer price index (CPI) - - 2.4 - - 2.5

Industrial producer price index (PPI) - - ▲ 3.7 - - ▲ 3.0

Industrial producer purchase price - - ▲ 5.0 - - ▲ 4.4

Exports (USD Bn) 206.81 ▲3.3 (USD Bn) 2,135.7 0.5

Imports (USD Bn) 143.89 ▲ 16.7 (USD Bn) 1,671.5 2.7

Trade balance (USD Bn) 62.93 - - (USD Bn) 464.2 -

Inward foreign direct investment (executed basis) (USD Bn) 9.87 4.2 (USD Bn) 167.2 3.7

* Year-to-date total from January

** Independently-accounted state-run companies and non-state-run companies with annual sales of RMB20Mn or more

Source: NBS

Gross Domestic Product (GDP)*

(State-owned sector)

(Private sector)

By

industry

Investment in fixed assets (excl. by rural

companies)*

[Fig. 1] Main Economic Indicators for June

ItemMay 2020 June 2020

Amount Amount



[Production/Investment/Consumption] Three Months Consecutive Growth in Production, Investment and Consumption Still Down but Show Further Improvement

Industrial production for June increased by 4.8% YoY (May: up 4.4%), up 0.4 points from the previous month, maintaining a growth trend for three consecutive months. Meanwhile, for the January to June period, investment in fixed assets decreased by 3.1% YoY (January-May: down 6.3%), and the total retail sales of consumer goods decreased by 1.8% (May: down 2.8%). Although both investments have turned negative, the size of the drops has been decreasing for four consecutive months (Fig. 3).

Taking a closer look at investment by sector for January to June 2020, real estate turned back to positive figures by growing 1.9% YoY, while infrastructure turned negative by falling 2.7%, as did manufacturing by falling 11.7%. Nonetheless, all the indicators for these sectors improved for four consecutive months (Fig. 4). However, the NBS emphasized the need to watch future trends in the real estate market, pointing out that leading indicators continued to show negative YoY growth in the same period: purchased area of land (down 0.9%), sold area of real estate (down 8.4%), and area of new housing development (down 8.2%).

As for consumption for June, the rate of decrease shrank in both consumer goods at 0.2% (May: down 0.8% YoY) and dining at 15.2% (May: down 18.9% YoY). However, the dining industry is still suffering from a delayed recovery in consumption as it involves social gathering and contact.

[Employment] Slight Improvement Seen for Two Consecutive Months

The surveyed unemployment rate in urban areas as of the end of June reached 5.7%, gradually decreasing for two consecutive months from 6.0% in April and 5.9% in May. However, the NBS noted that it still views the employment situation as harsh, referring to certain indicators: The number of people newly employed in urban areas for January to June 2020 was 5.64 million, 1.73 million fewer than for the same period in 2019. The surveyed unemployment rate as of the end of June for those aged 20 to 24, most of whom newly graduated from vocational schools or universities, was 19.3%, up 2.1 points from May. The number of workers originating from rural areas decreased by 4.96 million as of the end of June compared to the year before.

The NBS laid out a number of measures for employment in the future: tax breaks for companies, further reduction in social security premiums and rent, enhanced support for the employment of university graduates and encouraging more university students to enroll in graduate programs, and increasing and diversifying employment opportunities through the creation of new businesses.

[Trade] Positive Growth in Both Exports and Imports, ASEAN Becomes China’s Largest Trade Partner

According to the trade statistics bulletin (USD denominated) released by the General Administration of Customs (GAC) on July 14, both exports and imports for June 2020 turned positive. Exports increased 0.5% YoY (May: down 3.3% YoY) to USD 213.57 billion, while imports also went up 2.7% YoY (May: down 16.7% YoY) to USD 167.15 billion (Figs. 5 and 6).

For year-to-date trade from January to June, exports declined 6.2% YoY (January-May: down 7.7% YoY)

Notes: Fixed asset investment figures use year-to-date totals from January

Source: NBS

Industrial production and consumer sales figures use cumulative Jan-Feb

totals for Feb only

Investment:

▲3.1

Production:+4.8

Consumption:

▲1.8

▲ 25

▲ 15

▲ 5

5

15

234567891011122345678910111223456789101112234567891011122345678910111223456

2015 2016 2017 2018 2019 2020

[Fig. 3] Growth in Fixed Asset Investment, Industrial Production, and Retail Sales of Consumer Goods

Fixed asset investment

Industrial production (value-added)

Retail sales of consumer goods(%)



to USD 1.09875 trillion, and imports fell 7.1% YoY (January-May: down 8.2% YoY) to USD 930.95 billion, recording a trade surplus of USD 167.8 billion (Fig. 5).

For the January-June period, many products kept poorly performing YoY in exports, including apparel and shoes. However, several products performed better, such as textiles including face masks (up 27.8% to USD 74.1 billion), medical equipment (up 41.4% to USD 8.39 billion), and integrated circuits (up 10.5% to USD 50.51 billion). The growth of these products pushed up the overall YoY growth in exports. In imports, China saw YoY increases in meat (up 100.4% to USD 15.62 billion), soybeans (up 12.7% to USD 17.61 billion), and other agricultural products. Looking at import volume, there were YoY increases in soybeans (up 17.9%) and beef (up 42.9%), and pork was 2.4 times the volume imported in the previous year.

Taking a closer look at total exports and imports for January to June 2020 by country and region, ASEAN rose 2.2% YoY to USD 297.89 billion, which exceeded the USD 284.16 billion generated by trade with EU (down 4.9% YoY) to become China’s largest trade partner (Fig. 7). The GAC explains that closer collaboration with Vietnam, Malaysia, Singapore, and others in electronics manufacturing has contributed to expanding trade with ASEAN especially in integrated circuit-related products. Above all, Vietnam recorded the highest figures in the region for total exports and imports with China at USD 79.71 billion (up 14.1% YoY), showing a sharper rise than the other ASEAN countries. In trade with Vietnam, exports increased by 6.5% YoY to USD 47.38 billion, and imports increased remarkably by 27.5% YoY to USD 32.33 billion (Fig. 8).

As for trade with Japan for the January to June period, trade in both directions continues to be reduced, with exports down by 3.1% YoY to USD 67.43 billion and imports down by 2.6% to USD 79.66 billion (Figs. 7 and 8).

As for trade with the U.S. for the same period, exports decreased by 11.1% YoY to USD 177.55 billion and imports decreased YoY by 4.8% to USD 56.43 billion. While both figures continued to fall, the downward curve became flatter than in the previous month (Figs. 7 and 8).

Amount YoY

Exports 213.57 0.5%

Imports 167.15 2.7%

Trade balance 46.42 -

Amount YoY

Exports 1,098.75 ▲6.2%

Imports 930.95 ▲7.1%

Trade balance 167.80 -

Source: GAC

[Fig. 5] Summary of Trade Statistics for

June 2020

Trade Statistics for June 2020 (USD Bn)

Trade Statistics for Jan.-Jun. (USD Bn)

(USD Bn)

Country/

regionExports YoY Imports YoY

Trade

balance

Total

exports

and

imports

YoY

U.S. 177.55 ▲11.1% 56.43 ▲4.8% 121.12 233.99 ▲9.7%

Japan 67.43 ▲3.1% 79.66 ▲2.6% ▲ 12.23 147.09 ▲2.9%

South Korea 52.17 ▲5.3% 79.40 ▲6.1% ▲ 27.23 131.56 ▲5.8%

Hong Kong 113.36 ▲12.2% 2.99 ▲35.0% 110.37 116.35 ▲13.0%

Taiwan 27.42 7.9% 85.25 7.7% ▲ 57.83 112.67 7.8%

Germany 38.99 0.4% 45.22 ▲12.8% ▲ 6.24 84.21 ▲7.2%

Vietnam 47.38 6.5% 32.33 27.5% 15.06 79.71 14.1%

Australia 22.88 3.4% 56.14 ▲3.3% ▲ 33.26 79.01 ▲1.5%

Malaysia 22.86 ▲5.5% 34.04 2.6% ▲ 11.18 56.90 ▲0.8%

Brazil 14.25 ▲9.1% 37.65 2.0% ▲ 23.40 51.90 ▲1.3%

Note: Top 10 countries/regions by total export and import amounts

[Fig. 8] Import and Export Amounts and Growth Rates by Country/Region

for Jan.-Jun. 2020

Source: GACC



[Foreign Direct Investment/FDI] 3.7% Increase for Inward FDI and 0.4% Increase for Outward FDI

<Inward FDI>

According to an announcement made by the Chinese Ministry of Commerce (MOFCOM) on July 16, the amount of inward foreign direct investment (FDI) for June was USD 16.72 billion, up 3.7% YoY (May: up 4.2% YoY). Although the growth was smaller than that of the previous month, it marked a YoY increase for the third consecutive month and a record high in real terms for 2020 (Fig. 9). Year-to-date FDI from January to June was down by 4.0% YoY (January-May: down 6.2% YoY) at USD 67.93 billion (Fig. 10).

By industry for the January to June period, investments in the high-tech industry increased by 19.2% YoY, with large YoY increases notably in the sectors of information services (20.9%), inspection services (8.7%), and research, development and design services (35.7%).

By country/region for the same period, YoY increases were seen in investments from Hong Kong (up 4.2%), Singapore (up 7.8%), the U.S. (up 6.0%), the Belt and Road Initiative countries (up 2.9%), and ASEAN countries (up 5.9%).

<Outward FDI>

On July 16, MOFCOM announced that outward FDI in June rose 0.4%* YoY to USD 9.30 billion* (May: down 12.8%* YoY to USD 8.63 billion*), finally turning positive after four months of being stuck in negative territory (Fig. 11). China’s cumulative outward FDI from January to June was USD 51.50 billion, down 4.3%* YoY (January-May: down 5.3% YoY to USD 42.20 billion) (Fig. 10).

* Figures calculated by MUFG Bank based on the data published by MOFCOM.

By industry for the January to June period, outward investments increased for leasing/commercial services by 20.1% YoY to USD 19.56 billion and for scientific research/technology services by 11.1% YoY to USD 1.30 billion, while investments decreased for manufacturing by 15.6% YoY to USD 8.17 billion.

◆July Manufacturing PMI at 51.1, Up 0.2 points Month-on-Month (MoM)

According to statistics released by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP) on July 31, the July manufacturing PMI rose 0.2 points month-on-month (MoM) to 51.1, keeping above the economic sentiment benchmark figure of 50 for five consecutive months. Although the July non-manufacturing PMI decreased 0.2 points MoM to 54.2, it nonetheless surpassed 50 for five consecutive months (Fig. 1).

By manufacturing component, both production (54.0, up 0.1 points MoM) and new orders (51.7, up 0.3 points MoM) showed MoM increases, reflecting continued recovery due to the resumption of economic activities. New export orders increased to 48.4 (up 5.8 points MoM) and despite remaining below the



benchmark of 50, recovery has been seen for three consecutive months. On the other hand, while employment increased to 49.3 (up 0.2 points MoM), growth remained sluggish. Expected production and business activities, which indicates future business confidence, increased 0.3 points MoM to 57.8 (Fig. 2).

The NBS and CFLP state that although the economy has continued to recover with the help of quarantine measures for COVID-19 and the effects of economic policies, businesses classified as small decreased by 0.3 points MoM to 48.6 where severe difficulties remain in manufacturing and management due to the pandemic. Furthermore, it has been pointed out that businesses in a wide region spanning Anhui, Hubei and Hunan have been greatly affected by the flooding of their plant facilities, equipment, and inventories, causing logistics delays.

In non-manufacturing, construction rose to 60.5 (up 0.7 points MoM), reflecting the expanding business volume due to accelerated construction of infrastructure. Services fell to 53.1 (down 0.3 points MoM).

The composite PMI, which reflects the overall business confidence derived by weighted averages of the manufacturing PMI and non-manufacturing PMI, declined 0.1 points MoM to 54.1 (Fig. 1).

◆World Bank Revises China’s Growth Rate in 2020 Upward to 1.6%, but Recovery Remains

Uneven

The World Bank revised China’s growth rate in 2020 upward by 0.6 points from its June forecast to 1.6% in its July 29 report "Leaning Forward – COVID-19 and China’s Reform Agenda." However, this is still the lowest rate of growth since 1976. In 2021, the growth rate forecast was revised upward by 1.0 point to 7.9%.

The report expresses that despite the Chinese economy recovering to positive growth in the second quarter after a sharp decline in the first quarter of this year, recovery in economic activity is analyzed as uneven since recovery in consumption and private sector investment are still sluggish compared to manufacturing and infrastructure investment. Although disruption on the supply side has generally improved, reduced income and increased unemployment have restrained private consumption and there are still challenges in restoring demand both inside and outside China as many countries continue to place restrictions in international transportation.

The 1.6% growth in 2020 reflects the country’s general success in containing COVID-19. It is assumed that as long as a second wave is suppressed, sustainable fiscal support measures will effectively stimulate private consumption and public investment while the current financial environment will be maintained. Under such conditions, it is expected that the recovery of demand to normal levels in China will partially offset the impact of the slump in overseas demand.

On the other hand, the World Bank warned that if a resurgence of COVID-19 occurs, there will be downside risks such as stagnation in economic activity, dampened corporate and consumer sentiment, and external factors including prolonged global economic downturn and deepening trade frictions,

Manufac

turing PMIProduction

New

orders

New

export

orders

Raw

materials

prices

ImportsEmploy

ment

Expected

production

and

business

activities

Jan 49.5 50.9 49.6 46.9 46.3 47.1 47.8 52.5

Feb 49.2 49.5 50.6 45.2 51.9 44.8 47.5 56.2

Mar 50.5 52.7 51.6 47.1 53.5 48.7 47.6 56.8

Apr 50.1 52.1 51.4 49.2 53.1 49.7 47.2 56.5

May 49.4 51.7 49.8 46.5 51.8 47.1 47.0 54.5

Jun 49.4 51.3 49.6 46.3 49.0 46.8 46.9 53.4

Jul 49.7 52.1 49.8 46.9 50.7 47.4 47.1 53.6

Aug 49.5 51.9 49.7 47.2 48.6 46.7 46.9 53.3

Sep 49.8 52.3 50.5 48.2 52.2 47.1 47.0 54.4

Oct 49.3 50.8 49.6 47.0 50.4 46.9 47.3 54.2

Nov 50.2 52.6 51.3 48.8 49.0 49.8 47.3 54.9

Dec 50.2 53.2 51.2 50.3 51.8 49.9 47.3 54.4

Jan 50.0 51.3 51.4 48.7 53.8 49.0 47.5 57.9

Feb 35.7 27.8 29.3 28.7 51.4 31.9 31.8 41.8

Mar 52.0 54.1 52.0 46.4 45.5 48.4 50.9 54.4

Apr 50.8 53.7 50.2 33.5 42.5 43.9 50.2 54.0

May 50.6 53.2 50.9 35.3 51.6 45.3 49.4 57.9

Jun 50.9 53.9 51.4 42.6 56.8 47.0 49.1 57.5

July 51.1 54.0 51.7 48.4 58.1 49.1 49.3 57.8

Sources: NBS and CFLP

[Fig. 2] Trends of Major Components in the Manufacturing PMI

2019

2020



that could hinder recovery.

The World Bank then indicated that the implementation of appropriate policies could mitigate these risks, and that the economic recovery after the COVID-19 pandemic would be an opportunity for China to rebalance its economy and achieve ever more inclusive, sustainable and green growth. Specifically, it suggested that the fiscal policy should maintain flexibility to ensure liquidity, reduce the burden on corporate and household debt, focus on eliminating the shortcomings of the social security system, protect workers from distress due to unemployment and reduced income, and aim to achieve a more sustainable economic community through the promotion of investment in environmentally friendly infrastructure.

◆CPC Central Committee to Hold Fifth Plenary Session in October to Formulate the Next

Five-Year Plan

On July 30, the Central Political Bureau of the Communist Party of China (CPC) decided to hold the fifth plenary session of the 19th Central Committee (“Fifth Plenary Session”) in Beijing this October. The Fifth Plenary Session will discuss the 14th Five-Year Plan (2021-2025), which sets out the economic policy for the next five years, and its long-term development goals up to 2035.

The committee will also decide on the economic management policy for the second half of 2020 at the session.

Regarding the current economic situation, the committee stated that the situation is still complex and challenging, with great instability and uncertainty, and that “many of the problems we face are mid- and long-term, and they should be seen from the perspective of a protracted war.” The formation of a new development model known as “cross-cycle design” will be accelerated domestic and international economic cycles will be connected and complement each other, with domestic economic cycles as primary. The committee stated that it is necessary to establish a long-term system to achieve both suppression of the pandemic alongside economic development.

In terms of economic management in the second half of the financial year, the committee indicated that stable domestic operations will continue to be of utmost importance and by drawing on expanding domestic demand and the vitality of market entities (companies, sole proprietors, etc.), it will steadily carry out the "six stabilities“ (maintaining stability in employment, finance, trade, foreign investment, domestic investment, and economic outlooks) and "six securities” (guaranteeing administrative management of employment, basic living, market entities, food-energy safety, industrial chain and supply chain stability, and public services).

Fiscal policy will become more proactive with an emphasis on being pragmatic, focusing on securing funds for critical projects and improving quality and profitability. Monetary policy will focus on being more flexible and appropriate, ensuring reasonable expansions of loan sizes and reductions in lending costs, with an emphasis on boosting loans to manufacturing and small/medium/micro-sized enterprises.

[Industry]

◆June Housing Prices for 70 Medium- to Large-Sized Cities: More Cities See Prices Rising

Month-on-Month (MoM) with Sharper Rises in Regional Cities

On July 16, the Chinese National Bureau of Statistics (NBS) released the housing price indices for 70 medium- and large-sized cities for May.

Sale prices for newly constructed residential buildings increased over the previous month in 61 cities—an increase of four cities over the 57 cities in the previous month. Meanwhile, seven cities experienced declines, four cities fewer than the 11 cities last month. Two cities have seen no MoM housing price change from the month before (Fig. 1). As economic activity is returning to normal, the NBS views that housing demand will continue to recover.

Taking a closer look at price rises by city size, the first-tier cities* saw smaller MoM price rises from 0.7% to 0.6%, while the second-tier cities* saw moderate growth MoM price rises from 0.6% to 0.9%, as did the third-tier cities* from 0.7% to 0.8% (Fig. 3). The cities with substantial rises on a MoM basis include Yinchuan (Ningxia Hui Autonomous Region) at 1.9%, Tangshan (Hebei) and Huizhou



(Guangdong) at 1.5%, Wuhan (Hubei) and Changsha (Hunan) at 1.4%, while those with significant drops include Nanchong (Sichuan) at 0.9%, and Anqing (Anhui) and Beihai (Guangxi Zhuang Autonomous Region) at 0.6%.

Meanwhile, 60 cities—two fewer than the 62 cities in the month before—saw YoY price increases, while seven cities—one fewer than the eight cities in the month before—saw YoY price decreases (Fig. 2).

The YoY rate of growth in house prices rose to 3.3% from the previous month at 2.9% for first-tier cities, while declines continued on from the previous month in the growth rate of both second-tier cities, from 5.4% to 5.3% growth, and third-tier cities, from 4.8% to 4.6% growth (Fig. 4). On a YoY basis, the cities which saw substantial growth include Yinchuan (Ningxia Hui Autonomous Region) at 15.7%, Tangshan (Hebei) at 15.3%, and Xining (Qinghai) at 14.4%. Significant declines were seen in Jinan (Shandong) at 3.1%, Luzhou (Sichuan) at 2.8%, and Shaoguan (Guangdong) at 2.2%.

* First-tier cities: Beijing, Shanghai, Guangzhou, and Shenzhen Second-tier cities: 31 cities including provincial capitals and sub-provincial cities Third-tier cities: The 35 remaining cities of the 70, excluding the above first- and second-tier cities

◆Promotion of Industrial Internet Accelerated as Part of New Infrastructure Construction

Projects

On July 10, the Ministry of Industry and Information Technology (MIIT) published the “2020 Work Plan of the Industrial Internet Special Working Group.”

The Industrial Internet is intended to connect things, data and people to increase productivity and improve quality control in the manufacturing industry as a whole by advancing the application of IoT (Internet of Things) to industrial equipment. For further advancement of the manufacturing industry, the Chinese government released a plan for promotion of the Industrial Internet in 2017 and the “Industrial Internet Development Action Plan (2018–2020)” in 2018. This year, as part of “new infrastructure construction”* projects, the government unveiled the detailed 2020 Work Plan to demonstrate its stance in favor of further accelerating the efforts, following the release of a notice on driving the accelerated development of the industrial internet.”

*Note: As opposed to conventional infrastructure construction such as transportation networks, urban development, etc.,



“new infrastructure construction” is intended to develop infrastructure needed to build a digital society such as 5G, AI, Industrial Internet, and IoT. The plan was first suggested at the Central Economic Work Conference in December 2018, and in March 2019, the Standing Committee of the Central Political Bureau of the Communist Party of China ratified the policy to accelerate the construction of new infrastructure.

The 2020 Work Plan consists of 10 items along with 54 targets to be accomplished by the end of 2020.

The plan details multiple targets in the areas concerned. To upgrade basic infrastructure, it selects 100 national leading companies and 1,000 regional companies across the country as its models for improving intranet. One to three companies in each region are selected to take measures including improving their intranet by adopting 5G and building regional management centers for big data. To build a data analysis framework, the plan aims to strengthen the functionality of five nodes (Beijing, Shanghai, Guangzhou, Chongqing, Wuhan) and build emergency nodes in Nanjing and Guiyang. To build and apply platforms, it aims to develop 10 platforms that cover different industries and 50 platforms for key industries, and get 400,000 companies to use these platforms. In addition, the plan also incorporates targets for enhanced research in core technologies, improved security control, and increased international cooperation.

The China Academy of Information and Communications Technology (CAICT), an MIIT subsidiary, estimates that the size of the domestic market for the Industrial Internet (including ripple effects on relevant industries) was RMB 1.4 trillion (1.5% of the GDP) in 2018 and RMB 2.1 trillion (2.2% of the GDP) in 2019. CAICT forecasts that it will grow to RMB 3.1 trillion (2.9% of the GDP) in 2020.

[Trade/Investment]

◆China-Japan Regional Development Cooperation Model Zones: Details Announced for

Shanghai and Tianjin

At the end of April, the National Development and Reform Commission (NDRC) approved the establishment of China-Japan Regional Development Cooperation Model Zones in six cities: Shanghai, Tianjin, Dalian, Qingdao, Suzhou, and Chengdu, seeking a new model of cooperation in regional cities as part of the promotion of business cooperation between Japan and China and with the goal of high levels of open economic development. Following the lead of Dalian and the other three original regions, Shanghai and Tianjin also recently announced the details of its development cooperative model.

The priority industries for promotion in each model zone include the hydrogen energy industry in Shanghai, the health industry in Tianjin, the high-tech equipment manufacturing industry in Dalian, the energy conservation/environmental protection industry in Qingdao, the smart manufacturing industry in Suzhou, and the creative industry in Chengdu. These were chosen to take advantage of the characteristics of each region’s respective industrial structure.

Model Zone Area Development Objectives and Key Industries for Investment

China-Japan

(Dalian) Regional

Development

Cooperation Model

Zone

・52.9km2 zone centered in

the Dalian Jinpu New

Area

・The zone includes the

New Japanese Industrial

Park, Songmudao Zone,

Xidongdao Zone, and

Huayuankou Zone

・High-end equipment manufacturing and new materials are the core

industries, strengthening Sino-Japanese cooperation in product and

technological innovation, matching for industrial cooperation, and financial

services, as well as driving the upgrade of traditional industries in the

Northeast China region.

China-Japan

(Qingdao) Regional

Development

Cooperation Model

Zone


the Qingdao International

Economic Cooperation

Zone

・The energy conservation and environmental protection industry is the core

industry. The fundamental industries of materials, energy technology,

biotechnology, and information and communications will be built,

strengthening Sino-Japanese cooperation in the fields of technological

innovation, product development, and high-tech manufacturing.

・By 2025, the aim is to complete the development of the model zone

infrastructure, attract over 200 companies, hire 35,000 new employees, and

generate RMB 10 billion of GDP.

<China-Japan Regional Development Cooperation Model Zones: Primary Characteristics of Each Region>



China-Japan

(Suzhou) Local

Development

Cooperation Model

Zone


Xiangcheng District,

Suzhou City

・Smart manufacturing is the core industry and the aim is to become a place

for Sino-Japanese industrial matching and a cooperative technology

innovation center.

・The infrastructure for living, transportation and services are being

improved after taking into account the demand by Japanese companies,

and the construction of a cherry blossom theme park and the expansion and

renovation of Suzhou North Railway Station on the Beijing-Shanghai high-

speed railway are underway.

China-Japan

(Chengdu)

Regional

Development

Cooperation Model

Zone


the southern part of the

Chengdu Hi-Tech

Industrial Development

Zone

・The zone includes the

Denglinggu Zone, Qilong

Zone, and the Future

Technology City

・Aiming to be an innovative and open center for internationally known

creative industry clusters.

・Key industries for investment:

　- Denglinggu Zone: animation, video games, digital media, cultural

industry conferences/exhibitions, etc.

　- Qilong Zone: information services, creative design, etc.

　- Future Technology City: aviation, cultural tourism, cultural education,

etc.

China-Japan

(Shanghai) Local

Development

Cooperation Model

Zone

・Phase one is a 1.1 km2

area centered on

"Zhizaoyuan" in the

Shanghai Lingang Area

・Promoting technical collaboration among Japanese and Chinese

companies in the field of hydrogen energy, forming a new energy industry

cluster focused on hydrogen, and establishing a standard system for the

domestic hydrogen energy industry.

・Key industries for investment:

　- Hydrogen-related parts

　- Hydrogen fuel cell equipment

　- Hydrogen production, storage, transport and related

　- Materials for hydrogen storage equipment

　- Research and development of materials for weight reduction of

hydrogen fuel cell vehicles

　- Development of "all-inclusive energy stations" that provide conventional

refueling, battery charging, and hydrogen refueling.

China-Japan

(Tianjin) Local

Development

Cooperation Model

Zone

・Centered in the Tianjin

Health Industry Park of

Jinghai District, Tianjin

City

・The health industry is the core industry. Elements for innovation will be

converged for healthy living, and the international cooperative model for

the "medical and elderly care facility," which combines medical services

and elderly care services, will be evolved . The zone will also drive high-

quality development of the health industry in the Jing-Jin-Ji (Beijing-

Tianjin-Hebei) region.

　・Priority fields for promotion:

　－Innovation: Promotion of research and application of pharmaceutical,

medical, and elderly care health based on traditional Chinese medicine

　－Healthy living: Strengthening public health services using big data and

AI, development of the sports and leisure industry, building lifelong health

service systems

　－International cooperation: Strengthening international cooperation for

industrial-academic collaboration

Note: Created based on announcements and reports by local governments

東京三菱 中国情報月報 12月号china biweekly(august 19th 2020） mufg bank (china), ltd. 2...

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東京三菱中国情報月報 12月号china biweekly(august 19th 2020） mufg bank (china), ltd. 2...