China Market Watch: China Reaches Five Year PPI High, and Digitization of Manufacturing Sector

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China’s PPI reaches five year high

The National Bureau of Statistics (NBS) released a statement that China’s producer price index (PPI) reached 3.3 percent in November – its highest reading since October 2011, when it recorded five percent. In a separate statement also made by the NBS, the consumer price index (CPI) rose by 2.3 percent in the same month year on year, the third consecutive month in which the index recorded an increase. China’s PPI had been shrinking for 42 consecutive months prior to the spike, which analysts have put down to soaring prices in the coal and steel sectors, as opposed to a rise in domestic demand.

China’s five year plan for digitizing the manufacturing sector

China’s Ministry of Industry and Information Technology and the Ministry (MIIT) of Finance have jointly released a five year plan to digitize the manufacturing sector, develop intelligent manufacturing, and generate new revenue channels. The plan claims that intelligent manufacturing development is key to improving production efficiency, and is also instrumental in reducing production costs and energy consumption. Research and development of such technical equipment will be undertaken in the five year period, setting new standards for the intelligent manufacturing industry, which forms a core part of China’s ‘Made in China 2025’ initiative.

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China further opens clean energy vehicle manufacturing to foreign investment

The National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) published a revised guidance to further open up the automotive electronics and new energy vehicles sectors to foreign investment, indicating the government’s intention to re-structure its market environment for clean energy vehicles. Car makers such as Volkswagen, AG, and Mercedes are expanding their production in China, along with introducing new hybrid models to the world’s largest auto market. According to Sinolink Securities Co, the output of lithium-ion automotive batteries in China was 16.9 GWh in 2015, with demand projected to reach 125 GWh in 2020. China’s local governments have also implemented some subsidies to support new energy vehicle companies, but with an increasing number of clean-energy scams, the censorship and supervision for such subsidies is growing stricter.

Google’s first developer conference in Beijing in five years

Google held its first developer conference in Beijing since 2011, five years after a high-profile withdrawal from China, where it failed to comply with policies regarding self censorship of sensitive topics. With the rapid growth of smartphones using Google’s inbuilt Android system in China, the country’s market environment has seen many changes. According to the MIIT, in November 2016, the Android system occupied more than 70 percent of smartphone production. In addition to global giants like Samsung, Chinese smartphones brands, such as Huawei and Xiaomi, also use Android for their operating system. However, the Google Play app store is still banned, and these brands must provide apps with their own online store. The global search giant modified its China strategy after a leadership succession, noting that it never left China and has maintained an existence by offering services through offices overseas.


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