China's recovery shows coast-inland divide

Business | Reuters and Stella Zhai 25 Sep 2020

While the economic recovery in China's coastal regions was intact in the third quarter, firms in inland areas have fallen behind in metrics like output and sales revenue, a private survey shows.

The report by US-based China Beige Book International showed that the majority of 3,300 surveyed firms are recovering far more slowly than those in wealthier areas around Beijing, Shanghai and Guangdong.

Sales revenues increased by 41 percent quarter-on-quarter for Shanghai and the wealthy eastern provinces of Zhejiang and Jiangsu, but fell by 10 percent in the more remote western regions of Tibet, Gansu, Qinghai and Xinjiang, according to the report.

This came as Hong Kong's exports fell for six consecutive months in August, down 2.3 percent from a year ago but paring a 3 percent drop in July, government data showed.

Imports of goods dropped 5.7 percent year-on-year in August, after a year-on-year decrease of 3.4 percent in July.

Dennis Ng Wang-pun, president of the Chinese Manufacturers' Association of Hong Kong, estimated Hong Kong exports would continue to record single-digit drops in the next few months.

Meanwhile, mainland foreign exchange regulator granted fresh quotas of US$3.36 billion (HK$26.21 billion) under its outbound Qualified Domestic Institutional Investor scheme for the first time since April 2019, official data showed yesterday.

Also, the inclusion of China's government bonds in the World Government Bond Index, run by FTSE Russell, is expected to bring billions of US dollars into the mainland onshore bond market. Goldman Sachs estimates China's inclusion could drive US$140 billion into mainland bonds.

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