Latest development

• China’s GDP declined by 6.8% in the first quarter of 2020 and grew by 3.2% in the second quarter of 2020.

• Added-value industrial output grew by 4.8% in June 2020 up from 4.4% in May 2020.

• Fixed assets investment declined by 3.1% in Jan-Jun 2020, which was narrowed by 3.2 percentage points compared with that in Jan-May 2020.

• Retail sales decreased by 1.8% in June 2020, registering a decline narrowed by 1.0 percentage points compared with May 2020.

• Inflation stood at 2.5% in June 2020, with food prices increased by 11.1% and non-food prices increased by 0.3%.

• In June 2020, exports (in terms of US$) increased by 0.5%, while imports (in terms of US$) increased by 2.7%, resulting in a trade surplus of US$46.4 billion.

• The Manufacturing Purchasing Managers’ Index up from 50.6 in May 2020 to 50.9 in June 2020.

Major International Ranking

• According to the World Bank, China is the second-largest economy in the world, behind the United States, ahead of Japan.

• According to UNCTAD World Investment Report, China was the second-largest recipients of FDI inflows (USD 141 billion) in the world in 2019 (China ranked 2^nd in 2008), behind the United States (USD 246 billion).

• According to UNCTAD World Investment Report, China was the fourth-largest source of outward FDI flows (USD 117 billion) in the world in 2019 (up from the 11^th in 2008), behind Japan (USD 227 billion), the United States (USD 125 billion) and the Netherlands (USD 125 billion).

• According to the World Trade Organisation (WTO), China was the world’s largest exporter of merchandise trade in 2019 (up from the 11^th in 1995), reaching USD 2,499 billion.

• According to WTO, China was the world’s 4^th largest exporter of commercial services in 2019 (up from the 16^th in 1995), reaching USD282 billion.

• According to International Monetary Fund, China has the largest foreign currency reserves as of December 2019, reaching USD 3,108 billion.

• According to HKSAR Marine Department, Shanghai’s container throughput surpassed Singapore and ranked the first in the world since 2010.

• According to World Tourism Organisation (UNWTO), China ranked the world’s top tourism spending in 2018 (USD 277 billion), followed by the United States (USD 144 billion) and Germany (USD 94 billion).

• According to Hong Kong Securities and Futures Commission, as at end December 2019, the market capitalisation of Shanghai Stock Exchange is the second-largest in Asia (after Japan) and the fourth largest in the world.

Recent Government Initiatives

• In March 2016, the National People’s Congress (NPC) adopted the 13th Five-Year Plan. It also announces the launch of six key scientific and technological (S&T) projects and nine major projects under the “Scientific Innovation 2030” initiative, as well as the implementation of the “Made in China 2025” strategy for building a strong manufacturing country.

• The Belt and Road Initiative (BRI) is a significant development strategy launched by the Chinese government in March 2015. The Chinese government also issued its Vision and Actions of Jointly Building the Silk Road Economic Belt and 21st Century Maritime Silk Road which outlined the framework, key areas of cooperation and cooperation mechanisms regarding the BRI.

• The State Council promulgated the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area on 18 February 2019, mapping out the development plan for the Greater Bay Area (GBA). The Greater Bay Area is strategically positioned to be (i) a vibrant world-class city cluster; (ii) a globally influential international innovation and technology hub; (iii) an important support pillar for the Belt and Road Initiative; (iv) a showcase for in-depth cooperation between the Mainland and Hong Kong and Macao; and (v) a quality living circle for living, working and travelling.

• On 5 July 2019, Guangdong has issued two key strategy documents relating to the Greater Bay Area – the Implementation Plan for the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area and a Three-Year Action Plan for Building the Guangdong-Hong Kong-Macao Greater Bay Area (2018-2020). The Action Plan proposes the implementation of 100 key measures across nine areas, including optimising and upgrading the environment of the GBA’s four core cities, establishing an international science and technology innovation centre and maintaining a state-of-the-art infrastructure base.

• On 9 August 2019, China’s State Council has endorsed plans to establish Shenzhen as a model for the country’s wider urban development and, ultimately, one of the foremost cities in the world in terms of economic resource and sustained, high-quality development. The five priorities for its future development include: establishing a national model for high-quality development, delivering exemplary law-based governance, proving a model of optimum urban living, prioritising the prosperity and wellbeing of residents and pioneering sustainable development in an urban environment.

• During the Boao Forum in April 2018, President Xi Jinping announced that China decides to adopt a series of new significant measures in expanding its opening-up. These measures include broadening market access, enhancing alignment with international economic and trade rules, strengthening protection of intellectual property rights and lowering imports tariffs.

• China is shifting towards a consumption-driven economy by lowering its import tariffs. In November 2017, China cut import tariff on 187 consumer goods, the tariffs drop from an average 17.3% to 7.7% on products including pharmaceuticals, food, health supplements and clothing. From 1 July 2018, China has further reduced tariffs on 1,449 items, from an average tariff rate of 15.7% to 6.9%; and lower import tariffs on vehicles (from average 21.5% to 13.8%) and auto parts (from average 10.2% to 6.0%).

• China reduced the Most-Favoured-Nation (MFN) tariff on 1,585 taxable items as of 1 November 2018. This coincided with the provisional MFN tariff rates being abolished for 39 import items, while the existing MFN provisional tariff rates remained in force for all goods unaffected by this latest round of cut. In total, the tariff reductions apply to 19% of all taxable import items, with the average tariff rate having fallen from 10.5% to 7.8%.

• The provisional import and export tariffs on a range of goods were revised as of 1 January 2019 in line with a prior announcement by the State Council Customs Tariff Commission. This has seen new provisional tax rates applied to such items as food stuffs and various categories of industrial equipment, while duty on several information technology products will be removed and the rates for a raft of other IT products reduced as of 1 July 2019.

• From 1 April 2019, China implemented a value-added tax (VAT) cut for manufacturing sector from 16% to 13% and VAT cut for construction and transportation sectors from 10% to 9%. From 1 May 2019, China reduced social security fees from 20% to 16%.

• The Foreign Investment Law of the People’s Republic of China took effect from 1 January 2020. This law assures non-mainland investors of national level protection for all their committed funds, income and other interests, provided their projects so not fall within the remit of the statutory Negative list.