March 2023 China Economics and Trade Bulletin, USCC, Mar. 15, 2023.

Highlights of This Month’s Edition

In Brief

Macro: Recovery Uneven as COVID Restrictions “Basically” Over .
Fiscal: China’s Fiscal Crisis
Diplomacy: Expanding China-Russia Trade Undermines U.S.-Led Sanctions, China-EU Ties
Finance: China Implements Long Overdue Change to Listing Process on Domestic Stock Exchanges
Macro: Retirement Age Policy Change Rumors Prompt Anger Online .
Finance: China’s Securities Regulator (Re)Opens a Pathway for Chinese IPOs on U.S. Stock Exchanges

In Brief
• U.S.-China trade reached a record high in 2022. According to U.S. government data, two-way trade flows between the United States and China amounted to over $690.6 billion in 2022, with imports totaling $536.8 billion and exports reaching $153.8 billion. The trade goods deficit was $382.9 billion, the second-highest number ever recorded for U.S.-China trade.

• U.S. companies are planning expanded retail footprints in China. As China’s economy recovers amid the end of Beijing’s zero-COVID policies, U.S. companies—including McDonald’s, Starbucks, and Ralph Lauren—have reported plans to launch new stores across China. Nevertheless, according to a recent survey by the American Chamber Commerce in China, only 45 percent of respondents listed China as a top three investment priority in 2023—the first time in approximately 25 years that fewer than half of firms have placed China in that position.

• China’s National People’s Congress announced an overhaul of China’s financial regulatory structure.* A new body directly under the State Council, the National Financial Regulation Administration, will replace the banking and insurance regulator and also supervise investor protection. China’s securities regulator will also fall under the State Council, increasing its bureaucratic sway, while changes to the People’s Bank of China will reduce its regulatory functions and increase its focus on monetary policy.

• A report released in February indicated that Ant Group, parent company of the world’s largest digital payment platform Alipay, saw its earnings fall 82.7 percent in the third quarter of 2022. Ant has been a target of Chinese regulators seeking to crack down on “disorderly” financial practices in China’s
fintech sector, notably having its initial public offering (IPO) blocked in 2020.* In January 2023, Ant Group announced that founder Jack Ma’s voting rights would shrink from above 50 percent to 6.2 percent, and ten individuals representing management, staff, and the founder would independently exercise non-controlling voting rights.

• China’s Ministry of Commerce (MofCOM) named U.S. defense contractors Lockheed Martin and Raytheon as the first entities on its Unreliable Entities List for their sale of arms to Taiwan. The blacklist prohibits firms from conducting business in China and bans their executives from entering the
country. MofCOM also announced it would fine both firms twice the total respective value of their arms sales to Taiwan since it announced the list in September 2020.

https://www.uscc.gov/sites/default/files/2023-03/March_2023_China_Economics_and_Trade_Bulletin.pdf