Snout Parade

Pigs

In an article about the futures market for hogs, Bloomberg.com revealed an interesting cultural fact about China.  It turns out that this year the country could buy as much as 5% of US hog output.  Why the demand?

China’s is the biggest pig eating country in the world, but because of high corm prices in China many hog farmers have culled their herds. That will not slow the country’s hog consumption or its desire to eat the whole animal – meaning the pig’s feet, ears and snout in addition to the standard cuts.  And that is why demand for hogs from the US is up.  Source: Bloomberg

More Nuance

GDP Growth by provinces

The economic news out of China has established that growth is slowing.  The official 2015 GDP was 6.9%, which is the lowest in 25 years – old news.  Before we slam on the brakes, it is worth looking at a GDP breakout of various provinces to get a more nuanced view.  On the high end we are seeing results from the newly emerging economy.  Its growth is probably a response to pretty low economic output in the past, so it must be read in that context.

On the bottom end, where the three percenters live, we are seeing China’s rust belt.  Even if it is worse there than these numbers imply, the areas are still competitive with Western growth rates and it represents the country’s largest decline.  The middle group is doing very well at 8% and they are areas that were fairly well developed before 2015.  Lesson: In any economy, and especially in the Chinese economy, things are lumpy.  It is good to look behind the overall numbers.  Source: Business Insider

Mom Power

Mom Population

There are lots of moms in China and they control the purse strings.  They are very watchful over the health of their kids and themselves, which drives much of their spending.  They also control much of the day-to-day household spending and often care for the spending needs of their parents as well, making them influential across three generations.  Women are the super consumers of the Chinese economy.

A subset of Chinese moms, an estimated 60,000, came to the US in 2015 to give birth, providing the child with US citizenship.  That helps in their future education – attending American universities or even international schools in China.   Another group comes to Los Angeles fertility clinics for services.  Clinics there claim that between 20 and 40% of their patients are Chinese.  Sources: Asia.Nikkei.com

Comeback for Future Sentiment

Business Sentiment-May-16

We speculated that April’s serious drop in future business sentiment might have been an anomaly.  With May’s bounce back to normal range, we see that it was an outlier.  And we move forward.  In spite of the slight tick downward in the current sentiment, when balanced against the view of the future, business thinking remains positive and that’s a good thing.  Source: Westpac MNI China Business Sentiment

Projected Business Travel into China Implies the Boom Continues

Projected Business Travel Spending

Mainland China, without Hong Kong, is second in projected growth for travel spending, but look at the other countries in this graph.  They are starting from zero when compared to China’s position as the number two economy in the world.  Every one hundred business travelers to these tertiary countries adds percentage points to their growth while the plane loads are arriving and departing Beijing.  When Hong Kong is added to the mix, the projected growth is through the roof.  Source: Skift.com

Consistent Gains Over the Last 12-Months

Carrier Data - May 2016

Seventy percent of all Chinese mobile subscribers are now using some form of smart device as the mass conversion continues.  New 3G/4G subscriptions are running at just below 20 million per month over the last year ending in May 2016. The run rate has been consistent with a low of 15.5 million conversions in March of this year and a high in January of 24.4 million. We track this number as an indicator of consumer sentiment believing no one has to upgrade their phone and because it defines the massive audience for mobile advertising in China.  Sources: China Mobile, China Unicom, China Telecom

China’s Economic Impact

Chinese Imports

China’s impact on the world economy is undeniable.  The country accounts for 12% of global GDP and 30% of the global investment demand according to a HSBC report.  Also notable is the impact China has on the GDPs of many other countries. Chinese imports represent exports from its trading partners.  This table counters the assumption in the West that Chinese trade moves in one direction. As their economy shifts toward the consumer sector, Chinese imports are bound to increase, further expanding China’s impact on the world economy.  Source: Business Insider

The Mobile Chinese Traveler

Mobile Travel by Device

This blog always watches for items relating to Chinese travel because it demonstrates the continuing progress of the Chinese consumer.  The more people are comfortable with their future, the more they are likely to vacation.

This table adds another element of interest; it illustrates just how important mobile life is to the Chinese consumer.  The significance of which cannot be exaggerated.  Note the speedy switch from desktop or laptop to mobile when booking travel in 2014 verses the projected use in 2017. It parallels the smartphone phenomenon we have reported since 2014.  Source: Skift.com

China’s Car Market Remains Hot

Car Sales May-16

Chinese consumers continue their spending.  Evidence: Year-over-year car sales for May 2016 were 11.4% higher and for the five months since January, year-over-year unit sales are up 7.7% according to China Passenger Car Association data.  Source: Reuters

Chinese Women, Hear Them Roar

Most Powerful Women

Chinese women are making their mark.  Nine of them have made the 2016 Forbes Most Powerful Women list ranking China in the number two spot after the US with 51.  The most powerful women in the world, for the tenth time, is Germany Chancellor, Angela Merkel.  Hillary Clinton and Janet Yellen of the Fed were number two and three.  Youngest on the list was Marissa Mayer, Yahoo’s chief executive (41), and oldest was Queen Elizabeth II (90). Sources: BBC.com; Forbes