Everything You Need to Know About China's Economy on Wednesday (June 4)
Your Daily & Trustworthy Updates on the Chinese Economy
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HOWDY! This is TIAN in Beijing, welcoming you to your Wednesday edition of Everything You Need to Know About China’s Economy.
DRIVING THE DAY, CHINA’S FACTORY ACTIVITY SEES MARGINAL UPTICK IN MAY.
China's official manufacturing purchasing managers' index came in at 49.5 in May, up from 49 in April, according to data released by the National Bureau of Statistics. The figure was still below the 50-point mark that separates contraction from expansion.
Meanwhile, China's nonmanufacturing PMI, which includes subindexes for service sector activity and construction, came in at 50.3 in May, down from 50.4 in April, China Daily reported.
The country's official composite PMI, which encompasses both manufacturing and nonmanufacturing activities, rose from 50.2 in April to 50.4 in May, NBS data showed.
Despite mounting external uncertainties, NBS data showed manufacturers expressing optimism and confidence, with the gauge for manufacturers' expectations for production and operation standing at 52.5 in May versus 52.1 in April.
MEANWHILE, CHINA'S TOP AUTO DEALERS URGE END TO PRICE WAR.
China's top auto dealer association urged all automakers to stop cutthroat competition in a rare public announcement, saying the race to the bottom is threatening the survival of dealerships and undermining the broader push for high-quality growth in the automotive sector.
The China Auto Dealers Chamber of Commerce, which is under the All-China Federation of Industry and Commerce, said that China's car dealers, a crucial link between manufacturers and consumers, are grappling with mounting pressures, including weakening margins, rising inventory levels, tighter liquidity, and overall operational stress.
"The situation worsened notably since the second quarter as a fresh wave of discounts, led by major EV players, spread through the market," the chamber said. "Price wars may win headlines, but they are dragging the entire industry into a downward spiral."
In response, the chamber released a proposal urging industry reform, calling to reject reckless discounting and return to fair, rational competition to preserve industry health.
Automakers should also avoid frequent changes to pricing and policy that confuse consumers and strain dealer relations, it said.
Meanwhile, the chamber emphasized that production must align with actual demand, and manufacturers should not offload excess inventory onto dealers, and must resolve pricing distortions, speed up rebates and reduce pressure on working capital.
Evaluation targets should be realistic, and penalties must not be used as tools to force dealer compliance. Dealers should not be coerced into closing under the guise of "network optimization", and those exiting the business should be fairly compensated, it added.
ALSO ON WEDNESDAY, CHINA LAUNCHES RENOVATION OF 5,679 OLD URBAN RESIDENTIAL COMPOUNDS IN FIRST FOUR MONTHS.
China initiated renovation of 5,679 old urban residential compounds in the first four months of 2025, the Ministry of Housing and Urban-Rural Development said.
The country aims to renovate 25,000 such residential compounds this year, as part of its ongoing efforts to transform cities into more resilient and intelligent areas that are desirable to live in.
From 2019 to 2024, China renovated a total of 280,000 old residential compounds, benefiting over 120 million people.
During this period -- 360,000 km of aging pipelines were renovated or upgraded, 3.87 million parking lots were added, and 78,000 public service facilities, such as elderly care and childcare centers, were constructed.
The ministry said it will keep working to enhance living environments and upgrade community facilities to better meet the daily needs of residents and ensure their safety.
IN TODAY'S FINANCIAL MARKET,
Chinese stocks closed higher on Wednesday, with the benchmark Shanghai Composite Index up 0.42 percent to 3,376.20 points.
The Shenzhen Component Index closed 0.87 percent higher at 10,144.58 points.
The combined turnover of these two indices stood at 1.15 trillion yuan (about 160 billion U.S. dollars), slightly higher than the previous trading day.
Shares related to tourism and clothing led the gains, while those in the transport sector were among the biggest losers.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, gained 1.11 percent to close at 2,024.93 points on Wednesday.
Hong Kong stocks close 0.6 pct higher
Hong Kong's stock market ended higher Wednesday with the benchmark Hang Seng Index up 0.6 percent to close 23,654.03 points.
The Hang Seng China Enterprises Index rose 0.67 percent to end at 8,576.75 points, and the Hang Seng Tech Index rose 0.57 percent to end at 5,219.02 points.
Chinese yuan weakens to 7.1886 against USD Wednesday
The central parity rate of the Chinese currency renminbi, or the yuan, weakened 17 pips to 7.1886 against the U.S. dollar Wednesday, according to the China Foreign Exchange Trade System.
In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
China's benchmark interbank gold prices higher Wednesday
According to the China Foreign Exchange Trade System, the benchmark price for gold that is 99.95 percent pure or above stood at 782.00 yuan per gram, up 14.40 yuan from the previous trading day.
The price for gold that is 99.99 percent pure or above was up 9.71 yuan from the previous trading day to 778.50 yuan.
AT THE END OF TODAY'S SHARING, LET'S TAKE A LOOK AT YOUR DAILY FUTURES:
No.1 soybean futures closed lower on Wednesday in daytime trading at the Dalian Commodity Exchange (DCE).
The most active No.1 soybean contract for July 2025 delivery dipped 7 yuan (about 97 U.S. cents) to close at 4,123 yuan per tonne.
On Wednesday, the total trading volume of six listed No.1 soybean futures contracts on the exchange was 173,433 lots, with a turnover of about 7.12 billion yuan.
Iron ore futures closed higher on Wednesday in daytime trading at the Dalian Commodity Exchange.
The most active iron ore contract for September 2025 delivery gained 9.5 yuan (about 1.32 U.S. dollars) to close at 704.5 yuan per tonne.
On Wednesday, the total trading volume of 12 listed iron ore futures contracts on the exchange was 564,505 lots, with a turnover of about 39.46 billion yuan.
Cotton futures closed flat Wednesday in daytime trading on the Zhengzhou Commodity Exchange (ZCE).
The most active cotton contract for September 2025 delivery closed at 13,265 yuan (about 1845.3 U.S. dollars) per tonne.
On Wednesday, the total trading volume for six listed cotton futures contracts on the ZCE was 236,696 lots with a turnover of 15.66 billion yuan.
Sugar futures closed higher Wednesday in daytime trading on the Zhengzhou Commodity Exchange.
The most active sugar contract for September 2025 delivery gained 6 yuan (about 83.5 U.S. cents) to close at 5,748 yuan per tonne.
On Wednesday, the total trading volume for six listed sugar futures contracts on the ZCE was 190,038 lots with a turnover of 10.87 billion yuan.
About the Newsletter:
Ran by TIAN Dongdong, this newsletter features daily and trustworthy content on China's economy. Having worked in Brussels, London, Cairo, and Tripoli for Chinese media as correspondent for several years, TIAN is now based in Beijing.