Everything You Need to Know About China's Economy on Tuesday (Dec. 31)
Your Daily & Trustworthy Updates on the Chinese Economy
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It’s Tuesday and it’s New Year’s Eve. This is TIAN in Beijing. GOOD MORNING and goodwill to all CPW readers.
As usual, welcome to monitor the pulse of China's economy together with me.
DRIVING THE DAY, U.S. carmaker Tesla's megafactory in Shanghai has kicked off trial production seven months after its construction started, according to Tesla China on Tuesday.
The company told Xinhua Tuesday that the factory is dedicated to manufacturing Tesla's energy-storage batteries, Megapack, whose mass production is expected to fully start in the first quarter of 2025.
As Gigafactory, Tesla's first plant in the eastern Chinese financial hub, was built and inaugurated within a year in 2019.
The new factory is built with an initial capacity of producing 10,000 units annually, equal to around 40 GWh of energy storage.
Covering an area of approximately 200,000 square meters, the new plant represents a total investment of around 1.45 billion yuan (about 201.7 million U.S. dollars), according to the administration of the Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone.
The mega factory is the first of its kind built by Tesla outside the United States, following the inauguration of its gigafactory in 2019, which involved an initial investment of over 50 billion yuan.
At the launch ceremony of the megafactory in May, Tesla signed a deal with Shanghai Lingang Economic Development (Group) Co., Ltd., securing the first batch of orders for its Megapacks in China.
MEANWHILE, China's manufacturing sector continued to expand in December as market sentiment improved, official data showed Tuesday.
The purchasing managers' index (PMI) for the manufacturing sector was 50.1 in December, down from 50.3 in November but exceeding the boom-bust line of 50 for a third consecutive month, the National Bureau of Statistics said.
A reading above 50 indicates expansion, while a reading below 50 reflects contraction.
The data showed that the production and new orders sub-indices came in at 52.1 and 51, respectively.
The PMI for the consumer goods sector came in at 51.4, up 0.6 points from the previous month, according to the NBS.
The PMI for the equipment manufacturing sector remained above 50 for a fifth straight month, with its December reading at 50.6.
Tuesday's data also showed that the non-manufacturing PMI came in at 52.2 in December, up from 50 in November, while the composite PMI rose to 52.2 from a month ago.
The business expectation index for the service sector remained at a high level of 57.6 in December, while that for the construction sector rose for the third consecutive month to reach 57.1.
IN ADDITION, the Fengning pumped storage hydropower plant, the largest of its kind globally, has commenced full operation in the city of Chengde, north China's Hebei Province.
Operated by the State Grid Corporation of China, the facility boasts a total installed capacity of 3.6 million kilowatts and is designed to generate 6.61 billion kilowatt hours of electricity annually.
The company said that since its initial units began operating in 2021, the plant has generated approximately 8.62 billion kilowatt hours of electricity.
IN TODAY'S FINANCIAL MARKET,
China's central bank to conduct second SFISF operation
China's central bank said Tuesday that it would conduct the second operation of the Securities, Funds and Insurance companies Swap Facility (SFISF) soon.
The second SFISF operation will have a swap term of one year, with the possibility of extension under certain conditions, according to a statement on the People's Bank of China website.
The central bank set up the SFISF in October. The tool allows eligible securities, funds and insurance companies to use their assets, including bonds, stock ETFs, and holdings in constituents of the CSI 300 Index, as collateral in exchange for highly liquid assets such as treasury bonds and central bank bills.
Also in October, China conducted the first operation of the SFISF, with a scale of 50 billion yuan (about 6.96 billion U.S. dollars), involving 20 securities and fund companies in the bidding process, the China Securities Regulatory Commission said Tuesday in a separate statement.
The commission has expanded the participant pool to 40 by adding 20 more eligible institutions. During each batch of operations, approximately 20 institutions will be chosen based on their intended scale of participation to engage in the bidding.
China's major stock indices have seen significant gains this year, with the benchmark Shanghai Composite Index rising by 12.67 percent, as the last trading day of 2024 came to an end on Tuesday.
On Tuesday, the Shanghai Composite Index went down 1.63 percent to 3,351.76 points. The Shenzhen Component Index closed 2.4 percent lower at 10,414.61 points.
The combined turnover covered by the two indices stood at 254.42 trillion yuan (about 35.39 trillion U.S. dollars) in 2024, up 20.2 percent year on year.
Shares related to artificial intelligence, low-altitude economy and finance posted brilliant performances in 2024.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 2.93 percent to close at 2,141.6 points on Tuesday.
China's benchmark interbank gold prices higher Tuesday
According to the China Foreign Exchange Trade System, the benchmark price for gold that is 99.95 percent pure or above stood at 620.00 yuan per gram.
The price for gold that is 99.99 percent pure or above stood at 618.40 yuan.
China's benchmark interbank gold prices lower Monday
According to the China Foreign Exchange Trade System, the benchmark price for gold that is 99.95 percent pure or above stood at 616.23 yuan per gram.
The price for gold that is 99.99 percent pure or aboves stood at 616.50 yuan per gram.
China's central bank conducts reverse repos Tuesday
China's central bank conducted 157.7 billion yuan (about 21.94 billion U.S. dollars) of seven-day reverse repos at an interest rate of 1.5 percent on Tuesday.
The move aims to keep liquidity in the banking system at an adequate level, the central bank said.
Chinese yuan strengthens to 7.1884 against USD Tuesday
The central parity rate of the Chinese currency renminbi, or the yuan, strengthened 5 pips to 7.1884 against the U.S. dollar Tuesday, 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.
Hong Kong's Hang Seng Index closes 0.09 pct higher
Hong Kong's stock market ended mixed on Tuesday with the benchmark Hang Seng Index up 0.09 percent to close at 20,059.95 points.
The Hang Seng China Enterprises Index edged up 0.13 percent to end at 7,289.89 points, and the Hang Seng Tech Index fell 0.72 percent to 4,468.11 points.
AT THE END OF TODAY'S SHARING, LET'S TAKE A LOOK AT YOUR DAILY FUTURES:
Cotton futures closed higher Tuesday in daytime trading on the Zhengzhou Commodity Exchange (ZCE).
The most active cotton contract for May 2025 delivery gained 65 yuan (about 9.04 U.S. dollars) to close at 13,495 yuan per tonne.
On Tuesday, the total trading volume for six listed cotton futures contracts on the ZCE was 263,099.0 lots with a turnover of 17.76 billion yuan.
Sugar futures closed higher Tuesday in daytime trading on the Zhengzhou Commodity Exchange.
The most active sugar contract for May 2025 delivery gained 18 yuan (2.50 U.S. dollars) to close at 5,961 yuan per tonne.
On Tuesday, the total trading volume for six listed sugar futures contracts on the ZCE was 335,230.0 lots with a turnover of 19.95 billion yuan.
Iron ore futures closed higher on Tuesday in daytime trading at the Dalian Commodity Exchange (DCE).
The most active iron ore contract for May 2025 delivery gained 9 yuan (about 1.25 U.S. dollars) to close at 779 yuan per tonne.
On Tuesday, the total trading volume of 12 listed iron ore futures contracts on the exchange was 323,454 lots, with a turnover of about 25.11 billion yuan.
No.1 soybean futures closed higher on Tuesday in daytime trading at the Dalian Commodity Exchange.
The most active No.1 soybean contract for May 2025 delivery gained 22 yuan (about 3.06 U.S. dollars) to close at 3,936 yuan per tonne.
On Tuesday, the total trading volume of six listed No.1 soybean futures contracts on the exchange was 142,399 lots, with a turnover of about 5.59 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.