Cango Newsletter 20210601
China to Support Couples Having Third Child
China will allow all couples to have three children and beef up support policies in a bid to cope with increasingly aging society, according to a key Party meeting on Monday. The meeting of the Political Bureau of the Communist Party of China Central Committee also highlighted the need to increase the mandatory age for retirement and to carry out a national strategy of responding proactively to the aging society.
China Raises Reserve Requirement Ratio for Foreign Currency Deposits by 2%
China's central bank announced Monday that it will raise the reserve requirement ratio for foreign currency deposits by 2 percentage points from the current 5 percent to 7 percent, beginning June 15. The move aims to strengthen the liquidity management of foreign currencies in financial institutions.
Manufacturing PMI Edges down to 51 in May, Says NBS
The official purchasing managers index for China's manufacturing sector came in at 51 in May, edging down from 51.1 in April, indicating that the sector has continued to expand, the National Bureau of Statistics said on Monday. China's nonmanufacturing PMI rose to 55.2 in May, up from 54.9 in April, showing that nonmanufacturing activities have accelerated.
Growth Rate of China Auto Sales to Revise Up from 6.5% Amid Strong Recovery Momentum, Says CAAM
Due to the gradual recovery of auto production and sales in April 2020, the impact of high growth triggered by the low comparable basis has been significantly reduced, leading to a much lower year-over-year growth of production and sales from January to April compared to the reading from January to March. However, compared with the same period in 2019, the cumulative production and sales data demonstrate a promising development trend. Total auto sales for the first fourth months of 2021 exceeded market expectations. The expected auto sales for 2021 might be revised up from previously forecast of 6.5%.
China Auto Market to Benefit from Three-child Policy
CuiDongshu, Secretary-General of China Passenger Car Association, said in a statement that China's auto market is dominated by middle-aged consumers and is gradually moving towards the market dominated by elderly consumers. Auto companies will benefit from three-child policy, but to a lesser extent, as China’s auto market is bound to be oriented to the middle-aged and the elderly. We expect to see more consumption upgrade and sales of luxury cars while driving the sales growth of the elderly mobility scooters and micro electric cars.
Chip Shortage Triggers Rise in Auto Price
The chip shortage starts to have negative impacts on the auto supply and triggers selling price changes. Due to the tight market supply, some brands have begun to increase the price of popular models. The luxury car market is growing fast, even though the discount margins are getting smaller. According to data from CPCA, the penetration of luxury brand hit a record high of 15.3% in April and 14.6% in January-April (13.1% for 2020). Among them, the sales of luxury cars priced greater than or equal to RMB300,000 increased by 31.3% year-over-year, with a market share of 11.6%, while sales of models priced below RMB300,000 increased by only 10.2% year-over-year.