In today’s talking points: China Plans to Cut 500,000 Jobs this Year in Smokestack Sectors; China Bike-Sharing Service Ofo is Now Worth More Than $1 Billion; PwC predicts slower growth of Australian economy; CBRC issues caution to local authorities on micro lending.
China Plans to Cut 500,000 Jobs this Year in Smokestack Sectors
China will further trim its bloated smokestack industries this year and support other sectors in services or internet-related businesses to create new jobs. According to minister of Human Resources Yin Weimin, China plans to cut another 500,000 jobs industries with excess capacity, and that’s part of an effort to trim 1.8 million employees in steel and coal over a few years. About 726,000 jobs were cut from those industries last year. China has decided to handle inefficiency and pollution in industries with excess capacity, aiming to do so without stirring social unrest from mass layoffs. The central government has allocated 100 billion yuan ($14.5 billion) to subsidize the transfer of displaced workers, with more than 30 billion yuan spent last year. The government will probably roll out policies to support internet-based sectors that are creating a large amount of new jobs so that there are enough news jobs for its massive labor force.
Read more at Bloomberg
China Bike-Sharing Service Ofo is Now Worth More Than $1 Billion
Ofo just raised $450 million at a valuation of more than $1 billion. Orange-hued Mobike raised $300 million a month earlier. But they’re not the only two. The competition has grown so ferocious that the Uber-like services are foregoing an already minuscule 1-yuan (15 cents) charge many days of the week and letting people use their bikes for free. Some people don’t see it as a great business opportunity. Its advocates argue there’s enormous value just waiting to be unlocked. The mostly youthful demographic that bike-sharing services cater to are coveted marketing targets who can offer up precious data and be sold on other products eventually. According to the company’s recent statement, Mobike and Ofo are among the two largest of a growing crop of private bike-sharing operators. Ofo alone has brokered more than 300 million rides and has more than 20 million users with operations in nearly 40 cities in China, the U.S., Singapore and the U.K.
Read more at Bloomberg
PwC predicts slower growth of Australian economy
According to a global ranking by PwC, Australia’s ranking amongst other major global economies is set to decline. PwC– a multinational professional services network – predicts that from a mere 13 years, countries in Asia will comprise half of global gross domestic product while Group of 7 major economiss will dwindle to just more than 20%. Due to slower economic growth and smaller population, Australia can expect to be overtaken by other countries including Thailand, Philippines and Bangladesh. PwC Australia Chief Economist, Jeremy Thorpe has voiced that “Lower growth puts pressure on our standard of living.” He also emphasised the need to trade with all of Asia and not just China. “Emerging countries will create many opportunities for businesses as these countries progress into new industries, engage more with world markets and their populations get wealthier.” Developing countries with fast growing economies are expected to expand 35% over the next 30 years.
Read more at the Financial Review
CBRC issues caution to local authorities on micro lending
The China Banking Regulatory Commission (CBRC) issued local authorities to be cautious when giving licenses to micro finance companies. Micro-lending is a source of financial services for entrepreneurs and small businesses who are traditionally overlooked by larger banks and corporations. Local authorities are able to award micro lending licenses to companies within their specific geographical territory however many are beginning to shift operations online, thereby allowing them to expand to other regions. This in turn, has implications for the local government who is less able to exert control and monitor them. Li Junfeng, director of the CBRC’s inclusive finance department announced that they will soon will issue a publication of new national guidelines and regulations with the aim of increasing supervision of sector however local authorities should maintain vigilance.
Read more at Caixin