ECONOMY'S REBOUND SET TO CONTINUE IN H2

China's growth recovery is set to continue in the second half of the year, and Beijing's policies are expected to focus on narrowing the development gaps amid the rapid and yet uneven rebound to consolidate the economy's long-term resilience, economists said.

They expect the government's main objectives to continue to center around stabilizing employment and ensuring corporate survival while retaining policy room for any shocks generated by the potential resurgence of the COVID-19 pandemic.

While the world is still struggling with the impact of the pandemic, China's economy made a strong bounce-back in the second quarter, beating economists' expectations by growing 3.2 percent from a year earlier.

Analysts are now pondering the sustainability of such strong rebound momentum and how China's policy may evolve in the second half of the year to keep its economy on a steady recovery path.

The general view among economists is that China's recovery will continue in the second half but the sequential pace may be slower as the economy continues to face acute challenges such as persisting unemployment pressure and the possibility of the resurgence of the pandemic.

China will need to step up policy support to address some of the uneven patterns behind the strong rebound, economists said. For example, household consumption remained subdued as national retail sales declined 1.8 percent year-on-year in June, and the recovery of the services sector has fallen behind the country's industrial production and construction growth.

"The economy has recovered well with respect to industrial production while services took a hit in the first half of the year. In the coming months, we will likely see this performance gap narrowing and economic growth accelerating," said Dominik Peschel, head of the economics unit for the Asian Development Bank's resident mission in China.

Economists expect that more supportive policies will be rolled out to facilitate a stronger recovery of the services sector and to spur domestic consumption.

The country's financial regulators have been keeping a vigilant eye on the recent rapid rise of asset prices as well as the potential growth of nonperforming loans in the banking sector amid concerns that the rapid buildup of leverage and the potential surge of bad loans could jeopardize the stability of the country's financial system.

DROP IN CHINA'S PER-CAPITA DISPOSABLE INCOME NARROWS IN Q2

After deducting price factors, China's per-capita disposable income stood at 15,666 yuan ($2,192.75), narrowing 2.6 percentage points compared with the first quarter, Yicai.com reported on Sunday, sourcing data from the National Bureau of Statistics.

Data showed in the first half of the year, 10 provincial-level regions saw their per-capita disposable income above the national average, namely Shanghai, Beijing, Zhejiang, Jiangsu, Tianjin, Guangdong, Fujian, Liaoning, Shandong and Chongqing. Eight of the 10 regions are along the east coast, one is in western China and another is in the northeast.

Shanghai, with a per-capita disposable income of 36,577 yuan and Beijing, with 34,573 yuan, are the two regions with the most advanced modern service industries. They saw the highest concentration in terms of industries such as information transmission, software and IT technical services, finance, scientific research and technical services in the country. These industries carry the highest incomes in recent years in China.

From the perspective of disposable income increases, a total of 28 provincial-level regions achieved growth in nominal terms in the first half of the year. Tibet, Jiangxi, Sichuan, Guizhou, Hunan, Chongqing, Qinghai, Gansu, Anhui and Yunnan were the top 10 regions with the highest growth rates, and are mostly in Central and West China.

Ding Changfa, associate professor of the Economics Department of Xiamen University, said there were several reasons the central and western areas grew faster in terms of income: Firstly, incomes in these regions are relatively low, so catch-up effects are more significant. Secondly, in many western areas, populations are sparse and less affected by the COVID-19 outbreak. Thirdly, wage earners in these areas are mainly local people, so the resumption of work is faster on a relative basis.

Looking at the bottom of the list for disposable income increase rates, with the exception of hard-hit Hubei province, provincial-level regions with relatively lower growth rates were mostly in North and Northeast China including Tianjin, Heilongjiang, Inner Mongolia and Northeast provinces. Among these, Tianjin and Heilongjiang saw reduction in per-capita disposable incomes. It was largely because in these areas heavy chemical industries, which have seen a lot of downward pressure in recent years, claim a large share in local industry structures.

HK COOPERATES WITH MAINLAND AGAINST 'HYPOCRITICAL' US ACTS

The Hong Kong Special Administrative Region government will fully cooperate with the central government to counter the United States' attempt at hegemony, Chief Secretary for Administration Matthew Cheung Kin-chung said on Sunday.

The tough stance was made amid a series of US confrontations with China after the enactment of the National Security Law for Hong Kong, including its ending Hong Kong's special trade status and imposing sanctions on individuals and institutions "undermining Hong Kong autonomy".

Cheung wrote in his blog on Sunday that it is "hypocritical" for the US to interfere in China's internal affairs under the pretexts of human rights, democracy and autonomy when it is acting solely out of its own political considerations.

He added that Hong Kong's special status as a separate customs territory is not revocable by an individual country, as it was guaranteed by the central government and the HKSAR's Basic Law, and was recognized by multilateral organizations such as the World Trade Organization.

Financial Secretary Paul Chan Mo-po also slammed the US hegemony and double standards on Sunday in his blog, citing moves that have breached international laws and norms.

Meanwhile, he also stressed, when responding to some concerns raised by the business sector, that the National Security Law won't affect legitimate financial activities in the city.

The SAR government will continue to offer a world-class business environment and regulatory framework to investors, Chan said, adding that he believes time will prove that national security will promote market vitality and long-term prosperity.

On Friday, the American Chamber of Commerce in Hong Kong expressed regret over the US revoking Hong Kong's special trade status, saying it will hurt American businesses in the city.

The chamber is the city's largest international chamber and one of the largest American Chambers outside the US. According to the chamber, there are 1,300 American firms and 85,000 US citizens in Hong Kong.

Hong Kong has been a strong market for US goods, the chamber noted in an online statement. Last year alone the United States had a $26 billion trade surplus with Hong Kong, the largest US surplus in the world. That figure included a substantial volume of US agricultural and manufacturing exports that are crucial to many US communities, according to the statement.

Also on Friday, Malaysian businessman Chandran Nair said during an interview after an online seminar held by China Daily that the West has always used its power to punish other countries under the pretext of a higher moral objective.

He added that many of his American friends based in Hong Kong were disappointed by the US sanctions.

ALERT RAISED AS WATER LEVELS KEEP RISING

Floodwaters kept pouring into the Three Gorges reservoir with a flow rate close to the location's record high in 1998 for a long period over the weekend, amid alert-triggering and even higher water levels in the Yangtze River's middle and lower reaches.

As of 8 am Saturday, the flow of water into the reservoir reached 61,000 cubic meters per second, which had approached the highest level that Yichang, the city where the reservoir is located, endured when it suffered devastating floods in 1998, according to the Ministry of Water Resources.

The rate remained unchanged until at least 6 pm Saturday, and figures on the website of the Changjiang Water Resources Commission showed that it had declined to 53,000 cubic meters per second by 2 pm Sunday.

Yichang, Hubei province, is the demarcation point dividing the upper and middle reaches of the Yangtze.

With a capability to handle a water level of up to 175 meters, the reservoir, which was completed in 2006, saw its water level rise to 160.17 meters on Saturday, according to the China Three Gorges Corp.

The ministry said it has instructed the company to increase outbound flow from 33,000 to 37,000 cubic meters per second.

As the Three Gorges Dam is tested by the biggest flood it has experienced so far this year, the water levels in most of Yangtze's river courses in its middle and lower reaches remain above their warning levels and some even reached record highs.

While major floods may occur in the Huaihe River, the water level in Taihu Lake, the country's third-largest freshwater lake, keeps rising slowly and has remained above the warning level for over 20 days, according to the ministry.

"The flood control situation is extremely grim," it said.

Jiangsu province raised its flood alert to red, the highest level, for the Yangtze's Nanjing section at 9 am on Saturday after the water level at the Nanjing hydrological station in the provincial capital rose to 10.26 meters as of 7:50 am, exceeding the previous high of 10.22 meters, which was recorded in 1954, said the local water resources department.

Anhui province activated a Level I emergency response−the highest in a four-tier emergency response system−for flood control at 6 pm on Saturday. At present, water at the Yangtze's mainstream in Anhui and the Wangjiaba hydrological station of the Huaihe River in the province has exceeded warning levels.

Due to continuous swelling in the Chuhe River, the authorities in Chuzhou, also in Anhui, demolished two sections of dikes to divert floodwater from the river.

However, more torrential rains are still expected in many areas along the Yangtze.

Seven rivers in Hunan, Hubei, Anhui and Jiangsu provinces are being lashed by heavy rainfall that started on Saturday and is expected to continue until Monday. The basin of four of the Yangtze's major tributaries−the Jialing, Minjiang, Tuojiang and Hanjiang rivers−is forecast to be engulfed by heavy rainfall lasting from Tuesday to Thursday, the ministry said.

DUTY-FREE SALES IN HAINAN SKYROCKET AFTER NEW POLICY

Duty-free products in Hainan province saw 1.07 billion yuan ($167 million) in sales from July 1 to 15, with daily sales hitting 71 million yuan, an increase of more than 30 percent compared to June's daily sales after new duty-free policies took effect on July 1, Hainan Daily reported on Monday.

The offshore duty-free shopping policies are conductive to build an international tourism consumption center, encourage overseas consumption inflow and enhance people's sense of gain from the free trade port in Hainan province, though the new policies also create new challenges for regulation, the head of the anti-smuggling bureau at Haikou Customs said.

In Hainan, there is no room for smuggling through trade in goods, said Liu Cigui, Party chief of Hainan province, at a press conference on the Overall Plan for the Construction of Hainan Free Trade Port on June 8.

The southern island province will implement strict regulation via big data and information technologies as much as possible and minimize the number of inspections to provide tourists with a comfortable and convenient shopping environment, the customs official said.

Currently, Hainan has an information platform characterized by information management, social management and supervision systems, and a port control system with multiple front-end sensing devices that can offer early warning to regulators to prevent smuggling.

"We submit sales data from each duty-free store to the platform every day. Through big data analysis, we can accurately recognize illegal buying", said Xie Zhiyong, general manager of Hainan Duty-free Co. Moreover, the company provides regular training to employees to standardize sales behaviors, and strictly prohibits employee participation in smuggling.

Hainan has carried out precision strikes on smuggling, with 13 gangs smashed during three anti-smuggling operations which took place in July, May and last November. Over 200 suspects were arrested, and duty-free cosmetics, suitcases and accessories were seized on the scenes, the customs official said.

In addition, tourists who violate duty-free purchase stipulations will face consequences, with punishments including suspension of offshore duty-free shopping for three years and including illegal acts in credit records.

THOUGHT FOR THE DAY

Worrying about things you cannot control is folly. Focus only on those few things you have any control over, and your life becomes much simpler. - Jeffrey Fry