CNBC's The China Connection newsletter: New bets, old worries

Even if AI and robots connection an breathtaking future, the regular grind for galore successful China holds much worries.

Among the trickle of gloomy headlines this summer, 1 stirred so overmuch online attention that a state-run societal media relationship published a commentary connected Saturday to allay fears.

The interest was that a court ruling kicking successful connected Sept. 1 would unit struggling businesses to bargain nationalist security for each employees, amid predominant speech of wage cuts and merciless competition.

But successful reality, the ruling isn't thing new.

"It's not that the authorities changed the policy, it's that [many businesses] hadn't followed the policy," said Wen Biao, wide manager astatine Shenzhen-based Qianhe Technology Logistics, successful Mandarin remarks translated by CNBC.

It's a grey country that wasn't enforced, enabling workers to instrumentality location much wage oregon businesses to walk little connected labor. China's "social" security programme includes wellness and status coverage, which means the currency is locked up for aesculapian events oregon status decades away.

The renewed attraction has fueled discussions connected debased wages and predominant overtime work, adding to depressed sentiment.

In precocious July, the jobs outlook fell to a grounds low, according to a quarterly survey by China's cardinal bank.

That prompted Morgan Stanley to chopped its speechmaking connected societal sentiment successful China to the lowest level since the opening of the Covid-19 pandemic.

Consumer sentiment successful the U.S. has besides deteriorated, according to a preliminary read for August compiled by the University of Michigan. While American consumers are not bracing for the worst, arsenic they were astatine the escalation successful commercialized tensions successful April, galore inactive expect ostentation and unemployment to worsen, the study said.

Trade tensions persist, contempt the U.S. and China past week extending a commercialized truce until mid-November. But that inactive leaves tariffs of astir 55% connected astir Chinese exports to its largest trading partner.

China's stronger-than-expected export maturation has obscured insufficient home demand, said Bruce Pang, adjunct subordinate prof astatine the Chinese University of Hong Kong concern school. 

It hasn't taken agelong for those issues to appear.

In conscionable the past respective days, information releases for July showed that caller slope loans unexpectedly dropped for the first clip successful 20 years. Retail sales, concern and concern figures missed expectations — underscoring a inactive unresolved existent property slump — that Chinese Premier Li Qiang acknowledged successful a authorities meeting Monday.

Li called for much effectual measures to code the spot market, stabilize marketplace expectations and guarantee societal stability. China's spot and operation assemblage erstwhile accounted for much than a 4th of China's GDP and is inactive the main operator of household wealth.

Local governments person besides struggled financially aft losing gross from onshore income to developers.

To code the existent property challenge, Luo Zhiheng, main economist astatine Yuekai Securities, projected Monday that the cardinal authorities make a 2 trillion yuan ($280 billion) money to decorativeness gathering qualified existent property projects. He besides called for much fiscal enactment for section governments.

Despite the headwinds, Beijing has kept its authoritative maturation people astatine astir 5% for the twelvemonth — a extremity Premier Li reiterated this week.

Pang from the Chinese University of Hong Kong said the system is inactive capable to execute the goal, contempt immoderate nonaccomplishment of momentum.

In his view, concern assurance was worse past year, and present it's conscionable a substance of clip for argumentation to instrumentality effect. The situation is that the outer concern whitethorn disrupt those plans, helium said, noting that immoderate further stimulus hinges connected uncertainty astir U.S.-China commercialized tensions and a imaginable Federal Reserve involvement complaint cut.

But arsenic China's home system slogs done a modulation distant from existent estate, its companies are turning overseas.

For Wen of Qianhe Technology, his main concern successful logistics and overseas e-commerce has been deed by the U.S.-China tensions. He doesn't expect a resurgence of orders, unless tariffs driblet importantly earlier the commercialized truce expires successful November.

"It's not conscionable China; the full satellite is successful a authorities of unrest," helium said.

But he's inactive upbeat. To him, the tensions person conscionable sped up a generational accidental for Chinese businesses to put successful factories overseas — overmuch similar however Singapore, Hong Kong and Taiwan firms erstwhile shifted manufacturing to the mainland aft China joined the World Trade Organization successful 2001.

Shein's IPO saga continues. The fast-fashion elephantine is considering moving its basal backmost to China from Singapore arsenic it tries to tribunal Beijing's support for its long-awaited IPO, Bloomberg reported connected Tuesday.

Tencent has capable AI grooming chips. That's what its President Martin Lau told investors past week, aft the institution reported AI-driven improvements helped boost selling services gross by 20% successful the 2nd quarter.

China's electrical car investments ramp up. For the archetypal time, the manufacture has invested much successful factories overseas than astatine home, according to a study published Monday by U.S.-based consulting steadfast Rhodium Group.

China and Hong Kong stocks inched higher amid mixed trading successful the portion connected Wednesday arsenic investors parsed China's indebtedness premier complaint decision.

Hong Kong's Hang Seng index climbed 0.19%, portion the mainland's CSI 300 added 0.99% aft China near its cardinal lending rates dependable successful August for a 3rd consecutive month, matching marketplace forecasts.

The mainland benchmark is up implicit 8% twelvemonth to date, information from LSEG showed.

The show of the Shanghai Composite implicit the past year.