China economy – Bizchina Update http://bizchina-update.com/ Thu, 12 May 2022 17:04:34 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://bizchina-update.com/wp-content/uploads/2021/10/icon-120x120.jpg China economy – Bizchina Update http://bizchina-update.com/ 32 32 “Localized” recessions? Chinese economy falters amid lockdowns | Business and Economy News https://bizchina-update.com/localized-recessions-chinese-economy-falters-amid-lockdowns-business-and-economy-news/ Wed, 11 May 2022 06:14:12 +0000 https://bizchina-update.com/localized-recessions-chinese-economy-falters-amid-lockdowns-business-and-economy-news/ Taipei, Taiwan – China could be heading for negative economic growth in some sectors and regions this year as it grapples with the worst economic indicators since the start of the pandemic, economic analysts have warned. The Chinese Communist Party (CCP) has locked down tens of millions of people since the start of 2022 to […]]]>

Taipei, Taiwan – China could be heading for negative economic growth in some sectors and regions this year as it grapples with the worst economic indicators since the start of the pandemic, economic analysts have warned.

The Chinese Communist Party (CCP) has locked down tens of millions of people since the start of 2022 to contain the spread of the Omicron variant, severely hampering key economic sectors including services and manufacturing.

The draconian measures disrupted production at factories operated by companies from Foxconn to Tesla and Toyota, and slashed retail sales as millions of people were forced to stay at home.

The Purchasing Managers’ Index, a key indicator that measures the health of the manufacturing sector, fell to 49.5% in March and 47.4% in April, according to China’s National Bureau of Statistics. A reading below 50 indicates a contraction. In Shanghai, the most populous city, first-quarter retail sales fell 3.8% from a year earlier.

While Beijing warns against any deviation from its controversial “dynamic Covid Zero” strategy, there are few signs of a respite from the economic haemorrhage on the horizon.

On Tuesday, WHO Director-General Tedros Adhanom Ghebreyesus said China’s strategy was unsustainable and that “change would be very significant”, in a rare public criticism of China’s handling of the pandemic. the country.

Shanghai, a key financial and manufacturing hub, has been under a form of lockdown since late March, while much of Beijing has come to a standstill as authorities scramble to put in place ever-tighter controls to avoid a city-wide lockdown.

“Worst Set of Numbers”

“The toll of what we’re seeing in China right now is hands down the worst set of numbers we’ve seen in terms of economic performance since the initial downturn that took place in 2020,” said Shehzad Qazi, chief executive of China Beige Book. , which surveys about 1,000 companies in China each quarter, told Al Jazeera.

April results from China Beige Book showed revenue and margin growth fell in China’s manufacturing, retail and service sectors, with new hiring returning to earlier levels. pandemic and loans down sharply.

None of this bodes well for Beijing’s ambitious target of 5.5% gross domestic product (GDP) growth in 2022, Qazi said, as the pursuit of “zero COVID” at all costs makes traditional economic tools, such as monetary stimulus, largely ineffective.

“The credit can only be used if you have normal economic activity, or if you have businesses that are functioning,” Qazi said, adding that the CCP is “very limited in what it can do if you simultaneously force the people to stay at home”. ”.

Far from adjusting the draconian pandemic strategy, the authorities have in recent days tightened restrictions in Shanghai and Beijing. More than 373 million people in 45 cities were in some form of lockdown as of mid-April, according to analysis by Nomura Holdings in Japan.

Qazi said he expects the economy to contract in the second quarter of 2022 if such measures continue, although a full-blown recession is less certain. China last reported a quarter of negative growth in April 2020, but has not experienced a recession – defined as two consecutive quarters of contraction – since the 1970s.

Even without a full-scale recession, the shutdowns could create uneven growth between north and south China as well as between industries, said Gary Ng, Asia-Pacific economist for Natixis, a French investment bank and of business.

“Even if it doesn’t go into recession across the country, if we look at some provinces, I wouldn’t be surprised to see negative growth for some of the provinces with strict lockdowns,” Ng told Al Jazeera. .

China’s economy slows as lockdowns in major cities including Shanghai weigh on growth [File: Qilai Shen/Bloomberg]

As Shenzhen, a manufacturing hub neighboring Hong Kong, emerged from lockdown earlier this year as factories continued to operate, Ng said exporting the ‘Shanghai model’ elsewhere could have serious economic ramifications. .

Tommy Wu, senior economist for Oxford Economics in Hong Kong, said a measure of particular concern is the effect of lockdowns on logistics and supply chains, with truck flow data at around 30% of levels. normal.

Wu said he expects the disruptions to last until the second quarter of 2022 with a “ripple effect” on Asian and global supply chains and uneven growth in the Chinese economy.

“It’s not as bad as 2020, but it’s still pretty big, bigger than what we’ve seen in the last two years,” he said.

“I think official statistics will still tell you very weak growth…but I would say there will be contraction at least in some sectors like consumption and also manufacturing.”

Beijing has drawn attention to growing economic risks ahead of a key National Congress in October without acknowledging that its zero-tolerance policies have been far from successful.

This year’s party congress is of particular significance as Chinese leader Xi Jinping is set to seek an unprecedented third term.

At a Politburo meeting last month, China’s top leaders stressed the importance of spending and building infrastructure for economic recovery, despite government efforts in recent years to reduce huge debts on balance sheets. public companies.

“China could actually trade off its call for deleveraging with essentially near-term short-term economic growth,” Ng said, adding that accommodative monetary policy could also help companies weather the storm.

Natixis has estimated that for China to meet its 2022 GDP targets, infrastructure investment would need to increase by almost 18%, returning to pre-2017 levels. infrastructure grew 8.5% in the first quarter compared to 2021, but there is still some way to go, the bank said.

On the consumer side, Ng authorities could seek to reduce down payments and interest rates for first-time buyers and even second-timers.

The real estate sector is set to recover from a low point in late 2021 and early this year – when big companies like Evergrande defaulted on their loans – amid signs of a possible reprieve for beleaguered tech companies.

After Beijing launched a sweeping regulatory crackdown on the tech sector in 2020, imposing restrictions on data collection, service fees and even app usage in pursuit of “common prosperity”, media outlets States have signaled in recent weeks the need for increased support for the industry. .

Qazi of China Beige Book said the issue could return to the national agenda in 2023 or 2024, but for now the CCP is focused on maximum stability and calm financial markets as it winds down. heading to its October meeting.

In the meantime, “zero COVID” seems here to stay.

Oxford Economics’ Wu said he could begin to move towards a more “dynamic” definition of strategy as Beijing finds itself both unable to admit defeat and also needs an economic recovery.

As part of such an adjustment, provincial and municipal governments could begin to gradually lift area-based lockdowns as individual districts are cleared of COVID cases and ease more extreme measures, he said, while continuing mass testing.

“This year, although I think it’s really difficult to achieve this goal [growth target]they’ll try as hard as they can,” Wu said. “It’s an important political year, so it’s important for them to balance things out.”

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Xi offers support for Chinese economy but COVID-19 restricts options https://bizchina-update.com/xi-offers-support-for-chinese-economy-but-covid-19-restricts-options/ Sun, 08 May 2022 08:46:00 +0000 https://bizchina-update.com/xi-offers-support-for-chinese-economy-but-covid-19-restricts-options/ Chinese President Xi Jinping has offered state support for technology, infrastructure and jobs to revive the country’s economy, but analysts warn growth will continue to falter until Beijing lets go of its rigid controls against viruses. Two and a half years after the outbreak of the coronavirus in Wuhan, China is the last major economy […]]]>

Chinese President Xi Jinping has offered state support for technology, infrastructure and jobs to revive the country’s economy, but analysts warn growth will continue to falter until Beijing lets go of its rigid controls against viruses.

Two and a half years after the outbreak of the coronavirus in Wuhan, China is the last major economy still closed in the world, despite its relatively low death toll.

Shutdowns in dozens of cities – from manufacturing hubs in Shenzhen and Shanghai to breadbasket in Jilin – have wreaked havoc on supply chains in recent months, crushing small businesses and trapping consumers at home .

This has jeopardized Beijing’s annual growth target of around 5.5%, with forecasters predicting that around a percentage point could be cut from that figure.

“We remain deeply concerned about growth,” Nomura analysts said this week. “We believe that the Omicron variant and zero COVID-19 strategy represent the main challenges to stable growth.”

Still, China’s communist leaders insisted on Thursday that the country would “unswervingly” stick to zero-Covid, with a meeting chaired by Xi declaring that “persistence is victory”.

To limit the mounting economic damage, Beijing offered words of respite to the tech sector from ongoing regulatory crackdowns and vowed to pump up the economy with an “all-out” infrastructure campaign.

But observers say the gatherings may be temporary as long as the state’s reflex remains to reduce the number of virus cases at all costs.

“(The measures are) all welcome… but how many more bridges and how many more sports stadiums are going to help us create an environment for predictable growth?” Joerg Wuttke, president of the European Chamber of Commerce, told reporters on Thursday.

While many cities have rebounded from short targeted shutdowns, other regions such as the agricultural base of Jilin province have been slow to recover from waves of restrictions.

“This (Jilin) ​​precedent could mean a more lasting impact from Shanghai’s highly disruptive lockdown,” Gavekal Dragonomics’ Ernan Cui said in a report on Friday.

Devil in the detail

Analysts are awaiting details of the delivery behind Beijing policymakers’ sweeping pledges of support.

Chinese tech companies have been under the microscope of the state due to concerns over data misuse and monopoly.

But shares of big tech companies soared as the government called for “healthy development” in the sector and changed its language to complete its “rectification”.

It is unclear whether this marks the end of a series of punitive regulatory reviews.

Markets also cheered when the government announced support for real estate and an infrastructure push to support economic and social development.

But China “doesn’t have much room for new infrastructure construction, (or) local government borrowing,” said Dan Wang, chief economist at Hang Seng Bank China.

“In reality, there is not much room to grow.”

Although reminiscent of Beijing’s four trillion yuan ($600 billion at the current rate) stimulus package after the 2008 financial crisis – which included massive investments in infrastructure – Zhaopeng Xing of ANZ Research said ” we doubt that the authorities will maintain it at the cost of increased debts.”

Falling confidence

China’s State Council also said it would give cash grants to unemployed migrant workers and called for more support for small businesses harassed by shutdowns and dwindling consumer demand.

But reinflating the economy is a big task made more complicated by each new level of virus control, experts say.

“These easing measures, even on a large scale, may not achieve the intended impact due to blockages and logistical disruptions,” Nomura added in its note.

A path of regular mass testing — which China appears to be heading — can also come with a hefty bill.

According to Nomura, it would cost between 0.9% and 2.3% of GDP for a regular testing mandate to extend to all of China.

With the economy faltering, an effective rebound could be given by lowering the interest rate, while authorities could also increase spending to spur the infrastructure push.

But the optimism is fading five months after a year already marked by the battle against the pandemic, with business activity collapsing and consumers fearful of what is to come.

“People had high hopes for this year,” Wang said.

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Fears mount for China’s economy as leaders dig into zero-Covid https://bizchina-update.com/fears-mount-for-chinas-economy-as-leaders-dig-into-zero-covid/ Fri, 06 May 2022 04:53:00 +0000 https://bizchina-update.com/fears-mount-for-chinas-economy-as-leaders-dig-into-zero-covid/ Mass testing of China’s vast population could bring further misery to the economy, experts warned on Friday, after Beijing pledged to regain control of the narrative around a zero-Covid policy that has strangled the economy. growth and stoking anger across the country. Leaders have taken a hardline approach to stamping out virus outbreaks, locking down […]]]>

Mass testing of China’s vast population could bring further misery to the economy, experts warned on Friday, after Beijing pledged to regain control of the narrative around a zero-Covid policy that has strangled the economy. growth and stoking anger across the country.

Leaders have taken a hardline approach to stamping out virus outbreaks, locking down Shanghai — the country’s economic powerhouse and biggest city — and slowly restricting travel in Beijing on dozens of new cases.

Authorities have refused to bow to growing public outcry over food shortages and spartan quarantine conditions in Shanghai, with top officials pledging on Thursday to “unwaveringly adhere” to zero-Covid and “fight against” criticism of politics.

The Chinese government has held up the strategy as proof that it values ​​human life above material concerns and can avert the public health crises seen in other countries.

But this approach hammers the economy and poses a sharp political challenge to President Xi Jinping.

He must now convince an increasingly volatile public, which has echoed its anger over social media lockdowns, that the trade-off between economy and life is sustainable.

At Thursday’s meeting attended by Xi Jinping, the country’s top brass pledged to “resolutely fight against all words and deeds that distort, question or reject our country’s disease control policies.”

Experts fear that Beijing’s game plan will weigh heavily on the world’s second-largest economy.

Nomura analysts predicted on Friday that mass testing mandates alone could cost up to 2.3% of annual gross domestic product.

Shanghai’s 25 million residents have been repeatedly tested, while some of Beijing’s 21 million people have also undergone repeated rounds of checks – a policy the government says could be rolled out nationwide. to combat the highly transmissible variant of Omicron.

Nomura said that requiring half of the world’s most populous nation to take a test every three days would cost around 0.9% of GDP, while any request that 90% of the population take a test every two days would cost 2.3%.

The restrictions could lead to “pretty high” costs if rolled out nationwide, while offering only “limited” benefits as the hard-to-contain Omicron strain could trigger shutdowns in more cities, Ting said. Lu, Nomura’s chief China economist.

The grim prediction follows Fitch Ratings’ drop in its forecast for China’s economic growth for the year as a whole to 4.3% from 4.8%.

This is a far cry from the official government target of 5.5%.

A key index of service sector activity fell to 36.2 in April, the second lowest on record, in what some experts have called a stark indicator of a country in recession.

mjw/apj/dan

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Digital Pivot Boosts West China’s Economy – OpenGov Asia https://bizchina-update.com/digital-pivot-boosts-west-chinas-economy-opengov-asia/ Thu, 28 Apr 2022 00:17:48 +0000 https://bizchina-update.com/digital-pivot-boosts-west-chinas-economy-opengov-asia/ It’s hard to imagine a more compelling case of how digital transformation can actually be the main driver of a region’s economy than economic output itself. China’s east-west digital pivot may be recent, but it’s already giving a substantial boost to the region’s industrial output. The industrial economy of western regions of China recorded rapid […]]]>

It’s hard to imagine a more compelling case of how digital transformation can actually be the main driver of a region’s economy than economic output itself. China’s east-west digital pivot may be recent, but it’s already giving a substantial boost to the region’s industrial output.

The industrial economy of western regions of China recorded rapid growth in the first quarter. What is becoming clear is that digital adoption and emerging industries are key to reinvigorating regional economic development amid uncertainties both at home and abroad, experts from industry.

Specifically, industrial output in southwest China’s Guizhou Province rose 15.2% year-on-year in the first three months. That’s 8.7 percentage points higher than that of the nation, according to the Provincial Bureau of Statistics.

Western regions have stepped up efforts to build a modern industrial system and develop big data and cloud computing technologies, showing strong resilience and great potential to support the development of high-tech and emerging industries. .

– Luo Zhongwei, researcher, Chinese Academy of Social Sciences

High-tech and emerging industries have seen solid growth. Firstly, the output of the new energy vehicle batteries and materials industry jumped 44.9% year-on-year in the first quarter, 29.7 percentage points higher than that of the province’s overall industrial output. . In addition, industries directly using digitization are even more numerous. Output of Guizhou’s computer, telecommunications and other electronic equipment manufacturing sector jumped 35.4 percent year on year.

Investment in the region has increased after Beijing decided to digitally pivot from east to west, meaning the country’s digital transformation is expected to shift to less-developed western regions. In the January-March period of this year, investment in high-tech industries jumped 96.1% compared to the same period a year earlier. Among the total, investment in high-tech manufacturing and service industries grew 129.6% and 66.8% year-on-year, respectively.

The government’s decision to establish eight national IT centers and 10 national data center clusters demonstrates that the country is taking steps to channel more IT resources from its eastern regions to less-developed but resource-rich western regions. The move will accelerate digital transformation and upgrade industries in western regions, Luo added.

In January, China issued a guideline to help Guizhou innovate in pursuing the rapid development of its western regions in the new era. The guideline, issued by the State Council, China’s Cabinet, stressed the importance of promoting the construction of a domestic open economy pilot zone and developing the digital economy.

Guizhou has witnessed rapid development in its big data industry in recent years, with domestic and foreign tech giants stepping up efforts to set up data centers in the province due to its cooler climate and vast energy resources. .

Chongqing, another western province, also saw its industrial output rise 8.5 percent on an annual basis in the first three months. The output of emerging industries, such as photovoltaic cells, industrial robots and service robots, increased by 92.9%, 34.1% and 20.7% respectively, which is higher than the overall industrial output of the country. first trimester.

The East-West pivot, indeed, has its inherent advantages. The western regions have abundant renewable energy and will become a key base for the development of strategic emerging industries in the country, an industry stalwart has revealed. Moreover, compared to the Yangtze River Delta and Pearl River Delta regions, labor costs are relatively low in western regions, he added.

Digital transformation has defined China’s economic rise. Just recently, industry stalwarts announced 2022 as the year of the Metaverse, the latest emerging ICT technology. Additionally, its approach to digital adoption is reflected in its drive to build over 2 million 5G bases by the end of 2022.

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China Perspective Podcast: Stats Reveal China’s Economy Has Exceeded Expectations https://bizchina-update.com/china-perspective-podcast-stats-reveal-chinas-economy-has-exceeded-expectations/ Tue, 19 Apr 2022 07:00:00 +0000 https://bizchina-update.com/china-perspective-podcast-stats-reveal-chinas-economy-has-exceeded-expectations/ In this week’s episode, they discuss the latest data released by China’s National Bureau of Statistics, how the country’s economy has exceeded expectations, the growing challenge in Shanghai due to lockdown and space ambitions. from China. Produced by: Tan Dawn Wei (dawntan@sph.com.sg) and Money FM’s Breakfast Huddle team Edited by: Nadhirah Kamarudin Follow the China […]]]>

In this week’s episode, they discuss the latest data released by China’s National Bureau of Statistics, how the country’s economy has exceeded expectations, the growing challenge in Shanghai due to lockdown and space ambitions. from China.

Produced by: Tan Dawn Wei (dawntan@sph.com.sg) and Money FM’s Breakfast Huddle team

Edited by: Nadhirah Kamarudin

Follow the China Perspective podcast every Tuesday on our Asian Insider Podcast channel:

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Follow our shows then, if you like short and practical podcasts!

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Macro Snapshot — China’s economy should continue to recover; Moroccan GDP growth lower than forecast https://bizchina-update.com/macro-snapshot-chinas-economy-should-continue-to-recover-moroccan-gdp-growth-lower-than-forecast/ Mon, 18 Apr 2022 07:00:00 +0000 https://bizchina-update.com/macro-snapshot-chinas-economy-should-continue-to-recover-moroccan-gdp-growth-lower-than-forecast/ RIYADH: Morocco’s gross domestic product growth is below previous forecasts, China’s economy slowed in March and Spain is due to revise its 2022 GDP target. faster rates, the mayor announcing 200,000 jobs threatened by the departure of foreign companies. The Chinese economy is expected to continue its recovery trend this year; the country’s retail spending […]]]>

RIYADH: Morocco’s gross domestic product growth is below previous forecasts, China’s economy slowed in March and Spain is due to revise its 2022 GDP target. faster rates, the mayor announcing 200,000 jobs threatened by the departure of foreign companies. The Chinese economy is expected to continue its recovery trend this year; the country’s retail spending fell 3.5% and its industrial production, on the other hand, rose 5.0%.

Morocco’s GDP growth

Morocco’s GDP growth is expected to average between 1.5% and 1.7% in 2022, down from the 3.2% projected in the finance law, the official MAP news agency reported. quoting Prime Minister Aziz Akhannouch.

China’s Q1 GDP beats forecast

China’s economy slowed in March as consumption, real estate and exports were hit hard, tarnishing faster-than-expected first-quarter growth figures and worsening an outlook already weakened by COVID-related restrictions -19 and the war in Ukraine.

The biggest near-term challenge for Beijing is tough new coronavirus rules at a time of heightened geopolitical risks, which have intensified pressures on commodity supply and costs. The Chinese authorities are therefore walking a tightrope trying to stimulate growth without jeopardizing price stability.

GDP rose 4.8% in the first quarter from a year earlier, data from the National Bureau of Statistics showed Monday, beating analysts’ expectations of a 4.4% gain and rising 4, 0% in the fourth quarter.

A surprisingly strong start to the first two months of the year improved the numbers, with GDP up 1.3% in January-March quarter-on-quarter, compared to expectations of a 0.6% rise and a revised gain of 1.5% in the prior quarter.

Analysts say April data is likely to be worse, with shutdowns in Shanghai’s mall and elsewhere dragging on, prompting some to warn of rising recession risks.

Moscow mayor says 200,000 jobs at risk as foreign companies leave

About 200,000 people are at risk of losing their jobs in the Russian capital because foreign companies have suspended their activities or decided to leave the Russian market, Moscow Mayor Sergei Sobyanin said on Monday.

Moscow authorities are ready to support people who have lost their jobs by providing them with training and temporary and socially important work, Sobyanin wrote on his blog.

Russia signals faster rate cut

The Central Bank of Russia should be able to lower its key rate more quickly and create the conditions for more affordable loans, Governor Elvira Nabiullina said Monday.

The central bank more than doubled its benchmark rate to 20% when Russia was hit by international sanctions, after sending forces to Ukraine in February, but then cut it this month to 17%, signaling a difficult economic environment and a slowdown in inflation. .

Spain to lower its GDP target for 2022

Spanish Prime Minister Pedro Sanchez (Shutterstock)

Spain will revise its economic growth target for 2022 downwards, Prime Minister Pedro Sanchez said in a television interview on Monday.

The government is expected to update its bullish 7% growth projection for 2022 later this month to take into account the impact of inflation fueled by Russia’s invasion of Ukraine.

“There will be a downward revision of the growth figures in Spain, in Europe and in the world, it is a fact, but that does not mean that Spain will not continue to grow and create jobs”, Sanchez told the Antena3 TV channel.

The Bank of Spain expects gross domestic product to grow by 4.5% in 2022.

China’s economy expected to remain in recovery in 2022

China’s economy is expected to remain on its recovery trend this year, and Beijing will step up macroeconomic policy implementation to stabilize the outlook, Fu Linghui, spokesperson for China’s statistics bureau, told a conference. press Monday.

China will be able to contain COVID-19 outbreaks and control consumer price hikes, Fu said.

Chinese industrial production up in March

Chinese industrial production rose 5% in March from a year earlier. That was down from a 7.5% increase seen in the first two months of the year, data from the National Bureau of Statistics showed on Monday.

The reading was stronger than a 4.5% rise forecast by analysts in a Reuters poll.

Retail sales in March contracted 3.5% year-on-year amid rising COVID-19 outbreaks and lockdowns, after rising 6.7% in January and February. The figure was well below expectations for a decline of 1.6%.

Capital investment rose 9.3% year-on-year in the first quarter, down from an 8.5% increase reported by the Reuters poll, but down from 12.2% growth in the first two month.

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China using payday loan diplomacy in the Pacific: U.S. diplomat https://bizchina-update.com/china-using-payday-loan-diplomacy-in-the-pacific-u-s-diplomat/ Thu, 14 Apr 2022 07:55:08 +0000 https://bizchina-update.com/?p=1269 China is using a payday loan diplomacy to exert influence in the Pacific, the new U.S. ambassador to Australia said on Wednesday, comments that threaten to inflame regional tensions. The United States and its regional allies have been battling China for greater influence in the Pacific – a region that has voted at international forums […]]]>

China is using a payday loan diplomacy to exert influence in the Pacific, the new U.S. ambassador to Australia said on Wednesday, comments that threaten to inflame regional tensions. The United States and its regional allies have been battling China for greater influence in the Pacific – a region that has voted at international forums like the United Nations and controls vast swathes of a resource-rich ocean. Same days cash loans in california.

How Important is China’s payday loan diplomacy to the Pacific?

The geopolitical competition has seen both sides increase foreign aid to the region in recent months. The West believes that this is needed to prevent the Pacific from falling into financial distress and becoming susceptible to diplomatic pressure from Beijing.

Late last year, USA Vice President Mike Pence accused China of ensnaring tiny island nations in foreign aid “debt traps.” New U.S. Ambassador to Australia Arthur Culvahouse said Pence’s criticism was not strong enough.

“I would use stronger language – I would use payday loan diplomacy,” Culvahouse told reporters in Canberra after presenting his diplomatic credentials to Australia’s Governor-General.

“The money looks attractive and easy loan upfront, but you better read the fine print,” he said.

Strengthening good relations

Speaking in Beijing, Chinese Foreign Ministry spokesman Lu Kang said China’s cooperation with Pacific island countries was good for both parties and broadly welcomed these countries.

Some U.S. officials have not been pleased to see such cooperation, and China hopes the United States can do more to benefit these countries’ development and not “keep making trouble out of nothing”, he added. China’s Ambassador to Australia last year said Beijing does not place undue debt on the region.

The Pacific Lending is also a venue for diplomatic competition between China and self-ruled Taiwan, claimed by Beijing as sacred Chinese territory. Taiwan’s president will visit three of its diplomatic allies in the Pacific next week.

The arrival of Culvahouse, the first U.S. ambassador to Australia in more than two years, comes at a time of bilateral tensions between Canberra and Beijing.

In 2017, then Australian prime minister Malcolm Turnbull accused China of meddling in domestic affairs. In 2018 Canberra banned foreign-government-linked companies from investing in a nascent 5G network, effectively blocking China’s Huawei Technologies.

China denied the allegations and has called on Australia to shed its “Cold War” mentality. Analysts believe Beijing may now be using trade to punish Canberra for its criticism.

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Chinese economy: PMI data shows the worst contraction since the start of the pandemic https://bizchina-update.com/chinese-economy-pmi-data-shows-the-worst-contraction-since-the-start-of-the-pandemic/ Thu, 31 Mar 2022 07:00:00 +0000 https://bizchina-update.com/chinese-economy-pmi-data-shows-the-worst-contraction-since-the-start-of-the-pandemic/ The official Purchasing Managers’ Index (PMI) for the manufacturing sector fell to 49.5 from 50.2 in February, the National Bureau of Statistics (NBS) said on Thursday, while the non-manufacturing PMI fell to 48 .4 against 51.6 in February. The last time both PMI indices were simultaneously below the 50 point mark that separates contraction from […]]]>

The official Purchasing Managers’ Index (PMI) for the manufacturing sector fell to 49.5 from 50.2 in February, the National Bureau of Statistics (NBS) said on Thursday, while the non-manufacturing PMI fell to 48 .4 against 51.6 in February.

The last time both PMI indices were simultaneously below the 50 point mark that separates contraction from growth was in February 2020, when authorities rushed to stop the spread of the coronavirus, first detected in the central city of Wuhan in China.

The world’s second-largest economy accelerated in January-February, with some key indicators beating expectations, but now risks slowing sharply as authorities restrict production and mobility in Covid-hit cities including Shanghai and Shenzhen.

“Recently, epidemic clusters have occurred in many places in China, and together with a significant increase in global geopolitical instability, the production and operation of Chinese enterprises have been affected,” said Zhao Qinghe, statistician. principal of the BNS.

The Covid-19 lockdown in Shanghai has disrupted car production in recent days as two major suppliers joined You’re here (TSLA) to close factories to comply with measures to control the spread of the coronavirus.

“The PMI weakened as Omicron outbreaks in many Chinese cities led to shutdowns and disruptions in industrial production,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

“As Shanghai’s lockdown only took place at the end of March, economic activities are likely to slow further in April.”

The production sub-index fell below 50 points for the first time since October, to 49.5, indicating a contraction. The new orders gauge was also in negative territory.

“Due to epidemic outbreaks, some enterprises in some regions temporarily reduced or stopped production, which also affected the normal production and operation of upstream and downstream enterprises,” Zhao said.

Traders sleep by their desks as China's financial hub locks down

Some companies have also seen the cancellation or reduction of overseas orders due to geopolitical uncertainties, Zhao said.

Weakening production and demand accelerated the contraction in factory jobs, with the employment sub-index dropping to 48.6 in March, the lowest since February 2021.

The worst since Wuhan

“PMIs likely underestimate the hit to activity last month,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

“The services index remained above the low of 45.2 reached last August during the Delta wave. This is likely because the survey was conducted before the worst disruptions.”

To cushion the impact of the new Covid-19 closures, authorities have unveiled measures to support businesses, including rent waivers for some small businesses in the service sector.

On Wednesday, the government announced that it would put in place policies to stabilize the economy as soon as possible amid heightened pressures.

The central bank, which kept its benchmark interest rate for business and household loans unchanged in March, is expected to cut rates and lower reserve requirements for banks as downward economic pressures build, according to analysts.

China’s official composite PMI, which combines manufacturing and services, came in at 48.8 in March from 51.2 in February.

The composite PMI was at its second-lowest reading on record since February 2020, when the initial Covid-19 outbreak caused the index to drop to 28.9.

“This suggests the economy is contracting at its fastest pace since the peak of the initial Covid-19 outbreak in February 2020,” Evans-Pritchard said.

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China’s economy faces another blow from Shanghai COVID lockdown https://bizchina-update.com/chinas-economy-faces-another-blow-from-shanghai-covid-lockdown/ Mon, 28 Mar 2022 05:51:22 +0000 https://bizchina-update.com/chinas-economy-faces-another-blow-from-shanghai-covid-lockdown/ Shanghai’s sweeping two-phase lockdown will likely deal a major blow to businesses that rely on consumer spending, though economists say the city’s industrial sector can largely weather the disruption, mitigating threats to the supply chain. global supply. The eight-day staggered lockdown in Shanghai – a city of 25 million people – and the lingering effects […]]]>

Shanghai’s sweeping two-phase lockdown will likely deal a major blow to businesses that rely on consumer spending, though economists say the city’s industrial sector can largely weather the disruption, mitigating threats to the supply chain. global supply.

The eight-day staggered lockdown in Shanghai – a city of 25 million people – and the lingering effects of the measure could shave up to 0.4 percentage points from China’s economic growth in the first and second quarters, per compared to a year ago, according to estimates by Liu Peiqian, China economist at NatWest Group Plc.

Restrictions targeting half the city at once will prevent city residents from leaving their homes, an attempt to curb China’s worst COVID outbreak since Wuhan in early 2020. It will likely hurt jobs in the sector services and will weigh most heavily on small businesses.

“COVID destroys people’s confidence and their spending expectations,” said Bruce Pang, head of macroeconomic and strategic research at China Renaissance Securities Hong Kong. He also pointed to the impacts on industries that rely on in-person and social gatherings, particularly the restaurant business.

Liu, whose first-quarter gross domestic product growth forecast is 4.7%, said the “gradual recovery” of the service and consumer sectors could take eight weeks.

As a major financial and commercial hub, Shanghai contributes 3.8% to the country’s GDP. It is also the second richest city, behind Beijing, according to the latest available figures from the National Bureau of Statistics.

Economists have downgraded China’s growth forecast for the year as outbreaks linked to the highly infectious omicron variant continue to spread. High-frequency indicators and company statements released so far suggest a likely temporary impact on factory output as the government tries to minimize the fallout. The damage to consumer confidence, however, could be more lasting, jeopardizing the government’s annual growth target of around 5.5%.

Even before Shanghai’s lockdown announcement, Nomura Holdings Inc. warned that China’s economy was facing its worst downward pressure since the start of the pandemic. The bank’s economists, led by Lu Ting, wrote in a note that markets should worry about weaker growth in the second quarter as they downgraded quarterly forecasts for the rest of the year. year.

Factory activity likely took a hit in March, with the official Manufacturing Purchasing Managers’ Index, due out on Thursday, likely slipping to a contraction after the Shenzhen lockdown, according to Bloomberg Economics.

What Bloomberg Economics says…

The lockdown of Shanghai – China’s international financial center and economically largest city – and the measures leading up to it will have a direct impact on the Chinese economy comparable to the episode in Shenzhen. But the negative impact on sentiment could be bigger. So far, the lockdown allows operations to continue at financial institutions and ports. Anything beyond the current plan risks disrupting financial flows and international trade.

Chang Shu and David Qu

On supply chains, China can probably limit the damage as long as the lockdown does not last more than three weeks, according to Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd.

He said a so-called closed-loop system being tested in Shenzhen – where factory workers live in dormitories, working in a separate bubble from the general public – has mitigated the impact on the economy. Shenzhen’s southern technology hub resumed normal operations on Sunday, about two weeks after the government placed its 17.5 million residents under lockdown.

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“Similar to Shenzhen, Shanghai is the country’s economic powerhouse,” Yeung said. “The scale is obviously bigger but the action is fast, hoping to minimize the economic impact as soon as possible.”

Shanghai’s port, the world’s largest, still operates 24 hours a day, according to local media. Chinese chipmaker Semiconductor Manufacturing International Corp is maintaining normal production at its factory in the city and complying with COVID prevention measures.

Tesla Inc., meanwhile, suspended production on Monday, with operations to be halted for four days.


COVID ZERO

China is the latest holdout in the pursuit of COVID Zero, a strategy that prioritizes controlling and eliminating the virus through tough restrictions such as lockdowns and mass testing. Many experts still believe Beijing will not ease the curbs and open up this year, although some have said the country’s virus strategy could continue to be changed, allowing some flexibility.

The government could boost confidence if it detailed a roadmap for eventual reopening to the rest of the world, according to Zhang Zhiwei, chief economist at Pinpoint Asset Management Ltd.

“The main uncertainty facing the fight against COVID in China is that the exit strategy is unclear going forward,” he said. “The zero-tolerance policy is likely to be unsustainable in the long term in terms of economic costs and burden on normal people’s daily lives.”

Larry Hu, an economist at Macquarie Capital Ltd., said policymakers will have “no choice but to step up stimulus in the coming months” in order to meet the GDP growth target this year.

“We maintain our annual GDP forecast of 5% as further policy easing materializes,” he said, anticipating a cut in benchmark interest rates in April, as well as increased support for financial sectors. infrastructure and real estate.

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China’s economy faces worst slowdown since pandemic, analysts say https://bizchina-update.com/chinas-economy-faces-worst-slowdown-since-pandemic-analysts-say/ Sat, 26 Mar 2022 07:07:26 +0000 https://bizchina-update.com/chinas-economy-faces-worst-slowdown-since-pandemic-analysts-say/ With outbreaks wiping out a wide range of sectors, including in-person services, construction and some manufacturing, ‘it’s becoming increasingly difficult for Beijing to meet its GDP growth target’ of around 5.5% “for 2022,” the economists said. The investment bank cut its estimate of China’s growth from April to December, citing the worsening COVID-19 situation. While […]]]>

With outbreaks wiping out a wide range of sectors, including in-person services, construction and some manufacturing, ‘it’s becoming increasingly difficult for Beijing to meet its GDP growth target’ of around 5.5% “for 2022,” the economists said.

The investment bank cut its estimate of China’s growth from April to December, citing the worsening COVID-19 situation. While economists revised expectations for expansion in the first three months up to 4.2%, they noted that their current forecast of 2.9% could reflect the “real economic situation on the ground” quite well. “.

The upward revision mainly shows the surprisingly strong official data for the January-February period. This did not lead to a change in the bank’s forecast for the full year, which stands at 4.3%.

The Chinese economy had a stronger than expected start to the year, with consumer spending, investment and industrial production all beating expectations. The outlook, however, has grown increasingly bleak as the country battles its worst Covid outbreak since it emerged in Wuhan two years ago, and Russia’s attack on Ukraine plunges global financial markets and energy prices in turmoil.

Production activities in the country’s technology and manufacturing hub of Shenzhen and the automotive city of Changchun have been disrupted by virus control measures, while residents of Shanghai’s financial hub have been told to stay home for a while. that the city was carrying out rounds of mass testing.

China reported 5,600 new cases of COVID-19 on Saturday, the most daily infections in more than two years.

Despite the impressive official data on activity, the economists wrote, policymakers are likely to “further step up easing measures to stem what is effectively a worsening growth slowdown.” They expect the central bank to cut the reserve requirement rate for banks by 50 basis points over the next two months, and the one-year medium-term lending facility rate and the agreements rate. 7-day repo rate by around 10 basis points in April. .

It is also likely that Beijing will allow more local governments to ease local housing restrictions, they said.

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