china economy – Bizchina Update http://bizchina-update.com/ Sun, 27 Mar 2022 00:44:09 +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 The Chinese economy accelerates in January-February; Omicron cases cloud outlook https://bizchina-update.com/the-chinese-economy-accelerates-in-january-february-omicron-cases-cloud-outlook/ Tue, 15 Mar 2022 06:17:00 +0000 https://bizchina-update.com/the-chinese-economy-accelerates-in-january-february-omicron-cases-cloud-outlook/ Industrial production Jan.-Feb. +7.5% y/y vs f’cast +3.9% Retail sales +6.7% y/y vs f’cast +3.0% Investment in fixed assets +12.2% y/y, vs f’cast +5.0% Strength may not last as COVID cases jump – analysts BEIJING, March 15 (Reuters) – China’s economy rebounded in the first two months of 2022, with key indicators all beating analysts’ […]]]>
  • Industrial production Jan.-Feb. +7.5% y/y vs f’cast +3.9%
  • Retail sales +6.7% y/y vs f’cast +3.0%
  • Investment in fixed assets +12.2% y/y, vs f’cast +5.0%
  • Strength may not last as COVID cases jump – analysts

BEIJING, March 15 (Reuters) – China’s economy rebounded in the first two months of 2022, with key indicators all beating analysts’ expectations, although an increase in Omicron business, weak real estate and heightened global uncertainties weigh on the outlook.

Industrial production rose 7.5% in January-February from a year earlier, the fastest pace since June 2021 and up from a 4.3% increase seen in December, Tuesday showed data from the National Bureau of Statistics. This compared to a 3.9% rise expected by analysts in a Reuters poll.

Retail sales, a lagging indicator of consumption since the hit of COVID-19, rose 6.7% year-on-year amid rising demand during the Lunar New Year holidays and the Olympics. winter. It also marked the fastest clip since June last year and beat expectations for a 3.0% rise in the poll.

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It posted a 1.7% gain in December.

The surprisingly strong performance of the world’s second-largest economy in the new year may have enabled the People’s Bank of China (PBOC) to keep its policy rates stable on Tuesday, said Iris Pang, chief economist for Greater China at ING, in a note.

The PBOC kept its one-year medium-term lending rate unchanged earlier in the day, dashing expectations of a cut, although investors believe policymakers may soon resume monetary easing to support the slowdown. economy. Read more

The statistics released combine economic data from January to February to help smooth out distortions caused by the Lunar New Year holiday, which fell in early February this year.

One of the data highlights was strong retail sales growth, which was boosted by sales of Winter Olympics-related products, such as ski gear and ice sports, Fu said. Linghui, spokesperson for the statistics bureau, at a press conference.

Bing mascot Dwen Dwen was an unexpected star of the Beijing Olympics, with thousands of fans queuing in sub-freezing temperatures to buy goods – from magnets and key rings to bags and soft toys – and factories scrambling to make more. Read more

The strong numbers came after growth lost momentum throughout last year due to a liquidity crunch in the housing market and stringent anti-virus measures that hit consumption.

“Indeed, every data point has bounced back, mainly because the political effects started early this year, with an easing in the infrastructure and real estate sectors. Restoration spending also remained relatively strong,” said Qu Qing, chief economist at Jianghai Securities.

However, analysts warn that any nascent recovery, which would help China reach an ambitious target of around 5.5% for 2022, could not be sustained due to the surge in COVID cases, a weak real estate market and the uncertain global recovery. Read more

Chinese stocks fell sharply on Tuesday as a rise in coronavirus cases overshadowed data and threatened the outlook.

“The momentum of economic recovery in January-February has been good. At the same time, we must also see that the external environment is still complex and severe, and China’s economic development faces many risks and challenges. “said Mr. Fu from the statistics office.

Analysts expect the central bank to continue to ease policy to support the economy.

“We still need to cut interest rates and reserve requirement ratios as soon as possible. There should be no hesitation in supporting easing policies,” said Wang Jun, chief economist at Zhongyuan Bank.

Premier Li Keqiang said last week that he was confident of achieving the economic growth target of around 5.5% for this year despite challenges including the war in Ukraine. Li also promised to provide more political support during the year. Read more

RESUMPTION OF INVESTMENTS IN INFRASTRUCTURES

Investments in fixed assets rose 12.2% in January-February from a year earlier, compared with a 5.0% increase predicted by a Reuters poll and 4.9% growth in 2021. The figure was the highest since July last year.

Investments in infrastructure rose 8.1%, helped by the move to this year’s early-loading 2022 local government special bonds.

Real estate investment rose 3.7% year on year in the first two months of 2022, following a 13.9% plunge in December, the data showed.

The slowdown in the housing market has also shown signs of easing, but sales are still mired in contraction while new construction starts have fallen by double digits.

“We continued to stabilize land prices, house prices and expectations, and there were positive changes in the real estate market,” Fu said.

China’s property market cooled last year as Beijing’s deleveraging drive triggered a liquidity crunch in some major property developers, leading to bond defaults, plummeting stock prices and suspended or suspended projects. left unfinished.

“The resurgence of COVID in several provinces is an additional drag on activity growth. Despite the relaxation of local real estate policy, real estate indicators, in particular new housing starts and land sales, have continued to Further policy easing would be needed to meet the challenging roughly 5.5% ‘growth target this year,’ Goldman Sachs analysts wrote in a note.

The national survey-based unemployment rate rose to 5.5% in February from 5.3% in January, but Fu said the rise was largely due to seasonal factors and the rate could drop after March.

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Additional reporting by Ellen Zhang, Liangping Gao and Ryan Woo; Editing by Sam Holmes, Bernard Orr

Our standards: The Thomson Reuters Trust Principles.

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China’s economy is increasingly isolated from the West https://bizchina-update.com/chinas-economy-is-increasingly-isolated-from-the-west/ Sat, 12 Feb 2022 08:00:00 +0000 https://bizchina-update.com/chinas-economy-is-increasingly-isolated-from-the-west/ As the Beijing Winter Olympics begin, all eyes are on China. There have been a lot of reports about China’s cold relations with the West and its persecution of Uyghurs and other minorities, but there is also a lot to be said about China’s economy. China’s great rise in recent decades has been the great […]]]>

As the Beijing Winter Olympics begin, all eyes are on China. There have been a lot of reports about China’s cold relations with the West and its persecution of Uyghurs and other minorities, but there is also a lot to be said about China’s economy.

China’s great rise in recent decades has been the great economic success of our time, lifting hundreds of millions of people out of poverty and giving wheels to the global economy in the years following the financial crisis of 2007-09.

Over the past decade, however, the miracle has become a little more ordinary as growth has gradually slowed. China has struggled to continue growing its exports at the same pace year after year, especially in the face of weaker international demand for its products, including due to the trade war with the United States. Other problems included an aging population and the fact that growth had become increasingly dependent on debt, which was unsustainable.

China’s economic growth 1997-2021

Trade Economics/National Bureau of Statistics of China, CC BY

China appears to have weathered the pandemic better than many major economies, having contained the virus so aggressively. Yet the situation has since deteriorated as new national outbreaks of Covid, including the new omicron variant, have caused further economic disruption.

The effect of Omicron on other major economies is also not good news for Chinese exports. Nor has the resurgence of inflation in many countries prompted the US Federal Reserve and other central banks to threaten to raise interest rates and end money creation via quantitative easing. This should further dampen demand for Chinese products.

China’s debt has also become an even bigger problem. Leading property developer Evergrande’s financial struggles in 2021 grabbed headlines, but excessive debt is rampant throughout the real estate industry and beyond. If the bubble bursts, it could lead to a prolonged downturn that would significantly damage the wider economy.

The government has pressured big business to reduce debt, while limiting borrowing in the property sector and cracking down on informal lending across the country. He also sent a warning to excess borrowers by his willingness to let Evergrande default.

Falling exports and debt reduction mean China is heading for a slowdown: the World Bank projects its economic growth to be just over 5% in 2022, down from 8% in 2021.

China’s challenges

More broadly, China’s traditional growth model based on exports, infrastructure and real estate investment seems to have run its course. The nation faces a difficult rebalancing act as it aims to shift to a much greater reliance on Chinese households consuming goods and services, while having to transition to a much less carbon-intensive economy.

Unfortunately for the ruling Communist Party, the best way to achieve this rebalancing is arguably to implement reforms that would limit government influence in Chinese life. For example, the World Bank believes China must make it easier for businesses to fail and allow greater private competition in sectors like education and health to increase productivity. It also recommends allowing workers to move around the country by removing the hukou registration system in cities, since this system stipulates where someone permanently resides.

Some World Bank recommendations involve greater government intervention, such as making the tax system more progressive to encourage consumers to spend more, and increasing public spending on health and education so people don’t have to. need to save so much. Generally speaking, however, further liberalization is on the agenda – and seems to be the right way forward in my view.

Yet China has become more interventionist in the Xi era, cracking down on everything from tech billionaires to the number of hours children can play video games each day. Meanwhile, China’s zero Covid strategy has involved tightly sealed borders, rapid citywide lockdowns and mass testing.

China adopted this strategy partly out of fear that its poor healthcare system would be completely overwhelmed by Covid, and more recently as a means of ensuring the smooth running of the Winter Olympics. However, the climate in China is such that some commentators fear that it will reopen, that the health crisis will turn into a political crisis of more committed isolation.

China is therefore at a crossroads. On the one hand, it wants to play a bigger role in the global economy, as evidenced by its Belt and Road Initiative to boost infrastructure development around the world in exchange for closer ties with Beijing.

But there is a contradiction between continuing to engage in global trade and the Chinese government’s instinct for technological self-sufficiency and local innovation. Trade liberalization also involves, for example, opening up the banking sector to foreign lenders to make it more efficient. However, we are far from Beijing’s interventionist approach. Indeed, the fact that banks, which are partly state-owned, were mandated to lend to state-owned enterprises in poor financial condition was the cause of many debt problems in the first place.

Unfortunately, the indications are that China is more likely to move towards greater western isolationism. This could mean restricting visits to the country and focusing more on domestic consumption than global trade. We could see him moving further away from globalization via trade wars, as well as imposing more capital controls to make it harder for money to move in and out of the country. Clearly, China is acting partly out of provocation from the West, but its overall policy shift is to a large extent home-grown.

As with the Winter Olympics, where China tries to separate the athletes from its people, the nation also behaves similarly towards the rest of the world. What should be a celebration of international cooperation is happening at a time when the exact opposite is happening.The conversation

Kate Phylaktis, Professor of International Finance and Director, Emerging Markets Group, City, University of London

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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China’s economy overtakes EU’s for first time https://bizchina-update.com/chinas-economy-overtakes-eus-for-first-time/ Tue, 01 Feb 2022 08:00:00 +0000 https://bizchina-update.com/chinas-economy-overtakes-eus-for-first-time/ By 2030, China is expected to become the largest economy in the world, for now it has just overtaken the EU. At a pivotal moment, China’s economy overtook the whole of the European Union (EU), for the first time. Figures released this week by the European Statistical Office (Eurostat) show that the EU’s gross domestic […]]]>

By 2030, China is expected to become the largest economy in the world, for now it has just overtaken the EU.

At a pivotal moment, China’s economy overtook the whole of the European Union (EU), for the first time.

Figures released this week by the European Statistical Office (Eurostat) show that the EU’s gross domestic product (GDP) grew by 5.2% for 2021, following a record recession in 2020.

EU GDP stood at just over $17 trillion, reverting to pre-Covid-19 size.

GDP is a measure of the market value of all final goods and services produced during a given period.

On the other hand, China’s GDP for 2021 grew by 8.1 percent, according to figures released last month by the National County Bureau of Statistics. Full-year GDP led to an increase in the value of China’s economy by $3 trillion between 2020 and $17.7 trillion in 2021, outpacing the EU.

The second largest economy in the world benefited greatly during the Covid-19 crisis from its status as the factory of the world. However, most of China’s economic gains have been driven by strong industrial production and exports.

China, however, has largely followed a zero Covid-19 policy, meaning the country has often locked down entire cities in an effort to prevent the spread of the virus.

The result has been that while the country’s manufacturing sector continues to grow, growth in services, consumption and investment has not returned to pre-pandemic levels due to localized outbreaks across the country that have prevented a return to normal.

China’s GDP growth rate easily exceeded the government’s target of more than 6% growth, and the country is now expected to account for more than 18% of global GDP.

As the country rebounded from the worst of the pandemic, analysts warn the country is still reeling from a weak real estate sector that saw businesses go bankrupt last year.

Likewise, the EU has yet to fully recover from the tight restrictions of the Omicron variant, which have led to tighter restrictions across the economic bloc, resulting in lower consumer spending and bottlenecks in the supply chain, affecting manufacturing.

China’s ability to leapfrog the bloc has also been influenced in part by the UK’s withdrawal from the EU after Brexit. The UK’s GDP of $2.7 trillion was the second largest in the bloc after Germany.

Beijing still has a long way to go before becoming the largest economy on the planet.

In a report released last month, the British consultancy Center for Economics and Business Research (CEBR) predicted that China will overtake the United States as the world’s largest economy by 2030.

In 2021, US GDP was just under $23 trillion, an increase of $2.10 trillion from 2020 figures.

The CEBR report projects that the US economy will continue to grow without any of the growth spurts needed to maintain its lead. He also added that China’s massive pool of engineers would be an important engine of growth unlike the United States, which cannot produce the same level of highly skilled labor.

In recent years, Chinese leaders have shifted their focus from achieving maximum levels of GDP growth to a high-quality growth stage.

Chinese President Xi Jinping said at the 19th National Congress of the Communist Party of China in 2017 that the country’s economy was emerging from a phase of rapid growth.

This means that the country is now seeking to invest and manufacture high-end products through innovation and technological self-sufficiency.

In a report on China’s reforms towards higher quality growth, the World Bank said the country needed to rebalance “external demand towards domestic demand and growth led by investment and industry towards greater dependence on consumption and services”.

The report adds that the country will also need to transition from a high-carbon to a low-carbon economy. China is already a world leader in renewable energy production figures and is currently the largest producer of wind and solar power in the world. It also has the largest electric vehicle market in the world.

Source: World TRT

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China’s economy starts the year faltering https://bizchina-update.com/chinas-economy-starts-the-year-faltering/ Sun, 30 Jan 2022 08:00:00 +0000 https://bizchina-update.com/chinas-economy-starts-the-year-faltering/ BY JONATHAN CHENG | UPDATED JANUARY 30, 2022 12:54 AM EST Manufacturing and services sector surveys show pullback in January as latest Covid-19 outbreaks hit domestic demand China’s economy started the year on an uncertain footing as Covid-19 outbreaks disrupted factory activity and consumer spending, according to a trio of manufacturing and service sector surveys. […]]]>

BY JONATHAN CHENG | UPDATED JANUARY 30, 2022 12:54 AM EST

Manufacturing and services sector surveys show pullback in January as latest Covid-19 outbreaks hit domestic demand

China’s economy started the year on an uncertain footing as Covid-19 outbreaks disrupted factory activity and consumer spending, according to a trio of manufacturing and service sector surveys. published on Sunday.

Two gauges of China’s manufacturing activity – one official and one private – each retreated in January, while a third measure, of the country’s service sector, shed light on the heavy toll that the latest spike in coronavirus infections coronavirus has inflicted on domestic demand.

China’s official manufacturing purchasing managers’ index fell to 50.1 in January, the National Bureau of Statistics said, from 50.3 in December and just above the 50 mark that separates the expansion of contraction activity.

The result was in line with the median forecast of economists polled by The Wall Street Journal and marked the third month in a row that the measure has been in expansionary territory.

However, the sub-index measuring total new orders contracted further, falling to 49.3 in January, while new export orders improved to 48.4 in January, still in contraction territory. . Factory output in January weakened to 50.9 and likely would have been even weaker had it not been for an acceleration in consumer goods production ahead of the Lunar New Year holiday which begins on February 1, the statistics office said. .

Meanwhile, the Caixin China manufacturing PMI, a private gauge that’s more focused on smaller private companies than the official manufacturing index – which is weighted more towards large state-owned companies – fell to 49.1 in January, its highest. low level since February 2020, at the peak of the initial Covid-19 outbreak in China.

The sharp decline in Caixin’s manufacturing PMI, from a reading of 50.9 in December, came as the production and total new orders sub-indexes fell to their lowest levels since August, said Caixin.

Overseas demand also contracted at a faster pace than usual as the rapid spread of the Omicron variant of the coronavirus dampened global consumer sentiment.

Weak demand prompted manufacturers to slow their pace of hiring in January to cut costs, the Caixin employment sub-index showed.

“This year, policymakers should focus on stability,” Wang Zhe, an economist at Caixin Insight Group, said in a press release accompanying the data release on Sunday.

Separate data on China’s services sector, also released by China’s statistics bureau on Sunday, showed renewed weakness in a part of the economy that has lagged the broader pandemic recovery for nearly two years.

While Chinese leaders have stressed the importance of orienting the Chinese economy more towards domestic consumption, this effort has repeatedly been hampered by new Covid outbreaks and the government’s strict measures to contain them.

China’s official non-manufacturing PMI, which includes both services and construction activity, fell to 51.1 in January from 52.7 in December, the statistics bureau said on Sunday.

The sub-index measuring services activity fell to 50.3 in January, the lowest level in five months, from 52.0 in December, dragged down by coronavirus outbreaks across the country.

Sub-indices tracking sectors of the economy requiring close human contact, including hospitality and consumer services, fell below 45, reflecting lower consumer willingness to spend, Zhao Qinghe said, Senior Statistician at the Chinese Bureau of Statistics.

The sub-index measuring construction activity also weakened to 55.4 in January, from 56.3 the previous month, as weather conditions and the return trips of construction workers for the New Year’s Eve festival Lunar year have taken their toll, the statistics office said.

Economic data releases this year give a first glimpse of the health of the world’s second-largest economy, which quickly lost momentum in the final months of 2021.

For the whole of last year, China recorded an expansion of gross domestic product of 8.1% compared to the previous year, but the growth profile was unbalanced. In the third and fourth quarters, year-over-year GDP growth was 4.9% and 4.0%, respectively, which is below China’s pre-Covid growth trajectory.

Late last year, Chinese leaders began to signal a move towards promoting stability rather than the structural reforms and disciplines they unleashed on a number of key drivers of economic growth, including the real estate, technology and private education sectors.

The Chinese central bank lowered its key benchmark rates twice, in December and January, while freeing up to lend a large sum of funds that it had forced banks to keep in reserve. Authorities have also recently encouraged banks to provide more home loans and made it easier for cash-strapped property developers to offload troubled assets.

However, Sunday’s release of relatively weak PMI numbers “indicates that the government’s policy easing measures have yet to trickle down to the real economy,” Zhang Zhiwei, an economist at Pinpoint Asset Management, wrote in a statement. note.

Zhang said the pandemic, combined with the collapse of the real estate sector, remained the main risks for the Chinese economy. He predicted that the government would further increase political support in the coming months, including through increased budget spending.

Last week, Chinese Premier Li Keqiang reiterated his promises to give more tax breaks to companies, especially small private companies.

More broadly, economists widely expect Beijing to roll out more easing measures as leaders prioritize stability in a politically important year when Chinese leader Xi Jinping will almost certainly seek and obtain a third term in office.

Across China, provincial and regional governments have set economic targets for 2022 that are roughly in line with last year’s growth rates, despite the heightened headwinds the economy is currently facing.

With the exception of Tianjin, a directly administered municipality that has yet to release its 2022 target, the country’s other 30 provincial governments directly administered by Beijing have a weighted average GDP growth target this year of 6.1 percent. , according to China. International Capital Corp., a Chinese investment bank.

This matched the weighted average GDP target set by all provinces and municipalities in 2021 and close to the national target of “6.0% or more” set in March 2021 by China’s top legislature, the CICC said. . Beijing is expected to release its annual growth target for 2022 in early March.

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China’s economy starts the year with a bang https://bizchina-update.com/chinas-economy-starts-the-year-with-a-bang/ Sun, 30 Jan 2022 05:54:00 +0000 https://bizchina-update.com/chinas-economy-starts-the-year-with-a-bang/ China’s economy started the year on an uncertain footing as Covid-19 outbreaks disrupted factory activity and consumer spending, according to a trio of manufacturing and service sector surveys. published on Sunday. Two gauges of China’s manufacturing activity – one official and one private – each retreated in January, while a third measure, of the country’s […]]]>

China’s economy started the year on an uncertain footing as Covid-19 outbreaks disrupted factory activity and consumer spending, according to a trio of manufacturing and service sector surveys. published on Sunday.

Two gauges of China’s manufacturing activity – one official and one private – each retreated in January, while a third measure, of the country’s service sector, shed light on the heavy toll that the latest spike in coronavirus infections coronavirus has inflicted on domestic demand.

China’s official manufacturing purchasing managers’ index fell to 50.1 in January, the National Bureau of Statistics said, from 50.3 in December and just above the 50 mark that separates the expansion of contraction activity.

The result was in line with the median forecast of economists polled by The Wall Street Journal and marked the third month in a row that the measure has been in expansionary territory.

However, the sub-index measuring total new orders contracted further, falling to 49.3 in January, while new export orders improved to 48.4 in January, still in contraction territory. . Factory output in January weakened to 50.9 and likely would have been even weaker had it not been for an acceleration in consumer goods production ahead of the Lunar New Year holiday which begins on February 1, the statistics office said. .

Container ships at a terminal in the port of Taicang in China’s Jiangsu province.


Photo:

Finn / Costfoto/Zuma Press

Meanwhile, the Caixin China manufacturing PMI, a private gauge that’s more focused on smaller private companies than the official manufacturing index – which is weighted more towards large state-owned companies – fell to 49.1 in January, its highest. low level since February 2020, at the peak of the initial Covid-19 epidemic in China.

The sharp decline in Caixin’s manufacturing PMI, from a reading of 50.9 in December, came as the production and total new orders sub-indexes fell to their lowest levels since August, said Caixin.

Overseas demand also contracted at a faster than usual rate as the rapid spread of the Omicron variant of the coronavirus dampened global consumer sentiment.

Weak demand prompted manufacturers to slow their pace of hiring in January to cut costs, the Caixin employment sub-index showed.

“This year, policymakers should focus on stability,” Wang Zhe, an economist at Caixin Insight Group, said in a press release accompanying the data release on Sunday.

Separate data on China’s services sector, also released by China’s statistics bureau on Sunday, showed renewed weakness in a part of the economy that has been lagging the broader pandemic recovery for nearly two years.

The 1000 Trees shopping center in Shanghai.


Photo:

alex plavevski / Shutterstock

While Chinese leaders have stressed the importance of orienting the Chinese economy more towards domestic consumption, this effort has repeatedly been hampered by new Covid outbreaks and the government’s strict measures to contain them.

China’s official non-manufacturing PMI, which includes both services and construction activity, fell to 51.1 in January from 52.7 in December, the statistics bureau said on Sunday.

The sub-index measuring services activity fell to 50.3 in January, the lowest level in five months, from 52.0 in December, dragged down by coronavirus outbreaks across the country.

Sub-indices tracking sectors of the economy requiring close human contact, including hospitality and consumer services, fell below 45, reflecting lower consumer willingness to spend, Zhao Qinghe said, Senior Statistician at the Chinese Bureau of Statistics.

The sub-index measuring construction activity also weakened to 55.4 in January, from 56.3 the previous month, as weather conditions and the return trips of construction workers for the New Year’s Eve festival Lunar year have taken their toll, the statistics office said.

Economic data releases this year give a first glimpse of the health of the world’s second-largest economy, which quickly lost momentum in the final months of 2021.

Chinese authorities encouraged banks to provide more home loans and made it easier for cash-strapped property developers to offload troubled assets.


Photo:

Andrea Verdelli/Bloomberg News

For the whole of last year, China recorded gross domestic product growth of 8.1% over the previous year, but the growth profile was unbalanced. In the third and fourth quarters, year-over-year GDP growth was 4.9% and 4.0%, respectively, which is below China’s pre-Covid growth trajectory.

Late last year, Chinese leaders began to signal a move towards promoting stability rather than the structural reforms and disciplines they unleashed on a number of key drivers of economic growth, including the real estate, technology and private education sectors.

The Chinese central bank lowered its key benchmark rates twice, in December and January, while freeing up to lend a large sum of funds that it had forced banks to keep in reserve. Authorities have also recently encouraged banks to provide more home loans and made it easier for cash-strapped property developers to offload troubled assets.

However, Sunday’s release of relatively weak PMI numbers “indicates that the government’s policy easing measures have yet to trickle down to the real economy,” Zhang Zhiwei, an economist at Pinpoint Asset Management, wrote in a statement. note.

Zhang said the pandemic, combined with the collapse of the real estate sector, remained the main risks for the Chinese economy. He predicted that the government would further increase political support in the coming months, including through increased budget spending.

Last week, Chinese Premier Li Keqiang reiterated his promises to give more tax breaks to companies, especially small private companies.

More broadly, economists widely expect Beijing to roll out more easing measures as leaders prioritize stability in a politically important year when Chinese leader Xi Jinping will almost certainly seek and obtain a third term in office.

Across China, provincial and regional governments have set economic targets for 2022 that are roughly in line with last year’s growth rates, despite the heightened headwinds the economy is currently facing.

With the exception of Tianjin, a directly administered municipality that has yet to release its 2022 target, the country’s other 30 provincial governments directly administered by Beijing have a weighted average GDP growth target this year of 6.1 percent. , according to China. International capital company.

a Chinese investment bank.

This matched the weighted average GDP target set by all provinces and municipalities in 2021 and close to the national target of “6.0 percent or more” set in March 2021 by China’s top legislature, the CICC said. . Beijing is expected to release its annual growth target for 2022 in early March.

-Grace Zhu contributed to this article.

Write to Jonathan Cheng at Jonathan.Cheng@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Chinese economy: MOFCOM: foreign trade hits a new high in 2021 https://bizchina-update.com/chinese-economy-mofcom-foreign-trade-hits-a-new-high-in-2021/ Thu, 27 Jan 2022 08:00:00 +0000 https://bizchina-update.com/chinese-economy-mofcom-foreign-trade-hits-a-new-high-in-2021/ China has become the world’s second-largest consumer market, the largest trader of goods for five consecutive years and the second-largest destination for foreign direct investment in 2021, the Chinese ministry announced on Tuesday. of Commerce during a press conference while unveiling the affairs of the country. and business performance for 2021. Yang Shanshan has more. […]]]>

China has become the world’s second-largest consumer market, the largest trader of goods for five consecutive years and the second-largest destination for foreign direct investment in 2021, the Chinese ministry announced on Tuesday. of Commerce during a press conference while unveiling the affairs of the country. and business performance for 2021. Yang Shanshan has more.

Despite COVID-19, China’s foreign trade hit new highs in 2021, with total imports and exports up 21.4 percent to RMB 39.1 trillion, or about $6 trillion. However, China’s Ministry of Commerce warns that the global economy still faces uncertainties in 2022.

LI XINGQIAN Head of Department of Foreign Trade Ministry of Commerce “The pandemic continues and there is still a risk of supply chain cuts, which could slow down the global economic recovery. We will support trade enterprises, diversify trade routes, use the international e-commerce platform to promote trade, improve the digitalization of trade, and develop green trade.

In 2021, China’s domestic consumption gradually recovered, and the total retail sale of consumer goods increased by 12.5%. As the world’s second-largest consumer market, consumption has remained the main driver of China’s economy. China also becomes the second largest destination for foreign direct investment in 2021, as well as a major global investor.

CHEN CHUNJIANG Head of Trade Service Department Ministry of Commerce “We will continue to reform and open up to the rest of the world. We will ease the automotive industry and provide land and tax policy to attract more foreign investors to invest in high-tech industries, advanced manufacturing, digital and green economy, as well as low-carbon technologies. carbon. We will also help foreign companies to solve their difficulties in China.

YANG SHANSHAN CGTN Reporter “To help support China’s economic growth, China promises to improve the business environment for investors and promote global trade through bilateral and multilateral cooperation. Yang Shanshan, CGTN.
Source: CGTN

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As China’s economy slows, policymakers look to revive growth https://bizchina-update.com/as-chinas-economy-slows-policymakers-look-to-revive-growth/ Sat, 22 Jan 2022 08:00:00 +0000 https://bizchina-update.com/as-chinas-economy-slows-policymakers-look-to-revive-growth/ VSHINA A hasn’t had much success in curling, which will be featured at the Beijing Winter Olympics from February 4. But the country’s economic decision-makers could take inspiration from this obscure event. Like curlers, they have a hard target to hit. They are believed to be targeting growth of 5% or more in 2022, despite […]]]>
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China’s economy is slowing, a worrying sign for the world https://bizchina-update.com/chinas-economy-is-slowing-a-worrying-sign-for-the-world/ Mon, 17 Jan 2022 19:52:30 +0000 https://bizchina-update.com/chinas-economy-is-slowing-a-worrying-sign-for-the-world/ BEIJING – Construction and real estate sales have fallen. Small businesses have closed due to rising costs and weak sales. Local authorities in debt reduce the salaries of civil servants. China’s economy slowed markedly in the final months of last year as government measures to curb property speculation also hurt other sectors. Lockdowns and travel […]]]>

BEIJING – Construction and real estate sales have fallen. Small businesses have closed due to rising costs and weak sales. Local authorities in debt reduce the salaries of civil servants.

China’s economy slowed markedly in the final months of last year as government measures to curb property speculation also hurt other sectors. Lockdowns and travel restrictions to contain the coronavirus have also weighed on consumer spending. Strict regulations on everything from internet businesses to after-school tutoring businesses have sparked a wave of layoffs.

China’s National Bureau of Statistics said Monday that economic output from October to December was only 4% higher than the same period a year earlier. This is a deceleration from the 4.9% growth in the third quarter, from July to September.

Global demand for consumer electronics, furniture and other home comforts during the pandemic has produced record exports for China, preventing its growth from stalling. For the whole of last year, China’s economic output was 8.1 percent higher than in 2020, the government said. But much of the growth took place in the first half of last year.

The snapshot of the Chinese economy, the main engine of global growth in recent years, reinforces expectations that the global economic outlook is beginning to darken. Worse still, the Omicron variant of the coronavirus is now beginning to spread in China, leading to more restrictions across the country and raising fears of further disruption to supply chains.

The slowing economy poses a dilemma for Chinese leaders. The measures they have imposed to tackle income inequality and curb businesses are part of a long-term plan to protect the economy and national security. But officials fear they could cause near-term economic instability, especially in a year of unusual political importance.

Next month, Beijing will host the Winter Olympics, which will shine the international spotlight on the country’s performance. In the fall, Xi Jinping, the Chinese leader, is expected to seek a third five-year term at a Communist Party congress.

Mr. Xi sought to strike an optimistic note. “We have every confidence in the future of China’s economy,” he said in a speech to a virtual session of the World Economic Forum on Monday.

But with slowing growth in his country, slowing demand and debt still at near-record levels, Mr. Xi could face some of the biggest economic challenges since Deng Xiaoping began to pull the country out of debt. its Maoist yoke four decades ago.

“I fear that the operation and development of China’s economy in the coming years will be relatively difficult,” Li Daokui, a prominent economist and adviser to the Chinese government, said in a speech late last month. “Looking at the five years as a whole, this is perhaps the most difficult period since our reform and opening up 40 years ago.”

China also faces the problem of a rapidly aging population, which could create an even greater burden on the Chinese economy and its workforce. The National Bureau of Statistics said on Monday that China’s birth rate had fallen sharply last year and was now barely higher than the death rate.

As the costs of many raw materials have risen and the pandemic has prompted some consumers to stay home, millions of private businesses have collapsed, most of them small and family-owned.

This is a big concern because private companies are the backbone of China’s economy, accounting for three-fifths of output and four-fifths of urban employment.

Kang Shiqing invested much of her savings nearly three years ago to open a women’s clothing store in Nanping, a river town in southeastern Fujian province. But when the pandemic hit a year later, customer numbers dropped drastically and never recovered.

As in many countries, there has been a broad shift in China towards online shopping, which can undermine stores by using less labor and operating from cheap warehouses. Mr. Kang was forced to pay high rent for his store despite the pandemic. He finally closed it in June.

“We can barely survive,” he said.

Another lingering difficulty for small businesses in China is the high cost of borrowing money, often at double-digit interest rates from private lenders.

Chinese leaders are aware of the challenges faced by private companies. Premier Li Keqiang has promised further tax and fee cuts to help the country’s many struggling small businesses.

On Monday, China’s central bank made a small move to cut interest rates, which could help slightly reduce interest charges for the country’s heavily indebted property developers. The central bank cut its benchmark interest rates for one-week and one-year loans by about a tenth of a percentage point.

The construction and equipping of new housing represents a quarter of the Chinese economy. Large loans and widespread speculation have helped the country erect the equivalent of 140 square feet of new housing for every urban resident over the past two decades.

This fall, the sector faltered. The government wants to limit speculation and deflate a bubble that had made new housing unaffordable for young families.

China Evergrande Group is just the largest and most visible of a long list of real estate developers in China that have faced serious financial difficulties in recent times. Kaisa Group, China Aoyuan Property Group and Fantasia are among other developers who have struggled to make payments as bond investors grow wary of lending money to China’s property sector.

As real estate companies try to conserve cash, they are launching fewer construction projects. And that has been a big problem for the economy. The price of steel rebar for concrete in apartment towers, for example, fell by a quarter in October and November before stabilizing at a much lower level in December.

Falling house prices in small towns have hurt the value of people’s assets, making them less willing to spend. Even in Shanghai and Beijing, apartment prices are no longer rising.

There have been faint signs of renewed government support for the property sector in recent weeks, but no sign of a return to lavish lending by state-controlled banks.

Evergrande’s financial distress “is a signal that money will be pushed from real estate to the stock market,” said Hu Jinghui, an economist who is a former chairman of the China Alliance of Real Estate Agencies, a trade group. national. “Policies can be relaxed, but there can be no turning back.”

The slowdown in the housing market has also hurt local governments, which rely on land sales as their main source of revenue.

The International Monetary Fund estimates that government land sales each year have raised funds equivalent to 7% of the country’s annual economic output. But in recent months, developers have scaled back land purchases.

Starved of revenue, some local governments have halted hiring and cut bonuses and benefits for civil servants, prompting widespread complaints on social media.

In Hangzhou, the capital of Zhejiang province, a civil servant’s complaint about a 25% cut in her salary quickly spread on the internet. The city government did not respond to a fax requesting comment. In the northern province of Heilongjiang, the city of Hegang announced that it would no longer hire “junior” workers. City officials removed the ad from the government website after it came to public attention.

Some governments have also increased fees charged to businesses in an attempt to make up the shortfall.

Bazhou, a city in Hebei province, levied 11 times more fines for small businesses from October to December than in the first nine months of last year. Beijing has criticized the city for undermining a national effort to reduce the cost of doing business.

Strong foreign demand for Chinese exports, especially consumer goods, has spurred a domestic wave of investment in new factories, up 13.5 percent last year from 2020.

Some areas of consumer spending have been quite robust, notably the luxury sector, where sports cars and jewelry are selling well. Retail sales rebounded 12.5% ​​last year from pandemic-depressed levels in 2020. But retail sales fell in December from November as coronavirus restrictions kept some shoppers at home.

Few expect the government to allow a severe economic downturn this year ahead of the Communist Party Congress. Economists expect the government to ease restrictions on lending and increase public spending.

“The first half of the year will be tough,” said Zhu Ning, vice dean of the Shanghai Advanced Institute of Finance. “But then the second half will see a rebound.”

Li you contributed to the research.

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‘Zero COVID’ and Xi’s ambitions could slow China’s economy in 2022 https://bizchina-update.com/zero-covid-and-xis-ambitions-could-slow-chinas-economy-in-2022/ Mon, 17 Jan 2022 08:00:00 +0000 https://bizchina-update.com/zero-covid-and-xis-ambitions-could-slow-chinas-economy-in-2022/ BEIJING – China’s economy is expected to slow ahead of the ruling Communist Party’s two-decade congress in the fall of 2022, as President Xi Jinping’s sweeping “COVID zero” policy and socialist ambitions are expected to stifle private spending in the country. Even after the end of the Beijing Winter Olympics, which are scheduled to begin […]]]>

China’s economy is expected to slow ahead of the ruling Communist Party’s two-decade congress in the fall of 2022, as President Xi Jinping’s sweeping “COVID zero” policy and socialist ambitions are expected to stifle private spending in the country.

Even after the end of the Beijing Winter Olympics, which are scheduled to begin on February 4, the Communist Party-led government is likely to continue to implement strong anti-epidemic measures, including the lockdown of major cities and the suspension of all public transport services.

To succeed in the economic sphere and secure a controversial third term as party leader in congress, Xi would also promote “common prosperity”, aimed at narrowing income gaps in the country, by imposing more regulations on the country’s lucrative sectors. .

Consumption in China has been “tepid” as people’s movements have only recovered to half the level before the coronavirus outbreak began nearly two years ago, said Kokichiro Mio, senior researcher at the NLI Research Institute in Tokyo.

According to an academic familiar with Chinese government thinking, “the Communist Party’s zero COVID policy will certainly remain in place most of 2022, given President Xi’s insistence on successfully ending the congress after the Beijing Olympics. “.

“For at least another year, Chinese citizens and businesses would be frustrated by the harsh restrictions imposed by the authorities and lose their motivation to increase spending and investment. This would put strong downward pressure on the economy,” added the researcher on condition of anonymity.

On Friday, people walk under lanterns decorating a food court at a shopping mall in Beijing. | Reuters

The world’s second-largest economy grew 8.1% in 2021 from a year earlier as domestic demand recovered from the coronavirus shock, marking the strongest expansion in 10 years, government data showed on Monday.

The economy, however, grew by just 4% in the October-December 2021 period alone, as the outlook darkened amid growing fears of another wave of infections, detected for the first time. in the Chinese city of Wuhan at the end of 2019.

In Xi’an, more than 2,000 people have been infected with the virus for about a month since early December, prompting municipal authorities to lock down the central city of 13 million since the middle of the month.

Tianjin, known as a key gateway to Beijing, has also carried out COVID-19 nucleic acid tests targeting all of its 14 million people since the start of the month after community infections were identified. by the highly contagious omicron variant.

Beijing has not been spared either, with the city government saying on Saturday it had detected its first case of omicron.

In Shanghai, China’s largest shopping mall, some restaurants and shops have been closed since infections were confirmed there.

On Friday, customers take an escalator in a mall in Beijing.  |  Reuters
On Friday, customers take an escalator in a mall in Beijing. | Reuters

“We are not in a situation where we can just pretend nothing has happened,” said Hiroyuki Tanaka, a 36-year-old Japanese employee in the city. “What we have to do is stay in Shanghai and stay at home.

“Many Chinese have refrained from going out and tightened their wallets as they feel anxious about the future,” he said. “Under such circumstances, it is very difficult for the Chinese economy to maintain its growth momentum.”

In January, the World Bank said in a report that it had lowered its forecast for China’s economic expansion in 2022 to 5.1% from 5.4% amid the pandemic.

“I think the pace of China’s economic growth would be much slower than the World Bank estimates,” Tanaka said. “I don’t know what can boost China’s economy this year unless the coronavirus crisis recedes.”

Xi’s efforts to achieve common prosperity have also raised concerns that the most populous country will become a less attractive market, as the goal could place a heavy burden on the wealthy so the government can coercively rectify economic inequalities. .

Drastic policy changes aimed at emphasizing income distribution could “hinder technological progress based on the free ideas of the private sector,” said Kenta Maruyama, an economist at Mitsubishi UFJ Research and Consulting Co. in Tokyo.

A medical worker in protective gear takes a swab from a resident for a COVID-19 nucleic acid test at a makeshift testing site in Tianjin, China on Thursday.  |  CNSPHOTO / VIA REUTERS
A medical worker in protective gear takes a swab from a resident for a COVID-19 nucleic acid test at a makeshift testing site in Tianjin, China on Thursday. | CNSPHOTO / VIA REUTERS

Indeed, the Communist Party has tightened surveillance of the country’s IT giants to curb their monopolistic behavior and disorderly expansion of capital, raising concerns that the innovation of China’s high-tech industry could be hampered.

Large Chinese companies and business leaders would also be forced by central authorities to take measures that could help reduce income disparities, such as donating and providing social support.

“If the government uses common prosperity as a means of power struggle and moves forward in an unpredictable way, it could severely hamper the Chinese economy. Common prosperity is a double-edged sword,” Maruyama said.

Some observers, meanwhile, have said that a possible escalation of tensions between China and Taiwan would make foreign companies – especially those from democratic countries – reluctant to invest in the mainland, which would deal a serious blow to the economy. broadly this year.

Speculation is rife that Xi’s leadership may take military action against democratic Taiwan to unify the self-governing island with the mainland, ahead of the party congress where he would try to lay the groundwork to retain power. for life.

Chinese People's Liberation Army soldiers stand in front of a giant screen as President Xi Jinping speaks during a military parade marking the 70th anniversary of the founding of the People's Republic of China on October 1, 2019 in Beijing.  |  Reuters
Chinese People’s Liberation Army soldiers stand in front of a giant screen as President Xi Jinping speaks during a military parade marking the 70th anniversary of the founding of the People’s Republic of China on October 1, 2019 in Beijing. | Reuters

But Jeff Kingston, director of Asian studies at Temple University Japan, threw cold water on such a possibility.

“There is little chance of an invasion of Taiwan as it is a high risk option which could backfire on Xi,” he said.

China and Taiwan have been governed separately since their separation in 1949 following a civil war. Their relationship has soured since pro-independence President Tsai Ing-wen became the island’s leader in 2016.

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China’s economy grew 8.1% in 2021, but growth is slowing – WISH-TV | Indianapolis News | Indiana Weather forecast https://bizchina-update.com/chinas-economy-grew-8-1-in-2021-but-growth-is-slowing-wish-tv-indianapolis-news-indiana-weather-forecast/ Sun, 16 Jan 2022 08:00:00 +0000 https://bizchina-update.com/chinas-economy-grew-8-1-in-2021-but-growth-is-slowing-wish-tv-indianapolis-news-indiana-weather-forecast/ (CNN) – China’s economy grew 8.1% last year, far exceeding the government’s own targets. But weaker growth in the final months of 2021 suggests trouble is still on the horizon as the country grapples with a deepening housing crisis, new COVID-19 outbreaks and the Beijing’s strict no-tolerance approach to controlling the virus. This figure is […]]]>

(CNN) – China’s economy grew 8.1% last year, far exceeding the government’s own targets. But weaker growth in the final months of 2021 suggests trouble is still on the horizon as the country grapples with a deepening housing crisis, new COVID-19 outbreaks and the Beijing’s strict no-tolerance approach to controlling the virus.

This figure is roughly in line, if not slightly above, the expectations set by many economists. And it exceeds the Chinese government’s goal last year of growing its economy by at least 6% by 2021.

But GDP only increased by 4% in the last quarter of the year compared to the previous year. Although higher than the 3.6% growth forecast in a Reuters poll of analysts, it is still the slowest pace in a year and a half.

Growth in the fourth quarter was boosted by industrial production, which rose 4.3% in December from a year earlier, an acceleration from 3.8% growth in November.

But consumption has weakened considerably. Retail sales rose only 1.7% in December from a year earlier, significantly lower than November’s 3.9% increase.

China has recently faced a host of problems, including turmoil in its real estate sector and a series of COVID-19 outbreaks.

Struggling Chinese property developer Evergrande – which has total liabilities of around $300 billion – is struggling to pay its debts and was recently ordered to demolish a few dozen buildings in the country. Analysts have long feared that a collapse in Evergrande could trigger greater risks for China’s property market, hurting homeowners and the wider financial system.

Beijing’s unwavering insistence on eradicating all traces of the coronavirus, meanwhile, faces a huge test as authorities battle the accelerating spread of Omicron. And an outbreak of the older Delta variant recently forced the industrial hub of Xi’an into lockdown, affecting production lines at global chipmakers like Samsung and Micron.

Economists have warned that China’s zero-COVID approach to containing the virus could spell serious trouble for the economy in 2022. Goldman Sachs, for example, cut its projection for China’s economic growth in 2022 to 4.3% against 4.8%, just over half of the last figure of the year.

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