economic growth – 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 economic growth – 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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Winter Olympics promote new growth points for China’s economy https://bizchina-update.com/winter-olympics-promote-new-growth-points-for-chinas-economy/ Fri, 11 Feb 2022 08:00:00 +0000 https://bizchina-update.com/winter-olympics-promote-new-growth-points-for-chinas-economy/ Two curling stone-shaped robots stretched their arms below the surface of the water, each carrying an Olympic torch, as the flame passed from one to the other. The scenes unfolded during a special show held in Beijing’s icy Yongding River ahead of the Beijing 2022 Winter Olympics, and this rendezvous between two robotic torchbearers was […]]]>

Two curling stone-shaped robots stretched their arms below the surface of the water, each carrying an Olympic torch, as the flame passed from one to the other.

The scenes unfolded during a special show held in Beijing’s icy Yongding River ahead of the Beijing 2022 Winter Olympics, and this rendezvous between two robotic torchbearers was the first of its kind in history. Olympic.

The ongoing 2022 Winter Olympics have showcased not only high-level sporting prowess but also futuristic technological extravaganza and appealing appeal to winter sports, which hold the potential to drive economic growth.

Forward-looking technology

From robots at the torch relay to smart beds and digital currency at the Olympic Village, futuristic tech aplenty at the Beijing Winter Olympics has swept across social media, and some may even find its way into people’s daily lives. .

“I am proud to show China’s technological progress in robots to the world,” said Tian Qiyan, who led the torch relay robot development team at China’s Shenyang Institute of Automation. Chinese Academy of Sciences.

China’s robot industry has grown rapidly in recent years, with industry revenue exceeding 100 billion yuan (about $15.7 billion) in 2020 and robot density in manufacturing nearly doubling the global average, according to the Ministry of Industry and Information Technology.

“Robots and relevant technologies developed for the Beijing Winter Olympics will be applied to scientific research and civilian uses in the future,” Tian said.

In addition to robots, some technologies designed to improve athlete performance at the Games are also expected to enter the wider market.

Huo Bo, a professor at the School of Astronautics, Beijing Institute of Technology, led a team to develop an intelligent training management system, which can provide personalized and intelligent training assistance for the big air freestyle skiing, bobsleigh and many other winter Olympic events.

“This set of core technical equipment and technology is relatively mature and cutting-edge in this field,” Huo said.

After serving training in the Winter Olympics, the devices will be used in fields such as rehabilitation training, health management and scientific research, Huo added.

Boost for winter sports, tourism

The growing popularity of winter sports brought by the Winter Olympics has also boosted the sports and tourism market, even in places with little snowfall.

Tan Zizhe, a 10-year-old boy living in Chongqing Municipality in southwest China, developed a passion for snowboarding in 2020 under the guidance of his father. During this winter vacation, Tan spent almost every day on an indoor skating rink in the suburbs of Chongqing.

Known for its scorching summers, Chongqing has a year-round warm climate and participation in winter sports was low until the approach of the Winter Olympics.

Statistics from the Chongqing Winter Sports Administration Center showed that in 2018, less than 10,000 people participated in winter sports, but the number jumped to over 1.5 million by the end of 2021.

Thanks to the construction of more skating and indoor skiing facilities in recent years, Chongqing residents can enjoy winter sports all year round, said Ke Ping, director of the administrative center.

In addition to participating in sports, people are also spending more on winter sports shopping and tourism.

Statistics on e-commerce platforms including Alibaba showed a sharp increase from previous years in sales of skiing and skating equipment during the Spring Festival holiday.

In Chongqing, snow and ice tourism has gained popularity during the holidays, with corresponding orders up more than 30 percent from the same period last year, the local culture and tourism department said. .

According to the National Bureau of Statistics, as of October 2021, 346 million Chinese have participated in ice and snow sports.

Changbai Mountains, a popular tourist destination in northeast China’s Jilin Province, is cashing in on winter tourism fever by marketing hot springs and skating resorts to lure visitors.

“Previously, the scenic spot had more tourists in summer, but with the increase in snow and ice activities, it has become a popular destination even in winter,” said Wang Yaxian, a local shopkeeper.

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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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How rising US interest rates will challenge the Chinese economy https://bizchina-update.com/how-rising-us-interest-rates-will-challenge-the-chinese-economy/ Sun, 30 Jan 2022 08:00:00 +0000 https://bizchina-update.com/how-rising-us-interest-rates-will-challenge-the-chinese-economy/ A sharp about-face by President Xi Jinping suggests China is in crisis mode as rising interest rates pose a serious threat to its economy. In the years leading up to the pandemic, Chinese President Xi Jinping warned that the global economy was facing challenges and that a Black Swan event posed a serious risk to […]]]>

A sharp about-face by President Xi Jinping suggests China is in crisis mode as rising interest rates pose a serious threat to its economy.

In the years leading up to the pandemic, Chinese President Xi Jinping warned that the global economy was facing challenges and that a Black Swan event posed a serious risk to the Chinese economy and the world.

Since the start of the pandemic, the People’s Bank of China, financial regulators and senior Chinese Communist Party leaders have further intensified their calls for consideration of systemic risk, as growing concerns about developments in global financial markets have were expressed last year.

But in recent months, the mood has changed considerably.

President Xi’s U-turn

In a virtual address atop the agenda of the World Economic Forum in Davos in mid-January, President Xi sent a very clear message to the US Federal Reserve and its Chairman, Jerome Powell: Please, don’t raise interest rates.

“If major economies slow down or reverse course in their monetary policies, there would be serious negative fallout. They would present challenges to global economic and financial stability, and developing countries would bear the brunt,” Xi said. .

With US inflation currently running at 7% a year and inflation posing a growing risk to post-pandemic economic recovery around the world, Xi’s comments run counter to the intentions of many. growing number of central banks, including the US Federal Reserve.

Growing risks in China

Although we can only speculate on the reasons for the change in the narrative coming out of Beijing, it is clear that risks are developing within the Chinese economy.

The Chinese government’s crackdown on the riskiest elements of its real estate sector has had a major impact on the industry, demand for materials and the economy in general.

According to a recent report by investment bank UBS, housing starts were down 31% year-on-year in December.

With the real estate sector and associated industries accounting for nearly a third of China’s GDP, there are growing fears that problems within the industry could cause a broader slowdown in the economy.

As risks continue to accumulate and growth in the consumer-driven elements of the economy deteriorates, this has created a rather ironic and, in some ways, contradictory set of circumstances.

One foot on the accelerator, one foot on the brake

Despite the economic difficulties that the Chinese government’s much-needed attempts to rein in risks in the real estate sector have created, they have so far refused to significantly alter course.

However, with so much of China’s economic fortune in the real estate sector, the Chinese government had only a simple choice, accept much weaker growth figures or find another engine of economic expansion.

Given the vastness of the Chinese economy and the practical impossibility of replacing real estate-led growth with sufficient domestic consumption in the short term, Beijing has been left with a very familiar option that it has largely previously used, the construction of infrastructures.

This is yet another departure from the course established by Beijing.

Under the leadership of President Xi’s predecessor, former President Hu Jintao, Hu Jintao reiterated the need for China to rebalance its economy away from capital investment and construction towards a more market-driven growth model. consumer.

Even in the middle of last year, the Chinese government halted work on two high-speed rail projects worth 130 billion yuan ($29 billion), due to concerns over rising debt. local governments.

Now that risks within the global economy continue to pile up and the true extent of China’s economic slowdown is becoming clear, Beijing is not just putting its foot back on the accelerator of infrastructure construction. , he puts his foot to the floor.

In megalopolis Shanghai, a full year of infrastructure and investment bonds will be issued by the end of June.

For the 2022 calendar year, Beijing has allocated a quota of 1.46 trillion yuan ($326 billion) in local government special bonds, as the country seeks to boost investment in local infrastructure and steady economic growth.

Local governments recently issued 190 billion yuan ($42 billion) worth of bonds in just one week, according to a report by Yuan Talks, a Chinese economy- and market-focused media outlet.

The course of Chinese monetary policy has also changed significantly in recent days, with the People’s Bank of China (PBOC) cutting the benchmark one-year lending rate twice in as many months for the first time in a short time. after the start of the pandemic.

Australia’s Fortune

In recent years it has been said that Australia’s economic fortunes rest on a bulk carrier and with up to half of all exports going to China, the Middle Kingdom’s economic fortunes have certainly come to define ours.

The trillion-dollar question that could define Australia’s economic fortunes in 2022 could be this: Can Chinese infrastructure building fill the inevitable hole that will be left by the real estate sector if Beijing continues on its path? current?

With Omicron still a major factor affecting the Chinese economy significantly and the IMF warning of a slowing global economy, the outlook is bleak at best.

As the Chinese government’s strategy continues to evolve, they no doubt have their finger on the panic button. They have already cut interest rates and flouted caution in increasing local government debt. New measures to stimulate growth may require an even greater degree of action.

Ultimately, if the US Federal Reserve raises interest rates in March as markets expect, against President Xi’s advice, China could face tough economic dilemmas in 2022.

Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator

Read related topics:China

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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

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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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China’s economy is estimated to be off to a good start (Best Economic Planner) https://bizchina-update.com/chinas-economy-is-estimated-to-be-off-to-a-good-start-best-economic-planner/ Tue, 18 Jan 2022 08:00:00 +0000 https://bizchina-update.com/chinas-economy-is-estimated-to-be-off-to-a-good-start-best-economic-planner/ A worker checks a chip product at a factory in Sihong Economic Development Zone in Sihong County, east China’s Jiangsu Province on Monday. At present, Sihong County has formed electronic information, new materials, mechanical and electrical equipment and other leading industry development poles. Photo: CGV China’s top economic planner, the National Development and Reform Commission […]]]>

A worker checks a chip product at a factory in Sihong Economic Development Zone in Sihong County, east China’s Jiangsu Province on Monday. At present, Sihong County has formed electronic information, new materials, mechanical and electrical equipment and other leading industry development poles. Photo: CGV

China’s top economic planner, the National Development and Reform Commission (NDRC), is confident of achieving a smooth start to this year’s economy in the first quarter of 2022 while envisioning stable, healthy growth. and sustainable, an official said Tuesday.

Yuan Da, spokesperson for the NDRC, said China’s economic development in 2022 still faces serious challenges, although the country has made remarkable achievements in 2021, pointing out that the complicated international environment and the Unbalanced and insufficient domestic economic development were among the challenges.

The response came as reporters asked for the NDRC’s opinion on the economic challenges facing the country during a press conference held on Tuesday. The Central Economic Labor Conference in December listed the challenges as “declining demand, supply shocks and weakened expectations.”

Yuan said sporadic COVID-19 outbreaks in China will continue to affect domestic consumption, in addition to uncertainties regarding the investment and foreign trade situation in the coming months.

Micro, small and medium-sized enterprises have encountered more difficulties in their normal operations, which has negatively impacted market expectations and business confidence, Yuan added.

China achieved strong performance in economic growth and coronavirus containment last year. The country’s national strength is now consolidating, with a GDP exceeding 114 trillion yuan ($17.98 trillion) in 2021, reflecting the growing resilience of the country’s industrial supply chains, Yuan said.

China recorded GDP growth of 8.1 percent in 2021 on Monday, defying market expectations and further cementing the leading position of the world’s second-largest economy in the global economy’s recovery from the COVID-19 pandemic.

Yuan noted that supply shortages have been largely resolved, with the price of coal falling and power supply stabilizing, with more than 20 days of coal reserves available. In 2021, semiconductor production increased by 33.3% compared to a year ago.

And, the country has upgraded and promoted digitalization of a number of key industries while deepening reform in key areas and accelerating opening up, Yuan said, adding that the economy would be boosted by higher levels. equality based on supportive government policies.

world times

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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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Growth rate of the Chinese economy: how the surge in GDP will not stop the Chinese crisis | World | News https://bizchina-update.com/growth-rate-of-the-chinese-economy-how-the-surge-in-gdp-will-not-stop-the-chinese-crisis-world-news/ Mon, 17 Jan 2022 08:00:00 +0000 https://bizchina-update.com/growth-rate-of-the-chinese-economy-how-the-surge-in-gdp-will-not-stop-the-chinese-crisis-world-news/ Despite rising 8.1% during 2021, Chinese government is “under the triple pressure of demand contractions, supply shock and weakening expectations,” says National Bank chief from China. According to data from the National Bureau of Statistics, GDP grew by 4% year on year, or 2.5% less in the same period of 2020. However, quarter-on-quarter growth improved […]]]>

Despite rising 8.1% during 2021, Chinese government is “under the triple pressure of demand contractions, supply shock and weakening expectations,” says National Bank chief from China. According to data from the National Bureau of Statistics, GDP grew by 4% year on year, or 2.5% less in the same period of 2020.

However, quarter-on-quarter growth improved to 1.6% from a revised July-September rate of 0.7%.

The People’s Bank of China slashed a major lending rate for the first time since April 2020, to cushion a housing downturn and the effect of recurring restrictions as coronavirus cases breach the country’s zero Covid policy.

The country’s strict measures to eliminate all cases of coronavirus, with major cities having implemented closures in recent weeks, have highlighted the continuing weaknesses in consumption.

READ MORE: North Korea launches unidentified projectile fueling war fears

The ongoing decline has accelerated a looming demographic crisis that economists say could reshape the country’s economic vitality.

For years, China maintained its notorious “one child” policy for families, but it was scrapped in 2016 and replaced with a maximum of two children per parent.

In 2021, the country’s birth rate was 10.6 million – down from 12 million in 2020 – and is the lowest number since the founding of the People’s Republic of China in 1949.

The number of people aged 60 or younger also fell for the first time, while overall population growth was just 480,000.

The decline and rise in life expectancy that has accompanied China’s economic transformation over the past four decades means that there will soon be a decline in the number of people of working age relative to the growing number of people too old to work.

According to data released on Monday, China’s population grew again last year – but not by much – reaching 1.412 billion.

However, for the first time since the Great Leap Forward era 60 years ago, the number of those who died was remarkably close to the number born, at 10.1 million.

The result could be labor shortages, which could seriously harm one of China’s biggest goals – economic growth.

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