estate sector – 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 estate sector – Bizchina Update http://bizchina-update.com/ 32 32 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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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

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

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Collapse of the Chinese Economy: Why China Could Face Major Problems in 2022 | World | News https://bizchina-update.com/collapse-of-the-chinese-economy-why-china-could-face-major-problems-in-2022-world-news/ Tue, 18 Jan 2022 08:00:00 +0000 https://bizchina-update.com/collapse-of-the-chinese-economy-why-china-could-face-major-problems-in-2022-world-news/ The bureau released the results of its review on January 17, noting a 4% increase in GDP in 2021. But the continued pandemic dampened its potential, as the rate had risen at its slowest pace in 18 months. The People’s Bank of China cut an instrumental lending rate as the economy failed to match the […]]]>

The bureau released the results of its review on January 17, noting a 4% increase in GDP in 2021. But the continued pandemic dampened its potential, as the rate had risen at its slowest pace in 18 months. The People’s Bank of China cut an instrumental lending rate as the economy failed to match the 6.5% growth at the same time in 2020, and several factors could hold it back again in 2022.

Zero Covid Policy

The Chinese government has zero tolerance for domestic Covid cases and has dramatic measures designed to torpedo transmission.

Continued lockdowns are not uncommon, with some cities forced to endure weeks of mandatory quarantine and testing.

The restrictions have proved game-changing for many of the country’s most successful businesses, as the measures strangle supply chains and the workability of workers.

In early 2022, China faces an influx of people during Lunar New Year and the Winter Olympics, forcing officials to crush at-risk regions.

READ MORE: China’s economic takeover of Europe laid bare by damning data

The Winter Olympics

The Winter Olympics, scheduled for February 4 this year, has led Chinese authorities to crack down on areas near the host city of Beijing.

The roughly 14 million residents of Tianjin, 100 km from the city, are currently living under compulsory testing.

Tighter measures ahead of the games could end up straining the economy even more, as the competition itself could lead to diminishing returns.

While hosting the Olympics would traditionally provide a valuable financial boost to a nation, several participants are considering a boycott.

Activists are calling on competitors to stand down in protest at China’s human rights record, including the oppression of pro-democracy protesters in Hong Kong and abuses against Uyghur Muslims.

No country has yet committed to a full boycott, but the US, UK, Australia and Canada have withdrawn their diplomatic presence, saying their officials will not attend ceremonies or events.

DO NOT MISS

The real estate sector

China’s vast economy is partly supported by a strong real estate sector that accounts for around 30% of its total output.

As with the rest of the world, the pandemic has also reduced this, with the factors responsible still in effect at the start of 2022.

The Chinese have accumulated more debt, which has led to lower consumption, a slowdown in real estate and slower growth.

A political adviser told the Financial Times they were “all connected”, leading to anxious conversations behind closed doors.

Local ministers have expressed – both publicly and privately – that they will struggle to make ends meet if the problems persist.

Demography

In recent years, China has had to deal with the fallout from its decades-long one-child policy.

Although the government purged its remaining one-child limits in 2015, birth rates have not recovered.

From 2011 to 2020, census data showed stagnant population growth, with the lowest rates in decades.

In 2021, it fell to 12 million, the lowest since the country grappled with the fallout from the Great Chinese Famine of 1959 to 1961.

In response, authorities relaxed the rules again last year, introducing a three-child limit in July.

Stagnant demographics have a ripple effect on the economy as they leave businesses with a shrinking pool of workers.

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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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China’s economy grew 8% in 2021, but property and virus threats loom: poll https://bizchina-update.com/chinas-economy-grew-8-in-2021-but-property-and-virus-threats-loom-poll/ Sat, 15 Jan 2022 08:00:00 +0000 https://bizchina-update.com/chinas-economy-grew-8-in-2021-but-property-and-virus-threats-loom-poll/ This file photo taken on December 16, 2021 shows a man waiting to cross a road in Beijing’s central business district. China’s economy grew at its fastest pace for 10 years in 2021, according to an AFP analyst poll, but its strong recovery from the Covid-19 pandemic is threatened by Omicron and a slowdown in […]]]>

This file photo taken on December 16, 2021 shows a man waiting to cross a road in Beijing’s central business district. China’s economy grew at its fastest pace for 10 years in 2021, according to an AFP analyst poll, but its strong recovery from the Covid-19 pandemic is threatened by Omicron and a slowdown in the economy. real estate sector. -AFP photo

China’s economy grew at its fastest pace for 10 years in 2021, according to an AFP analyst poll, but its strong recovery from the Covid-19 pandemic is threatened by Omicron and a slowdown in the economy. real estate sector.

The 8% growth would be well above the government’s target of more than 6%, and comes after a strong start to the year as a ‘zero-Covid’ policy has enabled the country to lead the global economic recovery.

China’s exports jumped nearly 30% last year on strong global demand as countries reopened from pandemic lockdowns, boosting its faltering economy.

But the country’s recovery in the second half of 2021 has been hampered by a series of epidemics – with authorities reimposing strict containment measures – as well as power outages caused by an emissions reduction campaign, supply chain problems and soaring energy costs.

While forecasts point to good annual growth – compared to 2.3% in 2020 – these problems have slowed down factory activity and led to the closure of businesses.

They have been compounded by a debt crackdown in the real estate sector, which accounts for a large part of the economy.

“The key factors (…) were the impact of power cuts, the slowdown in the residential construction sector and the moderation in retail sales,” said Rajiv Biswas, chief economist for the Asia region. Pacific at IHS Markit.

Analysts reported growth of just 3.5% year-on-year for the fourth quarter, compared to 4.9% the previous three months and 7.9% from April to June.

And headwinds from the slowdown in the construction sector, as well as the impact of Covid measures on consumer spending, will likely act as a “significant drag” on growth this year, Biswas added.

Beijing is on high alert as it prepares to host the Winter Olympics next month, with its zero Covid policy fueling lockdowns, border restrictions and lengthy quarantines.

“The current resurgence of the coronavirus poses significant downside risks to China’s economic recovery…under the government’s zero-tolerance approach,” said ANZ Research’s chief economist for the Great Britain. China, Raymond Yeung.

Yeung noted that Ningbo Port, the world’s third-busiest, was facing disruptions as cases led to truck entry restrictions, suspension of container cargo operations and roadblocks.

“These delays and backlogs could exacerbate shipping cost inflation and put pressure on export volumes,” he told AFP.

Another major port city – Tianjin – was hit by an Omicron cluster in January, the first time the virus strain was found in the community in China.

Analysts expect China will not ease its policy before the end of the Games.

Stay-at-home orders in the industrial heartland of Xi’an likely also disrupted manufacturing activities, Citibank said, as the city of 13 million was placed under a severe lockdown in December.

Uncertainties surrounding the real estate sector have also accelerated the cooling of fixed asset investment, DBS Bank economists said, adding that “tension will persist in the face of rising financial strains.”

Already, two-thirds of the top 30 real estate companies by sales have crossed one of “three red lines” set by regulators, DBS analysts Nathan Chow and Eugene Leow said in a recent report, referring to different debt ratios aimed at reducing leverage.

The crackdown that began in late 2020 dealt a heavy blow as developers – primarily Evergrande – plunged into liquidity crunches, raising concerns among investors and homebuyers.

“Reports of increased developer liquidity issues and construction or delivery delays will only further undermine confidence,” DBS analysts said.

This year, authorities hit some of the country’s largest companies with new restrictions and regulations, targeting concerns such as national security and allegations of monopolistic behavior.

But Macquarie economists expect authorities to return to “supporting growth” this year, with some signs that shifting priorities will reduce pressure on the property sector.

“It doesn’t mean regulation has ended, but it does mean the peak of regulation, the peak of property crunch and the peak of decarbonization are behind us,” said economists Larry Hu and Xinyu Ji.

Gene Ma, head of China research at the Institute of International Finance, said: “We expect further monetary easing and greater fiscal expansion this year.”

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Chinese economy: Funding ‘drying up’ after Evergrande crisis – real estate sector shaken | City & Business | Finance https://bizchina-update.com/chinese-economy-funding-drying-up-after-evergrande-crisis-real-estate-sector-shaken-city-business-finance/ Thu, 06 Jan 2022 08:00:00 +0000 https://bizchina-update.com/chinese-economy-funding-drying-up-after-evergrande-crisis-real-estate-sector-shaken-city-business-finance/ December saw two major defaults among indebted Chinese developers, with Evergrande and Kaisa missing bond repayments totaling almost $500m (£369.47m). The dire situation in the property sector is now straining regional government finances, with the Financial Times reporting that local officials are increasingly looking for new ways to generate revenue, including forcing local businesses to […]]]>

December saw two major defaults among indebted Chinese developers, with Evergrande and Kaisa missing bond repayments totaling almost $500m (£369.47m). The dire situation in the property sector is now straining regional government finances, with the Financial Times reporting that local officials are increasingly looking for new ways to generate revenue, including forcing local businesses to purchase equipment from designated vendors by the government. In Shaoyang City, Hunan Province, local officials auctioned Evergrande projects in a bid to raise funds. An official told the FT: ‘Neither the government nor Evergrande have any money…Someone else has to fill the void.’

Craig Botham, China+ chief economist at Pantheon Macroeconomics, said the reports from the ground were “what you would expect”.

Speaking to Express.co.uk, he explained that local governments had seen a key source of revenue “dry up” leaving few alternatives.

“Revenue from land sales is about 40% of local government revenue, so it is very dependent on keeping land prices high.

“When real estate companies fail, they don’t have the money to bid in those auctions, so a lot of those auctions have failed.”

Although China’s central government has most of the taxing power, local governments have most of the spending obligations.

Real estate currently accounts for a disproportionate share of China’s GDP at around 30%, making the country highly industrial-minded.

While Evergrande has dominated the headlines, many other companies are under pressure.

In a late Wednesday filing to the Hong Kong stock exchange, R&F Properties said it would struggle to service debt as volatility in the property sector means “proceeds from certain asset sales the group is considering may not not materialize”.

With many real estate companies trying to increase sales to increase revenue, prices have in turn fallen.

Mr Botham explained that companies typically use both debt and presales – homes sold before construction is complete – to fund themselves.

However, with growing government restrictions on corporate debt levels, pre-sales have become increasingly important, with Evergrande offering discounts of up to 20% to boost sales.

However, this caused other developers to lower their prices to stay competitive.

A key part of China’s housing problems stems from the actions of the government itself which introduced a debt crackdown in 2020 known as the “three red lines”.

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The measures imposed strict limits on companies’ debt ratios in a bid to wean them off dependency.

But that has proven tricky for the real estate sector which has relied heavily on debt financing.

China has made various interventions in the real estate sector in the past, sometimes reducing its activities when needed.

Mr Botham said Beijing seemed “more committed” to regulation than ever before, suggesting there was “more political capital being invested”.

He thinks the Chinese government might fear a future market correction if it doesn’t act now – and would likely prefer a “controlled demolition” on its terms.

A 2022 outlook report from global ratings agency S&P also predicted that reforms are likely to continue with more defaults expected in the real estate sector.

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The most read topics on the Chinese economy in 2021 https://bizchina-update.com/the-most-read-topics-on-the-chinese-economy-in-2021/ Fri, 31 Dec 2021 08:00:00 +0000 https://bizchina-update.com/the-most-read-topics-on-the-chinese-economy-in-2021/ Skyline of Shenzhen, China. /APC Skyline of Shenzhen, China. /APC The year 2021 for the Chinese economy has been marked by growing uncertainties caused by scattered outbreaks of Covid-19 and decisive regulatory reform in key areas. As the pandemic continues to weigh on the economy, consumer spending is showing signs of slowing. With competition in […]]]>

Skyline of Shenzhen, China. /APC

Skyline of Shenzhen, China. /APC

The year 2021 for the Chinese economy has been marked by growing uncertainties caused by scattered outbreaks of Covid-19 and decisive regulatory reform in key areas.

As the pandemic continues to weigh on the economy, consumer spending is showing signs of slowing. With competition in the technology sector and new fabricated accusations against Xinjiang, tensions between China and the United States are rising. In the face of all domestic and international challenges, China has implemented a series of regulatory changes in key industries to resolve risks and ensure healthy development.

Here are the most watched and read topics on China’s economy and enterprises during the year on the CGTN website.

Consumption

As the pandemic spreads with epidemics, retail sales of social consumer goods in China in 2021 still recorded monthly growth, but were often below analysts’ expectations.

Chain stores that have expanded rapidly in recent years are now under pressure, such as popular Chinese hotpot chain Haidilao, which plans to close around 300 underperforming restaurants by the end of this year. The chain had more than 1,500 restaurants on the mainland as of mid-2021, according to its website.

Compared to physical stores, online business continued to experience strong growth this year, driven by e-commerce live streaming and emerging national brands.

During this year’s Double Eleven shopping festival (November 1-11), the two major online shopping platforms, Alibaba’s Tmall and JD.com, recorded growth of 8.45% and 29% respectively in year-on-year.

Read more:

Chinese hot pot chain Haidilao to close 300 restaurants by end of 2021 after massive expansion

Made in Xinjiang

In recent years, anti-China forces have been keen to play the Xinjiang card – alleging that Xinjiang products are made by “forced labor”.

Better Cotton Initiative (BCI), a London-based NGO, caught on to the trend and announced it had ceased all operations in northwest China’s Xinjiang Uyghur Autonomous Region over the same charge.

Some fashion companies, such as H&M and NIKE, claimed that they “do not work with any garment factories located in Xinjiang”, although without proof of the accusations, quickly received a boycott from Chinese consumers.

The BCI, however, quietly removed its Xinjiang statement from its website without giving a future explanation, while its Shanghai office said it found no cases of “forced labor” in Xinjiang in a press release published at the end of March.

Read more:

BCI removes Xinjiang cotton statement from its website

Tech War

After nearly three years of detention in Canada, Huawei Technologies chief financial officer Meng Wanzhou returned to China in September. It was widely seen as China’s victory in years of battle with long-arm US jurisdiction amid a escalating tech war between the world’s two largest economies.

Meng was arrested in December 2018 at Vancouver International Airport on a US warrant charging her with bank fraud for allegedly misleading HSBC Holdings about Huawei’s business dealings in Iran, but Meng and Huawei have denied the charges.

Chinese Foreign Ministry spokeswoman Hua Chunying said the charges against Meng were purely fabricated and that her detention was “arbitrary”.

She was deemed free to leave Canada without extradition proceedings in Canada or prosecution in the United States after reaching a deferred prosecution agreement with the United States Department of Justice.

Read more:

Meng Wanzhou returns to China after 3 years of detention in Canada

Where is Huawei going after the chip shortage?

The growing competition began under the Trump administration and continued under current US President Joe Biden.

Beginning as a trade dispute, the conflict quickly escalated into a battle over core technologies, including semiconductors, 5G and AI.

In December, more Chinese companies were added to the U.S. Commerce Department’s entity list and an investment blacklist by the Treasury Department.

Read more:

China condemns US unjustified suppression of Chinese companies

Carbon reduction

This year, China officially launched its long-awaited domestic carbon trading market in July.

China’s Emissions Trading System (ETS), which has replaced the EU’s as the world’s largest emissions trading system, is expected to help China deliver on its reduction in carbon emissions – reaching peak carbon emissions by 2030 and carbon neutrality by 2060.

China will firmly control energy-intensive and emission-intensive projects, aiming to improve its “double-checking system” on energy consumption and energy intensity, or the amount of energy consumed per unit of GDP.

Read more:

CGTN Explains: Understanding China’s Domestic Carbon Emissions Trading Market

Regulatory Storms

To avoid speculation and systematic risk, China established a new regulatory guideline in 2020 to control the leverage of real estate developers and asked banks to cap outstanding real estate and mortgage loans this year.

Some real estate developers who were exposed to high leverage and indiscriminate expansion, struggled with liquidity pressures and even defaulted, such as China Evergrande.

But market regulators, including the central bank, reiterated that individual cases will not impact regular market funding and local governments have worked with developers to address risks and maintain stable development of the market. Chinese real estate sector.

Read more:

PBOC: Evergrande’s debt issuance will have no impact on long-term funding

Another major regulation has landed on the after-school tutoring (AST) industry, which has boosted Chinese parents’ anxiety with soaring investment.

China announced in July that it would ban curriculum-based AST companies from raising capital through public listings, and listed companies will not be allowed to invest in curriculum-based ASTs. through equity investments or to acquire AST assets (through the issuance of shares or cash).

The new rules also prohibited the granting of new AST licenses, and existing AST operators were only allowed to register their schools as nonprofits.

The new regulations (which leave the sector once seen as a “cash cow” in the education sector abandoned by investors) aim to further improve the quality of education and school teaching.

Read more:

China bans tutoring institutions in basic school subjects from IPO and foreign M&A

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What an Unusual 2021 Says About the Future of China’s Economy https://bizchina-update.com/what-an-unusual-2021-says-about-the-future-of-chinas-economy/ Fri, 31 Dec 2021 08:00:00 +0000 https://bizchina-update.com/what-an-unusual-2021-says-about-the-future-of-chinas-economy/ In a year marked by unexpected disruptions and growing uncertainties, China is expected to deliver stable growth thanks to its swift policy response. The world’s second-largest economy grew 9.8% year-on-year in the first three quarters, a hard-won result amid various challenges including pandemic resurgences and mounting debt pressures, reflecting the effectiveness of policies aimed at […]]]>

In a year marked by unexpected disruptions and growing uncertainties, China is expected to deliver stable growth thanks to its swift policy response.

The world’s second-largest economy grew 9.8% year-on-year in the first three quarters, a hard-won result amid various challenges including pandemic resurgences and mounting debt pressures, reflecting the effectiveness of policies aimed at supporting growth while defusing risks.

For the year as a whole, the World Bank forecast that China’s economy would grow by 8%, above the government’s target of “more than 6%”.

A review of the government’s fine-tuned policymaking in 2021 provides insight into how China has addressed common challenges facing the global economy and what that means for the year 2022 and beyond.

ACCURATE PANDEMIC CONTROL

Two years into the pandemic, global policymakers are still trying to figure out the best way to balance growth with controlling the pandemic.

China has adopted strict pandemic control policies in 2021, eliminating new epidemics as soon as possible through early detection, rapid response, targeted containment and effective treatment of COVID-19 patients.

Such policies have proven effective not only in ensuring public health, but also economically, as the gains from normalized production and consumption outweigh the costs of fighting the pandemic, analysts said.

“Overall, the policies have brought significant benefits. Thanks to these policies, the growth rate of the Chinese economy has outpaced the majority of other economies over the past year,” said Lu Ting, chief economist for China at Nomura securities firm.

Next year, striking a balance between precise pandemic control and economic growth will be increasingly critical, Lu said.

Although COVID-19 has caused consumption disruptions, the impact will be mitigated by the “learning effect”, reflected in the strengthening of government capacity to precisely contain COVID-19 and improve the willingness of people to consume offline, said the China International Capital Corporation (CICC). in a report.

“For 2022, we should not be too pessimistic about the possible impact of COVID-19. We expect household consumption to pick up slightly on the back of growth-friendly policies,” the CICC said.

TARGETED CREDIT SUPPORT

Another challenge facing global policymakers in 2021 is how to provide much-needed credit support to the COVID-battered economy without adding excessive debt.

Instead of printing money and pumping money into the entire financial system, China adopted a prudent monetary policy in 2021, channeling funds through targeted monetary tools to specific sectors such as the manufacturing industry as well as the most vulnerable small and medium-sized enterprises.

The country’s central bank has cut the reserve requirement ratio (RRR) of financial institutions twice this year to provide liquidity to the real economy.

Additionally, the country has been more proactive in taking fiscal measures to support growth, reducing taxes and fees for businesses while transferring central funds to support regions affected by natural disasters.

On the other hand, the country has remained cautious in channeling funds to the housing sector, continuing its debt reduction campaign that has been going on for years on the principle that “housing is for living in, not for living in.” speculation”.

In its latest effort to support the real economy, the country cut the benchmark one-year market-based benchmark rate by 5 basis points in December, but left the benchmark five-year plus rate unchanged, on which many lenders base their mortgage rates on.

Recent reductions in the reserve requirement ratio and lending rate signal more accommodative monetary policy, although efforts to reduce financial sector risk should continue, the World Bank said in a report.

In 2022, China will continue to implement proactive fiscal policies and prudent monetary policies, decided the Central Conference on Economic Work, adding that the country will stimulate the virtuous cycle and healthy development of the real estate sector with specific policies to the city.

ORDERLY GREEN TRANSITION

Despite growing pressure on growth, China has steadily pushed its cutting-edge and carbon neutral agenda with institutional innovations in 2021.

As a market-based mechanism to incentivize companies to reduce their carbon emissions, a national carbon market began trading in July, which saw the active trading of carbon emissions allowances.

While encouraging the use of green energy, policy makers paid particular attention to the potential disruption of energy supply and economic activity, reiterating that local governments should avoid carbon reduction “style countryside “.

“Achieving peak carbon and carbon neutrality is an inherent requirement for promoting high-quality development, which requires constant effort. It is impossible to achieve the goal all at once,” the Central Economic Labor Conference said.

To ensure a smooth transition to low-carbon development, China has stepped up investment in green technologies and created opportunities for domestic and foreign enterprises.

Within the framework of carbon targets, investments in the green manufacturing sector will see notable growth over the next year, particularly sectors such as pollution control, the digital economy as well as new energies and materials, the Bank of Communications said in a report.

Investments in these areas will boost near-term demand and help China transition to new engines of long-term growth, according to the report.
Source: Xinhua

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