largest economy – Bizchina Update http://bizchina-update.com/ Sun, 27 Mar 2022 00:44:09 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://bizchina-update.com/wp-content/uploads/2021/10/icon-120x120.jpg largest economy – Bizchina Update http://bizchina-update.com/ 32 32 The Chinese economy accelerates in January-February; Omicron cases cloud outlook https://bizchina-update.com/the-chinese-economy-accelerates-in-january-february-omicron-cases-cloud-outlook/ Tue, 15 Mar 2022 06:17:00 +0000 https://bizchina-update.com/the-chinese-economy-accelerates-in-january-february-omicron-cases-cloud-outlook/ Industrial production Jan.-Feb. +7.5% y/y vs f’cast +3.9% Retail sales +6.7% y/y vs f’cast +3.0% Investment in fixed assets +12.2% y/y, vs f’cast +5.0% Strength may not last as COVID cases jump – analysts BEIJING, March 15 (Reuters) – China’s economy rebounded in the first two months of 2022, with key indicators all beating analysts’ […]]]>
  • Industrial production Jan.-Feb. +7.5% y/y vs f’cast +3.9%
  • Retail sales +6.7% y/y vs f’cast +3.0%
  • Investment in fixed assets +12.2% y/y, vs f’cast +5.0%
  • Strength may not last as COVID cases jump – analysts

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

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

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

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It posted a 1.7% gain in December.

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

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

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

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

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

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

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

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

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

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

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

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

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

RESUMPTION OF INVESTMENTS IN INFRASTRUCTURES

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

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

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

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

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

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

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

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

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

Our standards: The Thomson Reuters Trust Principles.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: World TRT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Photo:

Finn / Costfoto/Zuma Press

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

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

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

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

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

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

The 1000 Trees shopping center in Shanghai.


Photo:

alex plavevski / Shutterstock

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

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

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

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

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

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

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


Photo:

Andrea Verdelli/Bloomberg News

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

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

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

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

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

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

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

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

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

a Chinese investment bank.

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

-Grace Zhu contributed to this article.

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

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

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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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Iron ore price falls as Chinese economy slows https://bizchina-update.com/iron-ore-price-falls-as-chinese-economy-slows/ Mon, 17 Jan 2022 15:56:04 +0000 https://bizchina-update.com/iron-ore-price-falls-as-chinese-economy-slows/ According to Fastmarkets MB, benchmark 62% Fe fines imported into North China were changing hands for $125.65 a tonne during morning trading, down 2% from Friday’s close. May’s most traded iron ore contract on China’s Dalian Commodity Exchange ended the day down 2.4% at 705 yuan ($111.12) a tonne, near a session low of 700 […]]]>

According to Fastmarkets MB, benchmark 62% Fe fines imported into North China were changing hands for $125.65 a tonne during morning trading, down 2% from Friday’s close.

May’s most traded iron ore contract on China’s Dalian Commodity Exchange ended the day down 2.4% at 705 yuan ($111.12) a tonne, near a session low of 700 yuan, its lowest since Jan. 10.

China’s central bank cut borrowing costs on its medium-term loans for the first time since April 2020, suggesting an intensification of the economic slowdown, even as the world’s second-largest economy recorded faster-than-expected annual growth of 4 % during the last quarter of 2021.

“The lagged economic data and the PBOC rate cut were already priced in, in our view,” said Atilla Widnell, managing director of Navigate Commodities in Singapore.

“Consumption remains the weakest link in China’s growth story right now and that will continue overall for much of this year,” said Louis Kuijs, head of Asian economics. at Oxford Economics. “We think Beijing has a net profit of around 5%. As is the case now, if growth is weaker than this, they will feel a strong incentive to pursue further policy easing.

The better-than-expected economic expansion, however, was China’s slowest pace of growth in a year and a half, and some analysts said the weakness is likely to persist in part due to ongoing covid-related restrictions. 19.

Iron ore was expected to correct following recent rallies, Widnell said, adding that improving weather conditions at the main Brazilian supplier and increased shipments from Australia could release some air. “overinflated” prices.

(With files from Reuters and Bloomberg)

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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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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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Chinese economy: LPR reduced for the first time in 20 months https://bizchina-update.com/chinese-economy-lpr-reduced-for-the-first-time-in-20-months/ Mon, 20 Dec 2021 08:00:00 +0000 https://bizchina-update.com/chinese-economy-lpr-reduced-for-the-first-time-in-20-months/ The People’s Bank of China on Monday cut its one-year lending prime rate (LPR) by 5 basis points to 3.8%. the The LPR is the rate at which commercial banks lend to their best customers and it serves as a reference rate for other loans. While Monday’s rate cut is small, it’s the first such […]]]>
The People’s Bank of China on Monday cut its one-year lending prime rate (LPR) by 5 basis points to 3.8%. the The LPR is the rate at which commercial banks lend to their best customers and it serves as a reference rate for other loans.
While Monday’s rate cut is small, it’s the first such move since April 2020, when China cut the rate to boost its Covid-hit economy, which had correct contracted for the first time in more than 40 years.

“The cut reinforces our view that authorities are increasingly open to cutting interest rates amid looming economic headwinds,” Zhaopeng Xing, senior China strategist at ANZ, said Monday. in a research note.

A lower lending rate can help reduce borrowing costs for households and businesses and thereby encourage consumers to expenses and investments.

Unlike the West, Beijing has refrained from flooding the economy with stimulus packages during the pandemic, instead focusing on offering targeted support to small businesses.

China was the only major economy to register growth in 2020, but this year the country’s expansion has been hit by several factors, forcing it to consider ways to provide support even as other major banks central governments are withdrawing stimulus and raising interest rates to fight inflation.

A power shortage has hampered industrial production for much of this year as the country struggles to balance its electricity needs with efforts to tackle the climate crisis.
Government data last week showed house prices fell for a third consecutive month in November, a sign that the ongoing housing crisis continues to deepen.
Retail sales have also struggled, suggesting the coronavirus outbreaks and the government’s “zero-Covid” approach of locking down areas where infections flare up are weighing heavily on the economy.
China’s top leaders have already expressed concerns about growth prospects. At a key economic meeting earlier this month, they said “securing stability” would be a top priority for the year ahead. It’s a huge pivot from last year’s meeting, when “limiting the disorderly expansion of capital” dominated the day.

To counter rising economic risks, policymakers pledged at this year’s meeting to implement “front load” policies, including keeping monetary policy “flexible”.

Last week, the central bank lowered the reserve requirement ratio for most banks by half a percentage point. The move, which reduces the amount of money banks must keep in reserve, is expected to free up some 1.2 trillion yuan ($188 billion) for lending to businesses and households, according to the PBOC.

China injects 188 billion dollars into the economy to counter the real estate crisis

Monday’s LPR cut is expected to reduce “interest burden” by about 80 billion yuan ($12.6 billion) a year, starting next year, for businesses and households, it said. Xing from ANZ.

“The PBOC wants to provide more easing because it is more concerned with economic dynamics,” Societe Generale analysts said in a research note on Monday.

“There should be no doubt now that a serious (although still limited) easing cycle is unfolding.”

Economists say the world’s second-largest economy could grow next year at its slowest pace since 1990.

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PBOC May Need To Boost Chinese Economy As ‘Stagflation’ Risk Rises https://bizchina-update.com/pboc-may-need-to-boost-chinese-economy-as-stagflation-risk-rises/ Mon, 22 Nov 2021 08:00:00 +0000 https://bizchina-update.com/pboc-may-need-to-boost-chinese-economy-as-stagflation-risk-rises/ [ad_1] Liu Shijin, a member of the People’s Bank of China monetary policy committee, said in an online forum on Sunday that the world’s second-largest economy may face “near stagflation” for the remainder of this year and through. in 2022, if demand continues to struggle and the cost of goods leaving Chinese factories remains high. […]]]>


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Liu Shijin, a member of the People’s Bank of China monetary policy committee, said in an online forum on Sunday that the world’s second-largest economy may face “near stagflation” for the remainder of this year and through. in 2022, if demand continues to struggle and the cost of goods leaving Chinese factories remains high.

“We need to pay attention to it, because if it happens, it will affect not only the fourth quarter, but also next year,” Liu said.

Stagflation – when inflation is high but economic growth slows – can be problematic because policies aimed at curbing inflation, such as higher interest rates, are likely to dampen growth even more. Policies aimed at stimulating growth risk pushing prices further upwards.

Even with his warning, Liu still expects the economy to meet China’s growth target of over 6% for the year.

Risks to the Chinese economy have accumulated in recent months. Along with soaring producer price inflation in factories around the world, the country is also grappling with a severe energy crisis and a big slowdown in real estate.

Chinese Premier Li Keqiang recently acknowledged these concerns, telling a seminar in Beijing last week that the economy was facing “further downward pressure.” He called the recent Covid-19 outbreaks, severe flooding, rising commodity prices and energy shortages as major concerns.

Li also said policymakers should focus on helping “market players,” including manufacturing companies and small businesses, by offering tax cuts or reductions in administrative costs.

“Fear of slower growth is clearly increasing among technocrats in different government agencies,” wrote Larry Hu, head of the Chinese economy at Macquarie Group, in a report on Sunday.

China's

Analysts also suspect that Chinese policymakers may consider cutting interest rates or taking other steps to ease monetary policy. A quarterly report released by the central bank on Friday omitted phrases that previously appeared to signal stricter policies.

Deleting those phrases suggests a change on the horizon, according to analysts at Goldman Sachs, Nomura and Citi.

“In our view, these cuts represent an official change in PBoC policy and set the stage for more decisive monetary and credit easing,” Nomura analysts wrote in a Sunday report.

These changes are not happening yet. On Monday, the central bank kept the Loan Prime Rate – a benchmark rate banks charge corporate clients for new loans – unchanged for November, the 19th month in a row.

But Capital Economics analysts believe it won’t be long before the central bank starts cutting key rates.

“As economic tensions continue to grow, there will be more pressure to ease funding tensions from indebted borrowers,” Julian Evans-Pritchard, senior Chinese economist for the company, wrote in a report Monday. He added that Capital Economists believe the central bank will start cutting rates before the end of 2021, “followed by further cuts in 2022.”

Others expect the central bank to explore other options. Rather than changing interest rates, Goldman Sachs analysts said they expected more targeted support for green development and small and medium-sized businesses.

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