Goldman Sachs Group Inc cut its growth forecast for China this year to 10.1 percent from 11.4 percent as government restrictions on lending and real estate slow expansion in the world’s third-largest economy.
Asian stocks fell after the report fanned concern the global recovery is losing steam. The US investment bank joins BNP Paribas, Macquarie Securities Ltd and China International Capital Corp (CICC, 中國國際金融) in reducing estimates for expansion in the fastest-growing major economy.
Meanwhile, the government raised its growth estimate for last year by 0.4 percentage point to 9.1 percent.
A third of China economists may reduce their “overly bullish” forecasts for this year and next year in coming weeks mainly due to the government’s property tightening measures, Bank of America-Merrill Lynch economist Lu Ting (陸挺) said in a note to clients on Wednesday.
The slowdown will help avert overheating and ensure the economy cools toward a “healthy soft landing,” Deutsche Bank economist Ma Jun (馬駿) said yesterday.
AGGRESSIVE TIGHTENING
“China’s growth has been slowing down sharply and the tightening measures we saw in April on property have been quite aggressive,” Isaac Meng (孟原), a Beijing-based economist at BNP Paribas, said in a phone interview yesterday.
The government won’t “launch easing measures in the short term as the major concerns, especially about the property bubble, haven’t been fully addressed,” he said.
BNP this week reduced its growth forecast for this year for China to 9.8 percent from 10.5 percent.
Macquarie cut its estimate to 9.5 percent to 10 percent from a previous 10 percent to 10.5 percent last month and CICC said in May that growth would likely ease to 9.5 percent from a previous estimate of 10.5 percent.
Manufacturing in China, the world’s biggest maker of computers and mobile phones, expanded at the slowest pace in 16 months, a survey of purchasing managers showed yesterday.
Stocks declined as the report added to concerns that a cooling China combined with austerity measures in Europe and slower growth in the US may undermine the global recovery.
Still, economists say the moderation in China’s growth is a sign that the government is moving the country to a more sustainable pace of expansion after a 4 trillion yuan (US$591 billion) stimulus package drove an 11.9 percent rebound in the first quarter.
“The June PMI data confirms that the manufacturing sector still remains in a solid expansion stage,” Sun Mingchun (孫明春), a Hong Kong-based economist at Nomura International, said in a note yesterday.
“If the decline does not continue for too long, it should prove a healthy correction that reduces the risk of the economy overheating,” Sun said.
“The momentum of growth has moderated as expected, but we do not see a sharp slowdown in China,” Liu Ligang (劉利剛), economist at Australia & New Zealand Banking Group Ltd, said in Hong Kong. “With this moderation, this will be a good thing for policymakers that they don’t have to tighten excessively.”
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by