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.”
Quanta Computer Inc (廣達) chairman Barry Lam (林百里) is expected to share his views about the artificial intelligence (AI) industry’s prospects during his speech at the company’s 37th anniversary ceremony, as AI servers have become a new growth engine for the equipment manufacturing service provider. Lam’s speech is much anticipated, as Quanta has risen as one of the world’s major AI server suppliers. The company reported a 30 percent year-on-year growth in consolidated revenue to NT$1.41 trillion (US$43.35 billion) last year, thanks to fast-growing demand for servers, especially those with AI capabilities. The company told investors in November last year that
Intel Corp has named Tasha Chuang (莊蓓瑜) to lead Intel Taiwan in a bid to reinforce relations between the company and its Taiwanese partners. The appointment of Chuang as general manager for Intel Taiwan takes effect on Thursday, the firm said in a statement yesterday. Chuang is to lead her team in Taiwan to pursue product development and sales growth in an effort to reinforce the company’s ties with its partners and clients, Intel said. Chuang was previously in charge of managing Intel’s ties with leading Taiwanese PC brand Asustek Computer Inc (華碩), which included helping Asustek strengthen its global businesses, the company
Taiwanese suppliers to Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) are expected to follow the contract chipmaker’s step to invest in the US, but their relocation may be seven to eight years away, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. When asked by opposition Chinese Nationalist Party (KMT) Legislator Niu Hsu-ting (牛煦庭) in the legislature about growing concerns that TSMC’s huge investments in the US will prompt its suppliers to follow suit, Kuo said based on the chipmaker’s current limited production volume, it is unlikely to lead its supply chain to go there for now. “Unless TSMC completes its planned six
TikTok abounds with viral videos accusing prestigious brands of secretly manufacturing luxury goods in China so they can be sold at cut prices. However, while these “revelations” are spurious, behind them lurks a well-oiled machine for selling counterfeit goods that is making the most of the confusion surrounding trade tariffs. Chinese content creators who portray themselves as workers or subcontractors in the luxury goods business claim that Beijing has lifted confidentiality clauses on local subcontractors as a way to respond to the huge hike in customs duties imposed on China by US President Donald Trump. They say this Chinese decision, of which Agence
RSS