China’s economic growth slowed unexpectedly in the first three months of the year, fueling concern about the strength of its shaky recovery.
The world’s second-largest economy grew 7.7 percent over a year earlier, down from the previous quarter’s 7.9 percent, the government reported yesterday. That fell short of many private sector forecasts that growth would accelerate slightly to 8 percent.
A recovery still is under way, but is “really very soft — very slow and gradual,” Societe Generale economist Yao Wei (姚煒) said.
Photo: AFP
Analysts have warned that China’s recovery from its deepest slump since the 2008 global crisis is weak and is being supported by bank lending and government-led investment, while growth in consumer spending is subdued.
The unexpected growth setback could add to challenges for Chinese Communist Party leaders who took power over the past six months. They are trying to avoid job losses, while they pursue more self-sustaining growth based on domestic consumption instead of exports and investment.
The latest quarterly growth was above Beijing’s official target of 7.5 percent for the year. That is well above forecasts in the low single digits for Western economies and Japan, but far from China’s blistering growth of the past decade.
Recent economic data in China has given mixed signals, raising questions about whether a full-fledged recovery was gaining traction.
Inflation fell last month, indicating consumer demand might not be as strong as Beijing hoped. Import growth accelerated, suggesting companies and consumers were buying more, but some analysts said those figures might be distorted and unreliable.
Also last month, growth in factory output weakened to 8.9 percent, down 1 percentage point from the first two months of the year, the National Bureau of Statistics said.
That was the lowest growth since August last year, when fears of an abrupt “hard landing” of plunging growth were strong. Beijing responded by boosting lending and government spending.
Chinese leaders are unlikely to repeat that strategy after a 60 percent surge in credit in the first quarter produced a lackluster response, IHS Global Insight analysts Ren Xianfang (任現芳) and Alistair Thornton said in a report.
“We have lost confidence in a robust recovery,” they said.
Forecasters who expected growth to accelerate might have been misled by inaccurate trade data due to companies falsely reporting higher exports as a way to evade capital controls and bring money into China, Moody’s Analytics economist Alaistair Chan (陳志雄) said.
Despite the surge in lending, yesterday’s data showed a slowdown in investment growth that is driving the latest recovery.
First-quarter growth in spending on factories, real estate and other fixed assets slowed to 20.9 percent from the 21.1 percent rate for the first two months of the year.
That shows the economy suffers from structural problems, including excess production capacity in some industries that makes more investment unprofitable, Yao said.
“Given all this credit injected into the system, the future should look better,” Yao said. “Nevertheless, the level of efficiency in the economy has declined. The same amount of money will no longer produce the same amount of growth.”
In a positive sign, growth in retail sales edged up to 12.6 percent last month from 12.3 percent for the first two months of the year.
Recent increases in required minimum wages and an improved housing market should help to boost household spending, Moody’s Analytics economist Fred Gibson said in a report.
Still, he cautioned that consumer confidence could be hurt if China’s export weakness persists.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last