China could miss its official growth target for the first time in 16 years, a snap poll of economists by Agence France-Presse showed after surprisingly weak data for January and last month.
Industrial output, a key measure of production at factories, workshops and mines in the world’s second-largest economy, rose just 8.6 percent in the first two months of this year, the slowest pace in five years, Chinese government figures showed on Thursday.
Retail sales, an indicator of consumer spending, increased at the lowest rate since February 2011, while growth in fixed asset investment, a gauge of government spending on infrastructure, came in at a surprisingly low 17.9 percent during the period, according to the data.
In a survey of 10 economists on Friday, the median forecast for this year’s growth was 7.4 percent, with some saying the weak start to the year had led them to cut their annual predictions.
At the just-concluded National People’s Congress, Chinese Premier Li Keqiang (李克強) set this year’s growth target at “around 7.5 percent,” lower than last year’s actual expansion of 7.7 percent — which was unchanged from 2012 and the worst since 7.6 percent in 1999.
“We have a level of flexibility by setting the target at around 7.5 percent,” the premier said.
“The disappointing economic data in January and February will be a test of the government’s tolerance level, as this pace of deceleration has rarely been seen before,” Hong Kong-based Mizuho Securities economist Shen Jianguang (沈建光) said in a research note.
He cut his projection for this year’s growth from 7.5 to 7.3 percent.
Bank of America Merrill Lynch analysts also lowered their prediction from 7.6 to 7.2 percent for the full year due to the “significantly weaker than expected” data in the first two months.
Meanwhile, Goldman Sachs said that if economic growth falls to less than 7.5 percent in the first quarter, there will be “significant risks of not hitting the annual target.”
China’s top leaders have said they are ready to accept slower expansion as they seek to transform the economy’s growth model away from an over-reliance on often wasteful investment, and instead make private demand the driver of future development.
“We think the government will not let growth slide below the 7.0 percent mark,” Wang Tao (汪濤), a UBS economist in Hong Kong, said in a report.
Key downside risks ahead this year include uncertainties in export recovery, credit volatilities related to China’s multitrillion-dollar shadow banking sector — heightened by the country’s first-ever default on a domestic corporate bond last week — and a “more pronounced” property slowdown, she said.
“New leaders are now facing a critical test: whether they can stabilize the economy without significantly compromising the progress of lowering debt risks,” Societe Generale analyst Yao Wei (姚煒) said in a research note.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s
Sony Corp has cut its estimated Play Station 5 (PS5) production for this fiscal year by 4 million units, down to about 11 million, following production issues with its custom-designed system-on-chip (SOC) for the new console, people familiar with the matter said. The Tokyo-based electronics giant in July boosted orders with suppliers in anticipation of heightened demand for gaming in the holiday season and beyond, as people spend more time at home due to the COVID-19 pandemic. However, the company has come up against manufacturing issues, such as production yields as low as 50 percent for its SOC, which have cut into
O2O BICYCLE SHOW: The Taiwan Bicycle Show next year is to be online to offline, with forums, audio-visual conferences and livestreaming of the offline events Local bicycle makers expect demand to continue outpacing supply due to orders triggered by the COVID-19 pandemic, with some companies seeing orders back up through next year. “Next year is all full in terms of orders. Our lead time on components is one year,” Giant Manufacturing Co Ltd (巨大機械) chairwoman Bonnie Tu (杜綉珍) told a news conference in Taipei organized by the Taiwan External Trade Development Council (TAITRA) to announce next year’s Taipei Cycle Show. The pandemic has reduced bicycle supplies and increased demand around the world, Robert Wu (吳盈進), chairman of KMC (Kuei Meng) International Inc (桂盟國際), one of the world’s