China’s GDP growth likely slowed further in the second quarter, an AFP survey has found, as a slowdown in investment and trade weighed on the world’s second-largest economy. The median forecast in a poll of 14 economists indicates GDP expanded 6.9 percent in the April-to-June quarter, marginally down from 7 percent in the first three months of this year.
That would be the worst quarterly result since the first three months of 2009 — in the depths of the global financial crisis — when China’s economy expanded by 6.6 percent.
The National Bureau of Statistics is set to release the official GDP figures for the first quarter of this year on Wednesday. China’s volatile stock markets have grabbed headlines this month after the benchmark Shanghai Composite Index fell more than 30 percent in less than four weeks.
However, economists are focused on more fundamental issues when assessing its overall health.
“According to the figures we have now, economic activity remained very sluggish, particularly fixed-asset investment, which grew 11.4 percent in May, a multi-year low,” ANZ Hong Kong-based economist Liu Li-gang (劉利剛) told reporters of the second-quarter performance. “Exports were weak and imports were even more so.”
State Information Center analyst Li Ruoyu said the economy is still under “quite big downward pressure.”
Li said new restrictions on local government debt and finance vehicles have limited lower-level authorities’ ability to fund infrastructure projects.
“The implicit guarantees of the local governments are gone, hurting their borrowing abilities,” she said.
The stock market turmoil could also create new risks in China’s financial system, which faces numerous other challenges such as high corporate debt and an opaque “shadow banking” sector.
However, the swings in equities are largely seen as having little effect on the real economy — a key driver of global growth — and unlikely to prove a major detriment to private spending.
“Given that the stock market didn’t provide any noticeable boost to spending on the way up, there is no reason to expect it to be a drag on the way down,” Capital Economics China specialist Julian Evans-Pritchard wrote in a report.
“With only a small and relatively wealthy portion of Chinese households exposed to the stock market, we aren’t particularly concerned about the impact of recent big falls in equity prices on consumption.”
For this year as a whole, the AFP survey predicts growth at a median 7 percent, more optimistic than a forecast of 6.8 percent in a similar poll in April and in line with the government’s official target of “about 7 percent.”
The IMF last week left its forecast for China intact at 6.8 percent this year, brushing off worries over Shanghai share volatility.
“The puncture of what had clearly become a stock market bubble may have some limited effect on spending,” IMF chief economist Olivier Blanchard said on Thursday. “There is no particular reason to have lost confidence [in China’s economy].”
China last year recorded its slowest annual growth since 1990, expanding 7.4 percent, down from 7.7 percent in 2013.
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
A proposed 100 percent tariff on chip imports announced by US President Donald Trump could shift more of Taiwan’s semiconductor production overseas, a Taiwan Institute of Economic Research (TIER) researcher said yesterday. Trump’s tariff policy will accelerate the global semiconductor industry’s pace to establish roots in the US, leading to higher supply chain costs and ultimately raising prices of consumer electronics and creating uncertainty for future market demand, Arisa Liu (劉佩真) at the institute’s Taiwan Industry Economics Database said in a telephone interview. Trump’s move signals his intention to "restore the glory of the US semiconductor industry," Liu noted, saying that
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
STILL UNCLEAR: Several aspects of the policy still need to be clarified, such as whether the exemptions would expand to related products, PwC Taiwan warned The TAIEX surged yesterday, led by gains in Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), after US President Donald Trump announced a sweeping 100 percent tariff on imported semiconductors — while exempting companies operating or building plants in the US, which includes TSMC. The benchmark index jumped 556.41 points, or 2.37 percent, to close at 24,003.77, breaching the 24,000-point level and hitting its highest close this year, Taiwan Stock Exchange (TWSE) data showed. TSMC rose NT$55, or 4.89 percent, to close at a record NT$1,180, as the company is already investing heavily in a multibillion-dollar plant in Arizona that led investors to assume
RSS