China is to further cut its target for economic growth next year amid excess capacity, sluggish investment and weaker manufacturing, economists said.
Government leaders are set to announce a growth objective between 6.5 percent and 7 percent for next year, according to eight of 15 economists in a Bloomberg News survey conducted from Thursday last week to Tuedsay. Four said they expect a 6.5 percent goal.
All of those surveyed said they saw next year’s target falling below the goal of about 7 percent set by Chinese Premier Li Keqiang (李克強) for this year’s growth, highlighting the challenges facing the government as exports slump and investment continues to weaken.
“We believe the government will take a more flexible way than before given the descending trend of real growth,” said Janice Yu (余晶晶), a Hong Kong-based economist at Guosen Securities Co (國信證券).
Economists also reduced their forecasts for third-quarter and fourth-quarter growth from a year earlier to a median estimate of 6.8 percent for both periods, down from 6.9 percent in the previous survey.
With slowing growth and a working-age population that shrank for the first time in at least two decades last year, the Chinese Communist Party might lower its hard growth target of 7 percent to a range between 6.5 percent and 7 percent, and make that a flexible guideline, a person familiar with the discussions said last month.
China announces its targets for growth, inflation and money supply at the National People’s Congress in March. Their challenge looks even harder after a disappointing factory report.
The preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics dropped to 47.0 for this month, missing the median estimate of 47.5 in a Bloomberg survey and falling from a final reading of 47.3 last month. Readings have remained below 50 since March, indicating contraction.
Daili Wang, a Singapore-based economist at Roubini Global Economics LLC, said the Chinese government would probably shoot for a 6.5 percent expansion, but amid a “heavy headwind” to growth, output next year will end up falling short of the government’s target.
Reforms of state-owned enterprises and the financial industry, plus excess supply in real estate and manufacturing, are likely to weigh on growth, Wang said.
The People’s Bank of China has lowered interest rates five times since November last year and reduced the ratio of reserves major banks are required to set aside.
The central bank is likely to cut its required reserve ratio for major banks to 17.5 percent by the end of this year and 15.5 percent by the end of next year from 18 percent, according to the median estimates in the survey.
Economists also forecast that the central bank would lower the benchmark lending rate by another quarter of a percentage point this year and that the government would expand its fiscal deficit next year.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day