China’s fiscal deficit exceeding the government’s preset limit last year was a sign it is easing policy further, Nomura Holdings Inc economists wrote in a report yesterday.
China’s fiscal spending last year jumped 15.8 percent to 17.6 trillion yuan (US$2.68 trillion), while revenue rose 8.4 percent to 15.2 trillion yuan, the Chinese Ministry of Finance said on Friday.
That amounts to a fiscal deficit equal to 3.5 percent of GDP, Nomura Hong Kong-based chief China economist Zhao Yang (趙揚) said in a report yesterday.
The government had previously set the fiscal spending limit at 2.3 percent of economic output.
China boosted fiscal spending as growth last year slowed to its weakest pace since 1990 and the central bank’s interest rate cuts appeared insufficient to revive slumping demand.
Economists had expected the government to exceed its budgeted limit last year and expand the deficit this year, according to a Bloomberg survey conducted in November last year.
“This fiscal deficit of above 3 percent, together with relatively large quasi-fiscal easing, also suggests to us that the government is willing to ease policy as growth slows,” Zhao wrote.
China might raise the fiscal deficit limit for this year to 3 percent of GDP when China’s National People’s Congress approves the annual budget next month, Zhao wrote.
He forecast growth this year of 5.8 percent.
AI SPLURGE: The four major US tech companies have lost more than US$950 billion in value since releasing earnings and outlooks, while equipment makers were gaining Four of the biggest US technology companies together have forecast capital expenditures that would reach about US$650 billion this year — a flood of cash earmarked for new data centers and all the gear within them. The spending planned by Alphabet Inc, Amazon.com Inc, Meta Platforms Inc and Microsoft Corp, all in pursuit of dominance in the still-nascent market for artificial intelligence (AI) tools, is a boom without a parallel this century. Each of the companies’ estimates for this year is expected either near or surpass their budgets for the past three years combined. They would set a high-watermark for capital spending
China’s top chipmaker has warned that breakaway spending on artificial intelligence (AI) chips is bringing forward years of future demand, raising the risk that some data centers could sit idle. “Companies would love to build 10 years’ worth of data center capacity within one or two years,” Semiconductor Manufacturing International Corp (SMIC, 中芯) cochief executive officer Zhao Haijun (趙海軍) said yesterday on a call with analysts. “As for what exactly these data centers will do, that hasn’t been fully thought through.” Moody’s Ratings projects that AI-related infrastructure investment would exceed US$3 trillion over the next five years, as developers pour eye-watering sums
Bank of America Corp nearly doubled its forecast for the nation’s economic growth this year, adding to a slew of upgrades even after a rip-roaring last year propelled by demand for artificial intelligence (AI). The firm lifted its projection to 8 percent from 4.5 percent on “relentless global demand” for the hardware that Taiwanese companies make, according to a note dated yesterday by analysts including Xiaoqing Pi (皮曉青). Taiwan’s GDP expanded 8.63 percent last year, the fastest pace since 2010. The increase “reflects our sustained optimism over Taiwan’s technology driven expansion and is reinforced by several recent developments,” including a more stable currency,
COLLABORATION: Taiwan and the US could jointly find solutions to weaknesses in supply chain resilience for critical materials, focusing on mining and initial refinement Taiwan is likely to purchase rare earths from the US in the future, and is also in talks with Australia and Canada to strengthen global rare earth supply chain security, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. Taiwan and the US last month concluded the sixth Economic Prosperity Partnership Dialogue, during which both sides signed a joint statement endorsing the principles of the Pax Silica Declaration, pledging to deepen cooperation in areas including critical minerals. At the time, Kung said the two sides would establish working groups to advance cooperation in areas including artificial intelligence, digital infrastructure, critical materials and
RSS