The long-feared Chinese hard landing has become a reality in northeastern Liaoning Province.
The province, ground zero in China’s multi-year slowdown, saw its economy contract 1 percent in the first half as factories splutter and the coal industry groans under the weight of overcapacity.
However, the hardship remains localized, with regional data for the first six months showing economic growth in 15 of the nation’s 31 provinces perked up from the first quarter. While the golden age of across-the-board double-digit growth is history, three provinces still maintained such rates, with inland Chongqing again topping the pack.
Together, the provincial data add to a picture of stabilization as a recovering property market and fiscal support cushion the drag from stalling old growth engines.
For policymakers, the sharpening divergence argues for tailored fiscal and monetary settings rather than nationwide stimulus that risks flooding outperformers with liquidity, brewing bubbles and over-investment.
The People’s Bank of China has held its benchmark policy rates unchanged since October last year, instead channeling money via policy banks tasked with lending for specific, government sanctioned purposes. Meanwhile, the government — often by stealth fiscal stimulus — has poured cash into infrastructure projects to prop up employment in some areas.
Researchers at China’s top economic planner yesterday called for further monetary easing this year to help lower business costs and boost investment, a rare move as such policy is under the central bank’s purview. They also called for implementing “proactive” fiscal policy and making investment more effective amid downward pressure on spending.
With growth in fixed-asset investment by the private sector — arguably the best gauge of business confidence since it measures expansion plans — slumping to 2.8 percent nationwide, the government sent officials to various parts of the nation to seek ways to boost such spending.
The results can be seen in northwestern Qinghai Province, one of China’s poorest provinces, where private investment plunged 13.8 percent year-on-year in the first half, local data show. However, overall fixed-asset investment jumped 12 percent as the government and state-owned corporations stepped up spending.
Other provinces pursued a similar strategy, boosting the role of the state. Inner Mongolia and Shandong provinces increased investment spending on infrastructure such as roads, railways, telecom networks and water treatment facilities to levels almost double the national pace.
By contrast, Guangdong Province — China’s biggest regional economy — missed out on government largess, with a modest 3.4 percent gain in infrastructure investment even though property and private investment there outpaced other regions.
Authorities in Beijing — so large it constitutes one of the four provincial-level economies — appear happy for it to continue down the post-industrial path. Factory output in the city rose a mere 1.7 percent year-on-year in the first half, local data show. In Shanghai, industrial production shrank 4.4 percent.
In the nation’s worst-performing economy, Liaoning, factory output declined 7.7 percent in the first half, prompting an exodus of workers.
Liaoning’s state television channel sought to look on the bright side. Instead of bemoaning the province’s 1 percent contraction, it buried it in math by lauding the 3.2 percent services growth that was “4.2 percent faster than its GDP growth.”
At the other end of the spectrum, Chongqing, the inland city-province that is another one of the four directly managed by the central government, posted an enviable 10.6 percent growth rate in the first half, with industrial output rising 10.2 percent as factories move there for cheaper land and labor.
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
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