The Chinese economy grew a forecast-beating 6.9 percent last year, picking up steam for the first time since 2010, despite its battles against massive debt and polluting factories, official data showed yesterday.
The world’s No. 2 economy eclipsed the official target of about 6.5 percent and picked up pace from the 6.7 percent growth seen in 2016, which was the slowest for more than a quarter of a century.
The robust economic expansion indicated stability after slowing down since China last posted double-digit growth in 2010.
“The national economy has maintained the momentum of stable and sound development and exceeded the expectation with the economic vitality, impetus and potential released,” Chinese National Bureau of Statistics Director Ning Jizhe (寧吉喆) said in a report.
“We should also be aware that there are still difficulties and challenges confronting the economy and the improvement of quality and efficiency remains a daunting task,” Ning said.
The latest data showed the economy expanding 6.8 percent in the final quarter of last year, matching the third-quarter figure, but below the first half’s 6.9 percent.
The GDP reading follows strong trade data last week, which showed the humming global economy had propelled China’s export machine.
“This momentum, especially the part fueled by external demand, might carry on well into this year,” Societe Generale chief China economist Yao Wei (姚煒) said.
However, the nation is facing pressure to prevent a credit crisis, with local government debt growing 7.5 percent last year to US$2.56 trillion, according to figures released on Wednesday.
China has largely relied on debt-fueled investment and exports to drive its tremendous economic growth of the past four decades, but it is now seeking to move its economy to more sustainable consumption-based growth.
The latest figures show the services industry grew 8 percent for the year, with retail sales spiking 10.2 percent — good news for the transition.
The IMF has repeatedly warned of risks stemming from China’s ballooning debt, saying last year that each extra US dollar of debt is producing diminishing returns for China’s economy.
China’s leaders appeared to wipe away some of those concerns at a critical planning meeting last month. While vowing a crackdown on financial risk and local government debt, leaders called for a reasonable credit expansion this year.
That flew in the face of the IMF’s and other economists’ warnings that China must deleverage.
Last year, China brought down the pace of debt accumulation, but allowed overall credit growth, analysts said.
“The bulls and the bears have never been so much in agreement since the financial crisis,” Macquarie Group head of China economics Larry Hu (胡偉俊) said.
“Most economists expect about 6.5 percent GDP growth this year,” Hu said, although one of China’s top state-affiliated think tanks last month forecast growth ticking slightly downward to 6.7 percent this year.
However, potential headwinds and risks for China’s economy are brewing.
US President Donald Trump is determined to change the balance of trade between the two large trading partners. China’s trade surplus with the US swelled 10 percent to a record US$275.8 billion last year.
In a telephone call with Chinese President Xi Jinping (習近平) this week, Trump “expressed disappointment that the United States’ trade deficit with China has continued to grow,” the White House said. “President Trump made it clear that the situation is not sustainable.”
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
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts