Economic growth slows
The economy expanded at the slowest pace in six years last year, when manufacturing took a battering and the country was dragged to the brink of a recession. Expansion was just 0.6 percent amid trade tensions and a broader slowdown in demand that added to fundamental structural challenges the country is battling. Automakers including Volkswagen AG are facing a critical period as they push sales of electric vehicles, while manufacturers such as Siemens AG are under pressure to adapt to climate change. Geopolitical uncertainty in the Middle East and continued risk of a disruptive Brexit are also weighing on sentiment and momentum. That means while last year was a year Germany will want to forget, the outlook for this year is barely any better. Economists see growth accelerating to only 0.7 percent this year.
Holiday cash infusion
The nation added liquidity to the financial system yesterday, helping to offset a cash squeeze ahead of the Lunar New Year holiday. It kept interest rates on the loans unchanged. The People’s Bank of China added 300 billion yuan (US$43.56 billion) through the medium-term lending facility at 3.25 percent, according to a statement from the central bank. It also injected 100 billion yuan through open market operations after a 15-day hiatus, selling 14-day reverse repurchase agreements at 2.65 percent. Some 257.5 billion yuan of targeted medium-term loans are to mature on Thursday next week. “The liquidity injection from the previous RRR [required rate of return] cut wasn’t enough to fill the gap in January because of the earlier Chinese New Year holiday season, heavy bond issuance and tax payment,” Oversea-Chinese Banking Corp economist Tommy Xie (謝東明) said. “The offering is not a surprise.”
Employment at record high
The employment rate hit a record high last year, offering President Moon Jae-in evidence that he is delivering on his pledge to provide more jobs, ahead of a parliamentary election. The employment rate climbed to 60.9 percent last year, matching a previous high set in 1997, statistics office data showed yesterday. At first glance, the rate, boosted by an increase in part-time work, appears to contradict the view among Moon’s opponents and some economists that his policies, including a higher minimum wage strategy, have priced people out of work. Still, the jobs growth relied heavily on part-time and elderly workers, a fact which casts doubt on the real strength of the recovery in the labor market and its effectiveness in boosting consumption.
OECD membership coming
The government on Tuesday welcomed the US’ change of stance to support its bid to join the Organisation for Economic Co-operation and Development (OECD) ahead of Argentina. The US plans are a win for President Jair Bolsonaro, who has sought closer ties with Washington since taking office last year. Backing Brazil’s path to joining the OECD had been seen by many as a tangible benefit of the ideological similarities between Bolsonaro and US President Donald Trump, who have sought to cast aside years of trade spats and political distrust between their two nations, and build a tighter relationship. OECD membership is seen as a stamp of approval that would boost investor confidence in the government and economy.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
Gold surged to a fresh record on Friday, fueled by US dollar weakness and low interest rates, while silver headed for its best month since 1979. Spot bullion is up more than 10 percent this month, as US real yields lingered near record lows. While the ferocity of rallies in gold and silver cooled in the middle of the week, most market watchers predict there might be more gains ahead. Both metals have added about 30 percent this year, with gold and silver exchange-traded funds boosting holdings to a record, as concern about the fallout from the COVID-19 pandemic fuels demand for
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion
MediaTek Inc (聯發科) has hired a former US Department of Commerce official to help it navigate worsening US-China tensions that have already ensnared its customer Huawei Technologies Co (華為). Patrick Wilson, who most recently served as director of the department’s Office of Business Liaison, has been appointed vice president of government affairs at MediaTek USA to lead its public policy initiatives, the chip designer said in a draft press statement seen by Bloomberg News. Wilson previously worked at the Semiconductor Industry Association, where he led the trade group’s dealings with the US federal government. Technology companies with ties to or operations in China