China’s economy may have expanded at the slowest pace in seven years in the fourth quarter as exports collapsed, adding to pressure for more stimulus measures and undermining growth across Asia.
GDP grew 6.8 percent from a year earlier, according to the median estimate of 12 economists surveyed by Bloomberg News, down from 9 percent in the previous three months. The data is due to be released this week.
Chinese Premier Wen Jiabao (溫家寶) has pledged more measures after unveiling a 4 trillion yuan (US$585 billion) package in November and the central bank may add to five interest rate cuts since September.
Plummeting Chinese demand for parts and materials for exports is reverberating across Asia, driving Taiwan and South Korea closer to recessions and worsening Japan’s economic slump.
“China’s era of hyper-growth is coming to a sudden, very disruptive end,” said Kevin Lai, an economist with the Daiwa Institute of Research in Hong Kong. “China’s imports are slumping dramatically and the rest of Asia relies on it very significantly.”
Lai expects the key one-year lending rate to decline to 4.5 percent from 5.31 percent by the middle of the year. He also sees reduced reserve requirements for banks.
After vaulting past Germany to become the world’s third-biggest economy in 2007, China may this year face its first drop in shipments since at least 1990.
The slowdown from the previous three months would be the sharpest since quarterly data began in 1994. The pace compares with 13 percent growth in 2007. Morgan Stanley on Saturday cut its forecast for this year’s expansion to 5.5 percent.
Consumer-price inflation may have cooled to 1.6 percent last month from a 12-year high of 8.7 percent in February, a second survey showed. Producer prices fell 0.1 percent, the first drop since 2002, economists estimated.
Besides the export slowdown, slumps in stocks and property are undermining consumer confidence and growth.
“Exports are not going to recover any time soon and the property market is struggling,” said Ben Simpfendorfer, an economist with Royal Bank of Scotland in Hong Kong. “More easing is needed because demand won’t return in a hurry.”
Exports may drop 6 percent this year, down from a 17.2 percent gain last year, Fitch Ratings said on Friday.
The central bank has helped exporters by halting the yuan’s gains against the dollar over the past six months.
Among the biggest losers from China’s waning demand are Taiwan, which shipped almost 36 percent of its exports to China in 2007; South Korea, which sent 25 percent; and Japan, which shipped 19 percent, UBS AG said.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS