China saw forecast-beating economic growth in the second quarter after a record contraction in the previous three months, as businesses cautiously returned to normality following lockdowns due to the COVID-19 pandemic.
The figures released yesterday follow a string of data showing the world’s No. 2 economy slowly emerging from the outbreak and should provide hope to other governments looking to get back on track.
GDP expanded 3.2 percent in the April-to-June period, the Chinese National Bureau of Statistics said, smashing expectations and a massive improvement on the 6.8 percent contraction in the first quarter.
Photo: AFP
However, in a sign that full recovery could take time, retail sales — a key indicator of consumer sentiment in China — fell short of forecasts, shrinking 1.8 percent year-on-year last month.
That suggests people remain reticent about going out to spend even as the virus appears largely under control in China.
The retail sector has taken on an increasingly crucial role in China’s economy as leaders look for consumers, rather than trade and investment, to drive growth.
There is an even greater need for a pickup in domestic consumption as China’s external demand weakens, but it is easier to normalize supply than demand, AxiCorp strategist Stephen Innes said.
Louis Kuijs of Oxford Economics said that household consumption remains the “weakest link” among indicators, although China’s economic upturn is expected to continue in the second half of this year.
Economists warn of uncertainty ahead owing to an uneven recovery — growth in infrastructure investment has rebounded, but private fixed-asset investment and retail sales remained weak.
Last quarter’s growth reading, while beating the 1.3 percent growth tipped in an Agence France-Presse poll of analysts, is still among China’s lowest quarterly growth rates on record.
The economy contracted 1.6 percent year-on-year in the first six months, the bureau said, while the urban unemployment rate dipped to 5.7 percent last month, from 5.9 percent a month earlier.
Unemployment is a closely watched marker, with nearly 9 million graduates expected to enter an uncertain labor market this year and analysts saying the actual jobless rate is likely higher, especially when the huge floating population of migrant workers is taken into account.
Industrial production grew 4.8 percent last month, in line with expectations and up from 4.4 percent in May.
Bureau spokeswoman Liu Aihua (劉愛華) told a news conference that China’s economy “demonstrated a momentum of restorative growth and gradual recovery.”
However, with the pandemic still ravaging many of China’s key trading partners, national economic recovery was “still under pressure,” Liu said.
China is expected to be the only major economy to see growth this year, being the first hit by the virus and to bounce back. However, economists warn that official Chinese economic figures should be taken with a grain of salt, with longstanding suspicions that growth data are massaged upward for political reasons by the Chinese Communist Party, which has based its legitimacy on delivering continued prosperity.
“Is it too good to be true?” ING Bank NV chief economist for Greater China Iris Pang (彭藹嬈) asked, adding that more data were needed.
She also pointed to risks down the road, including trade and tech tensions with other major economies, and major flooding in parts of China.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to