China’s factory activity continued to contract while the services sector slowed last month, as Chinese policymakers prepared an emergency stimulus blitz to revive an economy facing challenges across the board.
The official manufacturing purchasing managers’ index (PMI) was 49.8, meaning the sector has now been in contraction since April last year, except for three months. The non-manufacturing PMI showed construction and services activity lost momentum, after growing in August.
The data released yesterday showed the economy remained in a slump before Chinese officials announced a broad package of measures aimed at reviving growth. The central bank last week cut key interest rates and freed up cash for banks to boost lending, while the elite politburo pledged to support fiscal spending and stabilize the beleaguered property sector.
Photo: AFP
“I don’t think September macro data points are going to matter this time for markets,” abrdn Asia Ltd investment director Xin Yao Ng (黃新耀) said. “It’s all forward looking about what kind of fiscal stimulus comes out.”
The spotlight is now on what measures the Chinese Ministry of Finance might unleash, as officials from other arms of China’s economic universe implement measures to boost the property market and rate cuts.
Reuters reported the Ministry of Finance is planning to issue two trillion yuan (US$285.2 billion) worth of special sovereign bonds this year, with half devoted to boosting consumption.
If Beijing needed more reason to draw a line under its post-COVID-19 pandemic slowdown, the Caixin PMI survey last month also released yesterday showed the country’s manufacturing activity unexpectedly fell into contraction while services expansion weakened to the slowest in a year. That private gauge has typically painted a rosier picture of the economy.
“The PMIs suggest that the economy is still weak, but there will be more focus on the impact of the strong stimulus measures announced over the past week,” United Overseas Bank Ltd (大華銀行) economist Woei Chen Ho (何為真) said. “The monetary and fiscal policy mix should prevent the economy from further weakening in the near-term.”
While the Chinese ministry has yet to make an official announcement, other monetary and economic authorities have begun to flesh out their part of the stimulus package over the last few days. The People’s Bank of China on Sunday said homeowners would be able to renegotiate terms with their lenders, a move that would reduce their mortgage burdens and potentially boost household spending, starting Nov. 1.
The Chinese National Development and Reform Commission, the nation’s economic planning agency, on Friday pledged full support to help private companies overcome difficulties, while Chinese Premier Li Qiang (李強) at a Chinese State Council meeting on Sunday said that government agencies would accelerate the pace of implementing policies as they strive to meet annual goals, state broadcaster China Central Television reported.
Beijing’s ability to reach its target of about 5 percent GDP growth was increasingly in doubt after data showed activity cooled across the board in August.
“The State Council responds to the politburo who demands for increasing government investment,” said Australia & New Zealand Banking Group Ltd chief economist for greater China Raymond Yeung (楊宇霆), who expects the Chinese economy to grow 4.9 percent this year.
“The keyword here is ‘execution,’” Yeung said.
NEW MARKET: The partnership opens up India to the Dutch company, which already has a strong hold in the semiconductor market of South Korea, Taiwan and China ASML Holding NV entered into a partnership agreement with Tata Electronics Pvt Ltd aimed at ramping up India’s goal to develop domestic chip-manufacturing capabilities. The Dutch company’s technology would help power Tata Electronics’ planned 300 millimeter (mm) semiconductor foundry in Gujarat, according to a joint statement from the two companies on Saturday. The signing of a memorandum of understanding coincides with a visit by Indian Prime Minister Narendra Modi to the Netherlands, which is looking to deepen bilateral relations with New Delhi. ASML, whose top customers include Taiwan Semiconductor Manufacturing Co (台積電) and Samsung Electronics Co, makes lithography machines that can print
TECH RELIANCE: Growth is increasingly reflecting an unequal K-shaped distribution, where technology sectors outperform and other industries struggle, an expert said Standard Chartered Bank has significantly raised its forecast for Taiwan’s economic growth to 9.5 percent this year, up from 7.6 percent previously, citing surging artificial intelligence (AI) demand driving exports, semiconductor production and investment. The upgrade reflects a sustained AI supercycle that continues to fuel demand for advanced chips and technology infrastructure, which form the backbone of Taiwan’s exports, the bank said in a report this week. “We raise our 2026 growth forecast to reflect a much stronger-than-expected first-quarter GDP figure,” Standard Chartered senior economist for greater China and Asia Tommy Wu (胡東安) said in the report. Driven largely by a 35.3 percent
Two of Taiwan’s international carriers, Starlux Airlines Co (星宇航空) and EVA Airways Corp (長榮航空), have retained the five-star airline rating awarded by international airline review organization Skytrax. Starlux was awarded the distinction for a second consecutive year, while EVA Air received it for the 11th straight year, Skytrax said in statements released yesterday and on Thursday last week, respectively. The five-star rating is considered one of the airline industry's highest honors and is awarded following professional audits of airline product and frontline service standards, Skytrax said. The ratings are based on in-depth assessments using unified global quality standards rather than customer review scores
Tokyo Electron's Taiwan unit today said in a written response that it respects the judicial process, takes the court ruling seriously and would not appeal in the Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) trade secrets case. Last month, a court fined the Taiwan unit of Japan's Tokyo Electron NT$150 million (US$4.74 million) in a case involving trade secrets related to TSMC's sensitive chip technology.
RSS