China’s economy hit the government’s growth goal last year after an 11th-hour stimulus blitz and export boom turbocharged activity, although looming US tariffs threaten to take away a key driver of expansion.
GDP rose 5 percent in the world’s second-largest economy, data released by the Chinese National Bureau of Statistics yesterday showed, slightly exceeding the median estimate of 4.9 percent in a Bloomberg survey.
“The biggest bright spot in the economy last year was exports, which was very strong, especially if price factor was excluded,” BNP Paribas SA chief China economist Jacqueline Rong (榮靜) said. “That means the biggest problem this year will be US tariffs.”
Photo: EPA-EFE
China has vowed further monetary easing and stronger public spending this year, as its economy braces for US president-elect Donald Trump’s return to the White House.
Trump has threatened tariffs of as high as 60 percent on Chinese goods, which could decimate trade with the Asian country.
Those very threats encouraged global businesses to frontload shipments and bolstered growth last year. However, that boost might fade in the coming months, as potential levies, including from the EU and other trade partners, make Chinese exports less competitive.
The yuan strengthened 0.1 percent against the US dollar in onshore and offshore markets after the data release. The benchmark CSI 300 index of Chinese stocks erased an earlier loss of 0.5 percent to rise 0.5 percent.
“The government has repeatedly alluded to significant support. We see this forthcoming, as Friday’s data hammer home the pressing need. The imperative could become even greater in the case of higher tariffs hitting exports significantly,” Bloomberg economists Chang Shu and David Qu (曲天石) said.
While China’s nearly flawless record in reaching its headline growth target is frequently doubted, the broad set of data also suggests Beijing’s policy pivot since late September last year helped counter headwinds from a years-long property slump and entrenched deflation.
Industrial production beat estimates to rise 6.2 percent last month compared with the previous year, the fastest pace since April last year.
The picture for domestic demand is more mixed. While unemployment climbed for the first time since August last year and property sales continued to contract, consumption showed signs of an uptick in categories helped by the stimulus push.
Retail sales rose 3.8 percent in the last quarter, accelerating to the fastest pace last year after the government ramped up a program to subsidize purchases of appliances, cars and business equipment. That brought home goods sales growth to 12.3 percent, the highest since 2013.
“Front-loaded export orders certainly helped, but the improvement was not just seen in exports, but also in consumption, which was largely a result of purchase subsidies,” Macquarie Group Ltd China economics head Larry Hu (胡偉俊) said.
Economists led by Robin Xing (邢自强) at Morgan Stanley estimate that about 60 percent of the rebound in annual growth was caused by China’s policy to boost consumption and manufacturing investment, while the rest came from advanced shipments.
SEASONAL WEAKNESS: The combined revenue of the top 10 foundries fell 5.4%, but rush orders and China’s subsidies partially offset slowing demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) further solidified its dominance in the global wafer foundry business in the first quarter of this year, remaining far ahead of its closest rival, Samsung Electronics Co, TrendForce Corp (集邦科技) said yesterday. TSMC posted US$25.52 billion in sales in the January-to-March period, down 5 percent from the previous quarter, but its market share rose from 67.1 percent the previous quarter to 67.6 percent, TrendForce said in a report. While smartphone-related wafer shipments declined in the first quarter due to seasonal factors, solid demand for artificial intelligence (AI) and high-performance computing (HPC) devices and urgent TV-related orders
BYPASSING CHINA TARIFFS: In the first five months of this year, Foxconn sent US$4.4bn of iPhones to the US from India, compared with US$3.7bn in the whole of last year Nearly all the iPhones exported by Foxconn Technology Group (富士康科技集團) from India went to the US between March and last month, customs data showed, far above last year’s average of 50 percent and a clear sign of Apple Inc’s efforts to bypass high US tariffs imposed on China. The numbers, being reported by Reuters for the first time, show that Apple has realigned its India exports to almost exclusively serve the US market, when previously the devices were more widely distributed to nations including the Netherlands and the Czech Republic. During March to last month, Foxconn, known as Hon Hai Precision Industry
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and the University of Tokyo (UTokyo) yesterday announced the launch of the TSMC-UTokyo Lab to promote advanced semiconductor research, education and talent development. The lab is TSMC’s first laboratory collaboration with a university outside Taiwan, the company said in a statement. The lab would leverage “the extensive knowledge, experience, and creativity” of both institutions, the company said. It is located in the Asano Section of UTokyo’s Hongo, Tokyo, campus and would be managed by UTokyo faculty, guided by directors from UTokyo and TSMC, the company said. TSMC began working with UTokyo in 2019, resulting in 21 research projects,
Quanta Computer Inc (廣達) chairman Barry Lam (林百里) yesterday expressed a downbeat view about the prospects of humanoid robots, given high manufacturing costs and a lack of target customers. Despite rising demand and high expectations for humanoid robots, high research-and-development costs and uncertain profitability remain major concerns, Lam told reporters following the company’s annual shareholders’ meeting in Taoyuan. “Since it seems a bit unworthy to use such high-cost robots to do household chores, I believe robots designed for specific purposes would be more valuable and present a better business opportunity,” Lam said Instead of investing in humanoid robots, Quanta has opted to invest
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