The mainstream experts stuck in their globalist mindset believed that President Donald Trump couldn’t take China on in a trade war and possibly win. Those naysayers are beginning to look rather foolish as China’s economic growth is falling without US cooperation. The parasitic relationship between the nations is no more!
The Wall Street Journal noted the progress that Trump is making as he uses his leverage to put the screws to the communist government of China:
An intensifying trade brawl with the U.S. is starting to take a heavier toll on China’s economy, as weakening foreign demand and sluggish domestic consumption cause Chinese manufacturers to significantly scale back production.
The manufacturing slowdown, detailed in reports released Sunday, raises the prospect that China’s leaders will step up economic stimulus measures to prop up growth.
The new data showed that privately owned makers of cars, machinery and other products stopped expanding in September, as export orders dropped the most in more than two years. At the same time, output by large, state-owned manufacturers continued to weaken.
The data, among the first major gauges of China’s economic performance for the third quarter, indicate that the U.S.-China trade fight is beginning to take a bigger bite out of the growth of the world’s second-largest economy.
After renegotiating NAFTA under more favorable terms with Canada and Mexico, Trump is now freed up to blast China with a united front throughout the North American continent. The master deal-maker’s grand plan is coming to fruition before our very eyes!
“China is having a fair amount of difficulty in their domestic economy … so I continue to believe China will come to the table with some significant concessions (although they may be downplayed) this month,” said Tony Nash, CEO of Complete Intelligence, to CNBC reporters.
Trump’s brilliance is playing out on the global stage, and his detractors have more and more egg on their faces as a result. The days of China becoming rich and prosperous while bleeding the US dry are quickly coming to an end due to the incredible leadership of 45.
This article is originally published at https://www.bbc.com/news/business-36051327
China’s economy grew at an annual rate of 6.7% in the first quarter of the year, says the government.
It is the slowest quarterly growth in the Chinese economy in seven years, but in line with expectations and China’s own growth targets.
In the final quarter of last year, the economy expanded by 6.8%.
Friday’s figures confirm the slowing trend in the world’s second largest economy.
But there are pockets of growth. Investment in industrial assets and infrastructure registered a surprise jump by 10.7% in the three months to March, when compared to the same period last year.
Consumers also appear to be spending, with retail sales showing a robust 10.5% jump for March.
That fits Beijing’s attempts in recent years to transform China from an export-led economy to a consumer-led one.
Analysis: Stephen McDonell, BBC News, Beijing
To tell the truth China correspondents struggle with this country’s economic statistics because we don’t know how accurate they are and GDP figures are no exception.
Some provinces and companies are said to exaggerate their production figures to push themselves to the top of the pile but there are also those who are thought to under-estimate their performance so they can attract greater central government support.
For this reason there are economists who measure this country’s financial health using electricity consumption figures instead. By this measure the world’s second largest economy would still be growing but perhaps at not at such a rapid clip.
Asia’s economic giant is attempting to make up for a loss in traditional production and exports by shifting to a model much more dominated by services and domestic consumption. It is in the process of sacking millions of workers and looking for somewhere else to place them.
This might be the correct thing to do in the long run – the government would argue that it is working to eventually deliver more sustainable growth – but, in the short term, what it means is more pain to come.
Reforms ahead
China earned the label of being “the factory of the world” from decades of manufacturing activity, the main driver of its rapid economic growth.
But factory activity has drastically slowed, as foreign companies relocated to cheaper manufacturing bases around Southeast Asia.
Last year marked the slowest growth for the Chinese economy in 25 years, with 6.9% growth compared to 7.3% in 2014.
The government has set the growth target rate for 2016 at a lower range of 6.5%-7%.
Premier Li Keqiang told the annual meeting of parliament last month that China “will face more and tougher problems and challenges in its development this year, so we must be fully prepared to fight a difficult battle”.
The National People’s Congress (NPC) mapped out a new five-year plan for the economy and announced measures which included cutting high debt, streamlining state-owned enterprises, and reforming financial markets.
Tony Nash, chief economist at consultancy Complete Intelligence, based in Singapore, said the NPC had “conveyed a sense of real progress that Chinese leadership understood much of the problems and was working toward necessary state sector reforms”.
Mr Nash said analysts “see a more stable environment starting in the middle of the third quarter as some of the reforms announced at the NPC start to take hold”.
Craig James, chief economist at Commsec in Sydney, Australia said there was “a collective sigh of relieve, not just here in Australia but around the world. All the results are above market expectations, it shows the rebalancing of the economy is proceeding to plan”.
“If anything, the figures are surprisingly high, so one wonders about the sustainability of the growth rate for future months. Hopefully we’ll see other economies around the world focus on lifting their own growth rates,” he said.
BEIJING: China’s exports in March returned to growth for the first time in nine months, adding to further signs of stabilisation in the world’s second-largest economy that cheered regional investors.
March exports rose a blistering 11.5% from a year earlier, customs data showed yesterday, the first increase since June and the largest percentage rise since February 2015.
Economists warned that the data was heavily influenced by base effects and seasonal distortions from the Lunar New Year, and was not necessarily evidence of stronger global demand. Chinese investors celebrated, nevertheless, with key stock indexes hitting three-month highs and the yuan firming.
“China’s foreign trade sector will likely improve from last year due to low comparables, but the improvement will not be dramatic, as the trends in external markets are not great,” said Wang Tie Shi, economist with Industrial Securities.
“We’ve started to see improvement in PMI and other indicators, which points to some degree of recovery going into the second quarter.”
The upside surprise comes after other March economic indicators hinted of slight improvements in the broader economy, although other surveys have shown rising downward pressure on wages and employment.
Imports continued to fall but less than expected, declining by 7.6% in dollar denominated terms, led by sharp corrections in imports of tax-free foreign goods, rentals and leasing and imported equipment.
However, import volumes of most major commodities, notably copper and iron ore, rose strongly. That left the country with a trade surplus of US$29.86bil for the month, data from the General Administration of Customs showed, versus a forecast of US$30.85bil.
“I think we should focus on the better-than-expected imports growth rate, which means domestic demand is also recovering, driven by infrastructure investment and also the real estate sector recovery,” said Ma Xiaoping, analyst at HSBC.
China’s slowdown might not be quite as severe as first feared but its “momentous” shift from investment-led growth is still having a chilling effect on trade globally, the International Monetary Fund said on Tuesday.
The IMF estimates every one percentage point investment-driven drop in China’s gross domestic product (GDP), cut growth for the entire Group of 20 nations by 0.25 percentage points.
“Even countries that have few direct trade linkages with China are being affected through the Chinese slowdown’s impact on prices of commodities and manufactured goods, and on global confidence and risk sentiment,” the Fund said.
Regardless, overseas investors also appeared inspired by the trade data. The Australian dollar climbed above 77 US cents, while MSCI’s broadest index of Asia-Pacific shares outside Japan added 1.4% and Australian shares gained 1.1%.
Tony Nash, managing partner at advisory firm Complete Intelligence, which focuses on global trade flows, sees China’s exports and imports stabilising over the next six months.
“As we close out Q2 and enter Q3, we’ll see more stable trade data before starting to see sustainable, small rises in both sides,” Nash said, adding data should be much less volatile in the second half as currencies and commodities stabilise. – Reuters
This article is originally published at https://www.bbc.com/news/business-35723392
There are lots of things you may feel like doing or watching this Saturday – and my guess is deliberating over the details at China’s National People’s Congress (NPC) is unlikely to be high up on the list.
But here’s why it is important. It is an opportunity to gauge what Chinese leaders may be thinking about the economy, and whether they’re as committed to reform as they have said they are.
We are all affected in some shape or form by what goes on in the world’s second-largest economy, so keeping abreast of what happens there is important.
And even though most of the decisions at what is effectively Asia’s largest political pantomime are pre-determined, it’s still worth having a think about some of the big economic priorities for China’s leaders.
Especially in a year when the Communist Party is trying to assure its citizens and the world that it is in control of its economic destiny.
So here are four things I’ll be watching at the NPC:
• 13th five-year plan: Although details of the plan have actually been around since November, delegates will get a chance to vote on it during the NPC. Don’t forget this is all pre-scripted so no-one actually votes against the strategy. High up on the agenda will be cutting industrial over-capacity and high debt levels. The reform of state owned enterprises will also be in the spotlight – but more on that later. Basically the five-year plan is China’s vision for itself as it tries to manage the transition from an investment-driven economy into one that’s more dependent on services and consumption.
• Economic growth target: Don’t look at the target, says Tony Nash of Complete Intelligence. Look at the direction in which the country’s growth target is heading and at what pace. That’s far more useful than the actual number. We all know China’s growth is slowing down – it clocked the lowest growth figure in 25 years (6.9%) recently. But what will be important to look at is the make-up of GDP – are services becoming an increasingly important part of the economy, and if so what does that mean for job-growth?
• Zombie firms: Also known as the “walking dead” these massively debt-laden state-owned firms will be in focus as China looks to clean up the sector. The problem is what to do with the millions of Chinese factory workers who are employed in some of the country’s biggest companies. There were reports out earlier this week about 5-6 million jobs would be cut from state-owned enterprises. So expect big support packages, workforce training programmes and a commitment to create new jobs in new sectors.
• Stimulus measures: Markets in China have been rallying this week ahead of the NPC in anticipation that the government will announce further stimulus plans. The stock market in particular has been battered by the slowdown in the economy, but the financial sector has also benefited from billions of dollars being poured into the system. Fraser Howie, China watcher and co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise”, says it’s clear “there are aspects of the economy that are clearly out of control – the stock market, and the currency. They’re trying to get in control of those things by clamping down on activity – but not embracing the free market which they promised.”
So in a nutshell – a lot of long and possibly boring speeches – but some key points to look out for which will give us an indication of where China’s economy is heading over the next five years. Well, that’s if it all goes to plan at least…
This article is originally published at https://www.reuters.com/article/us-china-markets/chinas-growth-hits-quarter-century-low-raising-hopes-of-more-stimulus-idUSKCN0UX043
SHANGHAI (Reuters) – China’s economy grew at its weakest pace in a quarter of a century last year, raising hopes Beijing would cushion the slowdown with more stimulus policies, which in turn prompted a rally on the country’s rollercoaster share markets.
Growth for 2015 as a whole hit 6.9 percent after the fourth quarter slowed to 6.8 percent, capping a tumultuous year that witnessed a huge outflow of capital, a slide in the currency and a summer stocks crash.
Concerns about Beijing’s grip on economic policy have shot to the top of global investors’ risk list for 2016 after a renewed plunge in its stock markets and the yuan stoked worries that the economy may be rapidly deteriorating.
China’s slowdown, along with the slump in commodity prices, prompted the International Monetary Fund to cut its global growth forecasts again on Tuesday, and it said it expected the world’s second-largest economy to see growth of only 6.3 percent in 2016.
Data from China’s statistics bureau showed that industrial output for December missed expectations with a rise of just 5.9 percent, while electric power and steel output fell for the first time in decades last year, and coal production dropped for a second year in row, illustrating how a slowing economy and shift to consumer-led growth is hurting industry.
December retail sales growth was also weaker than expected at 11.1 percent last month, disappointing those counting on the consumer to be the new engine of growth.
“While headline growth looks fine, the breakdown of the figures points to overall weakness in the economy,” said Zhou Hao, senior emerging markets economist for Asia at Commerzbank Singapore.
“All in all, we believe that China will experience a ‘bumpy landing’ in the coming year,” he said.
There was relief in the markets, however, that growth at least matched forecasts, and a growing expectation that more monetary easing measures were imminent, possibly before Lunar New Year holidays in early February.
Angus Nicholson, market analyst at IG in Melbourne, said in a note that further cuts in interest rates and the reserves that banks have to set aside were already looking “a foregone conclusion” before the data release, and now it was a question of timing.
“That gives investors an excuse to buy stocks, after sharp falls recently,” said Linus Yip, strategist at First Shanghai Securities Ltd.
Investors took their cue, pushing the benchmark Shanghai Composite Index up 3.25 percent by the close of trading, while the CSI300 index of the largest listed companies in Shanghai and Shenzhen gained 2.95 percent.
The indexes remain about 14-15 percent down so far in 2016 after a series of sell-offs in the new year.
“We see this as a technical rebound,” said Yip. “It’s too early to say the market has seen its bottom, as we haven’t yet seen a turnaround in the economy.”
CURRENCY RISK
The People’s Bank of China (PBOC) did its bit to calm nerves by keeping the yuan largely steady, setting the currency’s daily midpoint fix at 6.5596 per dollar.
That followed news of plans requiring overseas banks to hold a certain level of yuan in reserves, a move that could raise the cost of wagering on further falls in the currency, which has lost about 5 percent since August.
Tommy Xie, economist at OCBC Bank in Singapore, said he expected more stimulus to the economy from the PBOC, but the stability of the yuan, also known as the renminbi, was critical to maintaining growth.
“This is a new risk for China. If the renminbi continues to weaken, the volatility and capital outflows get worse, then that is likely to pose a challenge to growth.”
The spot yuan was at 6.5789, barely changed from Monday’s close, but offshore it weakened to 6.5935 to stand 0.2 percent adrift from the onshore rate.
Confusion over China’s currency policy and its commitment to reforms has sparked mayhem in financial markets in recent weeks, as the PBOC allowed the yuan to fall sharply in early January then switched to aggressive intervention to steady it.
Likewise, concerns have mounted that the economy’s troubles might be beyond Beijing’s ability to fix.
Markets have long harbored doubts about the veracity of China’s growth data, given their habit of closely matching official forecasts year after year despite wildly changing circumstances at home and globally.
Investors used to comfort themselves with the assumption that the authorities, while often inscrutable, were competent managers who could be trusted to ultimately guide the economy to a more consumer-driven model.
That trust has been challenged by perceived policy missteps over the yuan and stock markets, giving weight to a voluble clique of China bears who claim high debt levels and massive overcapacity are bound to end in tears.
Even relative optimists are worried.
“A recent trip back to China suggests the economy remains in a rather bad shape. Public confidence and expectations are very low,” says Wei Li, China and Asia economist at Commonwealth Bank of Australia.
“Faced with rising non-performing loans, banks are cutting credit lines despite policymakers calling for more support. New credits are mainly used to repay existing debts, rather than flowing into new investment projects.”
As the annual trade talks U.S.-China Joint Commission on Commerce and Trade (JCCT) gets underway in Washington D.C., the backdrop could hardly be more different from a year ago.
In 2015, each side in the series of annual meetings that cover everything from agriculture to cybersecurity had its own policy advantages, and policy continuity was the result of years of work by both sides.
Just a year ago, enthusiasm for the Trans-Pacific Partnership (TPP) also remained strong, with an official signing ceremony in Auckland, New Zealand, just months away. The agreement was positioned as America’s last, best hope to stay relevant in Asia’s economies.
And by design, the agreement positioned China as an outsider in its own neighborhood, instead of lining Asian countries up behind aging American assumptions around trade, intellectual property, and services in the world’s fastest-growing region.
