Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
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Dips in tourism, consumer spending could reduce first-quarter growth by three or four percentage points, according to Zhu Min, a former deputy managing director of the International Monetary Fund
Massive effort now needed to help country rebound, economist says
The coronavirus outbreak in China sparked a huge dip in consumer spending. Photo: EPA-EFE
The deadly coronavirus outbreak may have cost China more than 1.3 trillion yuan (US$185 billion) in the first two months of the year because of huge dips in consumer spending and tourism, according to a former senior executive with the
Zhu Min, who was deputy managing director of the IMF from 2011 to 2016, said during an online presentation on Saturday that the Covid-19 epidemic was likely to have cost the tourism industry about 900 billion yuan in January and February compared with last year, while consumer spending on food and drink was likely to have fallen by about 420 billion yuan.
While online spending – particularly on education and entertainment services – would offset some of the losses, the total drain on the economy over the period could be as much as 1.38 trillion yuan, said Zhu, who is currently head of the National Financial Research Institute at Tsinghua University in Beijing, which organised the presentation.
Based on figures from China’s National Bureau of Statistics, that would represent about 3.3 per cent of the country’s total retail sales in 2019.
Zhu Min says the Covid-19 epidemic cost China’s tourism industry about 900 billion yuan in January and February. Photo: AFP
“The falling consumption in the first quarter could knock down growth by three or four percentage points,” Zhu said. “We need a strong rebound, and that needs 10 times as much effort.”
Consumer spending is a cornerstone of the Chinese economy, accounting for almost 60 per cent of its growth last year. But with the coronavirus still far from contained, many local governments are reluctant to allow public facilities like cinemas and restaurants to reopen.
Despite the grim estimates provided by Zhu, his figures did not include car sales, which fell by 20.5 per cent year on year in January, their largest monthly dip in 15 years, according to figures from the China Passenger Car Association.
Sales in the first two weeks of February fell 92 per cent from the same period of 2019, mainly due to showroom closures. Over the whole of 2020, the coronavirus epidemic could cost China 1 million car sales, or about 5 per cent of its annual total, the industry group said.
In an effort to minimise that impact, Beijing has told local governments to introduce stimulus measures to boost car sales, including raising licence quotas in areas where numbers had previously been restricted to help fight air pollution.
Commerce ministry official Wang Bin said on Friday that the central government expected consumer spending to bottom out in March before rebounding in the second half of the year.
As for the economy as a whole, Chen Wenling, chief economist at the China Centre for International Economic Exchanges, a Beijing-based think tank, said this week that even if national production returned to 80 per cent by the end of February, first-quarter growth would still be less than 4.5 per cent. By comparison, China’s economy grew by 6.4 per cent in the first three months of 2019.
Economists from French bank Natixis forecast China’s gross domestic product to grow by between 2.5 and 4 per cent in the first quarter, depending on how quickly the situation was stabilised and the effectiveness of the government’s stimulus measures.
Chinese academics and young scientists join global scientific elite to explore frontiers of research
International joint laboratory announced at Shanghai forum
More than three dozen Nobel Prize winners for science were among the gathering in Shanghai for the second annual forum of the World Laureates Association. Photo: Xinhua
Shanghai hosted one of the largest gatherings of Nobel laureates in the world last week, with 44 Nobel Prize-winning scientists in the city for a government-sponsored forum with the lofty goal of discussing science and technology for the “common destiny of mankind”.
The four-day forum, which brought together young Chinese scientists and the cream of the international scientific crop, was a signal of China’s ambitions for its own researchers to take their place at the forefront of development and bring home their own prizes.
Experts agreed the event – the second in an annual “World Laureates Forum” – was hardly a public relations stunt, but a testament to China’s deep-seated, steadfast desire to learn from the world’s top scientists and join them, and their home countries, as leaders on the frontier of science and produce regular home-grown contenders for top prizes.
“The Nobel Prize is the holy grail for China, and it is still quite elusive for Chinese indigenous scientists to be awarded this prestigious recognition,” said Chengxin Pan, an associate professor of international relations at Australia’s Deakin University. “You could say China has a Nobel Prize complex.”
China says US tech ban is a barrier but will not halt scientific advance
Becoming a leader in the sciences was more than just an issue of driving economic expansion through technology and innovation, it was a matter of national preservation with deep roots in Chinese history, Pan said.
“China sees the lack of power, lack of scientific achievements and modern technology as largely responsible for the backwardness and humiliation it suffered during much of the 19th century and early 20th century,” he said.
“They need to make up for lagging behind by engaging with the top leading scientists in the world, wherever they are from.”
To that end, celebrated theoretical physicists, organic chemists, neuroscientists and biologists joined Chinese academics and youth scientists for the conference organised by the Shanghai city government and an association of top global scientists known as the World Laureates Association.
Among them were 2019 Nobel Prize for physics laureates Michel Mayor and Didier Queloz, as well as winners of other top prizes including the Wolf Prize, Lasker Award, and Fields Medal for mathematics. Discussions included the latest breakthroughs in disease prevention and drug development, sustainability and new energy, aerospace and black holes, as well as what drives their scientific curiosity.
Swiss professor Michel Mayor, astrophysicist and director of the Geneva Observatory, was one of the co-winners of the 2019 Nobel Prize in physics and among the attendees at the forum in Shanghai. Photo: EPA-EFE
The event, which culminated with the announcement of an international joint research laboratory for the world’s top scientists, to be established in Shanghai, was lauded by President Xi Jinping in an open letter to the attendees.
“China attaches great importance to the development of the frontier fields of science and technology,” Xi said, stressing China’s willingness to “work with all countries of the world” to “address the challenges of our age”.
The high calibre meeting was a rare opportunity for China to broadcast its message of commitment to scientific advancement, at a time when the reputation of its universities, academics and hi-tech companies have been taking a broad hit as part of a blowback from the US-China trade and tech wars, as well as suspicion among Western countries of China’s geopolitical aims.
In the past year, a number of major global Chinese tech companies, including Huawei and Hikvision, have been blacklisted in the US, while US tech giants like Google and Apple noticeably skipped out on China’s annual state-run World Internet Conference last month. Academic ties between Chinese and Western universities have also been called into question over suspicions of espionage, fraud, and intellectual property theft.
“China is saying we are still open for business and, at this juncture, we more warmly welcome foreign scientists and collaboration between countries in science and technology,” said Zhu Tian, an economics professor at the Chinese Europe International Business School in Shanghai.
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The past decade has seen China advance rapidly in the sciences. A surge in government funding, along with successive top level strategies to build up science and tech – including the Made in China 2025 innovation blueprint – and a significant uptick in international collaborations, have propelled the nation on to the global scientific stage.
Recent developments, like the first successful landing of a probe on the far side of the moon earlier this year, the dominance of the 5G network technology created by China’s Huawei, and the opening of the world’s largest radio telescope in Guizhou in 2017, have also raised the country’s profile in emerging tech and science.
But, so far, China’s rising visibility as a scientific powerhouse has been largely driven by scale. A June report by the journal Nature found researchers affiliated with the Chinese Academy of Sciences contributed the greatest number of “high-quality natural sciences research” to international journals compared with their peers at other institutions, while last month the journal found the top four “fastest rising” new universities for research output were all from mainland China.
“To some in the outside world, China is already a powerhouse in innovation … but in terms of the quality of innovations or scientific research, China still lags behind developed countries like the US, UK or Switzerland,” Zhu said.
Despite “making the fastest progress among all countries”, and significant leaps as a developing nation, “China is not at the frontier of technology or science yet,” he said, which is why international engagement, like the recent summit, is key to China’s growth.
“In order to catch up you have to know what is the frontier, you have to learn from those who are at the frontier.”
It is a point further underlined by the numerous blog posts and widely circulated articles in Chinese media about China’s meagre Nobel track record. Apart from one celebrated exception – 2015 Nobel laureate for medicine Tu Youyou – Chinese-born scientists who have won the prize did so for their work in overseas laboratories, or after changing citizenship.
Nobel Prize winner may have found solution to malaria drug resistance
Tu was the People’s Republic of China’s first Nobel Prize winner in the sciences and the country’s first woman to win the prize in any category.
Among China’s other Nobel laureates in the sciences are 1957 physics prizewinners Li Zhengdao and Yang Chen-ning, who won their award while in the US, having left China before the Communist Party takeover in 1949. Both later became US citizens. In 2017,
relinquishing his US citizenship to become a Chinese citizen.
China has worked hard to reverse the damage of brain drain, for example with its flagship “Thousand Talents” programme, a high-profile, state-backed recruitment drive set up in 2008 to attract overseas Chinese students and academics back to China with generous funding.
But reaching the frontiers of science, and making Nobel-worthy advancements, will also require China to do some reshuffling of its domestic priorities, which have been heavy on producing innovations in applied sciences and tech, but lighter on the basics – like physics, chemistry, and biology – whose mysteries are probed by the leading labs around the developed world.
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“China in the past has been known as a place for incremental innovation, and not the place where really radical innovation and big breakthroughs have come from, but they don’t want to be tinkering at the margins, they want to be a major innovation powerhouse,” said Andrew Kennedy, an associate professor in the policy and governance programme at the Australian National University.
To change this, China has begun to raise investment in basic sciences, Kennedy said, pointing to National Bureau of Statistics figures which indicate an average spending increase of more than 20 per cent each year between 1995 to 2016. Even so, spending at the end of that period – some US$11.9 billion at market rates – still lagged well below the figure cited for the US in 2015, which rang up US$83.5 billion, he said.
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The gathering of science laureates itself was further indication of that shift to place more emphasis on basic sciences, the kinds of disciplines the laureates lead, and could be a major boost to that agenda, according to Naubahar Sharif, associate professor of social science and public policy at Hong Kong University of Science and Technology.
“This [event] is a rocket-propelled, massive injection of scientific power into one place, and China has ambitions to gear up their own scientists to this level,” Sharif said, “and I’m sure the local Chinese scientists have been prepped to take advantage of it.”
While China has work to do in pushing back on criticism of questionable practices in intellectual property transfer, or the extent to which they share their own advances with others, collaboration with leading scientists is a crucial part of China’s “long-haul” vision in the sciences, Sharif said.
“If you rub shoulders with the most prestigious scientists of your era, your local scientists will learn something, and there’s going to be knowledge exchange and making linkages and a start to partnerships,” he said.
“This is the way that getting to that frontier can be achieved.”
Image copyright FENG VIDEOImage caption Wu Huayan ate only rice and chillies in order to save money to help her ill brother
Well-wishers have donated almost a million yuan to a Chinese student who was hospitalised after living on 2 yuan ($0.30, £0.20) a day for five years.
The case of Wu Huayan shocked Chinese people after it hit the headlines earlier this week.
The 24-year old woman became seriously malnourished while struggling to study and support her sick brother.
Ms Wu’s story also sparked anger at authorities for failing to recognise her plight and help her much earlier.
After the story was reported, donations began pouring in for the college student in the city of Guiyang – reportedly totalling some 800,000 yuan ($114,000, £88,000).
What is Wu Huayan’s story?
Earlier, this month, the young woman went into hospital after having difficulty breathing, according to Chinese media.
She was only 135cm (4ft 5ins) tall, weighing barely more than 20kg (43 pounds; three stones).
The doctors found she was suffering from heart and kidney problems due to five years spent eating minimal amounts of food. She said she needed to save money to support her sick brother.
Wu Huayan lost her mother when she was four and her father died when she was in school.
She and her brother were then supported by their grandmother, and later by an uncle and aunt who could only support them with 300 yuan ($42, £32) each month.
Most of that money went on the medical bills of her younger brother, who had mental health problems.
This meant Ms Wu spent only 2 yuan a day on herself, surviving largely off chillies and rice.
The siblings are from Guizhou, one of the poorest provinces in China.
Media caption China’s uphill struggle fighting extreme poverty
What has the reaction been?
The case sparked an outpouring of concern – and anger at authorities.
Many people on social media said they wanted to help with donations, and many voiced concern about her college not helping her.
One user called her situation “worse than that of refugees in Afghanistan”, while another pointed to the extravagant cost of China’s 70th anniversary celebrations, saying the money could have been better spent.
Others expressed their admiration at her efforts to help her brother, while also persevering with her studies in college.
Aside from the donations on crowd funding platforms, her teachers and classmates donated 40,000 yuan ($5,700; £4,400), while local villagers collected 30,000 yuan to help her.
Officials released a statement saying Ms Wu had been receiving the minimum government subsidy – thought to be between 300 and 700 yuan a month – and was now getting an emergency relief fund of 20,000 yuan.
“We will keep following the case of this strong-minded and kind girl,” the Tongren City Civil Affairs Bureau said.
“We will actively co-operate with other relevant departments to solve the problem according to the minimum living standard and temporary assistance responsibility that the civil affairs department bears.”
Dubbed “Little Wang”, his story also went viral, leading to international donations from people impressed by his resilience, and shocked at his poverty.
Image copyright PEOPLE’S DAILY
While China’s economy has skyrocketed over the past decades, poverty has not disappeared, and inequality has grown.
One major reason cited is the huge divide between rural and urban areas.
As a point of comparison, in rural region of Guizhou where Ms Wu lives, that figure is around 16,703 yuan.
China has moved from being “moderately unequal in 1990 to being one of the world’s most unequal countries,” according to a 2018 report by the International Monetary Fund.
According to the National Bureau of Statistics in 2017, 30.46 million rural people were still living below the national poverty line of $1.90 a day.
China has previously pledged to “eliminate” poverty by 2020.
An increasing proportion of young people no longer willing to wait tables in China as restaurant owners look to new technology for answers
Catering robots developed by Pudu Tech, the three-year-old Shenzhen start-up, have been adopted by thousands of restaurants in China, as well as some foreign countries including Singapore, Korea, and Germany. Photo: Handout
Two years ago, Bao Xiangyi quit school and worked as a waiter in a restaurant for half a year to support himself, and the 19 year-old remembers the time vividly.
“It was crazy working in some Chinese restaurants. My WeChat steps number sometimes hit 20,000 in a day [just by delivering meals in the restaurant],” said Bao.
The WeChat steps fitness tracking function gauges how many steps you literally take and 20,000 steps per day can be compared with a whole day of outdoor activity, ranking you very high in a typical friends circle.
Bao, now a university student in Hangzhou, Zhejiang province, quit the waiter job and went back to school.
“I couldn’t accept that for 365 days a year every day would be the same,” said Bao.
“Those days were filled with complete darkness and I felt like my whole life would be spent as an inferior and insignificant waiter.”
Olivia Niu, a 23-year-old Hong Kong resident, quit her waiter job on the first day. “It was too busy during peak meal times. I was so hungry myself but I needed to pack meals for customers,” said Niu.
Being a waiter has never been a top career choice but it remains a big source of employment in China. Yang Chunyan, a waitress at the Lanlifang Hotel in Wenzhou in southeastern China, has two children and says she chose the job because she needs to make a living.
Catering robots developed by Pudu Tech, the three-year-old Shenzhen start-up. Photo: Handout
Today’s young generation have their sights on other areas though. Of those born after 2000, 24.5 per cent want careers related to literature and art. This is followed by education and the IT industry in second and third place, according to a recent report by Tencent QQ and China Youth Daily.
Help may now be at hand though for restaurants struggling to find qualified table staff who are able to withstand the daily stress of juggling hundreds of orders of food. The answer comes in the form of robots.
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Shenzhen Pudu Technology, a three-year-old Shenzhen start-up, is among the tech companies offering catering robots to thousands of restaurant owners who are scrambling to try to plug a labour shortfall with new tech such as machines, artificial intelligence and online ordering systems. It has deployed robots in China, Singapore, Korea and Germany.
With Pudu’s robot, kitchen staff can put meals on the robot, enter the table number, and the robot will deliver it to the consumer. While an average human waiter can deliver 200 meals per day – the robots can manage 300 to 400 orders.
“Nearly every restaurant owner [in China] says it’s hard to recruit people to [work as a waiter],” Zhang Tao, the founder and CEO of Pudu tech said in an interview this week. “China’s food market is huge and delivering meals is a process with high demand and frequency.”
Pudu’s robots can be used for ten years and cost between 40,000 yuan (US$5,650) and 50,000 yuan. That’s less than the average yearly salary of restaurant and hotel workers in China’s southern Guangdong province, which is roughly 60,000 yuan, according to a report co-authored by the South China Market of Human Resources and other organisations.
As such, it is no surprise that more restaurants want to use catering robots.
According to research firm Verified Market Research, the global robotics services market was valued at US$11.62 billion in 2018 and is projected to reach US$35.67 billion by 2026.
Can robots and virtual fruit help the elderly get well in China?
China’s labour force advantage has also shrank in recent years. The working-age population, people between 16 and 59 years’ old, has reduced by 40 million since 2012 to 897 million, accounting for 64 per cent of China’s roughly 1.4 billion people in 2018, according to the national bureau of statistics.
By comparison, those of working age accounted for 69 per cent of the total population in 2012.
Other Chinese robotic companies are also entering the market. SIASUN Robot & Automation Co, a hi-tech listed enterprise belonging to the Chinese Academy of Sciences, introduced their catering robots to China’s restaurants in 2017. Delivery robots developed by Shanghai-based Keenon Robotics Co., founded in 2010, are serving people in China and overseas markets such as the US, Italy and Spain.
Pudu projects it will turn a profit this year and it is in talks with venture capital firms to raise a new round of funding, which will be announced as early as October, according to Zhang. Last year it raised 50 million yuan in a round led by Shenzhen-based QC capital.
To be sure, the service industry is still the biggest employer in China, with 359 million workers and accounting for 46.3 per cent of a working population of 776 million people in 2018, according to the national bureau of statistics.
And new technology sometimes offers up new problems – in this case, service with a smile.
“When we go out for dinner, what we want is service. It is not as simple as just delivering meals,” said Wong Kam-Fai, a professor in engineering at the Chinese University of Hong Kong and a national expert appointed by the Chinese Association for Artificial Intelligence. “If they [robot makers] can add an emotional side in future, it might work better.”
Technology companies also face some practical issues like unusual restaurant layouts.
“Having a [catering robot] traffic jam on the way to the kitchen is normal. Some passageways are very narrow with many zigzags,” Zhang said. “But this can be improved in future with more standardised layouts.”
Multi-floor restaurants can also be a problem.
Dai Qi, a sales manager at the Lanlifang Hotel, said it is impossible for her restaurant to adopt the robot. “Our kitchen is on the third floor, and we have boxes on the second, third, and fourth floor. So the robots can’t work [to deliver meals tdownstairs/upstairs],” Dai said.
But Bao says he has no plans to return to being a waiter, so the robots may have the edge.
“Why are human beings doing something robots can do? Let’s do something they [robots] can’t,” Bao said.
The manufacturing purchasing managers’ index, released by the National Bureau of Statistics on Saturday, was 49.5 in August
Figure adds to a month of woe for policymakers in Beijing, even ahead of planned US tariff increases on September 1, October 1, and December 15
China’s manufacturing purchasing managers’ index fell by 0.2 points in August as the trade war continued to bite. Photo: Xinhua
As the trade war with the United States continues to gather pace, manufacturers in China remain gloomy about their prospects, with the sector activity contracting for the fourth successive month in August.
The manufacturing purchasing managers’ index (PMI), released by the National Bureau of Statistics (NBS) on Saturday, stood at 49.5 in August, down from a reading of
, and below analysts’ expectations. The median result of a survey of analysts by Bloomberg expected a reading of 49.6.
The PMI is a gauge of sentiment among factory operators, with 50 being the demarcation line between expansion and contraction in sector activity. In the survey, manufacturers are asked to give a view on business issues such as export orders, purchasing, production and logistics.
That the index has remained in contractionary territory for six of eight months this year shows that the effects of US tariffs are resonating through the Chinese economy. The manufacturing PMI only showed expansion in March and April of this year.
New and higher US tariffs scheduled to enter force on September 1, October 1 and December 15 could provide some very temporary boost to Chinese exports and therefore manufacturers, should they inspire American buyers to make early purchases to pay lower tariff rates. However the long term trajectory is negative, with many manufacturers scoping out or already relocating to production sites outside the world’s second largest economy.
Also released on Saturday was the official non-manufacturing PMI, a survey of the construction and services sectors. This stood at 53.8, up from 53.7 in July, showing that these sectors have remained more robust in the face of a general slowdown in China’s economy. The Bloomberg survey of analysts had expected non-manufacturing PMI in August to remain unchanged.
Composite PMI, a combined reading of both manufacturing and non-manufacturing, was 53, down from 53.1 in July.
The August PMI decline “indicates downward pressure on the economy,” said Zhang Liqun, an analyst with the China Federation of Logistics and Purchasing, which produces the index with the NBS.
“Corporations’ forecasts of the market outlook were quite poor while being cautious on their production operations,” Zhang said. The PMI indicated a drop in new orders, which also reflected a lack of domestic demand. Given that the US is escalating tensions with China, downward pressure on external demand is also apparent, Zhang said.
August was a month to forget for policymakers in Beijing, with a series of negative data highlighting the serious economic challenges facing the nation. With the trade war threatening to tip the global economy into a recession, China remains heavily exposed.
The trade war is having a significant impact on Chinese manufacturing. Photo: Xinhua
While exports grew by 3.3 per cent in July, a sign of front-loading, imports fell by 5.6 per cent, emphasising the issues with consumption in China. This problem was also clear in retail sales figure, which came in at a disappointing 7.6 per cent for July, down from 9.8 per cent growth in June.
BEIJING, Aug. 11 (Xinhua) — Chinese residents saw their per capita disposable income surge by nearly 60 times during the past seven decades thanks to the country’s steady economic expansion.
The per capita disposable income stood at about 49.7 yuan in 1949, and topped 28,200 yuan (about 4,030 U.S. dollars) in 2018, registering a growth of over 59 times factoring in inflation, a report from the National Bureau of Statistics (NBS) showed.
The steady income growth also led to continuous increases in consumption spending. Chinese residents’ per capita consumption spending surged from 88.2 yuan in 1956 to 19,853 yuan in 2018, growing 28.5 times in real terms, NBS data showed.
A villager shops at a mart in Wangzhuanggou Village of Wuxiang County, north China’s Shanxi Province, Feb. 17, 2019.
China has seen rapid income and consumption growth in rural areas over the past 70 years, according to a report from the National Bureau of Statistics (NBS). In 2018, rural per capita disposable income had increased 40 times from 1949 to stand at 14,617 yuan (about 2,088 U.S. dollars) in real terms after deducting price factors, up 5.5 percent on average annually, the NBS said. The country’s urban-rural income gap narrowed remarkably, with the ratio of per capita disposable income for urban residents to that of rural residents hitting 2.69 in 2018, 0.64 lower than 1956. The rural consumption level continued to rise in the last 70 years, as indicated by its expanding size and improving quality. Per capita rural consumption grew by an average annual rate of 5.2 percent to reach 12,124 yuan in real terms in 2018 after deducting price factors, up 32.7 times from 1949, while the Engel coefficient for rural residents dropped 38.5 percentage points from 1954 to reach 30.1 percent. Per capita living space in rural areas reached 47.3 square meters, posing a sharp contrast to 8.1 square meters in 1978, according to the report.
Household consumption in rural areas also increased, with the average ownership of cars, computers and cell phones per 100 households reaching 22.3, 26.9 and 257, respectively in 2018. (Xinhua/Zhan Yan)
BEIJING (Reuters) – China’s producer prices flatlined in June on lower oil prices and weak global demand, fuelling concerns that a slowdown in manufacturing from a bruising trade war will further drag on growth in the world’s second-biggest economy.
The producer price index (PPI) showed no growth in June from a year earlier, the National Bureau of Statistics (NBS) said on Wednesday. That compared with a 0.6% rise in May and a gain of 0.3% forecast by economists in a Reuters poll.
The June PPI reading was the lowest since August 2016 when the index last fell year-on-year. Factory gate prices slowed from May as well, falling 0.3%.
On the other hand, June consumer price growth in annual terms matched a 15-month high seen in May as supply shortages triggered by the African swine fever outbreak and extreme weather conditions continued to push up pork and fruit prices.
A cooling in producer prices, seen as a gauge of industrial demand that gives momentum to investment and profits in the Chinese economy, may rekindle worries about deflation and prompt the authorities to launch more aggressive stimulus.
“The bigger picture is inflation, apart from food inflation, is actually pretty weak and with the economy continuing to cool, I think the return to factory-gate deflation is very likely,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
Tommy Xie, China economist at OCBC Bank in Singapore, also said he saw the risk of produce prices contracting in annual terms as early as next month.
Upstream sectors were particularly weak, with prices for oil and natural gas extraction down 1.8% from a year earlier, the NBS data showed. Price gains in the coal mining sector also eased.
Although Beijing and Washington reached another truce in their trade war last month, economists expect continuing pressure on the Chinese economy as manufacturers shift more production abroad to avoid U.S. tariffs on China-made goods.
China’s factory activity shrank more than expected in June as tariffs and weaker domestic demand hit new orders for goods.
Beijing is fast-tracking more infrastructure projects but prices for some construction materials remain lacklustre.
Spot prices for steel rebar in June lingered below the levels of a year earlier and may worsen due to seasonal slackening of construction activity amid high temperatures and rainfall in summer.
Premier Li Keqiang pledged earlier this month to implement financing tools including reserve requirement ratio (RRR) cuts to support small and private firms, adding to expectations for further stimulus measures.
At the same time, however, he and other top policymakers have reiterated that China will not resort to large-scale stimulus.
Evans-Pritchard from Capital Economics said the government could adopt more monetary easing and off-budget fiscal support to bolster the economy.
“But I think the days of big drastic stimulus are probably over. The most we can hope for is really it (more government support) helps to dampen the headwinds and prevent the economy from slowing too sharply.”
CPI STILL ELEVATED
The consumer price index (CPI) in June rose 2.7% in annual terms, driven by higher food prices. Fruit prices surged 42.7% from a year earlier while pork prices rose 21.1%.
Analysts polled by Reuters expected consumer prices to rise 2.7%, matching the pace seen in May.
Some economists said consumer inflation may accelerate due to dwindling pig stocks, but others contended price rises will cool.
“CPI may have peaked in June and could come off steadily in the second half,” said Wang Jun, Beijing-based chief economist at Zhongyuan Bank. “There are deflationary risks but the overall pressure is not big, because deflationary risk is only restricted to manufacturing products.”
Core inflation that strips out volatile food and energy prices was at 1.6% in June from a year earlier, the same annual pace as in May.
On a month-on-month basis, CPI fell 0.1% in June after no change in May.
BEIJING, July 8 (Xinhua) — China’s high-speed railway (HSR) has registered rapid growth and offered many viable practices for other countries considering HSR investment, according to a World Bank report released Monday.
Key factors enabling the growth include the development of a comprehensive long-term plan and the standardization of designs and procedures, said the report, which summarizes China’s HSR development.
China’s Medium- and Long-Term Railway Plan, which looks up to 15 years ahead, provides a clear framework for the development of the system, according to the World Bank.
Meanwhile, the construction cost of the Chinese HSR network stood at about two-thirds of the cost in other countries, the report said, citing an average of 17 million U. S. dollars to 21 million U. S. dollars per km.
“China has built the largest high-speed rail network in the world. The impacts go well beyond the railway sector and include changed patterns of urban development, increases in tourism, and promotion of regional economic growth,” said Martin Raiser, World Bank director of China.
By the end of 2018, the total railway operation mileage reached 131,000 km, five times higher than 1949, while the high-speed railway exceeded 29,000 km, accounting for more than 60 percent of the world’s total, according to a recent report by the National Bureau of Statistics.
In China, high-speed rail service is competitive with road and air transport for distances of up to about 1,200 km, while fares are about one-fourth the base fares in other countries, which allows HSR trains to attract passengers from all income groups, the report said.
“Large numbers of people are now able to travel more easily and reliably than ever before, and the network has laid the groundwork for future reductions in greenhouse gas emissions,” Raiser said.
The manufacturing purchasing managers’ index (PMI), a gauge of sentiment among factory operators, fell to 49.4 in May
This was a decrease on April’s performance of 50.1, and below the median expectations of a poll of Bloomberg analysts, which had predicted a drop to just 49.9
An index reading above 50 indicates growth, while anything below 50 indicates a contraction. Photo: AFP
China’s manufacturing purchasing managers’ index fell further in May, suggesting the economy is continuing to slow amid the escalating trade war with the United States.
The manufacturing purchasing managers’ index (PMI), a gauge of sentiment among factory operators, fell to 49.4 in May, a decrease on
of 50.1, and well below the median expectations of a poll of Bloomberg analysts, which had predicted a drop to 49.9. A reading of below 50 means that the activity in the sector is contracting.
The 49.4 reading was the lowest since February’s 49.2.
Non-manufacturing PMI, which covers the services and construction sectors, remained the same as last month at 54.3, in line with the expectations of the Bloomberg poll.
“The fall in the headline index was mostly driven by weaker new orders. Export orders dropped back particularly sharply, which suggests that [US President Donald] Trump’s latest tariff hike may already be undermining foreign demand,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
“Stocks of raw materials continued to decline, reversing the build-up of inventories ahead of the 1 April VAT cut that helped to temporarily boost output in March.”
The composite PMI, which combines both manufacturing and services activity, was 53.3 in May, a slight decrease on 53.4 a month earlier.
An index reading above 50 indicates growth, while anything below 50 indicates a contraction.
The fall in the headline index was mostly driven by weaker new orders. Export orders dropped back particularly sharply, which suggests that [US President Donald] Trump’s latest tariff hike may already be undermining foreign demand.Julian Evans-Pritchard
The dip into contractionary territory for China’s manufacturing sentiment will be a concern to policymakers in Beijing, as they struggle to contain the effect the trade war is having on both economic mood and investment sentiment. While both composite and non-manufacturing PMIs remained above contraction levels, their stagnation points to continued challenges facing China’s economy.
The new data, released by the National Bureau of Statistics (NBS), combined with weaker economic data readings for April, suggest that Chinese growth slowed in the second quarter after stabilising at 6.4 per cent in the first quarter.
Details of the data show that within the manufacturing PMI, new orders were 49.8, down from 51.4 in April. Output also fell to 51.7, from 52.1 last month, while employment fell to 47.0 from 47.2 and new export orders plunged to 46.5 from 49.2.
Within the non-manufacturing PMI, the service sector was up to 53.5 from 53.2 in April, which the NBS said showed that “the service industry continued to maintain rapid growth”.
Details of the data show that within the manufacturing purchasing managers’ index, new orders were 49.8, down from 51.4 in April Photo: AFP
“China’s non-manufacturing business activity index was 54.3 per cent, which was the same as last month, indicating that the non-manufacturing industry continued to develop steadily and rapidly,” said the NBS statement.
Zhao Qinghe, senior statistician at the Service Industry Research Centre at the NBS, said that “there was some fluctuation in the manufacturing boom” and pointed to slowing demand as the cause of the slump.
“In May, the manufacturing PMI fell back. Among the 21 industries surveyed, 13 of the industry’s production indices are located in the expansion range, indicating that most industries in the manufacturing industry are relatively stable in production and operation,” said Zhao.
Among the 21 industries surveyed, 13 of the industry’s production indices are located in the expansion range, indicating that most industries in the manufacturing industry are relatively stable in production and operation.Zhao Qinghe
Zhao added that “the overall production and operation activities of Chinese enterprises have maintained a stable development trend”.
The deterioration in the PMI sentiment data was expected after the US escalated the trade war on May 10. From Saturday, a higher tariff of 25 per cent – increased from the earlier 10 per cent rate – will apply to US$200 billion of Chinese imports to the US. The US is also processing a tariff of up to 25 per cent on a further US$300 billion of Chinese goods, which would put significant further pressure on the Chinese economy. China has already retaliated by placing variable tariffs on US$60 billion of US imports.
Even before the escalation of the trade war, Chinese economic data in April was disappointing.
Retail sales growth slowed to 7.2 per cent in April – the lowest rate in 16 years – from 8.7 per cent in March, while industrial production growth slowed markedly to 5.4 per cent from 8.4 per cent. Exports fell 2.7 per cent in April compared with the same period in 2018, a sharp reversal from the 14.2 per cent rise in March.
While many private analysts expected the Chinese government to enact further
to offset the slowdown in growth, Beijing has so far refused to commit to doing so.
In part, the government is counting on already implemented personal and business tax cuts – including the trimming of the value-added tax rate for manufacturing firms – to gradually provide support for the economy.
Industrial profits stood at 515.39 billion yuan (US$74.7 billion) last month, down 3.7 per cent compared to a year earlier. Photo: AFP
The PMI rounds off a poor week for China’s economy after Monday’s industrial profits released by the NBS showed the fastest slump in almost three and a half years in April.
stood at 515.39 billion yuan (US$74.7 billion) last month, down 3.7 per cent compared to a year earlier, the largest percentage decline since December 2015. With further tariffs about to kick in on
this month, said that the escalation could lead to half a per cent being detracted from the Chinese economy this year, which would bring it to the lower limits of Beijing’s target growth range of between 6.0 and 6.5 per cent.
It is expected that a surge in orders will lead to a bumper month of exports in May and June as US importers and Chinese exporters attempt to front-load their stocks to beat the tariffs.
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