Tag: Breaking News: Asia

Singapore avoids technical recession as economy grows 0.7% year-on-year in second quarter

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Exterior of the Singapore Exchange building.

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Singapore’s economy avoided a technical recession in the second quarter, growing 0.7% year-on-year and 0.3% quarter-on-quarter, advanced estimates showed.

Economists polled by Reuters expected to see growth of 0.3% quarter-on-quarter and 0.6% year-on-year.

In the first quarter, Singapore’s economy contracted by 0.4% quarter-on-quarter on a seasonally adjusted basis and saw marginal growth of 0.4% year-on-year.

The latest data comes after the Monetary Authority of Singapore, the city-state’s central bank and financial regulator, warned of an “uncertain” growth outlook earlier this month.

“The near-term outlook remains uncertain with downside risks,” the MAS said in an annual review. “Should latent vulnerabilities in the global financial system emerge in the coming months, consumer and investor confidence could take a further hit, with adverse implications for the broader economy,” it said.

In its annual review, MAS estimated the gross domestic product for 2023 to ease to a range of 0.5% to 2.5%, lower than the growth of 3.6% in 2022.

The Singapore dollar slightly strengthened against the U.S. dollar after the GDP release and traded at $1.321 against the greenback.

Singapore’s manufacturing sector noticeably led declines in overall growth, contracting 7.5% from a year ago, a further decline from the contraction of 5.3% in the previous quarter.

“The weak performance of the sector was due to output declines across all manufacturing clusters, except for the transport engineering cluster,” Singapore’s Ministry of Trade and Industry said.

Singapore’s latest industrial production readings spurred concerns that the economy could enter a technical recession. The figures fell for a second month in May dropping 10.8% year-on-year, while its non-oil domestic exports plunged by 14.7% in May.

‘Pockets of resilience’

HSBC economist Yun Liu noted that Singapore is likely to avoid a recession throughout the year, adding that “there are still pockets of resilience” in the economy.

Pointing to a steady recovery in visitors to Singapore, Liu said in HSBC’s third-quarter outlook report, “The ripples will mostly come from travel and tourism sectors,” adding that the resumption of Chinese tourists has yet to reach 2019 levels.

Monthly statistics from its tourism agency showed Singapore has consistently welcomed over 1 million arrivals since March this year.

“While the return of Chinese tourists is only back to 30% of the equivalent level (2019 levels), Singapore is, nonetheless, the champion in restoring direct flights with China,” Liu said. “This paves the way for an acceleration in Chinese tourists in the coming months, supporting Singapore’s services sectors.”

“Singapore is well position to lead the region with a swift recovery,” said Liu.

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July 13, 2023
China’s June trade data badly misses expectations

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The dollar value of China exports are expected to decline 9.5% in June from a year earlier, according to a Reuters poll, deepening a 7.5% annual decline in May.

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China’s exports contracted in June at the fastest pace since the start of the Covid-19 pandemic, as high inflation in key developed markets and geopolitics hit global demand.

Thursday’s trade data release is yet another fresh indication that China’s leaders will not be able to count on external factors in reviving the faltering growth momentum. The decline in June imports was also more severe than expectations, suggesting local demand is also waning.

The dollar value of China’s exports plunged 12.4% in June from a year ago, customs data showed Thursday. This is a far bigger drop than expectations for a 9.5% decline in a Reuters poll and the 7.5% annual decline in May. The percentage decline was the biggest that the world’s second-largest economy has recorded since February 2020.

Imports declined 6.8%, in June from a year ago, also worse than expectations for a 4% decline and the 4.5% annual decline in May.

China’s trade still faces rather great pressure in the second half of the year, partly due to high inflation in developed countries and geopolitics, Lu Daliang, a spokesperson for China’s customs bureau, said at a press conference Thursday.

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July 12, 2023
Australia’s central bank leaves its key rate unchanged, says inflation ‘passed its peak’

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An aerial view of the central business district and Sydney Opera House on February 17, 2023.

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Australia’s central bank held its official cash rate steady at 4.10% in a closely watched decision Tuesday.

Economists were split on expectations ahead of the decision, with 16 out of 31 respondents surveyed by Reuters forecasting a hike of 25 basis points and 15 expecting the central bank to hold.

Stocks cheered the move as the central bank said “inflation in Australia has passed its peak.” The S&P/ASX 200 pared earlier gains and rose 0.21%.

The Australia Bureau of Statistics’ monthly inflation indicator showed some cooling in the rise of prices at 5.6% for the month of May, led by housing prices, food and non-alcoholic beverages.

Australia’s monthly inflation indicator peaked at 8.4% in December. The economy’s consumer price index rose 7% in the first quarter of 2023.

The decision comes after the central bank raised its cash rate by 25 basis points last month — a move it described as a “finely balanced” decision, according to minutes from its June meeting.

It added that inflation risks have “shifted somewhat to the upside.” The RBA added that the inflation rate’s return to the central bank’s price stability target range of 2 to 3% was “already drawn out.”

Tuesday’s decision will revolve around similar discussions that took place in the RBA’s June meeting, Commonwealth Bank of Australia’s senior economist Belinda Allen said ahead of the decision.

“The recent data flow has been mixed and we think this affords the RBA some time to slow its hiking cycle,” said Allen, adding that the second-quarter CPI print will be closely watched ahead of the central bank’s next meeting in August.

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July 3, 2023
China’s factory activity grew more slowly in June, Caixin survey shows

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Official and private surveys showed China’s factory activity slowed in June 2023 as growth momentum stalls in the world’s second-largest economy.

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China’s factory activity grew more slowly in June, a private-sector survey showed on Monday, corroborating official data last week that pointed to stuttering growth in the world’s second-largest economy.

The Caixin/S&P Global manufacturing purchasing managers’ index slipped to 50.5 in June from 50.9 in May. Economists expected the reading to hit 50.2 for June, according to a Reuters poll. The 50-point mark separates expansion from contraction.

China’s National Bureau of Statistics released data last Friday that showed the country’s official manufacturing PMI coming in at 49.0 in June — compared with 48.8 in May.

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July 2, 2023
China’s factory activity shrinks for a third month as recovery momentum stalls

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Factory activity in China in June contracted for a third month, official data released June 30, 2023 show. Weak China economic data in April and May have fanned calls for economic stimulus for the world’s second-largest economy.

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China’s factory activity in June contracted for a third month, while non-manufacturing activity was at its weakest since Beijing abandoned its strict “zero Covid” policy late last year.

The latest data points to a patchy recovery in the world’s second-largest economy as the growth momentum fizzles.

The official manufacturing purchasing managers’ index (PMI) came in at 49.0 in June — compared to 48.8 in May and 49.2 in April — according to data from the National Bureau of Statistics released on Friday. June’s reading was in line with the median forecast in a Reuters poll.

Friday’s figures also showed China posting its weakest official non-manufacturing PMI reading this year, coming in at 53.2 in June — compared to 54.5 in May and 56.4 in April. A PMI reading above 50 points to an expansion in activity, while a reading below that level suggests a contraction.

“Economic momentum is still quite weak in China. Recent data shows the global economy is slowing, which will likely put further pressure on external demand in the coming months,” said Zhang Zhiwei, Pinpoint Asset Management’s president and chief economist.

“On the other hand, the government’s growth target of 5% this year is quite modest given the low base last year. It is not clear if the weak economic data would push the government to launch aggressive stimulus measures soon,” he added.

The Hang Seng Index and the CSI 300 index reversed losses to rise marginally in early Friday trade after the PMI data was released. The Chinese yuan hit its weakest against the U.S. dollar since mid-November despite the central bank’s stronger-than-expected midpoint fix — the fourth this week as the PBOC seeks to stem weakness in the currency.

Key meetings ahead

Chinese Premier Li Qiang said Tuesday his country was still on track to reach its annual growth target of around 5% — a modest target after China grew just 3% last year, one of the weakest showings in nearly half a century.

Market watchers are anticipating the next steps from a Politburo meeting in July, during which the Communist Party’s top brass will review the country’s economic performance in the first half of the year.

China’s State Council had pledged in mid-June to roll out “more forceful measures” in a timely manner to enhance the momentum of economic development, optimize the economic structure, and promote sustained recovery.

Economic growth in April and May came in below expectations, intensifying calls for more decisive monetary measures to support China’s growth, as a much-anticipated post-Covid rebound disappointed.

Major Wall Street banks — from Goldman Sachs and Bank of America to UBS and Nomura — recently cut their China growth projections.

But a private survey released Friday showed China’s monetary stimulus in August did little to boost loan demand in the second quarter — even though borrowing costs for businesses were lower than a year ago.

It underscores the difficulties faced by the Chinese government face, and throws doubt on whether the latest round of rate cuts in mid-June will be effective.

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June 29, 2023
Alibaba announces Eddie Wu to succeed Daniel Zhang as CEO in surprise move

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The logo of the Alibaba office building is seen in downtown Huangpu District in Shanghai, China, June 16, 2023.

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Eddie Wu will succeed Daniel Zhang as chief executive of Alibaba Group, while Joe Tsai will take Zhang’s place as the group’s chairman, China’s largest e-commerce company announced Tuesday.

Wu is one of Alibaba’s co-founders and currently chairman of Taobao and Tmall Group. Brooklyn Nets owner Tsai is currently Alibaba’s executive vice chairman.

Zhang will continue to lead the Alibaba Cloud Intelligence Group as chairman and chief executive after this change, which the company said will take effect Sept. 10.

This surprise succession announcement comes after Alibaba said in March it will split its company into six business groups. The company explained at that time that this will allow each business group to raise outside funding and go public in the most significant reorganization in the Chinese e-commerce giant’s history.

Wu has held a multitude of roles in his time at the company, including heading technology at Alibaba’s inception, as well as chief technology officer at Alipay and Taobao. He was also director of Alibaba Health Information Technology and founded Vision Plus Capital, a venture capital firm focused on investing in advanced technologies, enterprise services and digital healthcare.

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June 19, 2023
Blinken to meet China’s Xi Jinping on Monday

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US Secretary of State Antony Blinken walks after arriving in Beijing, China, June 18, 2023.

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U.S. Secretary of State Antony Blinken is to meet with Chinese President Xi Jinping on Monday, as the top U.S. diplomat wraps up his rare two-day visit to Beijing amid simmering U.S.-China tensions.

Blinken will meet with Xi at 4:30 p.m. local time, according to a State Department official.

The trip by Blinken makes him the highest-level American official to visit China since Joe Biden became U.S. president and the first U.S. secretary of State to make the trip in nearly five years. A meeting with Xi had not been confirmed before Blinken arrived in Beijing, and will likely be seen as a positive sign that talks are going well.

Blinken met top Chinese diplomat Wang Yi on Monday, after “candid, substantive, and constructive talks” with Chinese Foreign Minister Qin Gang on Sunday.

Wang stressed that the Blinken visit came at a critical juncture in Sino-U.S. relations, in a statement released by the Chinese foreign ministry translated via Google. He said both parties must choose between cooperation and conflict, adding that the difficulties in the countries’ ties are rooted in the U.S.’ “erroneous perception of China, which leads to wrong policies towards China.”

Wang further urged Washington to give up its so-called “China threat theory,” to lift sanctions against Beijing and to no longer suppress China’s technological development.

The State Department did not immediately respond to a request for comment.

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June 19, 2023
Blinken meets Chinese Foreign Minister Qin Gang on high-stakes diplomatic trip to Beijing

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US Secretary of State Antony Blinken (L) walks with China’s Foreign Minister Qin Gang (R) ahead of a meeting at the Diaoyutai State Guesthouse in Beijing on June 18, 2023.

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U.S. Secretary of State Antony Blinken on Sunday met with Chinese Foreign Minister Qin Gang and top diplomat Wang Yi in Beijing on a high-stakes diplomatic mission to cool U.S.-China tensions that have overshadowed geopolitics in recent months.

The trip by Blinken makes him the highest-level American official to visit China since Joe Biden became U.S. president and the first U.S. secretary of state to make the trip in nearly five years.

Blinken’s original travel plans for February were disrupted by news of an alleged Chinese spy balloon flying over U.S. airspace. The U.S. ultimately shot down the alleged spy balloon, and tensions between the world’s two largest economies have since remained tense. Beijing insisted the balloon was an unnamed weather tracker that blew off course.

Blinken is set to have a working dinner later Sunday at the Diaoyutai State Guesthouse with Qin, who was previosuly China’s ambassador to the U.S. Some reports suggest there may also be a meeting with President Xi Jinping on Monday during Blinken’s two-day visit.

Expectations for a significant recovery in the U.S.-China relationship, especially as a result of Blinken’s trip, remain low. State department spokesperson Matthew Miller said in a statement last week that Blinken will discuss the importance of maintaining open lines of communication and will “raise bilateral issues of concern, global and regional matters, and potential cooperation on shared transnational challenges.”

At the annual Shangri-La Dialogue event in Singapore earlier this month, the U.S. defense chief and his Chinese counterpart didn’t have a formal meeting. And more broadly, international travel restrictions during the Covid-19 pandemic limited contact between the U.S. and Chinese governments.

In August, a controversial visit to Taiwan by Nancy Pelosi, then speaker of the U.S. House of Representatives, fueled Beijing’s ire. Beijing considers Taiwan part of its territory, with no right to conduct diplomatic relations on its own. The U.S. recognizes Beijing as the sole legal government of China, while maintaining unofficial relations with the island, a democratically self-governed region.

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Biden’s visit to Beijing could also possibly pave the way for a November meeting between Biden and his Chinese counterpart Xi — their first since Bali in November, a day before a G-20 summit kicked off.

In late May, the U.S. commerce secretary and her Chinese counterpart met in Washington, D.C. And U.S. Treasury Secretary Janet Yellen is also expected to visit China at an unspecified time.

China’s new ambassador to the U.S., Xie Feng, arrived in the U.S. in late May after a period of about six months with no one in that position. Biden said around the same time that he expected U.S.-China tensions would “begin to thaw very shortly.”

A potential opportunity for Biden and Xi to meet again would be in November, during the Asia-Pacific Economic Cooperation Leaders’ Summit that’s set to be held in San Francisco.

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June 17, 2023
China’s youth unemployment hits a fresh record high in May, major data disappoint

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A woman rests on a table at a job fair on June 9, 2023 in Beijing, China.

Kevin Frayer | Getty Images News | Getty Images

BEIJING — China’s youth unemployment rose to a record in May, while major data missed expectations, according to data released Thursday by the National Bureau of Statistics.

The unemployment rate for young people ages 16 to 24 rose to 20.8% in May, a record and above the high set in April. The jobless rate for people of all ages in cities was 5.2% in May.

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Retail sales for May rose by 12.7% in May from a year ago, below expectations for 13.6% growth forecast by a Reuters poll.

Industrial production rose by 3.5% in May from a year ago, slower than the 3.6% expected by the Reuters poll.

Analysts predicted a 4.4% increase in fixed asset investment for the first five months of the year from a year ago. Fixed asset investment for the first five months of the year rose by 4% from a year ago, slower than the 4.4% predicted by Reuters.

“The national economy sustained the recovery momentum,” the statistics bureau said in a release in English.

Challenges for China growth

However, the bureau warned of persistent challenges from the international environment and “mounting pressure” on the “domestic structural adjustment,” without elaborating much.

Figures for April had also missed analysts’ expectations, reflecting how China’s economic recovery from the pandemic was losing steam.

Statistics bureau spokesperson Fu Linghui told reporters Thursday that second quarter growth is expected to be faster than the first quarter, since the comparable base from last year was low.

He said growth in the third and fourth quarters would return to a “normal” pace. Fu said China could achieve its full year growth target, set at around 5% GDP growth for 2023.

The economy grew by only 3% in 2022, a year that saw the metropolis of Shanghai locked down in April and May as part of measure to control Covid.

Beijing ended those controls in December, but an initial rebound in growth has lost steam in recent months.

“Switching to policy stimulus mode with large-scale easing measures would be the first imperative,” said Bruce Pang, chief economist and head of research, JLL Greater China.

“But it could [take] two to three years to shore up a slowing economic recovery and regain a higher potential growth rate of over 6%,” he said, “with more balanced growth drivers and stronger internal impulse.”

Authorities have started to loosen monetary policy in a bid to support growth, although broader measures aren’t expected until top leaders hold a regular meeting in late July.

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June 14, 2023
China’s producer prices plunge the most in seven years as deflation hangs over economy

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People walk past buildings in Shanghai, Shanghai, China, on Friday, April 21, 2023.

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Inflation in China stayed at low levels in May, as the economy struggles to recover even after its strict Covid lockdown measures lifted late last year.

Producer price index in May fell 4.6%, compared to a decline of 3.6% in April. A Reuters poll showed economists expected to see a decline of 4.3% in producer prices.

The reading marked the steepest year-on-year drop in seven years, when producer prices saw a year-on-year drop of 7.2% in May 2016.

China’s consumer price index in May rose 0.2% compared to a year ago, government data showed. Economists surveyed by Reuters expected a 0.3% rise. CPI in April was at a two-year low of 0.1%.

Month-on-month, prices fell 0.2% — economists predicted a 0.1% decline.

China’s low consumer inflation and deflation in its producer prices come in contrast to relatively high inflation in major economies around the world.

Global central banks, including the U.S. Federal Reserve, have been fighting to bring down rising prices for more than a year. Just this week, Canada and Australia defied expectations and raised interest rates.

After the release , the onshore Chinese yuan weakened 0.06% after to 7.1154 against the U.S. dollar. The CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, shed 0.2% and last traded slightly above the flatline.

The latest data is among a batch of economic indicators that point to a cooling economy in China.

Pinpoint Asset Management’s Zhiwei Zhang said, “The risk of deflation is still weighing on the economy. Recent economic indicators send consistent signals that the economy is cooling.”

Zhang expects the Chinese government’s next fiscal policy review to take place after its second quarter gross domestic product is released next month.

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June 8, 2023
China’s exports plunge by 7.5% in May, far more than expected

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A cargo ship carrying containers is seen near the Yantian port in Shenzhen, following the novel coronavirus disease (COVID-19) outbreak, Guangdong province, China May 17, 2020.

Martin Pollard | Reuters

BEIJING — China’s exports fell in May for the first time since February, customs data showed Wednesday.

Exports fell 7.5% year-on-year to $283.5 billion, far worse than the 0.4% decline predicted by a Reuters poll.

The disappointing export figures indicate that the longer-term trend is down, said Hao Hong, chief economist at Grow Investment Group.

China won’t be able depend on trade to boost its economy for “another six months, for sure,” he said, noting a drag from lackluster U.S. demand, where inflation — and interest rates — remain high.

Imports for May dropped by 4.5% from a year ago to $217.69 billion — less than the 8% plunge forecast by Reuters.

China’s monthly imports have declined on a year-on-year basis since late last year.

A breakdown of China’s trade for May by country or category wasn’t immediately available.

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June 6, 2023
China’s economic data misses expectations as economy continues to show uneven recovery

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YANGZHOU, CHINA – MAY 02: Aerial view of tourists visiting the Dongguan street during the May Day holiday on May 2, 2023.

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China’s economic data for April broadly missed expectations as the economy continued to show an uneven path of recovery from the impact of its stringent Covid restrictions.

Industrial production for April rose by 5.6% year-on-year, compared to the 10.9% expected by economists surveyed in a Reuters poll. The figure was up 3.9% in March following a muted start to the year.

Retail sales rose by 18.4% – lower than economists’ forecast a surge of 21%.

Fixed asset investment rose by 4.7%, against expectations of 5.5%. The reading rose 5.1% the previous month.

“China is in the stage of recovering, compared to last year, the numbers are positive as we just saw, but is the recovery good enough for the market, is the recovery good enough to meet investors’ expectations – that’s the big question here,” BofA Securities China equity strategist Winnie Wu told CNBC’s “Street Signs Asia.”

“It’s not good enough to meet with investors’ expectations – that’s a problem,” Wu said, adding that the momentum from China’s pent-up demand seems to be fading away.

“The recovery of income, of job security, and confidence will take time,” she said.

China stocks have pared most of the gains seen this year. The Shenzhen Component was down 4.67% quarter-to-date and up only 1.48% year-to-date, and notching a 9.5% drop from its peak in early February.

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“Market sentiment remains very weak in our client conversations,” Goldman Sachs economist Hui Shan wrote in a Sunday report.

She expects more measures from the government rather than a change in interest rates to improve market confidence.

“Symbolic measures that aim at boosting confidence, such as RRR cuts, seem more likely to us, especially around quarter-end when liquidity demand is high,” she wrote, referring to banks’ reserve requirement ratio — the amount of funds banks need to hold as reserves.

Record-high youth unemployment

The latest data included a 20.4% youth jobless rate, the unemployment rate between ages 16 and 24. The reading in April marked a record high.

“Many people, investors see this as a leading indicator. If the younger people are unable to get jobs, don’t have the income security, where is the confidence, where is the consumption recovery coming from?” said Wu.

She said the question of confidence is resonated in weakened markets sentiment as well as other high-frequency data, including new home sales.

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May 15, 2023
Consumer prices in China rose 0.1% in April, the slowest rate in two years

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The People’s Bank of China (PBOC) building in Beijing, China, on Tuesday, April 18, 2023. China’s economy grew at the fastest pace in a year in the first quarter, putting Beijing on track to meet its growth goal for the year without adding major stimulus, while also helping to cushion the global economy against a downturn. Source: Bloomberg

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China’s consumer price index rose 0.1% in April year-on-year, the slowest since early 2021. Month-on-month, prices declined by 0.1%.

Economists surveyed by Reuters expected to see consumer prices rise 0.4% from a year ago and remain unchanged from the previous month.

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Core inflation, which excludes food and energy, remained steady at 0.7% year-on-year and 0.1% month-on-month.

April’s reading comes after China’s inflation rate eased to 0.7% in March after marking a recent peak of 2.8% in September.

Compared with last year, service prices rose 1% in April, according to the National Bureau of Statistics. That’s faster than the 0.8% increase in March. Notable strength came from travel as domestic tourism recovers, especially in transportation and leisure activities over the Golden Week holiday.

China’s producer price index, which measures prices paid by wholesalers, fell 3.6%. Economists surveyed by Reuters expected to see a decline of 3.2% year-on-year after dropping 2.5% in the previous month.

That’s a stark contrast to the latest U.S. inflation data overnight which showed consumer prices rose 4.9% in April – easing in the wake of the Federal Reserve’s efforts to tame inflation by hiking rates 10 consecutive times.

The onshore Chinese yuan weakened by 0.04% to 6.9428 against the U.S. dollar shortly after the release.

“China consumer recovery is still in its early stage, given the fact that the economy has been weak for quite some time, and people’s income levels are not that strong,” Aletheia Capital’s China strategist Vincent Chan told CNBC’s Street Signs Asia.”

Chan added that there is an expectation for the Chinese government to “do more” in providing stimulus to boost the economy’s weak demand.

“There’s more room for stronger fiscal stimulus,” he told CNBC. “Probably the market wants to see that.”

Inflation has largely moderated in China following its reopening, prompting market watchers to question whether the world’s second-largest economy is heading into deflation, BofA’s chief China economist Helen Qiao wrote in a Tuesday note.

“It almost appears that when major central banks find it hard to tame the inflation beast, the [People’s Bank of China] would have ranked high on the scorecard for inflation control,” she wrote.

Qiao added that China has managed to keep its consumer price index inflation rate at an average of 1.8%, which is close to the lowest 3-year average reading since 2003.

Now, China’s core CPI inflation is already well below Japan’s levels, BofA economists noted.

Though not yet at deflationary levels, China’s low inflation is likely driven by insufficient demand.

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“Households, though have already seen a notable pent-up demand from tourism during the recent holidays, are still cautious on goods spending, especially for large ticket items (white goods, autos etc.,),” Qiao wrote in the note.

“The weak labor market as well as the slower recovery in the property market continued to weigh on consumer sentiments,” she wrote.

Inflation spillover unlikely

The service-driven inflation readings show there is a lower chance of inflation from China’s reopening spilling over to the global economy.

“In short, it is clear that the service sector is normalizing quickly since the beginning of the year, but at this stage the broadening of the reopening recovery remains to be seen with risks from slowing exports, a sluggish property recovery, still weak confidence,” Societe Generale economists Michelle Lam and Wei Yao wrote.

The latest Caixin/S&P Global services purchasing managers’ index remained in growth territory in April, showing the service sector remained a bright spot despite disappointing factory activity data.

“The service-driven nature of this recovery also means there are less inflation spillovers to the rest of the world this year,” they wrote.

– CNBC’s Lim Hui Jie contributed to this report

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May 10, 2023
China’s exports rose 8.5%, continuing its growth streak at a slower pace

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QINGDAO, CHINA – MAY 06: Aerial view of illuminated Qingdao Qianwan Container Terminal at dusk on May 6, 2023 in Qingdao, Shandong Province of China.

Vcg | Visual China Group | Getty Images

China’s exports grew 8.5% in April in U.S. dollar terms, marking a second-straight month of growth, while imports fell 7.9% compared with a year ago.

Economists polled by Reuters estimated exports would rise 8% in April, while imports were forecast to remain unchanged. In March, imports declined 1.4% year-on-year while exports saw a surprise jump of 14.8%, government data showed.

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China’s trade surplus grew to $90.21 billion in April, up from the surplus of $88.2 billion in March.

Softer trade data in April is likely to reflect “residual seasonality” after this year’s Lunar New Year, economists at Goldman Sachs said in a Monday note.

Goldman Sachs economists expected to see “the dissipation of this seasonal bias to slow export growth in April,” they wrote in a note earlier this month previewing China’s trade data.

Recent economic data released from the world’s second-largest economy showed that China’s service sector remained a bright spot despite disappointing factory data.

The National Bureau of Statistics’ manufacturing purchasing manager’s index reading missed expectations and fell into contraction territory with a reading of 49.2 in April from March’s reading of 51.9.

“China is past the fastest stage of its reopening,” Goldman Sachs economists wrote in a separate Friday note. It reiterated its forecast for China’s economy to see full-year growth of 6% in 2023.

“Recent meetings with clients in the mainland suggest gradually fading pessimism on near-term growth, but some concern around deflationary pressures, though in our view this is not a major risk for 2023-24,” they wrote.

Inflation ahead

China’s inflation data is slated for release Thursday. Economists expect inflation slowed to a 0.3% year-on-year rise, according to a Reuters poll.

Month-on-month, prices are predicted to remain flat, according to the survey.

The economy’s producer price index is forecast to mark its seventh-straight month of declines after the index fell 2.5% in March. Economists polled by Reuters expect to see a drop of 3.2%.

“Central bankers in China seemed to have little concerns about deflation, judged by the PBoC quarterly monetary policy reports and meeting minutes,” BofA Global Research economists including Helen Qiao wrote in a note, adding that officials seem confident in a rebound for inflation ahead.

BofA economists said they “expect inflationary pressure to rise as the output gap narrows in 2H23, especially on the back of a new credit cycle kicking off.”

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May 8, 2023
Alibaba to split into 6 units and explore IPOs; shares up 14% in the U.S.
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Alibaba has faced growth challenges amid regulatory tightening on China’s domestic technology sector and a slowdown in the world’s second-largest economy. But analysts think the e-commerce giant’s growth could pick up through the rest of 2022.

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Alibaba said Tuesday it will split its company into six business groups, each with the ability to raise outside funding and go public, in the most significant reorganization in the Chinese e-commerce giant’s history.

Each business group will be managed by its own CEO and board of directors.

Alibaba said in a statement that the move is “designed to unlock shareholder value and foster market competitiveness.”

Alibaba’s shares popped and closed more than 14% in higher in the U.S.

The move comes after a tough couple of years for Alibaba which has faced slowing economic growth at home and tougher regulation from Beijing, resulting in billions being wiped off its share price. Alibaba has struggled with growth over the past few quarters.

Alibaba is now looking to reinvigorate growth with the reorganization.

The business groups will revolve around its strategic priorities. These are the groups:

Cloud Intelligence Group: Alibaba CEO Daniel Zhang will be head of this business which will house the company’s cloud and artificial intelligence activities.

Taobao Tmall Commerce Group: This will cover the company’s online shopping platforms including Taobao and Tmall.

Local Services Group: Yu Yongfu will be CEO and the business will cover Alibaba’s food delivery service Ele.me as well as its mapping.

Cainiao Smart Logistics: Wan Lin will continue as CEO of this business which houses Alibaba’s logistics service.

Global Digital Commerce Group: Jiang Fan will serve as CEO. This unit includes Alibaba’s international e-commerce businesses including AliExpress and Lazada.

Digital Media and Entertainment Group: Fan Luyuan will be CEO of the unit which includes Alibaba’s streaming and movie business.

Each of these units can pursue independent fundraising and a public listing when they’re ready, Zhang said.

The exception is the Taobao Tmall Commerce Group, which will remain wholly-owned by Alibaba.

$600 billion wipeout

Around $600 billion of value has been wiped out since Alibaba’s share price peak in October 2020. Since then, the Chinese government has cracked down on private technology businesses, introducing a slew of regulation and increasing scrutiny on the practices of domestic giants.

Alibaba’s fintech affiliate Ant Group was forced by regulators to cancel its mega public listing in November 2020. And in 2021, Alibaba was fined $2.6 billion as part of an antitrust probe.

Alibaba is now looking to reinvigorate growth. The company has grown into a giant that encompasses businesses from e-commerce to cloud computing to streaming and logistics.

The company sees the creation of the six businesses as a way to be nimbler.

“This transformation will empower all our businesses to become more agile, enhance decision-making, and enable faster responses to market changes,” Zhang said in a statement.

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The reorganization also comes at a time when there are signs that Beijing is warming back up to technology businesses, as the government seeks to revive economic growth in the world’s second-largest economy.

Jack Ma, Alibaba’s outspoken and charismatic founder who was out of the public eye and travelling abroad for several months, has returned to China, in a move perceived as an olive branch from Beijing.
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March 28, 2023
China’s Xi to go to Russia next week for his first visit since Putin ordered invasion of Ukraine

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Russian President Vladimir Putin speaks to China’s President Xi Jinping during the Shanghai Cooperation Organization leaders’ summit in Samarkand on Sept. 16, 2022.

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BEIJING — Chinese President Xi Jinping is set to visit Russia from March 20 to 22, China’s Ministry of Foreign Affairs announced Friday.

This is Xi’s first visit to Russia since the invasion of Ukraine in late February last year.

The two leaders last met in Samarkand, Uzbekistan in September.

The ministry said the visit was at Russian President Vladimir Putin’s request. It did not specify whether Putin would meet with Xi.

The two leaders are expected to discuss further Sino-Russian cooperation, the Kremlin said in a statement, adding that “important bilateral documents will be signed” without elaborating.

The visit comes as China called again for a ceasefire in the Russia-Ukraine war and for peace talks to resolve the conflict that began just over a year ago.

Beijing has refused to call Moscow’s unprovoked attack on Ukraine an invasion.

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March 17, 2023
China’s Xi gains unprecedented third term as president

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Chinese President Xi Jinping is pictured here on Oct. 23, 2022, after consolidating his control of the ruling Communist Party of China.

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BEIJING — Chinese leader Xi Jinping gained an unprecedented third term as president of the country on Friday.

Xi rose through China’s political ranks, becoming president in 2013 and abolishing term limits in 2018.

At the Chinese Communist Party’s 20th National Congress in October, Xi consolidated his control of the ruling party by filling the highest circle of leadership with loyalists.

After such party congresses, top leaders of the Chinese Communist Party then go on to fill government positions such as president and premier.

Delegates on Friday approved a proposal to restructure the State Council, the Chinese government’s top executive body.

A draft of the plan was released earlier this week, and comes as the ruling Communist Party of China is expected to significantly increase its direct control of the government.

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March 9, 2023
China sets GDP target of ‘around 5%’ for 2023

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China’s economy is widely expected to grow by more than 5% this year.

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BEIJING — China set a growth target of “around 5%” for 2023, according to Premier Li Keqiang’s government work report released Sunday.

Analysts generally expected China to set a GDP target of above 5% for 2023. The average forecast for growth is 5.24%, according to CNBC analysis.

China also set a goal of 3% for the consumer price index, and a 5.5% unemployment rate for people in cities — with the creation of around 12 million new urban jobs. That’s more than last year’s target of “over 11 million.”

The work report called for implementing “prudent monetary policy” in a “targeted” way. The deficit-to-GDP ratio is expected to increase to 3% from 2.8% last year, the report said.

Li presented the report Sunday at the opening of the National People’s Congress, part of the annual “Two Sessions” parliamentary meeting. This is his last such congress as premier.

The work report noted the coming change in central government leadership, while laying out eight priorities for economic policy.

Spurring domestic demand — from consumption and investment — ranked first, followed by improving the industrial system and supporting non-state-owned enterprises, according to the report.

Other priorities included “intensifying efforts to attract and utilize foreign investment,” “preventing and defusing” financial risks, stabilizing grain production, continuing green development and developing social programs.

“We should strive to develop the digital economy, step up regular oversight, and support the development of the platform economy,” the report said in English.

While it did not name specific companies, internet tech companies such as Alibaba typically fall under the “platform economy,” which has been subject to increased scrutiny from Beijing in the last few years.

Real estate

On real estate, the work report called for supporting people in buying their first homes and to “help resolve the housing problems of new urban residents and young people.”

“We should ensure effective risk prevention and mitigation in high-quality, leading real estate enterprises, help them improve debt-to-asset ratios, and prevent unregulated expansion in the real estate market to promote stable development of the real estate sector,” the report said.

A slump in the massive property sector has weighed on China’s economic growth in the last year. Beijing cracked down on developers’ high reliance on debt for growth in 2020.

China’s real estate policy will likely support high-quality real estate companies’ reasonable financing needs, and guide them toward areas of sustainable growth, said Bruce Pang, chief economist and head of research for Greater China at JLL.

On the other hand, developers “that cannot take the initiative to complete business adjustment and transformation are naturally cleared by the market,” he said in Mandarin, translated by CNBC.

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China’s GDP only rose by 3% last year in a rare miss of the national goal.

The country had set a target of around 5.5% growth for 2022. But Covid controls, including the two-month lockdown of Shanghai, and the real estate slump dragged down growth.

This year, the Two Sessions is also set to formalize government titles for the new premier, vice premiers and heads of different ministries. This year’s National People’s Congress is set to end on March 13.

“Given the complete reshuffling of the government, a key issue to watch in the next few months is how the new leaders will boost private sector confidence,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. “This is more important than the fiscal and monetary policies, in my view.”

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March 4, 2023
China to increase defense spending by 7.2%

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China’s air force shows off its L15 Falcon trainer at the Zhuhai Air Show in 2022. The country has a deal to export the aircraft to the United Arab Emirates.

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BEIJING — China is set to increase defense spending this year by 7.2% to 1.56 trillion yuan ($230 billion), according to a draft released Sunday by the Ministry of Finance.

China’s defense budget grew by 7.1% last year to 1.45 trillion yuan, faster than the 6.8% increase in 2021 and 6.6% climb in 2020, according to official data.

In 2019, China’s defense spending rose by 7.5% to 1.19 trillion yuan.

In a separate report Sunday about government work, Premier Li Keqiang did not mention the Russia-Ukraine war. “We should stay committed to an independent foreign policy of peace,” the report said.

The work report called for “resolute steps to oppose ‘Taiwan independence’” while sticking to Beijing’s call for “peaceful reunification.”

Taiwan is a democratically ruled self-governed island that Beijing claims is part of its territory.

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March 4, 2023
China’s factory activity bounces further into expansion in February

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A worker processes high-end yarn at a new materials workshop in Zaozhuang, East China’s Shandong Province, Feb. 27, 2023.

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China’s factory activity for February bounced further into expansion territory, according to data from the National Bureau of Statistics.

The official manufacturing purchasing managers’ index rose to 52.6 in February – above the 50-point mark that separates growth from contraction. That marks the highest reading since April 2012, when it hit 53.5.

February’s PMI reading is also higher than the 50.1 reported for January and above expectations of 50.5, according to economists surveyed by Reuters.

Non-manufacturing PMI also grew further to 56.3 from January’s print of 54.4, when it saw a sharp improvement backed by a recovery in services and construction activity.

The Chinese onshore yuan stood at 6.9325 against the U.S. dollar while the offshore yuan strengthened 0.15% to 6.9480 against the greenback.

China Beige Book’s chief economist Derek Scissors told CNBC’s “Squawk Box Asia” he expects to see an improvement in consumption later this year – buoyed by any announcements from the upcoming National People’s Congress meetings.

“I think April’s really the time that consumers will take cues from the March National People’s Congress meetings and the announcements made there,” said Scissors.

He added, “In April, we should see where the course of Chinese consumption is going. It will be better than last year, but it won’t be much better and the people relying on that may be disappointed.”

China’s National Party Congress kicks off on Sunday.

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February 28, 2023