The World Bank cut its economic growth forecast for China this year to 9.6 percent from 10.8 percent yesterday because of cooling global export demand and said storms battering southern China should have little long-term impact.
Growth should be buoyed by expected strong demand from China's own consumers, though a possible US slowdown might hurt the country's large export sector, the bank said in a quarterly report.
Economists have slashed forecasts for China's fast-growing economy amid worries that a US recession could cut US imports from China and hurt other Chinese markets such as Europe and Japan.
PHOTO: AFP
"The world economy is going to be weaker and this will have an impact on China," said Louis Kuijs, a bank economist who was the report's chief author.
Still, "China is in a relatively strong position," he said.
Growth of 9.6 percent was "still robust," Kuijs said.
Snowstorms that have wrecked crops and disrupted trains and trucking in southern China would hurt industrial output and push up prices of vegetables and other perishable goods, but there should be little long-term effect, the bank said. The government has reported storm damage so far at 53.8 billion yuan (US$7.5 billion).
"There is no doubt it is going to affect industrial production and economic activity in the short term," Kuijs said. "We do think, though, that most of this impact is going to be temporary."
The slowdown in global demand would hurt China's manufacturers and exporters, Kuijs said. The government said exports rose 25.7 percent last year to US$1.2 trillion.
But Chinese consumer spending and corporate profits are "still strong" and Beijing is moving ahead with investment plans that should help to shore up growth, Kuijs said.
The bank warned that China still faces potential problems as it tries to manage rapid growth, control a surge in inflation and cope with a flood of export revenues that are straining the central bank's ability to contain pressure for prices to rise.
Inflation so far is limited to food, but if it continues, "the risk remains that it will be fed through into general inflation," Kuijs said.
The central bank has raised interest rates repeatedly over the past year and Kuijs said regulators were right to focus on such a "relatively tight" monetary stance.
Beijing has responded to the surge in food costs by imposing price controls and trying to increase supplies by boosting subsidies to pig farmers and curbing grain exports.
David Dollar, director of the World Bank's Beijing office, said such controls could help in the short run. But he echoed warnings by other economists who say they could hurt the economy by eliminating incentives to expand output.
If pork or grain prices are set below what it costs farmers to produce them, "then you are discouraging production of exactly what is in short supply," he said.
CLASH OF WORDS: While China’s foreign minister insisted the US play a constructive role with China, Rubio stressed Washington’s commitment to its allies in the region The Ministry of Foreign Affairs (MOFA) yesterday affirmed and welcomed US Secretary of State Marco Rubio statements expressing the US’ “serious concern over China’s coercive actions against Taiwan” and aggressive behavior in the South China Sea, in a telephone call with his Chinese counterpart. The ministry in a news release yesterday also said that the Chinese Ministry of Foreign Affairs had stated many fallacies about Taiwan in the call. “We solemnly emphasize again that our country and the People’s Republic of China are not subordinate to each other, and it has been an objective fact for a long time, as well as
‘CHARM OFFENSIVE’: Beijing has been sending senior Chinese officials to Okinawa as part of efforts to influence public opinion against the US, the ‘Telegraph’ reported Beijing is believed to be sowing divisions in Japan’s Okinawa Prefecture to better facilitate an invasion of Taiwan, British newspaper the Telegraph reported on Saturday. Less than 750km from Taiwan, Okinawa hosts nearly 30,000 US troops who would likely “play a pivotal role should Beijing order the invasion of Taiwan,” it wrote. To prevent US intervention in an invasion, China is carrying out a “silent invasion” of Okinawa by stoking the flames of discontent among locals toward the US presence in the prefecture, it said. Beijing is also allegedly funding separatists in the region, including Chosuke Yara, the head of the Ryukyu Independence
UNITED: The premier said Trump’s tariff comments provided a great opportunity for the private and public sectors to come together to maintain the nation’s chip advantage The government is considering ways to assist the nation’s semiconductor industry or hosting collaborative projects with the private sector after US President Donald Trump threatened to impose a 100 percent tariff on chips exported to the US, Premier Cho Jung-tai (卓榮泰) said yesterday. Trump on Monday told Republican members of the US Congress about plans to impose sweeping tariffs on semiconductors, steel, aluminum, copper and pharmaceuticals “in the very near future.” “It’s time for the United States to return to the system that made us richer and more powerful than ever before,” Trump said at the Republican Issues Conference in Miami, Florida. “They
GOLDEN OPPORTUNITY: Taiwan must capitalize on the shock waves DeepSeek has sent through US markets to show it is a tech partner of Washington, a researcher said China’s reported breakthrough in artificial intelligence (AI) would prompt the US to seek a stronger alliance with Taiwan and Japan to secure its technological superiority, a Taiwanese researcher said yesterday. The launch of low-cost AI model DeepSeek (深度求索) on Monday sent US tech stocks tumbling, with chipmaker Nvidia Corp losing 16 percent of its value and the NASDAQ falling 612.46 points, or 3.07 percent, to close at 19,341.84 points. On the same day, the Philadelphia Stock Exchange Semiconductor Sector index dropped 488.7 points, or 9.15 percent, to close at 4,853.24 points. The launch of the Chinese chatbot proves that a competitor can
RSS