Goldman Sachs Group Inc became the latest bank to cut their forecasts for China’s economy, citing limited options to boost stimulus.
Analysts at Goldman lowered their estimates for China’s GDP growth this year to 5.4 percent from 6 percent previously, a report dated on Sunday showed.
Any upcoming policy easing is unlikely to exceed those implemented in previous downturns including 2020, economists including Hui Shan (閃輝) said in the report.
Photo: Reuters
Property and infrastructure stimulus would probably be “targeted and moderate” given the shrinking population, elevated debt levels and Chinese President Xi Jinping’s (習近平) call for curbing property speculation, they wrote.
“Going down the same old route of using property and infrastructure to engineer a strong economic rebound would be inconsistent with the type of ‘high-quality growth’ that the leadership has been emphasizing repeatedly,” the report said.
Expectations for more policy support including government spending to pay for infrastructure and also property easing measures were rising last week, with some analysts floating the possibility that central government might issue special-purpose bonds to fund projects.
Data released last week showed the recovery was weakening last month and the central bank cut key policy interest rates to lower borrowing costs and boost sentiment.
The Chinese State Council, which is Beijing’s Cabinet and coordinates policy among central government ministries and the central bank, on Friday called for “more forceful” policies to support the economy, saying new measures are being studied and would be adopted in a “timely manner,” although it did not release a timeline or details.
“We judge that growth headwinds are likely persistent while policymakers are constrained by economic and political considerations in delivering meaningful stimulus,” Goldman economists said.
They do not expect the central government to issue special sovereign bonds, as these have only been sold three times in the past during particularly difficult periods including the COVID-19 pandemic in 2020 and during the Asian Financial Crisis in 1998.
The government is also unlikely to launch another round of shantytown redevelopment like it did in 2015, they wrote.
That policy injected central bank money into the property market to pay for urban renewal and to compensate households whose homes were demolished as part of that. It led to a surge in property prices and sales.
Instead, the government might accelerate the issuance of local government special bonds, which are mainly used for infrastructure construction, Goldman analysts said.
Authorities might also continue to ease property policies including lowering down-payment requirements, cutting mortgage interest rates and removing purchase restrictions in top-tier cities, they said.
While supportive policies such as easier lending, tax cuts and subsidies are likely to continue or even increase, the effect on GDP growth is likely limited because these plans have already been in place for years, Goldman said.
TECH SECURITY: The deal assures that ‘some of the most sought-after technology on the planet’ returns to the US, US Secretary of Commerce Gina Raimondo said The administration of US President Joe Biden finalized its CHIPS Act incentive awards for Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), marking a major milestone for a program meant to bring semiconductor production back to US soil. TSMC would get US$6.6 billion in grants as part of the contract, the US Department of Commerce said in a statement yesterday. Though the amount was disclosed earlier this year as part of a preliminary agreement, the deal is now legally binding — making it the first major CHIPS Act award to reach this stage. The chipmaker, which is also taking up to US$5 billion
TRADE WAR: Tariffs should also apply to any goods that pass through the new Beijing-funded port in Chancay, Peru, an adviser to US president-elect Donald Trump said A veteran adviser to US president-elect Donald Trump is proposing that the 60 percent tariffs that Trump vowed to impose on Chinese goods also apply to goods from any country that pass through a new port that Beijing has built in Peru. The duties should apply to goods from China or countries in South America that pass through the new deep-water port Chancay, a town 60km north of Lima, said Mauricio Claver-Carone, an adviser to the Trump transition team who served as senior director for the western hemisphere on the White House National Security Council in his first administration. “Any product going
CHANGING JAPAN: Nvidia-powered AI services over cellular networks ‘will result in an artificial intelligence grid that runs across Japan,’ Nvidia’s Jensen Huang said Softbank Group Corp would be the first to build a supercomputer with chips using Nvidia Corp’s new Blackwell design, a demonstration of the Japanese company’s ambitions to catch up on artificial intelligence (AI). The group’s telecom unit, Softbank Corp, plans to build Japan’s most powerful AI supercomputer to support local services, it said. That computer would be based on Nvidia’s DGX B200 product, which combines computer processors with so-called AI accelerator chips. A follow-up effort will feature Grace Blackwell, a more advanced version, the company said. The announcement indicates that Softbank Group, which until early 2019 owned 4.9 percent of Nvidia, has secured a
CARBON REDUCTION: ‘As a global leader in semiconductor manufacturing, we recognize our mission in environmental protection,’ TSMC executive Y.P. Chyn said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday launched its first zero-waste center in Taichung to repurpose major manufacturing waste, which translates into savings of NT$1.5 billion (US$46 million) in environmental costs a year. The environmental cost savings include a carbon reduction benefit of 40,000 tonnes, equivalent to the carbon offset of over 110 Daan Forest Parks, the chipmaker said. The Taichung Zero Waste Manufacturing Center is part of the chipmaker’s greater efforts to reach its net zero emissions goal in 2050, aligning with the UN’s 12th Sustainable Development Goal. The center could reduce TSMC’s outsourced waste processing
RSS