China’s factory activity continued to contract while the services sector slowed last month, as Chinese policymakers prepared an emergency stimulus blitz to revive an economy facing challenges across the board.
The official manufacturing purchasing managers’ index (PMI) was 49.8, meaning the sector has now been in contraction since April last year, except for three months. The non-manufacturing PMI showed construction and services activity lost momentum, after growing in August.
The data released yesterday showed the economy remained in a slump before Chinese officials announced a broad package of measures aimed at reviving growth. The central bank last week cut key interest rates and freed up cash for banks to boost lending, while the elite politburo pledged to support fiscal spending and stabilize the beleaguered property sector.
Photo: AFP
“I don’t think September macro data points are going to matter this time for markets,” abrdn Asia Ltd investment director Xin Yao Ng (黃新耀) said. “It’s all forward looking about what kind of fiscal stimulus comes out.”
The spotlight is now on what measures the Chinese Ministry of Finance might unleash, as officials from other arms of China’s economic universe implement measures to boost the property market and rate cuts.
Reuters reported the Ministry of Finance is planning to issue two trillion yuan (US$285.2 billion) worth of special sovereign bonds this year, with half devoted to boosting consumption.
If Beijing needed more reason to draw a line under its post-COVID-19 pandemic slowdown, the Caixin PMI survey last month also released yesterday showed the country’s manufacturing activity unexpectedly fell into contraction while services expansion weakened to the slowest in a year. That private gauge has typically painted a rosier picture of the economy.
“The PMIs suggest that the economy is still weak, but there will be more focus on the impact of the strong stimulus measures announced over the past week,” United Overseas Bank Ltd (大華銀行) economist Woei Chen Ho (何為真) said. “The monetary and fiscal policy mix should prevent the economy from further weakening in the near-term.”
While the Chinese ministry has yet to make an official announcement, other monetary and economic authorities have begun to flesh out their part of the stimulus package over the last few days. The People’s Bank of China on Sunday said homeowners would be able to renegotiate terms with their lenders, a move that would reduce their mortgage burdens and potentially boost household spending, starting Nov. 1.
The Chinese National Development and Reform Commission, the nation’s economic planning agency, on Friday pledged full support to help private companies overcome difficulties, while Chinese Premier Li Qiang (李強) at a Chinese State Council meeting on Sunday said that government agencies would accelerate the pace of implementing policies as they strive to meet annual goals, state broadcaster China Central Television reported.
Beijing’s ability to reach its target of about 5 percent GDP growth was increasingly in doubt after data showed activity cooled across the board in August.
“The State Council responds to the politburo who demands for increasing government investment,” said Australia & New Zealand Banking Group Ltd chief economist for greater China Raymond Yeung (楊宇霆), who expects the Chinese economy to grow 4.9 percent this year.
“The keyword here is ‘execution,’” Yeung said.
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
CHIP BOOM: Revenue for the semiconductor industry is set to reach US$1 trillion by 2032, opening up opportunities for the chip pacakging and testing company, it said ASE Technology Holding Co (日月光投控), the world’s largest provider of outsourced semiconductor assembly and test (OSAT) services, yesterday launched a new advanced manufacturing facility in Penang, Malaysia, aiming to meet growing demand for emerging technologies such as generative artificial intelligence (AI) applications. The US$300 million facility is a critical step in expanding ASE’s global footprint, offering an alternative for customers from the US, Europe, Japan, South Korea and China to assemble and test chips outside of Taiwan amid efforts to diversify supply chains. The plant, the company’s fifth in Malaysia, is part of a strategic expansion plan that would more than triple
Taiwanese artificial intelligence (AI) server makers are expected to make major investments in Texas in May after US President Donald Trump’s first 100 days in office and amid his rising tariff threats, Taiwan Electrical and Electronic Manufacturers’ Association (TEEMA, 台灣電子電機公會) chairman Richard Lee (李詩欽) said yesterday. The association led a delegation of seven AI server manufacturers to Washington, as well as the US states of California, Texas and New Mexico, to discuss land and tax issues, as Taiwanese firms speed up their production plans in the US with many of them seeing Texas as their top option for investment, Lee said. The
RSS