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.
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
RSS