Last week, the Chinese National Bureau of Statistics reported that China’s real GDP expanded by 5.2 percent year-on-year last year, which was in line with the market consensus and slightly better than the official target of about 5 percent. The showing is not too bad if compared with the IMF’s forecast of 3 percent growth for the global economy last year. However, the biggest challenge Beijing faces is not about figures, but the generally low degree of confidence inside and outside the country.
China’s economic performance in the past year had been somewhat surprising to the rest of the world. Initially, there was speculation that a reopening boom would follow after China’s abrupt lifting of its COVID-19 restrictions in late 2022 and that it would quickly lift the nation’s economy. China’s economic performance in the first quarter of last year did meet market expectations, with real GDP rising 4.5 percent from a year earlier, and some big US investment banks such as Goldman Sachs Group Inc even predicted a 15 percent rally in Chinese equities in the year.
However, China’s momentum slowed in the second quarter, with GDP expansion shy of market expectations at 6.3 percent. Since then, news of sluggish consumption, declining exports, a struggling property market and rising local government debts have continued leading other countries to adopt a conservative attitude toward China’s economic outlook, with pessimistic predictions becoming mainstream. For instance, some warned that China’s economic scale would never surpass that of the US, while others even suggested India would surpass China.
Furthermore, the news for China stocks is less pleasant, as it turned out that its benchmark CSI 300 Index last year declined 11.38 percent, dropping for a third consecutive year, while the Shanghai Composite Index shed 3.7 percent and the Shenzhen Composite Index fell 13.54 percent. In Hong Kong, the Hang Seng Index also lost 13.8 percent in the year, making it one of the worst-performing markets in the world, while many emerging markets remained resilient and did just fine.
There has been speculation that China might set its growth target for this year similar to last year’s, as policymakers aim to boost investors’ confidence as the target is made public during the Chinese National People’s Congress in early March.
However, the biggest problem and a hidden concern for China’s economy is not about the give or take of one or two percentage points in the GDP growth target, but a question of overall confidence in the country.
Last week, a slew of economic data for last month accompanying the GDP figures showed a mixed view of the economy and suggested a fragile recovery ahead, as weak domestic consumption, low employment and further weakening of the property market continue to be key risks to China’s economy this year, despite an upturn in the manufacturing sector. Longer-term, China is confronted with another urgent issue as official data showed the country’s population declined last year for the second year in a row, decreasing by 2.08 million people — more than twice the drop in 2022 — while its working-age population is projected to fall to just 210 million people by 2100 — a mere one-fifth of its peak in 2014.
As such, fiscal and monetary policy support remain crucial to China’s economic woes, but unfortunately the measures Beijing has offered so far have been unable to turn around the country’s property sector, which last year saw land sales halved, falling property investment and tepid sales growth. The weak fundamentals are likely to stay unimproved this year. Coupled with the external environment growing increasingly uncertain and the withdrawal of foreign capital from China, the country’s economy this year faces even more difficulties and risks a downward trend for another year unless Beijing greatly and effectively expands its policy support.
Taiwan’s semiconductor industry gives it a strategic advantage, but that advantage would be threatened as the US seeks to end Taiwan’s monopoly in the industry and as China grows more assertive, analysts said at a security dialogue last week. While the semiconductor industry is Taiwan’s “silicon shield,” its dominance has been seen by some in the US as “a monopoly,” South Korea’s Sungkyunkwan University academic Kwon Seok-joon said at an event held by the Center for Strategic and International Studies. In addition, Taiwan lacks sufficient energy sources and is vulnerable to natural disasters and geopolitical threats from China, he said.
After reading the article by Hideki Nagayama [English version on same page] published in the Liberty Times (sister newspaper of the Taipei Times) on Wednesday, I decided to write this article in hopes of ever so slightly easing my depression. In August, I visited the National Museum of Ethnology in Osaka, Japan, to attend a seminar. While there, I had the chance to look at the museum’s collections. I felt extreme annoyance at seeing that the museum had classified Taiwanese indigenous peoples as part of China’s ethnic minorities. I kept thinking about how I could make this known, but after returning
What value does the Chinese Nationalist Party (KMT) hold in Taiwan? One might say that it is to defend — or at the very least, maintain — truly “blue” qualities. To be truly “blue” — without impurities, rejecting any “red” influence — is to uphold the ideology consistent with that on which the Republic of China (ROC) was established. The KMT would likely not object to this notion. However, if the current generation of KMT political elites do not understand what it means to be “blue” — or even light blue — their knowledge and bravery are far too lacking
Taipei’s population is estimated to drop below 2.5 million by the end of this month — the only city among the nation’s six special municipalities that has more people moving out than moving in this year. A city that is classified as a special municipality can have three deputy mayors if it has a population of more than 2.5 million people, Article 55 of the Local Government Act (地方制度法) states. To counter the capital’s shrinking population, Taipei Mayor Chiang Wan-an (蔣萬安) held a cross-departmental population policy committee meeting on Wednesday last week to discuss possible solutions. According to Taipei City Government data, Taipei’s