China’s forecast economic growth of 5 to 6.1 percent this year is based on “zombie economics,” as the economy is only being “kept alive” by bank loans and government debt, a report compiled by the Chung-Hua Institution for Economic Research said.
China’s internal consumption, overall investment and exports have all slowed, according to the report, tendered to the Mainland Council Affairs and compiled by assistant researcher Wang Kuo-chen (王國臣).
China’s domestic GDP in the second quarter grew 0.8 percent compared with the previous quarter, the report said.
Photo: Reuters
Wang’s report said that China is facing economic stagnation after its strict “zero COVID-19” policies, lifted late last year, exacerbated an already uneasy economic situation, as a growing wealth gap further inhibited weak domestic consumption.
China’s consumer confidence index dropped from 82.3 in April to 69.1 in June, while consumer price index growth in June was nearly zero and the producer price index has reported negative growth for nine consecutive months, he said.
The second half of this year is not likely to be better than the first, due to a diminishing base period effect from COVID-19 lockdowns in Shanghai last year, a general slump in the global economy and US restrictions on Chinese tech, the report said.
China is facing deflation, it said.
A cooling global economy, along with destocking and tech restrictions have severely affected China’s exports, with June imports and exports falling 12.4 percent and 6.8 percent respectively from a year earlier, Wang said.
High-tech and new technology imports fell 16.8 percent year-on-year, while exports fell 10.4 percent.
Weak domestic consumption and slumping exports have made it difficult for Chinese companies, as industrial firms reported an 18.8 percent annual slump in profits for the first five months of this year, the report said.
Wang said that a recovery in the second quarter was weak due to tightening financial and monetary policies.
Beijing is continuing to lower its bond yield rates to reduce local government financial burdens, but that has forced the yuan to depreciate, he said.
China could achieve its forecast economic growth this year, but the policies used to achieve such goals cannot continue indefinitely, he added.
On Thursday, US President Joe Biden called China a “ticking time bomb,” because of economic challenges including weak growth.
“They have got some problems. That’s not good because when bad folks have problems, they do bad things,” Biden said at a political fundraiser in Utah.
“China is in trouble,” he added.
The remarks drew a sharp response from Beijing.
Chinese embassy spokesman Liu Pengyu (劉鵬宇) said that Washington was “scapegoating” Beijing and fanning “division and confrontation.”
“We oppose the US side seeking to make an issue of China, smearing China or talking down China’s prospects,” he said in a statement on Friday, without mentioning Biden.
White House spokesperson John Kirby on Friday said that Biden’s “ticking time bomb” comment referred to internal economic and social tensions that could have an effect on how Beijing interacts with the world.
Kirby said that one area of concern regarding China was “the way that they bully and coerce and intimidate countries around the world” by offering high-interest infrastructure loans and then seizing assets when countries default.
Taiwan aims to open 18 representative offices and seven Taiwan Tourism Information Centers worldwide by next year to attract international visitors, the Tourism Administration said on Saturday. The agency has so far opened three representative offices abroad this year and would open two more before the end of the year, it said. It has also already opened information centers in Jakarta, Mumbai and Paris, and is to open one in Vancouver next month and in Manila in December, it said. Next year, it would also open offices in Amsterdam, Dubai and Sydney, it added. While the Cabinet did not mention international tourists in its
EYES AT SEA: Many marine enthusiasts have expressed interest in volunteering for coastal patrols, which would help identify stowaways and illegal fishing, the CGA said Six thousand coastal patrol volunteers are to be recruited for 159 inspection offices to enhance the nation’s response to “gray zone” conflicts, Coast Guard Administration (CGA) sources said yesterday. Volunteer teams would be established to increase the resilience of coastal defense systems in the wake of two unlawful entries attempted by Chinese over the past three months, Ocean Affairs Council Minister Kuan Bi-ling (管碧玲) said. A former Chinese navy captain drove a motorboat into the Tamsui River (淡水河) in Taipei on the eve of the Dragon Boat Festival in June, while another Chinese man sailed in a rubber boat into the Houkeng
NEXT LEVEL: The defense ministry confirmed that a video released last month featured personnel piloting new FPV drone systems being developed by the Armaments Bureau Taipei and Washington are pushing for their drone companies to work together to establish a China-free supply chain, the Financial Times reported on Friday. A delegation of high-level executives and US government officials were yesterday to arrive in Taipei to discuss with their Taiwanese counterparts collaboration on drone technology procurement and development, the report said. The executives represent 26 US manufacturers of drone and counter-drone systems, while the officials are from the US Department of Commerce and the US Department of Defense’s Defense Innovation Unit, along with Dev Shenoy, principal director for microelectronics in the Office of the Under Secretary of Defense
‘ANONYMOUS 64’: A national security official said that it is an attempt by China to increase domestic anti-Taiwanese sentiment and inflame cross-strait tensions The Ministry of National Defense’s (MND) Information, Communications and Electronic Force Command (ICEFCOM) yesterday denied accusations by China that it had undermined regional security by carrying out cyberattacks against targets in China, adding instead that Beijing was responsible for raising tensions and undermining regional peace. The Chinese Ministry of State Security on WeChat accused a hacker group called “Anonymous 64” of targeting China, Hong Kong and Macau starting earlier this year through frequent cyberattacks. The group carried out cyberattacks to seize control of Web sites, outdoor electronic billboards and video-on-demand platforms in China, Hong Kong and Macau, it said, adding the hackers’