|The World Bank In China|
China has had a remarkable period of rapid growth shifting from a centrally planned to a market based economy. Today, China is an upper middle-income country that has complex development needs, where Bank continues to play an important development role.
Since initiating market reforms in 1978, China has shifted from a centrally-planned to a market-based economy and has experienced rapid economic and social development. GDP growth has averaged nearly 10 percent a year—the fastest sustained expansion by a major economy in history—and has lifted more than 800 million people out of poverty. China reached all the Millennium Development Goals (MDGs) by 2015 and made a major contribution to the achievement of the MDGs globally. Although China’s GDP growth has gradually showed since 2012, it is still impressive by current global standards. With a population of 1.3 billion, China is the second largest economy and is increasingly playing an important and influential role in development and in the global economy. China has been the largest contributor to world growth since the global financial crisis of 2008. Yet China remains a developing country (its per capita income is still a fraction of that in advanced countries) and its market reforms are incomplete. According to China’s current poverty standard (per capita rural net income of RMB 2,300 per year in 2010 constant prices), there were 55 million poor in rural areas in 2015 … for more, go to http://www.worldbank.org/en/country/china/overview
Is China’s economy really wobbling?
The three news posted by Reuters today (June 14) titled China's central bank unexpectedly holds fire on rates as economy wobbles, China May industrial output weaker than expected and Hong Kong's central bank raises base rate 25 bps after Fed hike are sure to raise global concern for investors to digest for their short and long-term strategic economic action.
However, investors also need to take the news reports with a pinch of salt because Reuters is a pro-US international news agency.
The accuracy and reliability of the news, and the responses or decisions investors in the rest of the world make will surely affect their returns.
One report claims China’s economy is wobbling as it decided to leave its interbank loans unchanged as the US Federal Reserve ups it rate.
But, Hong Kong (read as China)’s central bank has raised its base rate 25bps in line with the US?
And, according to Reuters, China reported weaker-than-expected activity data for May, adding to views the economy is finally starting to slow under the weight of a prolonged crackdown on riskier lending that is pushing up borrowing costs for companies and consumers.
I Love Malaysia-China Silk Road reproduces the three Reuters report for the convenient reading of our followers:
"China's central bank unexpectedly holds fire on rates as economy wobbles
Thursday, 14 Jun 2018
11:55 AM MYT
SHANGHAI: China's central bank left borrowing costs for interbank loans unchanged on Thursday, a surprising decision that shrugged off the U.S. Federal Reserve's policy rate increase and came as data showed the world's second-biggest economy lost more steam than expected.
The People's Bank of China's (PBOC) on-hold stance highlighted uncertainty about the economic outlook as policy makers try to steer through the challenge of a trade spat with the United States and a government-led clampdown on debt.
U.S. President Donald Trump is set to meet with his top trade advisers on Thursday to decide whether to activate threatened tariffs on billions of dollars in Chinese goods.
The rate for seven-day reverse repurchase agreements remained at 2.55 percent, the 14-day tenor at 2.70 percent and the 28-day tenor at 2.85 percent, the PBOC said in a statement on its website.
Reverse repos are one of its most commonly used tools to control liquidity in the financial system.
Analysts had expected the PBOC to follow the Fed to increase interest rates modestly - as it has tended to do - to keep the spread between Chinese and U.S. yields stable, reducing the risks of potential capital outflows that could pressure the yuan currency.
"But now it seems the PBOC no longer needs to stabilise the currency," said Ken Cheung, senior Asian FX strategist at Mizuho Bank in Hong Kong.
"May economic data have showed weakness in the economy. I believe they would choose not to raise the interest rates now in order to keep the economic growth momentum."
China reported weaker-than-expected activity data for May, adding to views the economy is finally starting to slow under the weight of a prolonged crackdown on riskier lending that is pushing up borrowing costs for companies and consumers.
Beijing is into the third-year of a sweeping regulatory clampdown on riskier lending practices. Intensifying concerns over credit quality in China after a spate of corporate bond defaults over the past few months have also put the focus on finiancial stability.
The yuan has strengthened about 1.7 percent against the dollar so far this year, on top of gains of about 6.8 percent in 2017.
In March, China gingerly raised market rates following the U.S. move, in a symbolic reminder that Beijing is keeping an eye on global market trends.
Policy makers are also balancing those moves by taking the brakes off some liquidity controls. Markets expect the PBOC to make another cut in banks' reserve requirement ratios (RRR) in the second half, with some speculation it could come as early as this month or July.
The PBOC's surprise RRR cut in April and fears of a trade war with the United States have fanned market expectations that it may loosen policy to support the economy.
The Fed on Wednesday raised U.S. interest rates by a quarter of a percentage point for the second time this year, and is expected to hike twice more in 2018.
The PBOC has kept its benchmark one-year lending and deposit rates steady since October 2015.
The central bank injected a net 70 billion yuan via reverse repos in open market operations on Thursday, according to the statement. - Reuters/The Star Online
China May industrial output weaker than expected
Thursday, 14 Jun 2018
11:05 AM MYT
|Workers dismantle used television sets at a recycling plant in Neijiang, Sichuan province, China June 11, 2018. REUTERS|
BEIJING: China reported weaker-than-expected activity data for May, adding to views the economy is finally starting to slow under the weight of a prolonged crackdown on riskier lending that is pushing up borrowing costs for companies and consumers.
Industrial output, investment and retail sales all grew less than expected, data showed on Thursday, offsetting upbeat trade data and suggesting further weakness ahead if Beijing perseveres with its crackdown on factory pollution and questionable local government spending.
Adding to the uncertainty over economic conditions, China's central bank left its short-term money market rates unchanged earlier in the day, surprising financial markets and analysts who had expected it to follow a policy rate rise by the U.S. Federal Reserve overnight.
China's fixed-asset investment growth cooled to 6.1 percent in the January-May period from a year earlier, the slowest pace since February 1996.
Retail sales in May expanded at the slowest pace since June 2003, according to Reuters calculations.
May industrial output rose 6.8 percent from a year earlier, the National Bureau of Statistics said, missing analysts' estimates for a rise of 6.9 percent and compared with a rise of 7 percent in April.
April data had also been mixed, suggesting a softening in demand.
Analysts polled by Reuters had expected investment growth to remain steady at 7.0 percent in the first five months of the year, the same pace seen in January-April.
Private sector fixed-asset investment rose 8.1 percent in January-May, compared with an increase of 8.4 percent in the first four months, according to official data.
Private investment accounts for about 60 percent of overall investment in China.
Growth in infrastructure spending, a powerful economic driver last year, slowed to 9.4 percent in the first five months, compared with a rise of 12.4 percent in January-April.
Analysts forecasting an economic cooldown are largely basing their assumptions on slowing local government spending and real estate investment in response to regulators' campaign to reduce financial risks and curb a rapid build-up in debt.
But a construction boom which began in 2016 may still be going strong. Data from the China Construction Machinery Association showed the sales of excavators doubled in May from a year earlier.
Retail sales rose 8.5 percent in May from a year earlier, missing with expectations of an increase of 9.6 percent, compared with a rise of 9.4 percent in April.
The growth was the slowest since June 2003.
China's economy will likely expand by around 6.7 percent in the second quarter from a year earlier, the State Information Center (SIC), an official think tank, said recently.
That would mark only a fractional easing from 6.8 percent growth reported by Beijing in each of the three preceding quarters.
In the same article, the think tank said it expects China's industrial output to grow about 6.6 percent in April-June from a year earlier, with fixed-asset investment growth of around 7.2 percent and retail sales seen rising about 10 percent.
While first-quarter growth was better than expected, economists polled by Reuters still expect China's economy to gradually slow to around 6.5 percent this year, from 6.9 percent in 2017, even if there are no trade shocks.
A third round of talks between China and the United States early this month ended with few signs of progress, as Beijing issued a counter-warning that any trade and business deals reached with Washington would be void if the United States implemented tariffs.
On Friday, Washington is expected to release a list of some $50 billion worth of Chinese goods that will be subject to a 25 percent tariff. - Reuters/The Star Online
Hong Kong's central bank raises base rate 25 bps after Fed hike
Thursday, 14 Jun 2018
11:02 AM MYT
Hong Kong tracks U.S. rate moves because its currency is pegged to the U.S. dollar.
The Hong Kong dollar has repeatedly hit the lower end of its trading band in April and May. The HKMA had mopped up a total HK$70.35 billion of Hong Kong dollars from the foreign exchange market since April 12, nudging up a key lending rate that could push borrowing costs higher.
The HKMA, the city's de facto central bank, sets its base rate through a formula that is 50 basis points above the prevailing U.S. Fed Funds Target or the average of the five-day moving averages of the overnight and one-month HIBORs (Hong Kong Inter-bank Offered Rate).
In March, the HKMA raised the base rate by 25 basis points to 2.00 percent and the central bank's chief warned that mortgage rates in one of the world's most expensive property markets would have to rise in the longer term.
However, major banks such as HSBC and Standard Chartered have left the city's lending rate unchanged.
Hong Kong's record-breaking private home prices rose at their fastest pace in a year in April, the latest government data showed, as the city's hot housing market showed no sign of cooling.
The financial hub has one of the least affordable housing markets in the world, with flat prices doubling between 2010 and 2017. - Reuters/The Star Online"