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Malay Mail
16-06-2025
- Business
- Malay Mail
China's May consumer spending jumps 6.4pc, but industrial slowdown and property woes persist
BEIJING, June 16 — Retail sales in China grew at a faster rate than expected last month, official data showed Monday, a positive sign for the world's second-largest economy during its grinding trade war with the United States. The key gauge of consumer demand grew 6.4 per cent year-on-year in May, according to data published by the National Bureau of Statistics (NBS). The figure beat the 4.9 per cent growth forecast in a Bloomberg survey of economists and was also sharply up from April's 5.1 per cent increase. However, the NBS also said industrial production grew a below-par 5.8 per cent. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, wrote in a note that the retail sales figures 'came as a surprise', but warned the economic outlook for the rest of the year was uncertain. The NBS said the economy 'maintained stability' last month as authorities 'stepped up the implementation of more proactive and effective macro policies'. But it added that 'there are still many unstable and uncertain external factors, and the internal momentum for expanding domestic demand needs to be further strengthened'. Beijing has struggled to sustain strong growth since the pandemic, grappling with deep-seated problems at home including a persistent slump in domestic consumption and a debt crisis in the property sector. Commercial property prices in a representative group of 70 cities fell month-on-month in May, reflecting continued consumer caution, the NBS said. The surveyed unemployment rate – another notable figure as millions of young people struggle to find suitable work – edged down to five per cent in May from 5.1 per cent the previous month, the bureau said. China is targeting economic growth of around five per cent this year. But the picture is also complicated by trade tensions with Washington that erupted in a gruelling tit-for-tat tariff war after US President Donald Trump took office in January. The two sides have since agreed a pause on retaliatory levies but have not yet announced a lasting deal. Trade delegations met in London this month for a second round of high-stakes talks, with Trump saying the superpowers reached an agreement that would preserve a truce. Li Chenggang, the head of the Chinese team, said communication with the US had been 'very professional', but did not say whether an accord had been reached. — AFP
Yahoo
16-06-2025
- Business
- Yahoo
China factory output slumps but consumption offers bright spot
China's factory output grew slower than expected last month as trade war pressures bit, official data showed Monday, while a bump in a key gauge of domestic consumption offered a rare bright spot for the economy. The United States and China this month agreed to a temporary truce in a blistering trade war that saw tariffs hiked to eye-watering levels and upended global supply chains. And the impact of the standoff was highlighted Monday as a report showed industrial production grew just 5.8 percent last month, below the 6.0 percent predicted in a survey of economists by Bloomberg. That was below a forecast-beating 6.1 percent in April, according to the data published by the National Bureau of Statistics (NBS). "Weaker external demand was partly to blame," Zichun Huang, China Economist at Capital Economics said in note. "Despite the tariff truce, the contraction in industrial sales for export appears to have deepened last month." However, retail sales -- a key gauge of consumer demand -- grew 6.4 percent year-on-year in May, according to the NBS, topping the 4.9 percent forecast in the Bloomberg survey and sharply up from April's 5.1 percent increase. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, wrote in a note that the retail sales figures "came as a surprise" -- pointing to the possible impact of a government trade-in programme for consumer goods. The NBS said the world's number two economy "maintained stability" last month as authorities "stepped up the implementation of more proactive and effective macro policies". But it added that "there are still many unstable and uncertain external factors, and the internal momentum for expanding domestic demand needs to be further strengthened". Beijing has struggled to sustain strong growth since the pandemic, grappling with deep-seated problems at home including a persistent slump in domestic consumption and a debt crisis in the property sector. Commercial property prices in a representative group of 70 cities fell month-on-month in May, reflecting continued consumer caution, the NBS said. The surveyed unemployment rate -- another closely watched figure as millions of young people struggle to find suitable work -- edged down to five percent in May from 5.1 percent the previous month, the bureau said. China is targeting economic growth of around five percent this year. But the picture has been complicated by trade tensions with Washington that erupted in a gruelling tit-for-tat tariff war after US President Donald Trump took office in January. The two sides have since agreed a pause on retaliatory levies but have not yet announced a lasting deal. isk-mjw/oho/dan Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Free Malaysia Today
16-06-2025
- Business
- Free Malaysia Today
China retail sales beat forecast despite trade war tensions
The key gauge of consumer demand grew 6.4% year-on-year in May, according to the National Bureau of Statistics. (AFP pic) BEIJING : Retail sales in China grew at a faster rate than expected last month, official data showed today, a positive sign for the world's second-largest economy during its grinding trade war with the US. The key gauge of consumer demand grew 6.4% year-on-year in May, according to data published by the National Bureau of Statistics (NBS). The figure beat the 4.9% growth forecast in a Bloomberg survey of economists and was also sharply up from April's 5.1% increase. However, the NBS also said industrial production grew a below-par 5.8%. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, wrote in a note that the retail sales figures 'came as a surprise', but warned the economic outlook for the rest of the year was uncertain. The NBS said the economy 'maintained stability' last month as authorities 'stepped up the implementation of more proactive and effective macro policies'. However, it added that 'there are still many unstable and uncertain external factors, and the internal momentum for expanding domestic demand needs to be further strengthened'. Beijing has struggled to sustain strong growth since the pandemic, grappling with deep-seated problems at home including a persistent slump in domestic consumption and a debt crisis in the property sector. 'Commercial property prices in a representative group of 70 cities fell month-on-month in May, reflecting continued consumer caution,' the NBS said. 'The surveyed unemployment rate – another notable figure as millions of young people struggle to find suitable work – edged down to 5% in May from 5.1% the previous month,' the bureau said. China is targeting economic growth of around 5% this year. However, the picture is also complicated by trade tensions with Washington that erupted in a gruelling tit-for-tat tariff war after US President Donald Trump took office in January. The two sides have since agreed a pause on retaliatory levies but have not yet announced a lasting deal. Trade delegations met in London this month for a second round of high-stakes talks, with Trump saying the superpowers reached an agreement that would preserve a truce. Li Chenggang, the head of the Chinese team, said communication with the US had been 'very professional', but did not say whether an accord had been reached.
Asia Times
11-06-2025
- Business
- Asia Times
Asia's shaky economies need a US-China trade truce, fast
As Asian governments go through the motions of negotiating with the US, Donald Trump's trade war is inflicting serious and ever-increasing damage on the region's largest economies. It remains to be seen what the US and China will ultimately agreed on in London this week. Vague talk of a preliminary strategy to ease trade tensions, with zero specifics or timelines, has so far left global markets with more questions than answers. The final readout said the two sides agreed in principle on a framework for de-escalating trade tensions, which will next be presented to Trump and Chinese President Xi Jinping for approval, according to reports. In the meantime, Japan and South Korea, Asia's No 2 and No 4 economies, are officially in negative territory, both down 0.2% in the first quarter on an annualized basis. What's important to consider is that these contractions predate the worst of Trump's tariffs. As the full brunt of those import taxes hits, Japan and Korea are sure to slide deeper into the red. Those levies include 30% on China, down from 145% earlier, 25% on autos, 50% on steel and aluminum and 10% across the board globally. Things could quickly get worse from there if China's factory gate deflation deepens. In May, China's producer prices fell to the lowest level in nearly two years. Consumer prices, meanwhile, extended declines as trade headwinds collide with a prolonged housing downturn. The 3.3% year-on-year drop in the May producer price index was even steeper than the 2.7% decline in April — and the deepest contraction in 22 months. China, says economist Zhiwei Zhang at Pinpoint Asset Management, 'continues to face persistent deflationary pressure.' Given the magnitude of the headwinds, says Johns Hopkins University economist Steve Hanke, it's 'no surprise' why this is the fourth-straight month in which China's consumer price trajectory 'has been gripped with an outright deflation.' The collateral damage from Trump's trade war is rising, in part because no one knows where the tariffs are headed. On China, it's still an open question whether Trump will lower Chinese taxes to 10% or raise them to 100%. For Japan and Korea, only Trump can say whether or not reciprocal tariffs of 24% and 25%, respectively, will soon return. Risks abound as neither Japanese Prime Minister Shigeru Ishiba nor new South Korean President Lee Jae-myung seems in any hurry to sign a bilateral trade pact with the US that might disadvantage their populations. That risks enraging a Trump White House desperate for any deal at all. Declarations by Trump trade Peter Navarro and Howard Lutnick have aged terribly. Trade advisor Navarro earlier assured that Trump would seal 90 deals in 90 days. Commerce Secretary Lutnick's late April statement that Trump already had 200 agreements nailed down is now a punchline. As Trump becomes more desperate for a win, real or imagined, the odds of him making tariffs great again increase. Especially since Chinese leader Xi Jinping hasn't rolled out lots of concessions, as Trump hoped. Optimism that Xi's government might increase the flow of now-restricted rare-earth minerals hasn't come to fruition. On Sunday, Kevin Hassett, Trump's National Economic Council head, told CBS News: 'We want the rare earths, the magnets that are crucial for cell phones and everything else to flow just as they did before the beginning of April, and we don't want any technical details slowing that down. And that's clear to them.' Yet what Xi has in common with Ishiba and Lee is a belief that time is on his side. The longer Trump's tariffs fan US inflation and cause economic disruption at home, the more he needs big splashy trade deals to justify the pain households are enduring in the name of making America great again. It follows, then, that Trump will become more willing to sign trade deals in name only to save face. That's the strategy China and Japan employed during the Trump 1.0 era to great effect. And it might well work again under Trump 2.0. The best hope for the global economy and financial system is Trump throttling back on tariffs in the months ahead. 'If this problem goes away, I think that the second half of this year will actually be one of growth,' says Indermit Gill, the World Bank's chief economist. The World Bank has a rather bleak view of the rest of 2025. It expects the slowest growth in 17 years, outside of recessionary periods. It sees global growth weakening to 2.3% this year, 0.4 percentage points less than it expected a few months back. Trouble in bigger economies is sure to spill over into smaller, less developed ones, given today's 'tight trade and investment linkages' with the US, Europe and China, the World Bank said in a report. The good news is that 'capital flows to emerging markets stabilized in May, breaking a two-month pattern of volatility and retrenchment,' says Jonathan Fortun, an economist at the Institute of International Finance. Non-resident flows rose to US$19.2 billion, marking a decisive shift from the $3.7 billion net outflow recorded in April. 'The rebound,' Fortun says, 'was broad-based, with both equity and debt components contributing positively. However, the recovery masks significant asymmetries across regions and asset classes, and the underlying investor tone remains cautious in light of ongoing global uncertainty.' Fortun adds that emerging Asia was the main beneficiary in May, attracting $11.4 billion across asset classes. 'The bulk of the inflows came through local debt and equity channels, as investors responded to stabilizing inflation prints and more predictable policy stances,' he says. In contrast, Fortun adds, Latin America recorded a modest 1.1 billion in net inflows, with strong equity demand partially offset by a sharp decline in debt flows. Emerging Europe attracted $5.1 billion, 'supported by resilient demand for domestic bonds in countries with improved fiscal outlooks,' he notes. In Japan's case, says economist Takeshi Yamaguchi at Morgan Stanley MUFG, markets are waiting with bated breath for the Bank of Japan's views on downside risks. BOJ Governor Kazuo Ueda, after all, is grappling with the impact of Trump's 25% automobile tariff by the US on small and midsize enterprises and spring wage negotiations amid prolonged US-Japan trade discussions. Yamaguchi says BOJ officials are also watching the impact of China's rare-earth export regulations on manufacturing activity, including automobile production. Other factors include the impact of US lawmakers giving Trump latitude to tax foreign investors, including potentially for punitive purposes on US Treasury holders. 'All underlying inflation measures of the BOJ have risen further' in the central bank's latest update, Yamaguchi says. Stefan Angrick, head of Japan at Moody's Analytics, notes that 'tariffs and tariff threats are damaging [Japan's] exports and industrial production. Household spending is weak as inflation outpaces wage growth, and pay gains may slow further if tariff pain derails the economy.' At the same time, Angrick says, slowing inflation will 'help home-made demand find better traction, but reduced government support for energy bills and a surge in food prices mean inflation will decelerate very gradually.' This will push real pay gains further into the distance, raising the stakes ahead of the upper house election in July, Angrick adds. Opposition parties have called for consumption tax cuts to ease the cost-of-living crisis. 'We're not convinced that's the best way forward,' Angrick says. But Prime Minister Shigeru's blanket rejection of all forms of fiscal support was already looking shaky before the trade war ramped up. All told, the outlook for 2025 looks extremely challenging.' In Seoul, the arrival of President Lee's new administration 'will reduce political tensions and improve the country's economic outlook,' following the six-month vacuum caused by Yoon Suk Yeol's impeachment, says Jeremy Chan, a Eurasia Group analyst. 'Lee will immediately confront two major challenges: reviving economic growth and striking a trade deal with the US to reduce crippling US tariffs on Korean exports,' Chan says. China's trajectory is complicated by a serious property crisis that's helping to drive deflation. The danger is that the trade war precipitates 'a race deeper into deflation,' says Tom Orlik, chief economist for Bloomberg Economics. Zichun Huang, China economist at Capital Economics, adds that 'we still think persistent overcapacity will keep China in deflation both this year and next.' There's still hope Trump might pivot away from tariffs. Headlines about several trillions of dollars of stock market losses, talk of a 'Trumpcession' and chatter that the so-called 'bond vigilantes' were displeased had Trump backing off. The same with China's stance going into the weekend trade talks in Geneva in mid-May, where Team Xi demanded a goodwill gesture on tariffs; Trump ultimately obliged by throttling back on import taxes from 145% to 30%. Asian 'economies now face the secondary shock of an influx of cheap Chinese imports, as China exports excess capacity amid subdued domestic demand and elevated trade tensions with the US and other developed markets,' says Alex Wolf, head of Asia investment strategy at JP Morgan Private Bank. 'This phenomenon is already negatively impacting local emerging market manufacturing and employment.' Wolf adds that 'as the Trump administration targets not just China but almost every trading partner with trade imbalances – whether due to trade deficits or tariff rate differentials – many EM [emerging market] economies could end up in the crosshairs. With both the direct impact of US tariffs and the indirect impact of a slowing China and weaker global trade, EM economies may face tougher challenges ahead.' Yet the detour in Trump's phraseology thickens the plot. Around 'Liberation Day' on April 2, Trump World argued the US is being 'looted, pillaged, raped and plundered by nations near and far.' Since then, Trump's White House has also talked of the 'importance of a sustainable, long-term and mutually beneficial economic and trade relationship.' All officials in Tokyo and Seoul can do is hope real progress was made behind closed doors in London this week. In the interim, though, Asia's 2025 is turning out monumentally different from what Asia expected. Follow William Pesek on X at @WilliamPesek
Observer
09-06-2025
- Business
- Observer
China's exports slow as trade war takes toll
BEIJING: Chinese exports grew at a slower pace than expected in May, official figures published Monday showed, hours ahead of expected talks between Beijing and Washington aimed at easing a gruelling trade war. Imports fell more dramatically than expected last month, with weak domestic consumption in the world's number two economy highlighted by data earlier in the day revealing another month of falling prices. The 4.8 per cent year-on-year increase in overseas shipments last month was slower than the 8.1 per cent growth recorded in April, also falling short of the six per cent jump that was forecast in a survey of economists by Bloomberg. It comes as representatives from China and the United States are expected to meet in London on Monday for another round of high-stakes trade talks that markets hope will ease tensions between the economic superpowers. Monday's reading included a 12.7 per cent plunge in exports to the United States compared with April, when US President Donald Trump unveiled his eye-watering tariffs on China. May's exports to the United States also represented a year-on-year decline of more than one third -- the steepest slide since early 2020. In contrast, customs data showed shipments to Vietnam increased from the previous month. Those to other Southeast Asian countries including Malaysia, Thailand, Singapore and Indonesia all declined slightly after soaring in April, the figures indicated. "The acceleration of exports to other economies has helped China's exports remain relatively buoyant in the face of the trade war," wrote Lynn Song, chief economist for Greater China at ING, noting that shipments to Southeast Asian nations were up 14.8 per cent year-on-year. China's overall imports in May dropped 3.4 per cent year-on-year, coming up short of the 0.8 per cent decline forecast by the Bloomberg survey. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said the trade outlook "remains highly uncertain". He pointed to the impact of "frontloading", when overseas buyers increase shipments ahead of potentially higher tariffs. — AFP
