German industrial orders surprise with October boost

German manufacturers of capital and consumer goods both saw increased orders in October, but producer goods makers reported falling demand. (AFP)
Updated 06 December 2017
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German industrial orders surprise with October boost

FRANKFURT: Industrial firms in Germany beat analysts’ expectations by reporting slightly increased orders in October, official data showed Wednesday, suggesting a run of strong growth has further to go before petering out.
New contracts — seen as an indicator of future growth in Europe’s largest economy — added 0.5 percent month-on-month, figures from federal statistics authority Destatis showed, where analysts surveyed by Factset had predicted a slight decrease.
The statisticians also revised the previous month’s growth in orders up slightly, to 1.2 percent.
Both domestic and foreign demand for German goods contributed to the October increase, with 0.4-percent growth in orders at home and 0.5-percent expansion abroad.
But new contracts from Germany’s neighbors in the 19-nation eurozone fell by 1.2 percent, while demand from the rest of the world increased 1.6 percent.
Manufacturers of capital and consumer goods both saw increased orders, but producer goods makers reported falling demand.
“Ordering activity increased for the third month in a row in October, overall a very active development,” the economy ministry in Berlin commented in a statement.
The government economists however noted “below average” large orders for items like aircraft weighing on the results.
A two-month comparison of September and October versus July and August — which the ministry argues is more representative of underlying trends — showed growth in orders of 3.4 percent.
Surveys among German business leaders show confidence at an all-time high, with economic growth powered by domestic consumption, a construction boom and growth in investments, while foreign demand for the nation’s goods remains unslaked.
Combined with those factors, Wednesday’s results mean “the business cycle in industry should remain on a strong upward trend,” the ministry predicted.


Malaysia reviews China infrastructure plans

Malaysia’s former PM Najib Razak (AFP)
Updated 18 June 2018
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Malaysia reviews China infrastructure plans

  • Malaysia's scandal-mired former PM Najib Razak signed a string of deals for Beijing-funded projects, including a major rail link and a deep-sea port.
  • New Prime Minister Mahathir Mohamad has announced a planned high-speed rail link between Kuala Lumpur and neighboring Singapore will not go ahead as he seeks to reduce the country’s huge national debt.

KUALA LUMPUR: Malaysia has been a loyal partner in China’s globe-spanning infrastructure drive, but its new government is to review Beijing-backed projects, threatening key links in the much-vaunted initiative.

Kuala Lumpur’s previous regime, led by scandal-mired Najib Razak, had warm ties with China, and signed a string of deals for Beijing-funded projects, including a major rail link and a deep-sea port.

But the long-ruling coalition was unexpectedly voted out last month by an electorate alienated by allegations of corruption and rising living costs.

Critics have said that many agreements lacked transparency, fueling suspicions they were struck in exchange for help to pay off debts from the financial scandal which ultimately helped bring down Najib’s regime.

The new government, led by political heavyweight Mahathir Mohammed, has pledged to review Chinese deals seen as dubious, calling into question Malaysia’s status as one of Beijing’s most cooperative partners in its infrastructure push.

China launched its initiative to revive ancient Silk Road trading routes with a global network of ports, roads and railways — dubbed “One Belt, One Road” —  in 2013.

Malaysia and Beijing ally Cambodia were seen as bright spots in Southeast Asia, with projects in other countries often facing problems, from land acquisition to drawn-out negotiations with governments.

“Malaysia under Najib moved quickly to approve and implement projects,” Murray Hiebert, a senior associate from think-tank the Center for Strategic and International Studies, told AFP.

Chinese foreign direct investment into Malaysia stood at just 0.8 percent of total net FDI inflows in 2008, but that figure had risen to 14.4 percent by 2016, according to a study from Singapore’s ISEAS-Yusof Ishak Institute.

However, Hiebert said it was “widely assumed” that Malaysia was striking quick deals with China in the hope of getting help to cover debts from sovereign wealth fund 1MDB.

Najib and his associates were accused of stealing huge sums of public money from the investment vehicle in a massive fraud. Public disgust at the allegations — denied by Najib and 1MDB — helped topple his government.

Malaysia’s first change of government in six decades has left Najib facing a potential jail term.

New Prime Minister Mahathir Mohamad has announced a planned high-speed rail link between Kuala Lumpur and neighboring Singapore will not go ahead as he seeks to reduce the country’s huge national debt.

The project was in its early stages and had not yet received any Chinese funding as part of “One Belt, One Road.” But Chinese companies were favorites to build part of the line, which would have constituted a link in a high-speed route from China’s Yunnan province to trading hub Singapore, along which Chinese goods could have been transported for export.

Work has already started in Malaysia on another line seen as part of that route, with Chinese funding — the $14-billion East Coast Rail Link, running from close to the Thai border to a port near Kuala Lumpur.

Mahathir has said that agreement is now being renegotiated.

Other Chinese-funded initiatives include a deep-sea port in Malacca, near important shipping routes, and an enormous industrial park.

It is not clear yet which projects will be amended but experts believe axing some will be positive.

Alex Holmes, Asia economist for Capital Economics, backed canceling some initiatives, citing “Malaysia’s weak fiscal position and that some of the projects are of dubious economic value.”

The Chinese foreign ministry did not respond to request for comment.

Decoder

What is the "One Belt, One Road" initiative?

The “One Belt, One Road” initiative, started in 2013, has come to define the economic agenda of President Xi Jinping. It aims to revive ancient Silk Road trading routes with a network of ports, roads and railways.