China growth beats forecasts in face of US trade row, financial risk

About 20 percent of China’s exports have been ferried to the US for the past decade, according to Moody’s Investors Services. (AFP)
Updated 17 April 2018
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China growth beats forecasts in face of US trade row, financial risk

  • Fears of a China-US trade war have been simmering in recent weeks, with Washington and Beijing exchanging threats of tit-for-tat levies on hundreds of billions of dollars’ worth of goods
  • For the past decade, about 20 percent of China’s exports have been ferried to the US, according to Moody’s Investors Services

BEIJING: China’s economy grew more than expected in the first quarter as it withstood headwinds from Beijing’s fight against financial risk and pollution, and trade tensions with the US.
While acknowledging the potential negative impact of a US trade war officials on Tuesday warned the country faced greater downside risk at home, citing the need for reforms.
The world’s number two economy expanded 6.8 percent in January-March, better than the 6.7 percent tipped in an AFP survey of economists and the same as the previous three months.
It is also much better than the annual rate of around 6.5 percent targeted by the government.
Growth remained resilient even as Beijing kicked its war on smog into a high gear during the winter months by cutting production for many steel smelters, mills and factories.
“The national economy maintained the momentum of steady and sound development,” said Xing Zhihong, a spokesman for the National Statistics Bureau. “The economic performance continued to improve and the economy was off to a good start.”
Fears of a China-US trade war have been simmering in recent weeks, with Washington and Beijing exchanging threats of tit-for-tat levies on hundreds of billions of dollars’ worth of goods.
US President Donald Trump has issued the warnings as part of his “America First” protectionist agenda that has focused on what he calls unfair practices by China that are killing American jobs.
Last week his Chinese counterpart Xi Jinping sounded a conciliatory note, promising to reduce tariffs on cars and open up the economy further.
For the past decade, about 20 percent of China’s exports have been ferried to the US, according to Moody’s Investors Services, which forecasts a material macroeconomic impact if Trump makes good on his threats with the consequences vibrating beyond China’s end exporters and deep into the economy.
While a tariffs spat with Trump has yet to make a significant impact, Commerzbank economist Hao Zhou warned “the overall growth is still under pressure.”
“The trade tensions are likely to persist over the foreseeable future, clouding the trade and growth outlook.”
Xing at the statistics bureau acknowledged the cloud of “international economic uncertainties” but said “China-US trade frictions do not pose a problem for China’s economy.”
Instead, he pointed to domestic risks to growth.
“The problems of unbalanced and inadequate development in China are acute and the tasks for reform and development are daunting,” he said.
After years of breakneck growth driven by exports and debt-fueled investment, authorities are increasingly worried about a possible credit crisis and are stepping up their battle against financial risk.
And the forecast-beating growth will give policymakers room to push through measures to battle those hazards and also address pollution.
Last week, the central bank released data showing total financing grew at 10.5 percent in March, the slowest pace on record, according to China-focused economist Andrew Polk.
“We think a further (economic) slowdown is on the cards before the end of the year,” said Julian Evans-Pritchard of Capital Economics, pointing to the drags “from tighter fiscal policy and slower credit creation” that will weigh on activity.
But China is counting on its 1.4 billion consumers to pick up the slack.
Retail sales grew 9.8 percent in the first quarter on-year, beating forecasts of 9.7 percent in a Bloomberg News survey.
Output at China’s factories and workshops expanded 6.8 percent for the first quarter, matching the expansion seen during the same period last year, but below the 6.9 percent forecast by Bloomberg News. Industrial production grew six percent in March.


Going, going, gone: A slice of Europe on Dubai’s doorstep

Updated 17 August 2018
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Going, going, gone: A slice of Europe on Dubai’s doorstep

DUBAI: Billionaire investors from Saudi Arabia are snapping up a slice of Europe — minutes from Dubai’s coast — as work on a luxurious man-made archipelago gathers pace.
On the emirate’s “The World” archipelago, the Heart of Europe project provides a series of island destinations, made up of opulent palaces, island villas and 13 luxury hotels on six small islands. Each offers a different aspect of European life and aims to bring European hospitality “with a Maldivian twist” to the Middle East’s Arabian Sea.
According to its developer, Joseph Kleindienst, chairman of the Dubai property developer Kleindienst Group, wealthy investors across the Kingdom are among the most prominent buyers of the multimillion-dollar properties being developed on the island, with almost a quarter of investments to date being made by Saudi nationals.
“We have a very good interest from Saudis in the Heart of Europe project,” said Kleindienst, speaking to Arab News during a private tour of Sweden Island. “Here in Sweden Island, soon you will find very, very famous Saudi names. It is not for us to disclose these names, but later on, as the development grows, you will meet very interesting Saudis here.”
The Heart of Europe is the first big project to go ahead as part of The World project, a 60-square-kilometer archipelago of more than 200 islands laid out in the shape of a world map, which was created from millions of tons of sand and rock. Currently, Lebanon Island is the only one open to the public; it operates The World Island Beach Club.
Construction of the Heart of Europe project was due to begin in November 2008 but was delayed by the global financial crisis. Development finally began in 2014. The project’s value has grown from an initial Dh1.5 billion ($408 million) equity undertaking by the Kleindienst Group to Dh5 billion ($1.36 billion) after sales.
On Monday thousands of workers at Heart of Europe were busy across the islands striving to get the project ready for the completion deadline of 2020, ahead of Dubai’s Expo; with an initial focus on Germany Island and Sweden Island.
The Heart of Europe has 10 beach palaces on Sweden, 32 beach villas on Germany and 131 “Floating Seahorse” villas, marketed as the world’s “first luxury underwater living experience.”
Kleindienst expects that all of the homes for sale across the Heart of Europe project will be handed over by the end of this year.
In total, 4,000 residential and hotel units will eventually be available across the project, about 1,000 of which have already been bought by investors, Kleindienst said.
Besides handing over residences to owners by the end of the year, The Heart of Europe is due to have the first of its planned hotel “soft openings,” at the Portofino Hotel in Italy, in December.
Lying five kilometers (3.1 miles) off mainland Dubai, the Heart of Europe will feature Italian, Spanish, Swedish, Swiss and German architecture as well as landscaped gardens and streets that will, in some cases, feature artificial snow, due to climate control technology. And, for those who miss Europe’s winter drizzle, some streets will also feature artificial rain.
Sweden will feature 10 Scandinavian-style villas. This week, the Kleindienst Group unveiled the first completed six-floor Sweden Beach Palace, and invited Arab News for a viewing.
With a price tag of Dh100million, the villa comes with Bentley Home interiors, seven bedrooms, a fitness center, an underground “snow room” that can be set as low as minus 5C, a Swedish massage room, an entertainment room and an observation deck — designed to mimic the upturned hull of a Viking ship — with 360-degree views of the Arabian Gulf.
Each property has its own private section of beach. The palaces also own a piece of the marine area plot, including a private coral reef.
Of the 10 for sale, three have already been bought by investors based in Saudi Arabia, said Kleindienst.
Saudis, along with other wealthy Middle Eastern residents, are an important segment of the investors the Kleindienst Group hopes to attract. “It is an excellent product for investors from Saudi Arabia because we are selling this ‘second-home’ concept here in the Heart of Europe.
“People from Saudi Arabia can travel to Dubai and enjoy their time in the Heart of Europe. And when they are not here, we hope they can rent their homes out and produce an income from the property,” he said.
Heart of Europe properties are not for people to live in 365 days a year, but for the uber-rich looking to snap up a second home in the Middle East, with a unique setting.
Kleindienst said that the project is Dubai’s first purpose-built luxury area offering UAE residents a holiday property in their own country, rather than in the Maldives, Mauritius or Seychelles.
“The second-home market is a new concept for Dubai,” he said, adding that while New York has places such as The Hamptons and many cities in Europe have countryside and seaside getaways, Dubai has lacked a luxury weekender destination.
“The Heart of Europe is a unique and ambitious project aiming to develop Dubai’s luxury freehold second-home market in an idyllic island location,” he said. “Our journey to date has taken us to the unveiling of the Sweden Beach Palaces, one of the most luxurious freehold second homes in the UAE. Our vision is turning into reality.”
Aside from Sweden Island, Saudis are also snapping up the Floating Seahorse vessels, which come with a slightly less eye-watering price tag of Dh16million, said Kleindienst. Of the 131 for sale, 60 have already been bought, he said. Figures from April show that about 40 percent of the buyers are from the Kingdom.
On the tour, Arab News saw a completed prototype. The bespoke one, two or three-bed floating homes have bathrooms and bedrooms below sea level so owners have only a pane of glass separating them from hundreds of fish and an abundance of marine life as they sleep and bathe.
Kleindienst hopes the Heart of Europe project will be the catalyst for world-breaking firsts, including a record he aims to break this year.
The soft opening of the 488-room Portofino Hotel, located on the Main Europe Island, will take place on the last quarter of 2018, despite only breaking ground on the construction site this year.
“No one has broken ground on a hotel, then completed it the same year,” he said. “We want to show that it is possible. That anything is possible. That there is the ability to build a hotel in a year on an island.”