China’s industrial output slows, unemployment rises

Output growth at China’s factories and workshops for the first two months slowed to 5.3 percent on-year.(AFP)
Updated 14 March 2019
0

China’s industrial output slows, unemployment rises

  • Output growth at China’s factories and workshops for the first two months slowed to 5.3 percent on-year
  • China is grappling with a decline in global demand — most notably from the US, which launched a trade war last year

BEIJING: China’s industrial output slowed during the first two months of the year as unemployment rose, official data showed Thursday, while some indicators showed a slowdown in the world’s second largest economy stabilizing.
The figures from the National Bureau of Statistics come as Beijing and Washington appear to be nearing a deal to resolve their painful trade spat, and Chinese leaders convene in the capital for an annual parliamentary session.
Output growth at China’s factories and workshops for the first two months slowed to 5.3 percent on-year, from 5.7 percent in December, a multi-year low and short of forecasts.
“We must be aware that there are many uncertainties and instabilities from the external environment,” said NBS spokesman Mao Shengyong. “The economy faces downward pressure,” he told reporters.
China’s normally steady unemployment rate rose to 5.3 percent in February, from 4.9 percent in December, with the NBS saying it had expected worse numbers.
Chinese Premier Li Keqiang last week laid out a lower growth target of 6.0-6.5 percent this year, from 6.6 percent growth in 2018, which was already the slowest pace for almost three decades.
Policymakers huddled in Beijing have talked up plans to support the economy, announcing tax cuts, fee reductions, and financing support. A plan to cut value-added tax for manufacturers will help the struggling sector.
In January and February car sales continued to fall and manufacturing activity sunk.
The latest data showed growth in retail sales for January-February remained flat from December, rising 8.2 percent on-year and slightly above forecasts from economists polled by Bloomberg News.
However, retail sales remain near a 15-year low, said Julian Evans-Pritchard of Capital Economics in a note, adding that “the near-term outlook still looks downbeat.”
Beijing is counting on consumers and renewed investment to stabilize the economy.
Fixed-asset investment rose 6.1 percent in the first two months, from 5.9 percent in 2018.
Last year investment in infrastructure crumbled as China hit the brakes on major projects such as subway lines and motorways to keep a lid on debt.
Beijing has tried to restart spending. Infrastructure spending ticked up 4.3 percent on-year in January-February, from 3.8 percent last year.
Still it remains well below the near 20 percent growth seen for many years.
“Infrastructure investment disappointed in the first two months, suggesting that government efforts to accelerate it have not yet yielded material impact,” said Louis Kuijs of Oxford Economics.
China is grappling with a decline in global demand — most notably from the US, which launched a trade war last year.
US President Donald Trump said Wednesday he sees a “very good chance” of reaching a trade deal with China but is in “no rush” to reach an agreement.
The two sides have exchanged tariffs on more than $360 billion in two-way trade, and China’s exports and imports plummeted much more than expected in February.
“We expect economic growth to remain under pressure in the coming months from slowing exports and still subdued sentiment,” said Kuijs.
The slowdown has stalled price growth in the country’s industrial sector while consumer inflation has eased.


Bitcoin craze hits Iran as US sanctions squeeze weak economy

Updated 18 July 2019
0

Bitcoin craze hits Iran as US sanctions squeeze weak economy

  • Some Iranian officials worry that “mining” is abusing the subsidized electricity
  • Iranian Bitcoin miners are purchasing more affordable Chinese ready-made computers

TEHRAN: Iranians feeling the squeeze from US sanctions targeting the Islamic Republic’s ailing economy are increasingly turning to such digital currencies as Bitcoin to make money, prompting alarm in and out of the country.
In Iran, some government officials worry that the energy-hungry process of “mining” Bitcoin is abusing Iran’s system of subsidized electricity; in the United States, some observers have warned that cryptocurrencies could be used to bypass the Trump administration’s sanctions targeting Iran over its unraveling nuclear deal with world powers.
The Bitcoin craze has made the front pages of Iranian newspapers and been discussed by some of the country’s top ayatollahs, and there have been televised police raids on hidden computer farms set up to bring in money by “mining” the currency.
Like other digital currencies, Bitcoin is an alternative to money printed by sovereign governments around the world. Unlike those bills, however, cryptocurrencies are not controlled by a central bank. Bitcoin and other digital currencies like it trade globally in highly speculative markets without any backing from a physical entity.
As a result, computers around the world “mine” the data, meaning they use highly complex algorithms to verify transactions. The verified transactions, called blocks, are then added to a public record, known as the blockchain. Any time “miners” add a new block to the blockchain, they are rewarded with a payment in bitcoins.
To work, the expensive specialized computers require a lot of electricity to power their processors and to keep them cool. In Iran, “miners” have an edge because electricity is cheap thanks to longtime government subsidies. “Miners” also buy cheaper Chinese ready-made computers to do the work.
But the constant raids and authorities’ conflicting statements on the issue have Bitcoin “miners” in Iran incredibly leery of being identified. Those contacted by The Associated Press refused to speak about their work or to say how much they earn from their “mining.”
But they acknowledge they do this to make some money at a time when Iran’s currency, the rial, tumbled from 32,000 rials to $1 at the time of the 2015 nuclear deal, to around 120,000 rials to $1 now.
“It is clear that here has turned into a heaven for ‘miners,’” Mohammad Javad Azari Jahromi, Iran’s minister for information and communications technology, recently told AP in an interview. “The business of ‘mining’ is not forbidden in law but the government and the Central Bank have ordered the Customs Bureau to ban the import of (mining machines) until new regulations are introduced.”
Ali Bakhshi, the head of the Iran Electrical Industry Syndicate, said earlier this month that the country’s Energy Ministry likely would boost costs for Bitcoin “miners” to 7 cents for each kilowatt of electricity they consume, a massive increase from the current half-cent but still almost half the cost of electricity in the United States, according to the semi-official Fars news agency.
Still, there are concerns, especially among Iran’s religious leaders, that people might try to circumvent paying extra for the electricity as well as using digital currency to hide or move money illicitly.
Tabnak, a hard-line news website associated with a former commander of the country’s paramilitary Revolutionary Guard, quoted three ayatollahs describing Bitcoin as either problematic or “haram,” meaning forbidden. Islam prescribes strict rules about finance.
But Jahromi said clerics became more receptive to the idea after his staff briefed them that Bitcoin had a value in the real world, which is required under Islamic finance. Islamic finance also prohibits gambling, the payment of interest and misleading others.
“Some of our top clerics have issued fatwas that say Bitcoin is money without a reserve, that it is rejected by Islamic and cybercurrencies are haram,” Jahromi said. “When we explain to them this is not a currency but an asset, they change their mind.”
Iran has tried to keep its economic situation in check by controlling foreign currency rates and cutting down on those moving their money from the rial to other currencies, including Bitcoin. Last year, the semi-official Mehr news agency quoted Mohammad Reza Pour-Ebrahimi, the head of the Iranian parliament’s economic commission, as suggesting that about $2.5 billion left Iran through digital currency purchases. He did not elaborate and authorities have not discussed it since.
The US, meanwhile, has been keeping a close watch on Iranians holding bitcoins. In November, a federal grand jury in Newark, New Jersey, accused two Iranian men of hacking and holding hostage computer systems of over 200 American entities to extort them for Bitcoin, including the cities of Newark and Atlanta.
“As Iran becomes increasingly isolated and desperate for access to US dollars, it is vital that virtual currency exchanges, peer-to-peer exchangers and other providers of digital currency services harden their networks against these illicit schemes,” said Sigal Mandelker, Treasury’s undersecretary for terrorism and financial intelligence.
Not so, said Jahromi.
“Cybercurrencies are effective in bypassing sanctions when it comes to small transactions, but we do not see any special impact in them as far as mega-transactions are concerned,” he said. “We cannot use them to go around international monetary mechanisms.”