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
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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.


Italy endorses China’s Belt and Road plan in first for a G7 nation

Updated 24 March 2019
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Italy endorses China’s Belt and Road plan in first for a G7 nation

ROME: Italy endorsed China’s ambitious “Belt and Road” infrastructure plan on Saturday, becoming the first major Western power to back the initiative to help revive the struggling Italian economy.
Saturday’s signing ceremony was the highlight of a three-day trip to Italy by Chinese President Xi Jinping, with the two nations boosting their ties at a time when the United States is locked in a trade war with China.
The rapprochement has angered Washington and alarmed some European Union allies, who fear it could see Beijing gain access to sensitive technologies and critical transport hubs.
Deputy Prime Minister Luigi Di Maio played down such concerns, telling reporters that although Rome remained fully committed to its Western partners, it had to put Italy first when it came to commercial ties.
“This is a very important day for us, a day when Made-in-Italy has won, Italy has won and Italian companies have won,” said Di Maio, who signed the memorandum of understanding on behalf of the Italian government in a Renaissance villa.
Taking advantage of Xi’s visit, Italian firms inked deals with Chinese counterparts worth an initial 2.5 billion euros ($2.8 billion). Di Maio said these contracts had a potential, future value of 20 billion euros.
The Belt and Road Initiative (BRI) lies at the heart of China’s foreign policy strategy and was incorporated into the ruling Communist Party constitution in 2017, reflecting Xi’s desire for his country to take a global leadership role.
The United States worries that it is designed to strengthen China’s military influence and could be used to spread technologies capable of spying on Western interests.
WARM WELCOME
Italy’s populist government, anxious to lift the economy out of its third recession in a decade, dismissed calls from Washington to shun the BRI and gave Xi the sort of red-carpet welcome normally reserved for its closest allies.
Some EU leaders also cautioned Italy this week against rushing into the arms of China, with French President Emmanuel Macron saying on Friday that relations with Beijing must not be based primarily on trade.
There was not even universal backing for the BRI agreement within Italy’s ruling coalition, with Deputy Prime Minister Matteo Salvini, who heads the far-right League, warning against the risk of China “colonialising” Italian markets.
Salvini did not meet Xi and declined to attend a state dinner held in honor of the visiting leader on Friday.
Di Maio, who leads the 5-Star Movement, says Italy is merely playing catch up, pointing to the fact that it exports significantly less to China than either Germany or France.
Italy registered a trade deficit with China of 17.6 billion euros last year and Di Maio said the aim was to eliminate the deficit as soon as possible.
After talks with Italian Prime Minister Giuseppe Conte and Di Maio in the morning, Xi flew to the Sicilian city Palermo for a private visit on Saturday afternoon.
He is due to head to Monte Carlo on Sunday before finishing his brief tour of Europe in France, where he is due to hold talks with Macron and German Chancellor Angela Merkel.