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Straits Times
3 days ago
- Business
- Straits Times
China private factory gauge plunges to weakest in over 2 years despite tariff reprieve
The picture painted by more export-oriented Caixin survey gloomier than official PMI reading released last week. PHOTO: AFP BEIJING – China's manufacturing activity fell to the weakest level since September 2022, according to a private survey, as improved trade flows proved insufficient to shore up an economy still under pressure from weak domestic demand. The Caixin manufacturing purchasing managers' index (PMI) fell to 48.3 last month from 50.4 in April, according to a statement released by Caixin and S&P Global on June 3, well below the 50 mark separating expansion from contraction. The figure is below every estimate in a Bloomberg survey of analysts, whose median was 50.7. The results were weaker than the official PMI reading released on May 31, which showed manufacturing contracted at a slower rate after the reprieve on tariffs unclogged trade flows. 'Manufacturing supply and demand declined, dragged by overseas demand,' senior economist Wang Zhe at Caixin Insight Group said in a statement. 'Major macroeconomic indicators showed a marked weakening at the start of the second quarter. The downward pressure on the economy has significantly intensified compared to preceding periods' The picture painted by the more export-oriented Caixin survey, offers another glimpse of how factories adjusted in the initial aftermath of the trade ceasefire, after China and the United States agreed to reduce tariffs for 90 days beginning from May 14. A renewed fall in new orders accompanied a decline in manufacturing output, according to the report. Companies reduced their purchasing activity and cut staffing levels, although sentiment towards future output improved, it said. The prospects for manufacturing in the months ahead are still in question, given an uncertain export outlook, and especially as tensions rose again in recent days between the world's two biggest economies. The Caixin results have tended to be higher than those from the official poll over the previous year as exports stayed strong. The two surveys cover different sample sizes, locations and business types, with the private poll focusing on small and medium-sized firms in the non-state sector. 'The trade environment remains highly uncertain,' said Mr Raymond Yeung, chief economist for Greater at Australia & New Zealand Banking Group. 'The key remains on property, which is still sluggish with no sign of recovery'. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
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Business Standard
19-05-2025
- Business
- Business Standard
Home prices in China fall at a faster pace during tariff war with US
China's home prices fell at a faster pace in April, signalling the property market slump remains a headache for policymakers as they fend off a tariff war with the US. New-home prices in 70 cities, excluding state-subsidised housing, dropped 0.12 per cent from March, when they declined 0.08 per cent, National Bureau of Statistics figures showed Monday. Values of used homes slid 0.41 per cent, compared with a 0.23 per cent drop a month earlier. The trade war risks worsening the housing slump that has dragged on economic growth and has only recently been showing signs of abating. While the US and China made a truce on tariffs last week, trade ructions may add to woes for workers in the export-driven economy, curtailing housing demand. 'The elephant in the room is China's property market,' ANZ Group Holdings Ltd. economists led by Raymond Yeung wrote in a recent note. 'The tariff shock is caused by the unpredictability rather than the tariff itself.' From a year earlier, declines in values eased. New-home prices fell 4.55 per cent, less than March's 4.99 per cent drop, the statistics bureau said. Existing-home prices slid 6.76 per cent, compared with a 7.25 per cent decrease a month earlier. Chinese leaders signalled last month that they will take a patient approach in defending growth despite the deepening trade war with the US, pledging to 'fully prepare' emergency plans to ward against increasing external shocks. Authorities reiterated their commitment to existing programmes to aid the property sector, such as renovating urban villages and run-down homes while streamlining policies for local governments to buy unsold homes. Top officials have signalled that a recovery in the property sector will help to shield the country from the US tariff hikes. China has been shifting to pro-consumption policies, including an effort to boost household income, provide more consumption subsidies and strengthen the social safety net. 'We believe the government has become more determined to reboot the property sector,' said Edward Chan, credit analyst at S&P Global Ratings. 'This will be key to supporting consumer confidence, which Beijing has identified as its economic priority.'
Japan Times
19-05-2025
- Business
- Japan Times
China consumption miss overshadows factory strength amid tariffs
China's industrial output expanded faster than expected in April while consumption disappointed, highlighting the challenges facing the world's second-largest economy despite a quick de-escalation of trade tensions with the U.S. Industrial output climbed 6.1% on year in April, slowing from the prior month but far exceeding the median estimate in a Bloomberg survey of analysts. Retail sales growth, a key gauge of consumption, also weakened from March to 5.1%, according to figures published by the National Bureau of Statistics on Monday, below economists' projection. Despite the resilience of factories, weaker consumption for April points to the need for more supportive policies as economists warn of complacency after a 90-day pause on tariffs. China's prolonged property crisis, deflationary pressure and worries about unemployment are weighing on confidence among households. The government, which set an ambitious economic growth target of about 5% for 2025, has previously made boosting domestic consumption a priority this year. Stay updated on the trade wars. Quality journalism is more crucial than ever. Help us get the story right. For a limited time, we're offering a discounted subscription plan. Unlimited access US$30 US$18 /mo FOREVER subscribe NOW "Rosy industrial production figures reflect only one part of the economy,' said Raymond Yeung, chief economist for Greater at Australia & New Zealand Banking Group. "But April retail sales figures show that people are not willing to spend. To achieve 5% growth, we still need consumption.' The urban jobless rate fell slightly to 5.1% in April, while growth in fixed-asset investment slowed to 4% in the first four months of the year. China's new home prices dropped at a faster pace in April. The offshore yuan held little changed after the data release. Yields on China's 10-year government bonds edged lower slightly to 1.67%. A gauge of Chinese stocks listed in Hong Kong pared early losses following the data. The snapshot of the economy offers the fullest look yet at how China coped with a drastic escalation in trade tensions with the U.S. While the two sides in May reached the truce in their tariff war, the uncertainty surrounding further negotiations toward a final deal could keep businesses cautious about expanding production or investing in new projects. Still, the surprise performance of industrial production provides further evidence that China was able to dodge a steep slowdown as it navigated the onset of U.S. President Donald Trump's trade war. Exports in April also rose more than forecast, as companies diverted goods to Southeast Asia and Europe to compensate for a plunge in shipments to the U.S. A few major international banks including Goldman Sachs Group upgraded their forecasts for China's 2025 growth last week, although their views remain below Beijing's target. Many economists are also expecting the de-escalation to buy the government more time before it needs to deploy more stimulus to prop up the economy. The agreement "between the U.S. and China could have reduced tariff uncertainties while domestic policymakers could further switch into a wait-and-see mode,' Citigroup economists including Xiangrong Yu wrote in a note last week. Morgan Stanley economists including Robin Xing have dialed back their expectations on a supplementary fiscal package to up to 1 trillion yuan ($139 billion) in the fourth quarter, from a previous forecast of as much as 1.5 trillion yuan in July-September. Consumer sentiment has remained fragile amid the property slump and concerns the trade war could cause layoffs in China's massive manufacturing and export sectors. In April, China's program to subsidize purchases of new consumer goods probably contributed to huge gains in sales of home appliances, telecommunications equipment and furniture. At the same time, car purchases — which account for nearly a 10th of total retail sales — grew less than 1% after an increase of 5.5% in March. "This indicates that while measures such as the trade-in policy indeed can help stabilize short term consumption, a more sustainable recovery of consumption may require an improvement in consumer sentiment,' said Lynn Song, ING's chief economist for greater China. That "requires a broader stabilization of asset prices and a recovery of wage growth,' he added.
New York Times
09-05-2025
- Business
- New York Times
Trade War Shock Is Scrambling China's Exports
Chinese government data released on Friday offered a peek into how the trade war is already reordering the flow of goods around the world. Exports from China jumped last month, driven by trade to other countries in Southeast Asia, even as President Trump's tariffs on Chinese goods forced a sharp slowdown in shipments to the United States. Inside China, imports fell as demand continued to weaken. The trade numbers released on Friday capture activity in April, when tensions between the United States and China escalated more rapidly than expected. In a series of measures, President Trump raised tariffs on Chinese goods to 145 percent, and China responded with 125 percent levies on American goods. As a result, Chinese shipments to the United States plunged by 21 percent compared with the same period a year earlier. But Chinese exports to Southeast Asian countries surged by 21 percent. 'This is an early signal that something is going on in terms of a front-loading of the supply chain,' said Raymond Yeung, the chief economist for greater China for ANZ, a New Zealand bank. 'It's a redirection of trade that is already well documented,' he said. Chinese exports to countries like Vietnam and Thailand have soared, Mr. Yeung said, while data on imports from Taiwan and South Korea suggested that Chinese factories are taking advantage of a 90-day pause in tariffs on countries across the region to complete orders destined for the United States. Want all of The Times? Subscribe.
Business Times
07-05-2025
- Business
- Business Times
Hong Kong dollar interest rate falls most since 2008 after intervention
[NEW YORK] The Hong Kong dollar's funding costs plunged the most since 2008, as the monetary authority's intervention to defend the currency peg helped boost liquidity in the financial system. The one-month Hong Kong Interbank Offered Rate declined 58 basis points to 3.08 per cent on Wednesday (May 7), the most since 2008, according to Bloomberg calculations. Easing interest rates will help reduce the appeal of purchasing the Hong Kong dollar and moderate appreciation pressure. The Hong Kong Monetary Authority (HKMA) stepped into the market to sell HK$129.4 billion (S$167 billion) worth of local currency against the greenback in four intervention operations since Friday, after the Hong Kong dollar reached the strong end of its 7.75 to 7.85 per greenback trading band. The HKMA interventions are also expected to drive up its aggregate balance, a measure of interbank liquidity, to HK$174.1 billion on May 8. That gauge was previously hovering near the lowest level since 2008, after the monetary authority sold US dollars to defend the peg in recent years. 'As the HKMA intervenes and inject liquidity, the short-end Hibors are bound to drop,' said Stephen Chiu, chief Asia FX and rates strategist at Bloomberg Intelligence. He expects the one-month and three-month Hibors to fall to 3 per cent and 3.3 per cent, respectively, assuming total Federal Reserve rate cuts of 50 basis points and if the aggregate balance reaches HK$300 billion this year. Additional cash in the banking system may also help alleviate the rising demand for cash in Hong Kong's capital market to subscribe shares of Contemporary Amperex Technology Co Limited, which is expected to be the city's biggest listing in years. It may also help support the city's economy in the face of steep US tariffs. The Hong Kong dollar edged down to 7.7544 per US dollar on Wednesday, further drifting away from the strong end of its trading band. Asian currencies have been gaining of late, as the US dollar sank on concerns over a US economic recession and amid hopes the global trade war may ease eventually. Like Hong Kong's authorities, Taiwan's central bank also intervened to limit the local currency's gains. 'With the fading of the US exceptionalism view and considering the market narrative of de-dollarisation, Hong Kong dollar strength will likely sustain for longer in 2025,' Raymond Yeung and Khoon Goh of Australia & New Zealand Banking Group wrote in a note, adding that 'The influx of capital into the Hong Kong market seems to be structural and is only in the early stages.' BLOOMBERG
