• IMF Lifts China Growth Forecast to 5%

    The International Monetary Fund now expects China’s economy to grow 5% this year, raising its forecast from 4.6% a few weeks ago to reflect a strong expansion at the start of 2024 and additional support from the government. 

    The Fund expects the momentum to continue, raising its gross domestic product forecast for next year to 4.5% from 4.1%, according to a press release published Wednesday. China is targeting growth of around 5% this year. In the first quarter it reported a better-than-expected expansion of 5.3%, although a drawn-out slump in housing continues to weigh on domestic demand. 

    “We certainly are seeing that consumption is recovering but it has some ways to go,” the Fund’s First Deputy Managing Director Gita Gopinath said in an interview with Bloomberg News earlier this week. “The strength we’re seeing in public investment remains. Private investment is still weak, mainly because of the weakness in the property sector.”

    The IMF has called on Beijing to provide more monetary and fiscal support for the economy, including further steps to resolve the housing crisis, which has persisted despite repeated efforts by authorities to put a floor under prices and boost demand. 

    In the IMF’s Wednesday statement, Gopinath said the priority should be to “mobilize central government resources to protect buyers of pre-sold unfinished homes and accelerate the completion of unfinished pre-sold housing, paving the way for resolving insolvent developers.”

    Earlier this month Chinese officials announced a new effort to shore up real estate markets, easing down-payment requirements for buyers and providing 300 billion yuan ($42 billion) of central bank funding to help local governments purchase excess inventory from developers.

    Gopinath said more is needed. “Fiscal policy should prioritize providing one-off central government financial support for the real estate sector,” she said in the statement, while low inflation means there’s also room for further monetary easing.

    Trade Tensions

    The Fund is still assessing the effects of the recently announced US tariffs on China, according to Gopinath, who said policies that exacerbate fragmentation are negative for the whole world. 

    “There has been an increase in more restrictive trade policies across countries,” with about 3,000 new trade restrictions imposed in 2023 — triple the number in 2019 — Gopinath said. 

    “There has been an increase in risks to the global trading system and we are seeing early signs of fragmentation,” she said. “Trade across countries that are more geopolitically aligned is holding up better than trade across countries that are less geopolitically aligned.” 

    Countries are also increasingly relying on industrial policies, which can lead to misallocation of resources and could create spillovers that affect other trading partners, Gopinath said. 

    “When any of these three regions — the US, the European Union or China — puts a subsidy in place, we’ve seen that within the next 12 months, there’s a 75% probability that the other country also retaliates with another subsidy,” she said.

    –With assistance from Haslinda Amin.

  • China’s Oil Demand Outlook Darkens…

    As OPEC+ prepares to review global oil markets, trouble is brewing in the group’s biggest customer.

    Chinese oil refiners are cutting processing rates as flagging factory strength and a housing crash crimp demand for plastics and fuels used in construction. The Asian giant is reining in crude purchases from Saudi Arabia and a key grade from Russia. The duo lead the OPEC+ producer coalition, which meets this weekend.

    The group has curbed oil supplies to stave off a surplus and shore up prices, and is expected to continue the measures into the second half of the year. But a downturn in Asia’s biggest importer could derail its efforts. 

    Crude prices have retreated almost $10 a barrel in the past six weeks, as China’s darkening outlook adds downward pressure to a global market awash with plentiful supplies from the US and elsewhere.

    While the pullback offers relief for consumers and central banks grappling with persistent inflation, it threatens revenues for the Saudis and their OPEC+ partners. Riyadh needs prices close to $100 a barrel to fund the ambitious plans of Crown Prince Mohammed bin Salman, the International Monetary Fund estimates.

    “At the heart of weakening demand is China,” said Henning Gloystein, head of climate and resources at consultants Eurasia Group. “If these early indicators of an emerging imbalance in China last,” then “OPEC+ would feel pressured to roll over its supply cuts.” 

    The Organization of Petroleum Exporting Countries and its allies will convene an online meeting on June 2, where officials expect they will agree to prolong about 2 million barrels a day of output cutbacks. A Chinese slowdown gives the producers all the more incentive to persevere.

    After faster-than expected economic growth in the first quarter, China’s strong start to 2024 soon began to fade, illustrating the challenges that confront President Xi Jinping as Beijing’s decades-long boom comes to an end. 

    The producer price index — one gauge of factory strength — has remained negative for 19 months. An 11-month consecutive plunge in home sales has crimped consumption of plastics and weakened petrochemical product margins. 

    It’s also limited demand for diesel used in outdoor construction, and as a transport fuel to ship industrial materials. According to one metric, Chinese apparent consumption of oil products fell year-on-year in April for the first time since December 2022.

    Consequently, refiners are dialing back operations. 

    Refining rates fell to 14.36 million barrels a day in April, the slowest pace since December and 4% lower than same time last year, according to Bloomberg calculations based on government data.

    Smaller Chinese refiners concentrated in Shandong province — known as teapots — have reduced operating rates to around 55% of capacity, compared with 62% a year ago, according to Mysteel OilChem. Their purchases of a key Russian grade —— ESPO —— have fallen to the lowest in three years, data analytics firm Kpler estimates.

    Meanwhile, major state-run plants are reluctant to revive operations after returning from seasonal maintenance, according to consultant Energy Aspects Ltd. Throughput at Chinese refineries will rise by less than 100,000 barrels a day this year, the weakest increase in at least two decades, the company estimates.

    There’s been a visible impact in oil flows to the Asian giant. The number of supertankers headed to China fell to the lowest in seven weeks in the most recent tracking data compiled by Bloomberg. One refiner with a long-term contract with Saudi Arabia scaled back purchases for June. 

    Bullish oil traders, having been burnt by last year’s surprise 10% price pullback, may remain wary on the commodity if Asia’s growth engine looks shaky.

    “Directionally the market will tighten,” said Gary Ross, a veteran oil consultant turned hedge fund manager at Black Gold Investors LLC. Still, “I have my doubts how much financial length will come back into the market because China looks relatively weak.”

    Still, OPEC+ officials privately remain confident about oil demand in China and other parts of Asia. Chinese oil consumption is on track to increase by 510,000 barrels a day this year — accounting for about half the global total — to 17 million barrels a day, and expand further in 2025, according to the International Energy Agency in Paris.

    Furthermore, the country’s oil intake may be buoyed as it takes advantage of low prices to replenish reserve stockpiles. China added more than 30 million barrels of crude to inventories in the month to mid-May, the fastest rate in a year, according to consultants Vortexa Ltd. These often comprise shipments from sanctioned nations like Iran, which trade at a discount to regional benchmarks. 

    China has been “pretty consistent” since 2008 in its policy to top up reserves when prices are low, said Ed Morse, senior advisor at Hartree Partners. “The basic structure is to build inventory when you can,” he said. 

    Nonetheless, it’s ominous for oil producers and bullish investors alike that China’s lull is emblematic of a global market that’s tipping from tightness into oversupply. 

    In other parts of Asia, a sharp drop in returns from making diesel is prompting some refiners — such as Taiwan’s Formosa Petrochemical Corp. and another in South Korea — to make modest reductions in operating rates. 

    From West African producers Nigeria to Azerbaijan and Kazakhstan, several OPEC+ exporters have struggled to sell cargoes at their usual speed amid competition from US exports, causing prices to weaken, traders say. A rebound in flows from the US Gulf to Europe has put pressure on key North Sea and Mediterranean markets. 

    In the US — still the world’s biggest oil consumer — crude inventories at the storage hub in Cushing, Oklahoma, are at the highest levels since July. Gasoline demand, while set for a boost when Americans take to the roads for vacations this summer, remains below the same period last year, implied consumption figures show. 

    “The physical market is still very sloppy,” said Brian Leisen, a commodity strategist at RBC Capital Markets LLC. “We find it hard to get more constructive until we see evidence that cargoes are starting to clear.”

    –With assistance from Julian Lee, Sharon Cho, Anthony Di Paola, Salma El Wardany, Devika Krishna Kumar, Bill Lehane and Sherry Su.

  • The amazing things China new remote sensing satellite can do

    China on Sunday launched a Long March-2D carrier rocket, placing a remote sensing satellite in space.

    The rocket blasted off at 7:45 a.m. (Beijing Time) from the Xichang Satellite Launch Center in the southwestern province of Sichuan and sent the Yaogan-42 02 satellite into the preset orbit.

    It was the 517th flight mission of the Long March series rockets. ■

    A Long March-2D carrier rocket carrying the Yaogan-42 02 satellite blasts off from the Xichang Satellite Launch Center in southwest China’s Sichuan Province, April 21, 2024. (Photo by Yang Xi/Xinhua)

    A Long March-2D carrier rocket carrying the Yaogan-42 02 satellite blasts off from the Xichang Satellite Launch Center in southwest China’s Sichuan Province, April 21, 2024. (Photo by Yang Xi/Xinhua)

    A Long March-2D carrier rocket carrying the Yaogan-42 02 satellite blasts off from the Xichang Satellite Launch Center in southwest China’s Sichuan Province, April 21, 2024. (Photo by Yang Xi/Xinhua)

    A Long March-2D carrier rocket carrying the Yaogan-42 02 satellite blasts off from the Xichang Satellite Launch Center in southwest China’s Sichuan Province, April 21, 2024. (Photo by Yang Xi/Xinhua)

    A Long March-2D carrier rocket carrying the Yaogan-42 02 satellite blasts off from the Xichang Satellite Launch Center in southwest China’s Sichuan Province, April 21, 2024. (Photo by Yang Xi/Xinhua)

  • How will China deliver a better life for the people in 2024?

    China’s ultimate goal is to deliver a better life for the people, Chinese President Xi Jinping said during his New Year address on Sunday in Beijing to ring in 2024.

    “Our children should be well taken care of and receive good education. Our young people should have the opportunities to pursue their careers and succeed. And our elderly people should have adequate access to medical services and elderly care,” Xi pledged.

    These issues matter to every family, and they are also a top priority of the government, he stressed. “We must work together to deliver on these issues.”

    While pursuing its development, China has also embraced the world and fulfilled its responsibility as a major country, Xi added.

    “No matter how the global landscape may evolve, peace and development remain the underlying trend, and only cooperation for mutual benefit can deliver,” said the Chinese president.

    Relying on the people

    The year 2023 has not been an easy one for China. Despite sluggish global growth, China has navigated economic headwinds and withstood the test of major natural disasters.

    “Having weathered the storm, the Chinese economy is more resilient and dynamic than before,” said Xi in Sunday’s address.

    “The people are the ones we look to when we fight to prevail over all difficulties or challenges,” Xi stressed.

    In the address, he mentioned that in 2023, some enterprises had a tough time, some people had difficulty finding jobs and meeting basic needs, and some places were hit by floods, typhoons, earthquakes or other natural disasters.

    “All these remain at the forefront of my mind,” he said.

    Looking to the future, Xi urged efforts to steadfastly advance Chinese modernization, fully and faithfully apply the new development philosophy on all fronts, speed up building the new development paradigm, promote high-quality development, and both pursue development and safeguard security.

    The Chinese president also vowed continued support for Hong Kong and Macao to harness their distinctive strengths, better integrate themselves into China’s overall development, and secure long-term prosperity and stability.

    “China will surely be reunified, and all Chinese on both sides of the Taiwan Strait should be bound by a common sense of purpose and share in the glory of the rejuvenation of the Chinese nation,” he added.

    Making the world a better place for all

    The Chinese president said in his New Year address that conflicts are still raging in some parts of the world.

    “We will work closely with the international community for the common good of humanity, build a community with a shared future for mankind, and make the world a better place for all,” said Xi.

    The China-proposed Belt and Road Initiative (BRI) provides a platform for building a community with a shared future for mankind through diverse, high-quality cooperation.

    Under the BRI, China has signed more than 200 documents on cooperation with over 150 countries and in excess of 30 international organizations. From 2013 to 2022, the cumulative value of trade between China and BRI countries reached $19.1 trillion, with an average annual growth rate of 6.4 percent.

    At the bilateral and multilateral level, China has built communities of shared future with an increasing number of partners in different forms. The China-proposed Global Development Initiative and Global Security Initiative have gained support from over 100 countries, and the Global Civilization Initiative has also been well received.

  • Spain emerges Nigeria’s top export destination

    Spain has emerged as the country’s top export destination, accounting for a remarkable 12.31 per cent of total exports, valued at N1.27 trillion.

    This was followed by India with N1.02 billion (9.81 per cent), Netherlands with N988.66 billion (9.56 per cent), Indonesia with N758.59 billion (7.33 per cent) and France with N720.45 billion (6.96 per cent) of total exports.

    These five countries collectively accounted for 45.98 per cent of Nigeria’s total exports, demonstrating the country’s growing presence in diverse global markets.

    These developments are according to the foreign trade report for the third quarter (Q3) of 2023 released by the National Bureau of Statistics (NBS) on Monday.

    Meanwhile, China has maintained its status as Nigeria’s top import partner in the third quarter of 2023, accounting for a significant 23.33 per cent of total imports.

    “Data on Imports in the third quarter of 2023 reveals that the top five partner countries of origin for imports to Nigeria was China (₦1,973.34 billion or 23.33%), this was followed by imports from Belgium with ₦996.65 billion or 11.78%, India with ₦802.07 billion or 9.48%, Malta with ₦561.37 billion or 6.64% and the United States of America with ₦502.92 billion or 5.95% of total imports,” NBS said.

    “The values of imports from the top five countries amounted to ₦4,836.36 billion representing a share of 57.18% of total imports.

    “The commodities with the largest values of imported products were ‘Motor Spirit Ordinary’ valued at ₦1,921.03 billion or 22.71%.”

    Also included are gas oil worth N736.66 billion or 8.71 per cent and durum wheat (not in seeds), valued at N331.76 billion or 3.92 per cent of total imports.

    In a related development, despite the diversification of export destinations, petroleum oils and oils obtained from bituminous minerals, crude, remained Nigeria’s primary export product, accounting for an impressive 82.50 per cent (N8.54 trillion) of total exports.

    However, natural gas, liquefied, and urea, whether or not in aqueous solution, also emerged as significant export earners, contributing 9.82 per cent (N1.02 trillion) and 1.06 per cent (N109.68 billion), respectively, to the overall export value.

    By Babajide Okeowo

  • China increases efforts in high-tech

    China’s leaders, determined to upgrade manufacturing, are steering money toward makers of high-tech products, from semiconductors to EVs

    Lending data from China’s central bank offers a glimpse of government priorities: as of the end of September, outstanding loans to the troubled property sector fell 0.2% year-on-year but lending to the manufacturing sector jumped 38.2%.

    Economists caution that this wave of investment differs in key respects from an earlier capital investment surge that, among other effects, inflated China’s solar panel industry, triggered a trade fight and put scores of companies out of business.

    But the trend has alarmed some key trading partners, particularly in Europe where an investigation into Chinese EV subsidies is underway.

    “There is lower consumption in China right now but you have massive overcapacity that is being pushed out to the world, including in batteries, solar and chemicals,” said Jens Eskelund, president of the European Chamber of Commerce in Beijing.

    “Europe and China are like two trains that are going to collide,” Eskelund said, referring to trade.

    China’s industrial policy will be on the agenda at this week’s meeting of the Asia Pacific Economic Cooperation (APEC) forum in San Francisco, where Chinese President Xi Jinping is expected to meet U.S. President Joe Biden.

    Under Xi, China has sought to make itself an advanced manufacturing powerhouse for high-end goods for the world, including EVs, wind turbines, aerospace components and advanced semiconductors.

    Critics say the push has come at the expense of another need – to get China to consume more and export less, a structural shift many economists see as key to preserving high levels of growth.

    Source: Reuters

  • Vlogger on fire for cooking 90-kg alligator

    A Chinese food vlogger sparked the ire of social media users after posting a video on Douyin that demonstrated how to kill and cook a 90-kg alligator.

    It was a three-minute video posted by “Chu Niang Xiao He.”

    In the video, she demonstrates the process of washing, gutting, skinning and deboning the alligator to prepare a variety of dishes. The video generated a wave of negative criticism on animal cruelty.

    However, the vlogger defended her actions, saying that the alligator in the video was artificially bred for the leather industry. A news source in China reported this.

    According to reports, these artificially-bred alligators are raised specially for leather and handbag companies. This is their mission.

    Many Chinese netizens have expressed their anger after watching the video.

    “Your action made me feel terrible,” one commented.

    “Oh my god, how dare you kill such a big alligator,” another user wrote.

    “I’m really afraid of you,” another user noted.

    Even the video-sharing platform Douyin has also been criticized for allowing the video to be posted.

  • China struggles to reshape the information landscape

    The Chinese (China) government is spending billions of dollars annually into a global campaign of disinformation, using investments abroad and an array of tactics to promote the country’s geopolitical aims and squelch criticism of its policies, according to a new State Department assessment.

    Beijing’s broad-ranging efforts, the assessment said, feature online bot and troll armies, legal actions against those critical of Chinese companies and investments and content-sharing agreements with media in Latin America and Africa…

    Read more

  • The U.S. Watches as China Moves Ahead in Africa

    China’s support for the ideologically driven freedom movements in Africa during the Cold War years was paid back when the African vote in 1971 pushed China over the threshold to claim its seat at the United Nations. While their mutual interest is the legacy of those times, mutual economic and strategic interests have drawn them closer over the years.

    China’s commercial engagement with Africa has ballooned since China opened its economy. China–Africa trade has grown 40-fold in the last 20 years, making China Africa’s biggest trading partner and top lender today. Throughout the continent, China has built soccer stadiums, hospitals and other infrastructure that touch lives of ordinary folks who still carry scars from Western colonialism. China’s multi-trillion, multi-country, multi-ocean Belt and Road Initiative (BRI) has provided another ambitious platform for its engagement with the African continent.

    Long marginalized, Africa badly needs foreign investments that Chinese companies are more than willing to provide. Compared to their Western counterparts, they are less easily deterred by human rights issues or non-official roadblocks to project development in Africa.

    The UN predicts that the population of Africa will surpass China’s by 2025. Given Africa’s youthful population, and that fact that in 2020 six of the world’s ten fastest growing economies were in Africa, the Chinese have come to see Africa as a sweet spot for investment. Of particular interest to China’s rapidly developing economy is Africa’s abundant natural resources, which also include strategic minerals.

    Chinese finance and contractors have therefore, literally reshaped Africa’s infrastructure by building new ports, railways and roads. Chinese investments in manufacturing, mines and commercial real estate have also been substantial. Mckinsey, one of the top consulting firms in the world suggests that insofar as Africa is concerned “no other country matches this depth and breadth of engagement.”

    90 percent of the 10,000+ Chinese companies operating in Africa are privately owned, finding that investing in Africa has become comparatively profitable. So, they keep reinvesting. The worry is the poorly governed states where China has poured in a lot of money into projects may turn out to be white elephants, compelling China to write-off loans.

    Another area where China focuses heavily is education. China gives tens of thousands of scholarships to African students. This has led to African students going to China surpassing those going to the U.S. and Britain combined for the first time since 2014, generating immense goodwill for China. Various other training programs create a massive network of human resources throughout Africa. For instance, more than half the South Africa’s African National Congress executive committee members have had training and education in China.

    In pursuit of its engagement policy, China has set up the Forum on China-Africa Cooperation (FOCAC) that includes China and 53 of 54 African states. Meeting every three years alternating between China and Africa, the Forum draws more heads of African states than at the annual UN General Assembly. The only holdout is eSwatini (previously Swaziland) that continues to recognize Taiwanese sovereignty. Since these African countries often vote as a bloc in international fora, the relationship with Africa is of immense importance for China.

    In the past year, Africa has recorded just about 5 percent of global Covid-19 cases and China has been quick to provide medical equipment, and has also joined in with WHO and G-20 initiatives meant to assist less privileged states. Since Covid – 19 has impacted global economic activity, FOCAC 2021 in Dakar is unlikely to see China matching its previous commitments but it shouldn’t be taken to mean China is losing interest in the African continent. Africa also is looking up to China for support in vaccinations, and the path forward beyond Covid-19.

    In the wider context of global geopolitics, China’s rise and its involvement in different parts of the world has attracted claims of strategic competition and rivalry between China and the U.S.. Fearing erosion of its influence, the U.S. has adopted an aggressive posture to counter increased Chinese influence worldwide. In Africa, however, the U.S. has historically had relatively minimal strategic interests that China could threaten. Therefore, increased Chinese penetration in Africa has not drawn the level of American bellicosity that it has drawn against China in Southeast and South Asia.

    On their part, African leaders have rejected American attempts to make relations with Africa a zero-sum game. Uhuru Kenyatta, Kenya’s president, warns that Africa is not a prize to be fought over and doesn’t want to be forced to choose. Similarly, the South African President, Cyril Ramaphosa, the veteran of the liberation movement, was blunt in warning that Africa should not suffer because of America’s “jealousy” of what China can offer the continent. “The West is unwilling to underwrite the cost of antagonizing China,” says W. Gyude Moore, a former cabinet minister in Liberia, now at the Centre for Global Development, a think-tank.

    The U.S. and Japan have tried to increase infrastructure development allocations but nowhere near the scale of BRI. So, instead of development assistance the U.S. Secretary of State warns the African states that China is out-competing the U.S. and that African states should scrutinize the Chinese assistance.

    The fact is, despite substantial spending in specific areas America does not match what China offers to the African nations. China is the ready partner in the continent’s need for new roads, bridges or other infrastructure projects. Huawei has not lost a single order in Africa despite American posturing against it . In absence of a real alternative offered up by the Americans, the U.S.’s demands cannot be taken seriously by Africa.

    No country is ‘indispensable.’ The rise and fall of great civilizations have occurred throughout history. If history was static, Europe would still be a part of the Roman empire. The United States has had its time, during which it has done a lot of good and continues to do good for humanity. Now, in its waning years the U.S. should do one big favor: that is to let the world transition to the next phase of history peacefully.

  • ‘China is angry’: Taiwan anxiety rises as sabre-rattling grows

    The tank traps on the beaches of Kinmen Island are a stark reminder that Taiwan lives under the constant threat of a Chinese invasion – and fears of a conflict breaking out are now at their highest in decades.

    Democratic Taiwan has learned to live with the warnings of Beijing’s authoritarian leaders that they are ready and willing to seize a place it views as part of its territory.

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