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The spacecraft carrying the Peregrine, a commercially built American lunar lander, may be facing a critical failure after its launch Monday. Derrick Pitts, the chief astronomer at Philadelphia's Franklin Institute, joins CBS News with details on the spacecraft's apparent fuel leak.
Damaged Peregrine moon lander beams back photo, time running out on power
An historic commercial US mission to the Moon will fail after suffering a critical loss of fuel, organizers admitted Tuesday, ending for the time being America's hopes of placing its first spacecraft on the lunar surface since the Apollo era.
Fixed to the top of United Launch Alliance's new Vulcan rocket, Astrobotic's Peregrine Lunar Lander blasted off Monday from Florida's Cape Canaveral Space Force Station, then successfully separated from its launch vehicle.
But a few hours later, Astrobotic began reporting malfunctions, starting with an inability to orient Peregrine's solar panel towards the Sun and keep its battery topped up, owing to a propulsion glitch that also damaged the spacecraft's exterior.
The company said it had "no chance of soft landing" on the Moon.
Peregrine has about 40 hours of fuel remaining and Astrobotic said it planned to operate the spacecraft until it ran out of propellant.
NASA had paid the company more than $100 million to ship scientific hardware to a mid-latitude region of the Moon to answer questions about the surface composition and radiation in the surrounding environment, as it prepares to send astronauts back to Earth's nearest neighbor later this decade.
The United States is turning to the commercial sector to stimulate a broader lunar economy and cut costs, but Astrobotic's failure could increase scrutiny about the strategy.
Astrobotic however said it was continuing to receive valuable data to prepare for its next contracted mission, sending the Griffin lander transporting a NASA rover to the lunar south pole, later this year.
Latest commercial failure
It is the latest private company to have tried and failed to achieve a soft lunar landing.
Israel's Beresheet lander, the first attempt by a non-government entity, was destroyed on impact with the Moon in April 2019, while Japan's private Hakuto mission, operated by iSpace, crashed in April 2023.
For now, the feat has only been accomplished by a handful of national space agencies: the Soviet Union was first, in 1966, followed by the United States, which is still the only country to put people on the Moon.
China has successfully landed three times since 2013, while India was the most recent to achieve the feat on its second attempt, last year.
The next commercial attempt will be by Houston-based Intuitive Machines, which is launching in February, bound for the Moon's south pole.
In addition to its scientific instruments, Peregrine is carrying more colorful cargo on behalf of its own private clients. These include a physical Bitcoin and cremated remains and DNA, including those of Star Trek creator Gene Roddenberry, legendary sci-fi author and scientist Arthur C. Clarke and a dog.
The Navajo Nation, America's largest Indigenous tribe, had objected to sending human remains, calling it a desecration of a sacred space. Though they were granted a last-ditch meeting with White House and NASA officials, but their misgivings failed to change matters.
On January 8 and 9, 2024, the Chang'e-6 lunar mission's spacecraft components arrived at Hainan Meilan International Airport aboard the An-124 and Yun-20 aircraft. They were then transported by road to the Wenchang Space Launch Site. This marks a significant step for the fourth phase of the lunar exploration program, with pre-launch testing preparations underway.
Economic engine: Cargo ships at Qingdao port in China. — AFP
China will likely remain the biggest contributor to global growth this year and next despite recent economic headwinds from the real estate sector, the International Monetary Fund said on Friday.
Steven Barnett, senior resident representative of the IMF in China, said although the fund has revised down its GDP growth forecast for China, the country is expected to contribute roughly one-third of global growth this year and next.
According to the IMF's World Economic Outlook in October, global economic output is forecast to expand by 3 percent this year, to which China is expected to contribute 0.9 percentage point, Barnett said.
He made the remarks at a launch of the publication in Beijing on Friday. The event was organized by the IMF Resident Representative Office in China and the International Monetary Institute at the Renmin University of China.
By comparison, the United States is forecast to contribute 0.3 percentage point while India's contribution might be 0.5 percentage point, Barnett told China Daily on the sidelines of the event.
In 2024, China is forecast to contribute 0.8 percentage point of the 2.9 percent global growth, just under one-third and still higher than 0.2 percentage point of the US and 0.5 percentage point of India, he said.
The WEO, published on Tuesday, has lowered the 2023 economic growth forecast for China to 5 percent from 5.2 percent, citing the pressures brought by the weakness in the real estate sector.
According to Zou Lan, head of the People's Bank of China's monetary policy department, the country's real estate market has recently seen positive changes, with reviving housing market transaction activity in key cities and marginal improvements in home sales and market expectations.
In terms of credit, real estate development loans and personal mortgages issued by major banks increased by more than 100 billion yuan ($13.68 billion) in September compared with August, Zou said at a news conference on Friday.
Zou also said the central bank's efforts to reduce the interest burden of existing mortgages have made rapid progress as 49.73 million in mortgages — representing 98.5 percent of the mortgages eligible for interest rate reduction and worth 21.7 trillion yuan in total — had interest rates reduced during the week starting Sept 25.
The weighted average interest rate of those mortgages decreased by 0.73 percentage point on average to a weighted average of 4.27 percent, Zou said, adding the alleviated interest rate burden will help boost investment and consumption.
While China faces real estate headwinds, it has the scope to boost the economy by reorienting fiscal stimulus to consumer spending and implementing further monetary accommodation given the lack of inflationary pressure, Barnett said.
To boost medium-term growth, it is critical for China to accelerate structural reforms, without which China's growth could slow to 3.4 percent in 2028, resulting in a slightly lower contribution to global growth of less than a quarter, Barnett said.
Ruan Jianhong, a PBOC spokeswoman, said China's central bank will continue to implement a sound monetary policy in a targeted and effective manner, aiming for overall and lasting improvements in economic performance.
Ruan said the country's macroeconomic leverage ratio came in at 291 percent for the second quarter of the year, up 9.4 percentage points compared with the end of last year and up 1.5 percentage points from the end of the first quarter.
Adding to signs that China's economic recovery is gaining momentum, financing activity picked up in September as the increment in aggregate social financing — the total amount of financing to the real economy — amounted to 4.12 trillion yuan, up by 563.8 billion yuan from a year earlier, the PBOC said on Friday.
The amount was also up from 3.12 trillion yuan in August and beat the market expectations of about 3.7 trillion yuan.
The world’s largest producer and consumer of tobacco, it has an estimated 300 million smokers, nearly a third of the world’s total.
Despite years of anti-smoking campaigns – Chinese President Xi Jinping reportedly gave up smoking in his 40s and banned smoking in government buildings – many continue to light up, driven by social mores, cheap cigarettes, a lack of public education and, crucially, the protection of Big Tobacco.
Cartons of smokes are considered appropriate business gifts while tobacco shops dot the streets, with prices ranging from as little as 10 yuan (RM6.40) a packet to over 200 yuan (RM127.70). Convenience stores prominently display a dizzying array of varieties.
But kicking the habit is far harder than simply going cold turkey. The tobacco industry is both regulated and controlled by the State Tobacco Monopoly Administration (STMA), an agency that provides jobs for over half a million people across the country.
In recent years, the problem has taken on a new dimension with the startling popularity of electronic cigarettes, making nicotine palatable – and readily available – even to the young.
How did the world’s second-largest economy get so addicted to smoking? And as the world moves towards tobacco-free societies, would it ever be truly possible for China to kick the habit?
Cigarette normalisation
Shortly after the establishment of the People’s Republic of China in 1949, Beijing declared that tobacco farms and cigarette manufacturing would be consolidated and managed by local governments.
When the country was put through rationing in those early years, cigarettes were among the “essentials” doled out to villagers and residents who registered with the local authorities, allowing officials to document the population.
Cigarette manufacturers also tapped iconography significant to China’s national consciousness. Brands like Xiongmao (Panda), Chunghwa (a metonym for China) and Zhongnaihai (a former imperial garden that now houses China’s leadership complex) all date back as far as the 1930s.
By the time STMA and its commercial arm China National Tobacco Corporation were created in the 1980s to consolidate and centralise tobacco production and sales, smoking was widely accepted.
Leaders ranging from Mao Zedong to Premier Zhou Enlai and Deng Xiaoping have all been photographed holding cigarettes, with ashtrays and spittoons commonplace in offices and government buildings across the country.
And it continues to play a significant role in society today.
When bistro owner Jeanne He was a bridesmaid in 2022 at a childhood friend’s wedding in Yunnan province – the country’s largest producer of tobacco – she had an important responsibility.
“I was in charge of arranging the cigarettes on trays for bridesmaids to hold up and offer to guests before the wedding dinner,” she said.
“The groomsmen had trays of snacks and candy.”
In much of China, working in the tobacco industry is seen to be as prestigious as being in the civil service, with its stable income, generous salaries and employee benefits.
In surveys of fresh graduates, China’s big tobacco firms – largely state-owned enterprises (SOE) – are consistently rated some of the best companies to work for, with degree holders happy to take on blue-collar jobs on the factory lines.
Some 98% of China’s tobacco firms are SOEs with little wiggle room for other market players. Manufacturing some 2.4 trillion cigarettes a year, the industry raked in 132 billion yuan in profits in 2022, nearly 12% up from the 118 billion yuan the year before.
China National Tobacco Corporation does not report sales figures but posted a record-breaking taxable income of 1.44 trillion yuan in 2022.
The second-highest tax payer, the Industrial and Commercial Bank of China, reported taxable income of 109 billion yuan.
The pressure that STMA exerts on the government is largely why tobacco regulation has hit a roadblock, said Dr Gan Quan, director of the China office of the International Union Against Tuberculosis and Lung Disease, a Paris-headquartered non-profit organisation aimed at eradicating tuberculosis and lung disease.
While major cities such as Beijing, Shanghai, Guangzhou and Shenzhen have been able to completely ban smoking indoors since 2007, this has been far more challenging in other cities like Chongqing.
In 2020, the city passed a law banning smoking in public places, but a loophole meant that certain establishments such as restaurants, hotels and entertainment venues were allowed to set up indoor smoking areas, exposing countless others to second-hand smoke.
“Smoking is strictly prohibited in the indoor areas of public places where smoking areas can be designated,” said the text of the law.
Dr Gan, who has spent his career studying China’s tobacco control policies, said: “It has become a pattern that whenever sub-national jurisdictions try to pass smoke-free laws, you have the STMA following them (to exert pressure to water down the laws) because they don’t want the momentum to spread from big cities like Beijing and Shanghai.”
Crucially, there is no national-level smoke-free legislation that will make it mandatory for all provinces and regions to adhere to, wrote Peking Union Medical College’s Dr Xia Wan in CCDC Weekly, a publication by the Chinese Centre for Disease Control and Prevention, in an article in 2022.
In November 2014, the State Council released a draft on national tobacco control guidelines to meet its obligations under the WHO FCTC, the first time such guidelines had been introduced at a national level.
“This draft was supposed to finish seeking advice, opinions and comments from the public by the end of 2014,” Dr Xia wrote.
“But unfortunately, the draft is still stuck in that stage and has not progressed further.”
Furthermore, regulation across cities remains lax, and it is not an uncommon sight to see people lighting up under “no smoking” signs in eateries.
STMA did not respond to a request for comment.
In 2021, China’s top health body, the National Health Commission, released its second report detailing the ill effects of smoking – an update from a 2012 version.
With more than half the male population smoking, over one million people lose their lives to tobacco use every year, a number that could double by 2030.
It also noted that “e-cigarettes are unsafe and pose a health hazard” but offered no solutions to the issue.
Electronic cigarettes
Electronic cigarettes and electronic nicotine delivery systems – more commonly known as vapes – have been regulated in China since 2022, and cartridges with flavours have been banned in a bid to stop young people from picking up smoking.
But results are mixed: While such vapes are no longer easily available, one can still walk up to any number of e-cigarette shops dotting the streets, where retailers pull out flavoured stock from under the counter.
In private chats on social media platform WeChat, sellers also directly market to consumers, sending catalogues every time a new flavour hits the market.
At a shop in Beijing, where this reporter was offered an ice lemon tea-flavoured vape, the shop assistant said it was impossible to stamp out demand.
“We’re just more discreet about it and don’t display what we have on offer. Also, if we see young people coming in to buy, we won’t sell to them,” said the assistant, who wanted to be known only by her surname Su.
In eateries and even shops across major cities, people can still be seen puffing away indoors, leaving cloyingly sweet vapour in their wake.
With smoking so socially accepted, those who have successfully quit say it usually takes a life-changing event to provide a much-needed jolt.
Aircraft engineer Li Peng, 52, kicked the 30-year habit only after discovering nodules in his lungs during a medical check two years ago.
“I’ve been smoking since I was a young apprentice nearly 30 years ago, and even though my wife kept urging me to quit, I found it hard because it’s such a social activity, too,” he said.
“After the medical scare, where the doctor told me I could either quit or risk it developing into something more severe, I got the boost I needed to go cold turkey.
“But I’ll admit it was very difficult in the beginning, especially during mornings in the toilet.”
Yet, given the industry’s strong hold over the market, China is unlikely to go cold turkey any time soon.
Dr Gan said: “The anti-smoking lobby is calling for the tobacco monopoly to be broken up from the regulator, but I don’t think the government is willing or interested in doing that because it takes huge political will and capital.”
Since 2021, STMA has been swept up in a corruption probe that has involved nearly two dozen current and former senior executives, including the retired head of an Anhui subsidiary who killed himself after investigations started.
The arrests and investigation of several top STMA officials for corruption are merely part of the anti-corruption campaign rather than an attempt to reform and rein in the tobacco industry, Dr Gan noted.
“The main issue is really a lack of (anti-smoking) education... for instance, if you compare cigarette packets to places like Hong Kong and Singapore, the language is very weak and not prominently displayed,” he said.
“And we don’t do that because of opposition from the tobacco monopoly.” — The Straits Times/ANN
The writer,ELIZABETH LAW is the China Correspondent at The Straits Times.
CHINA’S stuttering economic recovery post-Covid-19 pandemic reopening has stirred concerns that a protracted deep economic slowdown will have global repercussions, given its interconnectedness with each and every economy in this globalised world and transmission to both emerging and developed countries through different channels.
A slowing China economy is a bane for the world economy. While the global economy continues to gradually recover in 2023, the growth remains weak and low by historical standards, and the balance of risk remains tilted to the downside. It is not out of the woods yet.
Global manufacturing and services activities are losing momentum. Global trade, especially exports, remain in the doldrums, weighed down by weak consumer and business spending amid a continued inventory adjustment in the semiconductor sector.
Prices of commodities and energy have also softened. Global monetary tightening has started to weigh down on activity, credit demand, households and firms’ financial burden, putting pressure on the real estate market.
A slew of disappointing economic data for two consecutive months (June and July) from China indicated that the world’s second-largest economy (17.8% of the world’s gross domestic product or GDP) is indeed losing steam.
Falling exports, weak consumer spending, slowing growth in fixed investment and continued concerns about the property sector have dampened the recovery.
The emergence of deflation concerns adds to the complexity of China’s flagging recovery.
The Chinese government has provided a range of strategic measures aimed at targeting specific sectors.
These range from consumption (spending on new energy vehicles, home appliances, electronics, catering and tourism) to the property sector (reducing down-payment ratios for first-time homebuyers, lowering mortgage rates and easing purchase restrictions for buying a second house) and tax relief measures to support small businesses, tech startups and rural households.
China’s slowdown is a key risk for the world economy, commodities and energy markets as well as the semiconductor industry.
Prior to the Covid-19 pandemic, China was the world’s most important source of international travellers, accounting for 20% of total spending in international tourism (US$255bil overseas and making 166 million overseas trips in 2019).
We consider three channels through which China’s slowdown can have spillover effects on Malaysia via direct and indirect transmissions: trade and commodity prices, services and financial markets.
Overall, the estimated impact of a 1% decline in China’s GDP growth could impact about 0.5% points on Malaysia’s economic growth.
Trade is the most important channel as China has been Malaysia’s largest trading partner since 2009, with a total trade share of 16.8% (exports share: 13.1%; imports share: 21.2%) in the first half of 2023 (1H23).
Spillovers from slower China demand and commodity prices are negative for Malaysia, a net commodity exporter.
After recording seven successive years of increases in exports to China since 2017, Malaysia’s exports to China declined by 8.8% in 1H23.
In sectors such as tourism, China’s tourists are one of the major foreign tourists in Malaysia. In the first five months of 2023, Chinese tourists totalled 403,121 persons or 5.4% of total international tourists in Malaysia, and was only 12.9% of 3.1 million persons in 2019.
According to the Malaysia Inbound Tourism Association, though the number of Chinese tour groups coming to Malaysia has increased in July and August to between 800 and 1,000 for the summer vacation, the number of tourists per group is smaller between 10 and 20 persons.
While direct financial links between China and Malaysia are limited, there will be indirect spillovers through spikes in global financial volatility as investors worry that China’s deep economic slowdown would temper global growth, and also has spillovers to the US economy.
Will China foreign direct investment (FDI) inflows into Malaysia slow?
Capital movements will be influenced by the inter-linking of factors such as economic growth and investment prospects in the host country (Malaysia).
These include stable political conditions and good economic and financial management as well as conducive investment policies.
The US-China trade war and rising trends of geoeconomic fragmentation have witnessed FDI flows among geopolitically aligned economies that are closer geographically as well as geopolitical preferences.
Throughout the period 2015-2022, China’s gross FDI inflows into Malaysia averaged RM7.5bil per year. Even during the Covid-19 pandemic, China’s economic slowdown did not deter the inflows of FDI into Malaysia (RM7.8bil in 2020; RM8.1bil in 2021; and RM9.8bil in 2022).
In 1H23, China’s gross FDI inflows increased by 25.2% to RM2.1bil though it is likely that the full-year FDI will be below the average FDI inflows of RM8.6bil per year in 2020 to 2022.
China was the largest foreign investor in Malaysia’s manufacturing sector in 2016 to 2022 before dropping to second position in 2022 and the fourth position in 2021.
There was a contrasting picture when it comes to China’s approved investment in the manufacturing sector, which saw two consecutive years of decline (2022: 42.5% to RM9.6bil and 2021: 6.5% to RM16.6bil) and declining further by 17.8% to RM4.3bil in the first quarter of 2023.
We believe that Malaysia will remain one of the preferred investment destinations to China, given both countries’ strong established friendship and bilateral ties in trade and investment as well as people-to-people movements.
Malaysia needs to enhance its investment climate with progressive policies to rival regional peers to offer the country as a China Plus One destination for China and foreign companies.
Malaysia can offer investments to build a chip-testing and packaging factory, advanced manufacturing technologies such as robotics and automation, manufacturing electric vehicle supply chain, petrochemicals, renewable energy, agriculture and food processing.
China can offer the technology, innovation and technical know-how as well as talent that deepen the country’s industry integration with global supply chains and also links Malaysia and China to South-East Asia.
China can invest in Malaysian manufacturing companies to help them adopt advanced manufacturing technologies and further improve their competitiveness.
The RM170bil prospective investments (comprising RM69.7bil from 19 memoranda of understanding and RM100.3bil from the round-table meeting) concluded during the prime minister’s visit to China are set to provide a massive investment boost to our economy for years to come.
Among these are China’s Rongsheng Petrochemical Holdings, which will invest RM80bil to build a petrochemical park in Pengerang, Johor; and investment from Geely, with an initial investment of RM2bil in the Tanjung Malim Automotive Valley, which will gradually increase to RM23bil in the future.
LEE HENG GUIE is Socio-Economic Research Centre executive director. The views expressed here are the writer’s own.
China's official manufacturing purchasing managers' index (PMI) continued to improve in August, marking the third consecutive monthly increase despite the index remaining in contraction territory.
China is set to further increase financial support for private enterprises by introducing measures to lift the proportion of loans to private enterprises, according to the People's Bank of China (PBC), the country's central bank.
US investment restrictions on key technology sectors in China will undermine industries that are highly dependent on the global division of labor and a free and fair international economic order, China's trade promotion agency said on Wednesday
US Commerce Secretary Gina Raimondo was wrapping up her "successful and productive" four-day high-stakes visit to China on Wednesday, with the visit yielding material results, including the establishment of new communication channels to seek solutions to specific busine
China's economy isn't as bad as the prevailing mood suggests and growth is moving in the right direction as consumer spending picks up, said Chris Torrens, vice chairman of the Britis
China's top financial regulators on Thursday issued a notice to lower down payments for both first- and second-time homebuyers, while further cutting interest rates on existing mortgages, aiming to better meet housing demand and promote the healthy and steady development of the real estate market.
Johor Ruler: Crucial for Malaysia to maintain ties with key trading partner
PETALING JAYA: It’s crucial for Malaysia to maintain friendly relations with China, says Johor Ruler Sultan Ibrahim ibni Almarhum Sultan Iskandar (pic).
Describing the Asian superpower as a “good and reliable” investment partner, His Majesty said Johor has had a long-standing good relationship with China since the time of his ancestors.
“A Chinese emperor once presented the ‘Double Dragon Precious Star’ award to my great-great-grandfather.
“After that, the Chinese were invited to Johor to cultivate gambier and pepper.
“That’s why I have been reiterating that the Chinese in Johor are not outsiders. They were invited to be here,” the Ruler said in an interview published in Sin Chew Daily yesterday, following a recent meeting at the palace in Johor Baru.
The Ruler’s great-great-grandfather Sultan Abu Bakar received the “Imperial Order of the Double Dragon” award from the Chinese emperor during the Qing Dynasty in 1892.
The award was first presented as a gift to foreigners in 1882. From 1908, it was also conferred on Qing Dynasty officials.
The year 2024 marks the 50th anniversary of Malaysia-China diplomatic ties, and Sultan Ibrahim has been closely following developments since the unity government was formed.
The Sultan took a jibe at a former leader who claimed that his visit to China was unsuccessful despite receiving a warm welcome in the country.
“Do you want them to stop buying our palm oil?” Sultan Ibrahim said of the leader, whom His Majesty did not name, adding that “it is better to pick a fight with someone of equal stature”, the Chinese daily reported.
Sultan Ibrahim is confident of the reputation he has built in China, as many heads of Chinese corporations had wanted to meet His Majesty.
The Ruler revealed that he had advised a company to collaborate with Chinese partners to engage in the processing, producing, refining and export of palm oil.
His Majesty said he would like to “go everywhere” when visiting China, adding that the country holds a special place in his heart as it reminds him of his son, the late Tunku Abdul Jalil, who was the third prince of Johor.
While battling cancer, Tunku Abdul Jalil underwent liver transplant surgery in Guangzhou, China, in 2014 under a special permit from the Chinese government.
This arrangement helped to enhance the warm relations between the Johor royal family and China.
As Sultan Ibrahim strived to foster closer friendship with China, His Majesty’s efforts to bring in Chinese developers, however, drew criticism, as some assumed that land was being taken away.
His Majesty said this is a misconception, adding that land cannot simply be taken away.
“Under the land ownership law, if you want to convert a leasehold (99-year tenure) land to freehold status, fees and fines will be imposed. Why is this an issue?”
Sultan Ibrahim said Johor, with its neighbour Singapore and three states along its borders, is more adept at dealing with foreigners and building mutually beneficial relationships.
“By offering better incentives to foreign investors, our products can go further, reaching more markets,” His Majesty added.
Sultan Ibrahim said providing more incentives to foreigners will not disadvantage locals in Johor.
Instead, Johoreans can benefit from more businesses and job opportunities that will be available, His Majesty added.
One second, they may be exaggerating China's economic development, saying it is too fast and too good, posing a threat to their interests. The next second, they start talking about China's economic decline and the suffering it will bring to the world.
One second, they may be exaggerating China's economic development, saying it is too fast and too good, posing a threat to their interests. The next second, they start talking about China's economic decline and the suffering it will bring to the world.
THE global macroeconomic picture is still more sluggish than investors would have liked, particularly when viewed from the gross domestic product (GDP) growth perspective for the first half of 2023 (1H23), although it remains a stretch to say the world is heading for a recession.
A quick glance across the Causeway to Singapore sees the city-state registering a 0.5% yearon-year (y-o-y) growth rate for the second quarter of the year (2Q23), extending marginally from the 0.4% expansion it charted for the preceding quarter.
Elsewhere, such as in major markets like the United States, China and the eurozone, economists are of the opinion that growth has been sturdy during 1H23 but stiff hurdles still remain on the horizon.
While acknowledging that global GDP growth has been slower so far in 2023 due to several familiar factors such as higher interest rates and elevated cost pressures, newly appointed Bank Negara governor Datuk Abdul Rasheed Ghaffour is also not expecting the global economy to slip into recession.
He says resilient domestic demand in advanced economies is providing sufficient support, while also anticipating worldwide trade to improve towards the end of 2023.
Most notably, he perceives China’s slower-than-expected recovery to have limited impact on Malaysia’s own economic expansion and improvement.
“Malaysia’s economy is well diversified in terms of products, services and trade partners, which would cushion the Chinese impact,” says Abdul Rasheed.
According to Bernard Aw, chief economist at Singapore’s Coface Services South Asia-pacific Pte Ltd, although the global economy has been resilient year-to-date, growth outlook in the second half remains challenging, not the least from increasing signals of weakening Chinese economic activity.
Forecasting global GDP expansion to be at 2.2% y-o-y for 2023, and anticipating a similar growth rate of 2.3% growth for next year, he says: “We expect Asean GDP growth (2023: 4.3%; 2024: 4.6%) to be generally faster than advanced economies – at 4.3% and 4.6% for 2023 and 2024 respectively – as tourism recovery and domestic demand drives economic activity.”
Continuing subdued external demand for the region would imply that domestic demand has to continue to partially offset some of the slack, Aw, tells Starbizweek.
“However, the challenging economic environment worldwide, relatively high inflation and interest rates means that even growth in domestic consumption and investment may fall short of expectations,” Aw opines.
Commenting on the overall global interest rate environment, he believes that the trend of disinflation would continue into 2H23, mainly driven by lower energy prices, coupled with China’s deflation having fed into lower export prices, which has also moderated global price pressures.
On the flipside, Aw thinks underlying inflation will remain fairly sticky, despite not being severe enough necessarily for central banks to revert to hiking rates.
“Having said that, they will likely maintain the current restrictive interest rates for a longer-than-expected period,” he says.
Earlier in July, it was reported that the United States economy had grown 2.4% y-o-y in 2Q23, up from the 2% it posted for the first three months of the year and bringing 1H23 GDP to a commendable 2.2%.
“The improved expansion rate had been driven by consumer spending, on top of increases in non-residential fixed investment, government spending and inventory growth.
At the same time, China had registered a 6.3% 2Q23 y-o-y GDP growth rate, which was also an improvement from the 4.5% charted in the previous quarter.
The acceleration however was slower than the expected 7.3% forecast by economists on a Reuters poll, dragged back by tepid demand and sinking property prices which has sapped consumer confidence.
On the same note, chief executive of Centre for Market Education Carmelo Ferlito feels that China’s post “zero-covid” recovery has been fragile since the beginning.
“The economy is not an engine to be switched on and off, but rather it is a living emergent order.
“As such, China is paying the price to a degree with its severe, nation-wide lockdowns while it was implementing the zero-covid policy,” he says.
The decelerating growth in China, says Ferlito, is evidenced by the People’s Bank of China unexpectedly cutting a range of key interest rates on Tuesday, which is seen as an emergency move to reignite growth after new data showed the economy has decelerated further last month.
With Chinese officials from its National Bureau of Statistics also suspending reports on youth unemployment, he says the move would deprive investors, economists and businesses of another key data point on the declining health of the world’s second-largest economy.
Divulging more numbers, Ferlito says the twin moves of cutting rates and holding back unemployment data from the Chinese government has coincided with new data showing a slowdown in spending growth by consumers and businesses.
“Concurrently, factory output grew much less than expected, adding to a recent raft of worrying signals. For the first time since February, China’s headline measure of unemployment rose, climbing to 5.3%.
“The jobless rate for people ages 16 to 24, meanwhile, had marched steadily higher for six consecutive months to hit a series of record highs, culminating in a reading of 21.3% in June,” he says.
Ferlito says an economic trichotomy is emerging on the global scene, before adding: “The United States is still fighting inflation, but countries like Germany and Holland are starting to experience technical recession, while China is facing challenges of its own.
“It is that post-lockdown crisis that the CME predicted two years ago.”
Echoing Bank Negara governor Abdul Rasheed, he re-emphasises that it is important to look beyond GDP figures, making his case that if the GDP of a country declines because of a cut in impractical government spending, that would be positive for a country.
Conversely, he argues if GDP growth were to accelerate due to an increase in spending financed by debt, it ultimately would be a bane to the government’s coffers and the national economy.
Meanwhile, the International Monetary Fund (IMF) is predicting a 3% GDP global growth rate for this year and the next, receding from the 3.5% achieved in 2022.
It says the rise in central bank policy rates to stave off inflation has continued to weigh on economic activity, but the good news is that global headline inflation is expected to fall from 8.7% last year to 6.8% in 2023 and 5.2% in 2024.
“The recent resolution of the US debt ceiling stand-off and strong action by authorities to contain turbulence in the US and Swiss banking earlier this year reduced the immediate risks of financial sector turmoil. This moderated adverse risks to the outlook,” the IMF says.
However, it cautions that the balance of risks to global growth remains tilted to the downside, as inflation could remain high and even rise if further shocks occur, including those from an escalation of the Russia-ukraine conflict.
Moreover, the IMF warns that China’s recovery could slow further, partly due to unresolved real estate problems, with negative cross-border spillovers.
On the upside, inflation could fall faster than expected, reducing the need for tight monetary policy, and domestic demand could again prove more resilient
