26/06/2025

BIZ & FINANCE THURSDAY | JUNE 26, 2025

17

China can maintain high growth, says premier

Beijing calls Taipei’s tech exports blacklist ‘despicable’ BEIJING: China’s government hit out yesterday at Taiwan’s inclusion of two Chinese tech giants on an exports blacklist, calling it “despicable” and vowing to defend its interests. China’s Huawei and Semiconductor Manufacturing International Corp (SMIC) were among 601 entities from several countries added to a “strategic high-tech commodities entity list” by the Taiwanese government this month. Taiwan is a global chip powerhouse but companies based there must now obtain permission from the government to ship high-tech products to Huawei, SMIC or any other entity on the list. Zhu Fenglian, spokesman for Beijing’s Taiwan Affairs Office, said Taipei was attempting to curry favour with the United States by “repeatedly resorting to sinister and evil tactics”. “These despicable actions are disgraceful,” Zhu said when asked about the Taiwanese blacklist. “We will take effective measures to resolutely maintain the normal order of cross-strait economic and trade exchanges and cooperation, and safeguard the interests and well-being of compatriots on both sides of the Taiwan Strait,” she said in comments published by state broadcaster CCTV. Taiwan’s move comes as Chinese tech companies face increasing export restrictions imposed by the United States. Washington has expanded efforts to curb exports of state-of-the-art chips to China over concern that they could be used to advance Beijing’s military systems and other tech capabilities. The US recently unveiled guidelines warning firms that using Chinese-made high-tech AI semiconductors, specifically Huawei’s Ascend chips, would put them at risk of violating American export controls. – AFP Japan govt mulls cutting this year’s growth forecast TOKYO: Japan’s government will consider cutting its economic growth estimate for the current fiscal year ending in March 2026 due to the expected hit to global demand from US tariffs, three government sources told Reuters yesterday. The current projection of an 1.2% expansion, made at the end of last year, could be pushed down to below 1%, the sources said on condition of anonymity as they were not authorised to speak publicly. The government will finalise projections around the end of July, taking into account developments on US tariffs, the sources said. Japan’s tariff negotiator Ryosei Akazawa is arranging his seventh visit to the United States for as early as June 26, the Yomiuri newspaper reported on Tuesday. Japanese Prime Minister Shigeru Ishiba and US President Donald Trump agreed to push ahead with trade talks when they met in Canada but failed to achieve a tariff deal. The government produces economic growth estimates twice each year with one made around summer used as a basis for drafting the state budget for the following fiscal year. In its latest quarterly projections released on May 1, the Bank of Japan cut its economic growth forecast for fiscal 2025 to 0.5% from 1.1%, reflecting the expected hit from U.S. tariffs. – Reuters

Economists say more policy support for households could ease the transition to consumption-led growth, but the shift remains politically sensitive for the ruling Communist Party, which has long tied its legitimacy to high growth – a key reason why policymakers have delayed seriously pursuing it for over a decade. Household consumption has remained at around 39% of GDP over the past two decades, according to analysts at Rhodium Group, a China-focused US think tank, far below averages in OECD economies of 54%. On Tuesday, China released guidelines aimed at using financial tools to boost consumption, including pledges to support employment and raise household incomes. The International Monetary Fund last year said deeper reforms are needed to convert China’s economy to one led by consumption, including pension reforms, and erecting a social safety net to reduce the need for massive precautionary savings. “We aim to help China transition from a major manufacturing power to a colossal consumer market,” Li said. “This will open up vast and untapped markets for businesses from many countries.” – Reuters

slowing, growth driven by strong exports – a trend likely to fade as trade tensions with the West escalate – or it can endure several years of slower growth while implementing reforms aimed at unlocking longer-term gains through its vast consumer market. But China’s second-ranking official told delegates he was optimistic that Beijing could pull off both. “We are confident in our ability to maintain a relatively rapid growth rate for China’s economy,” Li said. “China’s economy showed steady improvement in the second quarter,” he added. “Regardless of how the international environment evolves, China’s economy has consistently maintained a strong momentum for growth.” Beijing has set an ambitious 2025 growth target of “around 5%”, although most analysts expect China will struggle to keep expanding at those rates in the coming years if a lasting truce cannot be secured with Washington. Oxford Economics expects average annual GDP growth this decade to halve from the 1999-2019 average to 4.5% and slow to 3% in the decade after.

TIANJIN: China’s Premier Li Qiang said yesterday he was confident the world’s No. 2 economy could maintain a “relatively rapid” growth rate as it transitions from a manufacturing-led model to a consumer-driven one, a shift analysts say is key to securing its future. Li’s keynote speech, delivered at a World Economic Forum meeting in Tianjin, comes as Chinese officials seek to cushion the economic damage caused by the trade war with the United States through policy support – a particularly daunting challenge for authorities grappling with the pressing need to undertake painful structural reforms. Most analysts believe China’s US$19 trillion (RM80 trillion) economy faces two broad paths: it can sustain relatively high, albeit o Transition to consumer-led economy to ‘open up vast and untapped markets’ for businesses

Li delivering a speech as World Economic Forum CEO Borge Brende listens during the opening ceremony of the WEF Meeting yesterday. – AFPPIC

BYD slows output, delays capacity expansion: Sources SHANGHAI: Chinese electric vehicle champion BYD has slowed its production and expansion pace in recent months by reducing shifts at some factories in China and delaying plans to add new production lines, said two people with knowledge of the matter. mostly in China, has at least seven car factories in the country and it has targeted a near-30% rise in sales to 5.5 million this year. Reuters was not able to identify the exact scale of the production reduction and expansion suspension, nor to ascertain how long these measures may last. average output in April and May 29% lower than in the fourth quarter of 2024. BYD has risen to become the world’s largest EV maker within the span of a few years by aggressively increasing production and speeding up the rollout of new and more affordable models. Its recent price incentives, which reduced the starting price of its cheapest model to 55,800 yuan (RM33,o00), triggered a broader selloff in Chinese auto stocks and fresh price cuts from rivals.

The decisions are a sign that BYD’s robust sales growth over the past couple of years that drove it to overtake Tesla as the world’s largest EV maker could slow, as it grapples with rising inventory even after offering deep price cuts in China’s cutthroat auto market. BYD has cancelled night shifts and reduced output by at least a third of the capacity at some of its factories, said the sources who declined to be named because the matter is private. These previously unreported measures were imposed on at least four factories and BYD had also suspended some plans to set up new production lines, one of the people said. BYD, which sold 4.27 million cars last year,

One of the sources said the moves were aimed at saving costs, while the other said they were imposed after sales failed to meet targets. Data from the China Association of Automobile Manufacturers showed growth of BYD’s output had slowed to 13% and 0.2% year-on-year in April and May, respectively, both of which were the slowest pace since February 2024 when factory activities were disrupted by a week-long lunar New Year holiday. BYD started ramping up monthly output from the second quarter of the year in 2023 and 2024, the data showed. But the trend has changed this year, with

A survey conducted by the China Automotive Dealer Association in May found that BYD dealers held an average inventory of 3.21 months, the highest among all brands in China, whereas the inventory level industry-wide was at 1.38 months. A large BYD dealer in the eastern province of Shandong has gone out of business with at least 20 of its stores found to be deserted or shut, government-owned media reported last month. – Reuters