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Calls grow for Beijing to prioritise consumers

BEIJING: Chinese government advisers are stepping up calls to make the household sector’s contribution to broader economic growth a top priority at Beijing’s upcoming five-year policy plan, as trade tensions and deflation threaten the outlook. Leaders are gathering proposals for their 15th five-year plan, a voluminous document that lays out priorities up to 2030. The plan is expected to be endorsed at a December Communist Party conference and approved by Parliament in March. Policy advisers told Reuters while they expect the document will elevate household consumption to a top goal in principle, it is likely to stop short of laying out an explicit target. Household consumption currently accounts for 40% of gross domestic product – some advisers propose China should aim for 50% over the next two five-year cycles. Economists have long urged Beijing to switch to a consumption-led economic model and rely less on debt-fuelled investment and exports for growth. While China has so far largely withstood pressures from higher US tariffs, fresh worries about industrial overcapacity, factory deflation and the resulting stress on jobs and incomes have heightened calls for a shift in long-term strategy. “Relying on external demand makes us vulnerable to global

o China lags the world with household consumption at 40% of GDP shocks,” a policy adviser said on condition of anonymity due to the topic’s sensitivity. “We should strengthen domestic consumption as a key driver of growth and economic transformation,” said the source, echoing calls from two other advisers Reuters spoke with. However, a fourth adviser said his proposals would not include this recommendation as “this is not something that can be easily achieved without the correct policies and reforms”. Calls for a more robust consumer sector are not new. While Beijing has pledged structural changes for more than a

Huawei’s AI lab denies its Pangu model copied Alibaba’s Qwen BEIJING: Huawei’s artificial intelligence research division has rejected claims that a version of its Pangu Pro large language model has copied elements from an Alibaba model, saying that it was independently developed and trained. The division, called Noah Ark Lab, issued the statement on Saturday, a day after an entity called HonestAGI posted an English-language paper on code-sharing platform Github, saying Huawei’s Pangu Pro Moe (Mixture of Experts) model showed “extraordinary correlation” with Alibaba’s Qwen 2.5 14B. This suggests that Huawei’s model was derived through “upcycling” and was not trained from scratch, the paper said, prompting widespread discussion in AI circles online and in Chinese tech-focused media. The paper added that its findings indicated potential copyright violation, the fabrication of information in technical reports and false claims about Huawei’s investment in training the model. Noah Ark Lab said in its statement that the model was “not based on incremental training of other manufacturers’ models” and that it had “made key innovations in architecture design and technical features.” It is the first large-scale model built entirely on Huawei’s Ascend chips, it added. It also said that its development team had strictly adhered to open-source license requirements for any third-party code used, without elaborating which open-source models it took reference from. While Qwen is more consumer-facing and has chatbot services like ChatGPT, Huawei’s Pangu models tend to be more used in government as well as the finance and manufacturing sectors. – Reuters Peng said in March that China should boost final consumption, which includes household and government spending, as a share of GDP to 70% by 2035. The share stood at 56.6% last year. – Reuters State-guided investment has turned manufacturing into a key growth engine. But an argument is emerging that investing more in an industrial complex that already accounts for a third of global manufacturing brings diminishing returns. A prominent Communist Party magazine last week called for a crackdown on price wars in various industries, in a nod to China’s overcapacity and deflation. Peng Sen, chairman of the China Society of Economic Reform, said in comments posted on the WeChat account of the Changan Avenue Reading Club, an informal body backed by senior officials, that sluggish consumption also hurts manufacturing profits and endangers jobs.

who have less and are more likely to spend it. New proposals include using state-owned assets to shore up pension funds and propping up the wobbly stock market and the crisis-hit property sector to increase households’ investment earnings. “We have to increase household incomes, we have to boost transfers to low-income groups, but we’ve seen wage cuts,” said a second adviser. He added household demand has taken on increased importance at the upcoming five-year plan with discussions focusing on whether China should set a specific consumption target. Yang Weimin, vice-chairman of the China Centre for International Economic Exchanges think-tank, said last month China should raise household consumption to over 50% of GDP by 2035. The advisers expect a goal from the 14th plan to keep the manufacturing share of GDP relatively stable will survive another five years.

decade, its household consumption share of GDP is roughly where it was in 2005 and far below the OECD average of 54%. The difficulty, analysts say, is that China has to shift resources from the business and government sectors to households in ways that could slow growth. Japan entered its decades long stagnation period with a household share of GDP of 50% in 1991. That only grew to 58% by 2013, before dipping back to 55%. A 14th five-year plan progress report from 2023 lamented “insufficient mechanisms” to boost consumption. The policy proposals for the 15th plan are largely the same ones Beijing had promised before, the advisers said. These include bolstering welfare, relaxing an internal passport system blamed for deep urban-rural inequality, and other measures – including tax changes – to redistribute income towards those

Nissan Motor eyes US$4 billion in bond sales TOKYO: Japan’s Nissan Motor plans to sell US$4 billion (RM17 billion) worth of US dollar- and euro-denominated senior unsecured bonds, according to a term sheet reviewed by Reuters yesterday.

The plan comes about a week after Reuters reported that Nissan has asked some suppliers to allow it to delay payments to free up short-term funds, highlighting its scramble to boost cash. The automaker aims to sell five-, seven- and 10-year dollar bonds and raise a minimum of US$750 million in each tranche. It has told prospective investors that coupons would be in the mid-7% area for the five-year tranche, high-7% area for the seven-year tranche and low-8% area for the 10-year tranche, the term sheet showed. Nissan also plans a four- and eight-year euro issuance with a minimum size of €500 million (RM2.5 billion) in each tranche. It has set price guidance at high 5% for the four-year bond and high 6% for the eight-year bond, the term sheet showed. Nissan said it also plans to sell a ¥150 billion yen (RM4.4 billion) six-year convertible bond. The automaker plans to use money raised to refinance outstanding debt, the term sheet showed. Last year Nissan raised US$300 million in a five-year dollar bond priced at 5.55%. It issued a five-year dollar bond in March 2021 worth US$800 million that had a coupon of 2% and is now trading at 6.0584%, LSEG data showed. A seven-year bond issued at the same time

Workers at a production line at Nissan’s Oppama plant in Yokosuka, south of Tokyo. – REUTERSPIC worth US$600 million with a coupon of 2.75% is now at 6.599%.

prices, the official told a press conference. The core CPI, which excludes volatile fresh food and energy prices, rose 1.06% in June from a year earlier, compared with a forecast increase of 1.10%. In the first six months, annual headline inflation averaged 0.37%, with core inflation at 0.97%, the ministry said. The ministry maintained its headline inflation forecast for 2025 at 0% to 1%. – Reuters Fitch in a report yesterday said Nissan’s credit profile was weaker than similarly rated automakers such as General Motors , Ford Motor and Stellantis. It said Nissan’s operating and free cash flow margins had been lower recently and were weak for its rating. “However, its low leverage and maintenance of a net cash position are considered strong for its current rating and compare well with higher-rated peers,” Fitch said. – Reuters

Hit by deteriorating sales and an ageing vehicle lineup, Nissan reported a US$4.5 billion net loss for the financial year that ended in March. It has declined to disclose a forecast for the year through March 2026. The automaker faces some ¥700 billion in debt due this financial year. Its debt has been cut to “junk” by all three major credit-rating firms.

Thai headline inflation negative for third straight month BANGKOK: Thailand’s annual inflation rate was negative for a third straight month in June, driven by lower energy and food prices, but the Commerce Ministry said yesterday there was no sign of deflation yet. inflation rate has been below the central bank’s target range of 1% to 3%.

Headline inflation in the third quarter is expected to remain negative before turning positive in the final quarter of the year, said Poonpong Naiyanapakorn, head of the Commerce Ministry’s Trade Policy and Strategy Office. There were no signs of deflation because the price drop was driven by lower energy

The consumer price index dropped 0.25% in June from a year earlier, bigger than the 0.1% decline forecast in a Reuters poll, and following a 0.57% drop in the previous month. It was the fourth month in a row that the

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