Tag: economy

UK-India FTA deal: From Scotch whisky tariff to business visa — areas that still need negotiations

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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For the Indo-British business community, Rishi Sunak becoming the new UK prime minister has again revived the question of where the Free Trade Agreement, which has been in the works for a while now, stands.

UK’s Secretary of State for International Trade, Greg Hands, addressed this in the House of Commons on Wednesday and it seems more negotiations and the next round of talks over the deal are expected shortly.

In a free trade agreement, two countries either eliminate or significantly reduce customs duties on the maximum number of goods traded between them, besides easing norms for promoting investments and services trade.

Also Read | Meet Rishi Sunak, the first Indian-origin British Prime Minister

Hands informed the UK parliament that the majority of chapters in the UK-India FTA have been closed. “Sixteen chapters across 26 policy areas agreed so far,” he said.

However, negotiations on three-four issues — tariffs on professional, financial and legal services; tariffs on Scotch whisky; SMEs and terms of business visas — are still awaited.

“Many exporters are facing considerable tariffs on professional, financial and legal services. (Also,) terms of business visas remain an active area of negotiation,” Hands said.

Another debated point has been the tariff reduction on imported Scotch whiskey by India. The British have been demanding lower tariffs which currently stand at 150 percent. As per reports after the last round of negotiations, India has sought more time to make this happen.

“Tariffs on Scotch whisky going to India are currently at 150 percent. (We) can’t guarantee to eliminate them,” said Hands.

Also Read | India, China trade crosses $100 billion during Jan-Sept

Along with these, Intellectual property rights (IPRs) is one of the main focuses of the India-UK FTA deal. Business visas and involvement in small and medium trade are also discussions left to be concluded.

“We are confident of getting a good deal for business visas and are negotiating a chapter for SMEs (small and medium-sized enterprises),” the Minister of State for Trade Policy said.

Why the FTA?

The UK is also a key investor in India. New Delhi attracted foreign direct investment of USD 1.64 billion in 2021-22. The figure was about USD 32 billion between April 2000 and March 2022.

The UK also sees “huge” potential for gain for India in areas of investment and life sciences. “The content, depth and breadth of FTA are more important than the data it delivers,” Hands said.

He further emphasised that a strong UK-India FTA will boost UK’s economy by over £3 billion by 2035. He said that the FTA can cut red tape and make it cheaper for UK companies to sell into India’s dynamic market, helping drive growth and support jobs across every nation and region.

Greater access could help UK businesses over a billion more consumers including India’s growing middle class estimated to reach a quarter of a billion by the year 2050 and give them a competitive edge over other countries that don’t have a deal with India, he said.

Describing India as an “economic superpower”, the minister said the UK was working towards the “best” Free Trade Agreement (FTA) that is beneficial to both countries.

The minister, however, placed a condition for signing the deal. he said the India-UK FTA “won’t be signed “until it is fair, reciprocal and in best interests of UK’s people and economy.”

India and Britain launched negotiations for the FTA in January with an aim to conclude talks by Diwali but the deadline was missed due to a lack of consensus on issues.

Sunak risking fresh row over the FTA ?

As part of the deal, the UK is mulling increasing the number of business visas granted to Indian nationals. Hands said an agreement with India will give exporters greater access to a billion consumers.

But, according to a Bloomberg report, “loosening visa arrangements could also put Sunak on a collision course with Home Secretary Suella Braverman”.

Braverman had recently commented on “Indian visa overstayers”. She triggered a controversy saying, “I do have some reservations. Look at migration in this country — the largest group of people who overstay are Indian migrants.”

“I have concerns about having an open-borders migration policy with India because I don’t think that’s what people voted for with Brexit,” Braverman had reportedly said.

(With inputs from agencies)

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China sees rare protests against President Xi Jinping ahead of Communist Party meet — Visuals

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A rare protest against Chinese President Xi Jinping and his government’s rigid zero-COVID policy took place in Beijing, days before he is expected to be handed an unprecedented third term in office at a landmark meeting of the ruling Communist Party.

Photos circulating in social media on Thursday showed two banners hung on an overpass of a major thoroughfare in the northwest of the Chinese capital, protesting against Xi’s unpopular zero-COVID policy and authoritarian rule.

China saw rare protests in 2022, from rallies against a banking fraud scandal to mortgage strikes and COVID lockdown protests. These come ahead of the Chinese Communist Party Congress, when Xi Jinping is likely to secure an unprecedented third term https://t.co/IpudP4h2fG pic.twitter.com/fJ7WykYS4c

— Reuters (@Reuters) October 13, 2022

Unfazed by the rare protests, China on Thursday ruled out a rollback of the zero-COVID policy, saying no timeline can be fixed over the restrictions to fight the deadly pandemic, amidst growing frustration over the damage it is inflicting on jobs, businesses, economy and public life.

China has no timeline for an exit from its COVID strategy, a senior government advisor heading an expert panel bluntly said over the state-run CCTV, dashing hopes that the 20th Congress of the ruling Communist Party of China (CPC) beginning here on October 16 may modify or reverse the tough policy.

ALSO READ | China steps up anti-COVID measures in megacities as infections mount

Liang Wannian, who heads China’s expert panel on COVID-19, said, it’s not scientifically possible to clearly delineate while acknowledging public expectations of the rollback of the policy ahead of the Congress, which was widely expected to confer a third term to the President Xi, who is an ardent advocate of the zero-COVID policy.

“We have been working to beat the pandemic but at this stage, from a scientific point of view, it is difficult to say definitively in which month we will have reached this standard,” he was quoted as saying by the Hong Kong-based South China Morning Post on Thursday.

Banners rattle Chinese officials

His comments came as rare protests displaying banners expressing resentment over the zero-COVID policy appeared on social media.

Banners displayed on a bridge in the district of Haidian, home to universities and tech firms in Beijing, read Food, not COVID test; Reform, not a Cultural Revolution; Freedom, not lockdowns; Votes, not a leader. Dignity, not lies. Citizens, not slaves etc.

Sitong Bridge, Haidian District, Beijing, a man displayed banners and shouted slogans against Xi Jinping. He had been arrested and voice disappeared, but maybe in the future, everyone who crosses this bridge will remember that there was once a man…#TheGreatTranslationMovement pic.twitter.com/Fr20sF9XFK

— The Great Translation Movement 大翻译运动官方推号 (@TGTM_Official) October 13, 2022

The banners appeared to have rattled officials in China where political protest is rare – as they hurriedly deployed police on numerous over bridges in Beijing to ensure that the protests are not spread, while mobile patrolling has been intensified in the city.

Gauging the public resentment, the CPC mouthpiece People’s Daily came strongly in support of the zero-COVID policy and accused those of lying flat.

A banner against Xi Jinping is raised at Sitong Bridge, Haidian District, Beijing.
Admire the courage of this man, but when the giant ship sank, the screams of the passengers were only the meaning of tragedy.#TheGreatTranslationMovement pic.twitter.com/tMt4spulZR

— The Great Translation Movement 大翻译运动官方推号 (@TGTM_Official) October 13, 2022

“If there is a large-scale COVID-19 resurgence, the spread of the epidemic will have a serious impact on economic and social development, and the final cost will be higher and the loss will be greater,” one of the commentaries in the daily said.

Xi, 69, too said in recent times that China witnessed fewer deaths due to the zero-COVID policy unlike in the rest of the world.

Chinese economy

The coronavirus, which first surfaced in Wuhan towards the end of 2019 before it spread to the world causing death and devastation, has become the Achilles heel of the Chinese economy resulting in its worst slowdown due to persistent lockdowns of top cities in the country.

Big productive cities like Shanghai, Chengdu, Xian and several top ones and two-tier cities suffered or continue to suffer periodic prolonged lockdowns severely disrupting people’s lives.

A new Hazmat suit-wearing police and health officials have become a common sight all over China. Public resentment is brewing as the slowdown is resulting in job losses.

According to recent data, China’s unemployment rate grew to about19 per cent, the highest in recent years. While China claims to have vaccinated the best part of the population, officials complain of vulnerable groups like people above 60 years who are a cause of concern.

In almost all cities, especially in Beijing, people have to undergo testing for COVID on alternative days without which they cannot enter public buildings, restaurants, transport services or even taxis.

Under the zero-COVID policy, travel and transportation services within China and its connectivity to the world are hit hard. So much so that most of China’s massive infrastructure including its once most busy airports is currently wearing a deserted look.

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Just top 20% of consumer driving demand as majority yet to recover from pandemic hit: Report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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That the rich got richer during the pandemic has become more evident with research data showing just 20 percent of the population are leading the discretionary consumption wagon as the rest are still recovering. The pandemic has not impacted affluent consumers’ income levels in the country is clear from the fact that the top 20 percent of the population account for the bulk of discretionary consumption — 59 percent in rural areas and 66 percent in urban areas, Tanvee Gupta-Jain, chief economist at UBS Securities India, said in a report.

Citing an in-house UBS survey (conducted in August among 1,500 higher-income consumers) results, she says more than half of the respondents have bought gold/ jewellery as planned or more in the past three months and more than half of them planning to invest in properties and buying cars/two-wheelers over the next two years.

That the rich will continue to drive consumption demand is clear from the UBS survey findings, with more than 70 percent of respondents anticipating their income will increase in 2023.

Similarly, nearly 70 percent of the respondents expect festive spending to rise, while 20 percent expect stable spending on online shopping, healthcare, online entertainment, household consumables like groceries, food, etc.

Spending on durables and education is likely to remain largely the same. Only 9 percent expect a slowdown in their festive spending. The survey also shows that 55 percent of respondents want to buy a car and two-wheeler over the next two years. As much as 50 percent of unique respondents are planning to purchase property over the next two years (33 percent for primary residence and 32 percent for secondary/investment property), but this is lower than 56 percent in the last survey.

According to a UBS analysis, during the pandemic, the formal sector gained market share at the cost of the informal economy as the rich continued to increase their spending on branded goods through online shopping, healthcare, online entertainment, and household consumables like groceries, food, etc.

Across age groups, income expectations diverge, with younger age groups (below 44) being more optimistic than their elders (45-54 years) likely on improved labour market conditions in the organised sector, she said, adding that optimism about income growth and a better financial situation is a key metric to track for continued normalisation in household consumption.

The survey further showed that nearly three-quarters of the respondents noted stable or increasing income levels (versus 54 percent in the August 2021 survey) and only 23 percent saw a decline in income since last year (versus 42 percent in the last survey).

Notably, the top 20 percent of the population accounts for the bulk of discretionary consumption with 59 percent of them leading the discretionary consumption spending in rural areas and a much higher 66 percent in urban areas, as per the survey.

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India will be at least a $30 trillion economy by 2047-50: Piyush Goyal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s goods and services exports have already crossed $675 billion in last fiscal year and the country is now aspiring to take international trade to $2 trillion by 2030, Commerce and Industry Minister Piyush Goyal has said.

Interacting with faculty, researchers, and students at the Stanford University in San Francisco, Goyal also said by the time India would celebrate the 100th anniversary of its independence, it would be a $30 trillion economy.

“…by 2047-2050 period, when India would be completing 100 years of Independence, we will be at least a $30 trillion economy on a business as usual scenario and possibly a $35-45 trillion economy if some of the aggressive plans that the government is putting together work well. That’s the kind of opportunity that I bring to the table, Goyal said.

India, with a GDP of $3.3 trillion, is currently the fifth largest economy in the world only behind the US, China, Japan and Germany.

Also Read: FM Nirmala Sitharaman says India’s shift to renewables has received a jolt

A decade back, India was ranked 11th among the large economies while the UK was at the fifth position. With a 13.5 percent expansion in June quarter, the Indian economy has overtaken the UK, which has slipped to the sixth spot. Goyal said the government has spent the last few years laying the foundation on which the country can rapidly transform, grow its economy, improve its systems, and engage in technology.

We have recently seen some successes in terms of our international engagement growing to about $675 billion (exports of goods and services) for the first time ever last year. We are hoping to do our international trade to about $2 trillion by 2030, the minister added.

During April-August 2022-23, India’s exports registered a growth of 17.12 percent to $192.59 billion. Imports during the five-month period grew 45.64 percent to $317.81 billion.

The trade deficit widened to $125.22 billion in April-August as against $53.78 billion in the same period last year. India’s exports contracted by 1.15 percent to $33 billion in August due to subdued demand in developed markets.

Also Read: India trusted partner of the world: Piyush Goyal

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US adds 315,000 jobs in August as companies keep hiring though at slower pace

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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America’s employers slowed their hiring in August in the face of rising interest rates, high inflation and sluggish consumer spending but still added 315,000 jobs.

The government reported Friday that last month’s job gain was down from 526,000 in July and below the average gain of the previous three months. The unemployment rate rose to 3.7 percent, from a half-century low of 3.5 percent in July, as more Americans came off the sidelines to look for jobs.

Even though the job gain declined from July, the report still pointed to a resilient labor market and an economy that is not near recession. The number of people looking for work jumped last month, which boosted the unemployment rate because not all of them found jobs immediately.

The influx of job seekers may help employers fill a near-record number of openings in the coming months.

Also read: Goldman Sachs expects RBI to slowdown rate hike pace

The smaller August gain will likely be welcomed by the Federal Reserve. The Fed is rapidly raising interest rates to try to cool hiring and wage growth, which have been consistently strong. Businesses typically pass the cost of higher wages on to their customers through higher prices, thereby fueling inflation.

Fed officials hope that by raising borrowing costs across the economy, they can reduce inflation from a near-40-year high. Some economists fear, though, that the Fed is tightening credit so aggressively that it will eventually tip the economy into recession.

Average hourly pay rose 10 cents to USD 32.36 in August, an increase of 5.2 percent from a year ago. That is still higher than Fed officials want to see. Some have said they would prefer for wages to be rising at a pace closer to 3 percent to help rein in rising prices.

Most industries added workers last month, with the biggest increases in professional and business services, which gained 68,000 jobs. That sector includes architects, engineers and some tech workers. Health care added 61,500 jobs, retailers 44,000.

Job openings remain high and the pace of layoffs low, indicating that most businesses still want to hire. The broadest measure of the economy’s output — gross domestic product — has shrunk for two straight quarters, meeting one informal definition of a recession. Yet another measure, focused on incomes, indicates the economy expanded in the first half of the year, albeit slowly.

Fed Chair Jerome Powell, in a high-profile speech last week, made clear that to curb inflation, the Fed was prepared to continue raising short-term interest rates for the foreseeable future and to keep them elevated. Powell warned that the Fed’s inflation fight would likely cause pain for Americans in the form of a weaker economy and job losses.

Also read: MNREGA job demand on decline since May indicating stabilising rural employment

The Fed chair also said the job market is “clearly out of balance,” with demand for workers “substantially exceeding” the available supply. Friday’s jobs figures and a report earlier this week that the number of job openings rose in July after three months of declines, suggested that the Fed’s rate hikes so far haven’t restored any such balance.

There are roughly two advertised job openings for every unemployed worker.

The central bank has raised its short-term rate to a range of 2.25 percent to 2.5 percent this year, after the fastest series of increases since it began using its short-term rate to influence the economy in the early 1990s.

It has projected that its key rate will reach a range of 3.25 percent to 3.5 percent by year’s end. Those rate hikes have made borrowing and spending steadily more expensive for individuals and businesses. The housing market, in particular, has been weakened by higher loan rates.

The jobs figures are helping fill out the economic backdrop as this fall’s congressional elections intensify. Republicans have pointed to high inflation to try to pummel Democrats in midterm campaigns. The Biden administration has pushed back and claimed credit for a robust pace of job growth.

Wages are rising at their fastest pace in decades as employers scramble to fill jobs at a time when fewer Americans are working or seeking work in the aftermath of the pandemic. Average hourly pay jumped 5.2 percent in July from a year earlier. Still, that was less than the 5.6 percent year-over-year in March, which was the largest annual increase in 15 years of records outside of the spring of 2020, when the pandemic struck.

Also read: India reports GST collection above Rs 1.4 lakh crore for sixth straight month in August

Some skeptics warn that the Fed may be focusing excessively on the strength of the job market when other indicators indicate that the economy is noticeably weakening. Consumer spending, for example, and manufacturing have slowed. The central bank might raise rates too far as a result, to the point where it causes a deeper recession than might be needed to conquer inflation.

The economic picture is highly uncertain, with the healthy pace of hiring and low unemployment at odds with the government’s estimate that the economy shrank in the first six months of this year, which is one informal definition of a recession.

Yet a related measure of the economy’s growth, which focuses on incomes, shows that it is still expanding, if at a weak pace.

So far, the Fed’s rate hikes have severely dented the housing market. With the average rate on a 30-year mortgage reaching 5.66 percent last week — double the level of a year ago — sales of existing homes have fallen for six straight months.

Consumers have moderated their spending in the face of much higher prices, though they spent more in July even after adjusting for inflation. But companies’ investment in new equipment has slowed, indicating they have an increasingly cautious outlook on the economy.

Also read: Economists expect downside risk to India’s growth estimates

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Economists expect downside risk to India’s growth estimates

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The first quarter’s Gross Domestic Product (GDP) reading of 13.5 percent missed estimates by economists and brokerage houses alike. Most had factored in a reading of 15-15.5 percent and the Reserve Bank of India itself was projecting growth of 16.2 percent.

In an interview with CNBC-TV18, Abhishek Upadhyay of ICICI Sec PD, Pronab Sen, Former Chief Statistician, Samiran Chakraborty of Citi and Rob Subbaraman of Nomura discussed what the reading tell us about the hidden weaknesses of the economy. Is the strength in domestic consumption strong enough to improve the coming quarters? Or will the coming quarters be worse because of the global slowdown?

According to Subbaraman there are downside risks to the Indian gross domestic product (GDP) growth rate.

“There are clear downside risks to India’s GDP growth forecast for 2023, which is currently 4.7 percent. I think this GDP number just came out for India, I don’t want to sugarcoat it. I think that is as best as it gets. I think it’s slowing down from here,” he said.

Also Read: Keki Mistry expresses confidence in the Indian economy despite subpar Q1 GDP

Samiran Chakraborty too believes that the India growth story is slowing down to some extent.

“Global growth is going to slow down even faster affecting our export volumes, that is going to be a critical driver. But at this moment, we have been slightly optimistic in forecasting that for the next few quarters, the headwind from these net exports will not be as sharp as it was in the first quarter,” he explained.

According to Sen, the impact of rate tightening has not been factored in yet.

“We really should be cautious about over projecting what the Indian economy is doing. And we have not yet factored in what going to the effects of the tightening of monetary policy. At the moment, it doesn’t seem to have had much effect, but sooner or later it will,” he said.

Also Read: Finance Ministry defends India’s first quarter growth even as brokerages downgrade annual GDP forecast

For the entire discussion, watch the accompanying video

Also, catch all the live updates on markets with CNBC-TV18.com’s blog

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI’s financial inclusion index rises; showing growth across all segments

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The RBI’s composite financial inclusion index (FI-Index) capturing the extent of financial inclusion across the country rose to 56.4 in March 2022, showing growth across all parameters.

The index captures information on various aspects of financial inclusion in a single value ranging between 0 and 100, where 0 represents complete financial exclusion and 100 indicates full financial inclusion. “The value of FI Index for March 2022 stands at 56.4 vis-a-vis 53.9 in March 2021, with growth witnessed across all the sub-indices,” the RBI said in a statement.

Also Read: India gets 58.3 million ITRs filed for FY22, tad below FY21 when due date was extended

In August last year, the central bank said it has been conceptualised as a comprehensive index, incorporating details of banking, investments, insurance, postal, as well as the pension sector, in consultation with government and respective sectoral regulators.

The FI-Index comprises three broad parameters — Access (35 percent), Usage (45 percent), and Quality (20 percent) with each of these consisting of various dimensions, which are computed based on several indicators. The FI-Index was constructed without any ‘base year’ and as such it reflects the cumulative efforts of all stakeholders over the years towards financial inclusion. The index is now published annually.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Govt, RBI trying to smoothen rupee slide against US Dollar; Forex levels continue to be comfortable for RBI interventions

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government and the Reserve Bank of India (RBI) are trying to smoothen the appreciation of the dollar against the Indian rupee, thereby making it more gradual, government sources told CNBC-TV18.

“The Indian government and the central bank have been taking steps to attract dollar inflows, to make the appreciation of the dollar against the Indian rupee more gradual and smoother”, government sources told CNBC-TV18.

Emphasising the role of the RBI in managing the Indian currency, sources said the central bank regularly monitors the foreign exchange market and intervenes in situations of undue volatility. “For its interventions, it uses its foreign exchange reserves which continue to be at comfortable levels”, government sources added.

Also Read | Explained | How the rupee’s plunge to record lows impacts you

Both, the government and the central bank have been taking steps to attract dollar flows and the strength of the US dollar has been uniform this year. It has appreciated against many other currencies. For instance, the US dollar index against six major currencies – Euro, British pound, Japanese yen, Swiss franc, Canadian dollar and the Swedish krona – has gained 13.0 percent this year.

“So, the strength of the US dollar against the Indian rupee cannot be viewed as an isolated case. It is just part of the strength of the US dollar globally, against all currencies – developed or emerging”, government sources told CNBC-TV18.

In February, the conflict in Ukraine broke out which has raised the price of oil and also uncertainty. On account of both these reasons, investors have turned cautious. When they become cautious, they begin pulling money out of emerging markets like India. Foreign investors have pulled out nearly USD 31.5 billion totally from the beginning of 2021-22 and up to July 15th in 2022-23, government sources explain.

Also Read | Will RBI have to raise rates to shore up the rupee?

“The rise in the price of oil has also pushed up our import bill this year compared to last year. That means more demand for US dollars to pay for crude oil but to reiterate, the US dollar has not strengthened only against the Indian rupee but also against many currencies, including other major currencies. In fact, the US dollar has strengthened more against those currencies than against the Indian rupee,” sources added.

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China’s economic growth falls to 0.4% amid COVID shutdowns

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China’s economy contracted in the three months ending in June compared with the previous quarter after Shanghai and other cities were shut down to fight coronavirus outbreaks, but the government said a stable recovery is under way after businesses reopened.

The world’s second-largest economy shrank by 2.6 percent, compared with the January-March periods already weak quarter-on-quarter rate of 1.4 percent, official data showed Friday. Compared with a year earlier, which can hide recent fluctuations, growth slid to a weak 0.4 percent from the earlier quarters 4.8 percent.

China also reported an increase in the broad budget deficit in the first six months of the year as government’s spending surged, amid fall in land sales and tax cuts. The deficit was at an all time high of 5.1 trillion yuan ($758 billion), according to calculations by Bloomberg.

Anti-virus controls shut down Shanghai, site of the worlds busiest port, and other industrial centers starting in late March, fueling concerns global trade and manufacturing might be disrupted. Millions of families were confined to their homes, depressing consumer spending.

Factories and offices were allowed to start reopening in May, but economists say it will be weeks or months before activity is back to normal. Economists and business groups say China’s trading partners will feel the impact of shipping disruptions over the next few months.

The resurgence of the pandemic was effectively contained, the statistics bureau said in a statement. The national economy registered a stable recovery.

The slowdown hurts China’s trading partners by depressing demand for imported oil, food and consumer goods and hampering shipments of products to foreign markets.

China’s latest infection numbers are relatively low, but Beijing responded to its biggest outbreak since the 2020 start of the pandemic with a zero-COVID policy that aims to isolate every person who tests positive. The ruling party has switched to a dynamic clearing policy that quarantines individual buildings or neighborhoods with infections but those restrictions covered areas with millions of people.

Also Read: Indian consumers ditch big brands and take up side jobs as inflation bites: Survey

The ruling Communist Party is promising tax refunds, free rent and other aid to get companies back on their feet, but most forecasters expect China to fail to hit the ruling partys 5.5% growth target this year.

Other major economies report growth compared with the previous quarter, which makes their levels look lower than China. Beijing for decades reported only growth compared with the previous year, which hit short-term fluctuations, but has started to release quarter-on-quarter figures.

Forecasters say Beijing is using cautious, targeted stimulus instead of across-the-board spending, a strategy that will take longer to show results. Chinese leaders worry too much spending might push up politically sensitive housing costs or corporate debt they worry is dangerously high.

Growth for the first half of the year was 2.5 percent over a year earlier, one of the weakest levels in the past three decades.

Retails sales were off 0.7 percent from a year earlier in the first half after plunging 11 percent in April.

Investment in factories, real estate and other fixed assets climbed 6.1 percent, reflecting the ruling party’s effort to stimulate growth by boosting spending on public works construction and ordering state-owned companies to spend more.

China rebounded quickly from the pandemic in 2020, but activity weakened as the government tightened controls on use of debt by its vast real estate industry, which supports millions of jobs. Economic growth slid due to a slump in construction and housing sales.

Investors are waiting to see what happens to one of China’s biggest developers, Evergrande Group. It has struggled since last year to avoid defaulting on $310 billion owed to banks and bondholders.

(Inputs from AP)

Also Read: June Wholesale Price Index inflation drops slightly but remains over 15% for third consecutive month

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow