AFP

The World Bank on Tuesday slashed its China growth forecast for the year as the pandemic and weaknesses in the property sector hit the world’s second largest economy.

In a statement, the institution slashed its forecast to 2.7 percent from 4.3 percent predicted in June. It also revised its forecast for next year from 8.1 percent down to 4.3 percent.

Both figures are well below Beijing’s GDP growth target of around 5.5 percent for the year, a figure many analysts believe is now unattainable.

“Economic activity in China continues to track the ups and downs of the pandemic — outbreaks and growth slowdowns have been followed by uneven recoveries,” the World Bank said. 

“Real GDP growth is projected to reach 2.7 percent this year, before recovering to 4.3 percent in 2023, amid a reopening of the economy.” 

After years of sudden lockdowns, mass testing, long quarantines and travel restrictions, China this month abruptly abandoned its zero-Covid policy. 

But disruption to businesses has continued as cases surge and some restrictions remain in place.

Health authorities have admitted that official figures no longer capture the full picture of domestic infections now that mass testing requirements have been dropped.

“Continued adaptation of China’s Covid-19 policy will be crucial, both to mitigate public health risks and to minimise further economic disruption,” Mara Warwick, World Bank Country Director for China, Mongolia and Korea, said. 

Last week the IMF warned it too would likely downgrade its projections for China again, blaming a predicted continued rise in cases. 

The fund cut its growth projection for China in October to 3.2 percent this year — the lowest in decades — while expecting growth to rise to 4.4 percent next year.

But “very likely, we will be downgrading our growth projections for China, both for 2022 and for 2023”, IMF chief Kristalina Georgieva told AFP. 

– Other stresses –

Experts fear China is ill-equipped to manage the exit wave of infections as it presses ahead with reopening, with millions of vulnerable elderly people still not fully vaccinated.

“Accelerated efforts on public health preparedness, including efforts to increase vaccinations especially among high-risk groups, could enable a safer and less disruptive reopening,” Warwick said. 

The economy is under pressure on other fronts, too. 

“Persistent stress” in the real estate sector — which accounts for about a quarter of annual GDP — could have wider macroeconomic and financial effects, the World Bank noted.

And it added that youth unemployment, the risks from extreme weather caused by climate change and the wider global slowdown also threatened growth.

The world economy is being battered by surging interest rates aimed at fighting runaway inflation that has been triggered by Russia’s war in Ukraine as well as global supply chain snarls.

Beijing has sought to mitigate low growth with a series of easing measures to provide support, slashing key interest rates and pumping cash into the banking system. 

“Directing fiscal resources towards social spending and green investment would not only support short-term demand but also contribute to more inclusive and sustainable growth in the medium term,” said the World Bank’s Lead Economist for China Elitza Mileva.

Japan’s central bank tweaked its longstanding monetary easing programme on Tuesday, in a surprise move that saw the yen strengthen quickly against the dollar while Tokyo stock markets fell.

The change marks a rare shift of gears for the dovish central bank, which has largely left its policy intact even as counterparts in other major economies hike rates to tackle inflation.

After a two-day policy meeting, the bank said it would widen the band in which it would allow rates for 10-year Japan government bonds to move, saying it would “improve market functioning”.

“The Bank will expand the range of 10-year JGB yield fluctuations from the target level: from between around plus and minus 0.25 percentage points to between around plus and minus 0.5 percentage points,” it said in a statement.

The move saw the yen strengthen rapidly against the dollar, with the greenback falling from a daily high of 137 yen to 133 yen within minutes of the decision.

The announcement came during the morning break in Tokyo trade, but the key Nikkei 225 index plunged as it reopened, falling as much as three percent before recovering slightly.

Few had anticipated the shift, with all 47 of the economists surveyed by Bloomberg ahead of the decision saying they expected no change in policy.

The bank left the rest of its longstanding loose monetary programme intact, including its years-old inflation target of two percent.

Governor Haruhiko Kuroda, whose term ends next spring, has for years struggled to steer the world’s third largest economy towards sustained two percent inflation, seen as necessary for growth.

Prices in Japan have risen sharply this year, with the consumer price index in October at 3.6 percent, the highest in four decades.

But Kuroda and the central bank consider the increases temporary, citing a lack of strong demand and wage rises.

– ‘A sense of policy flexibility’ –

Still, the BoJ has come under pressure to move away from its ultra-loose policy as central banks in other major economies hike interest rates to tackle inflation.

The resulting differential has seen the yen nosedive about 20 percent against the dollar this year.

Hideo Kumano, chief economist at Dai-ichi Life Group, said the decision showed the bank recognised its existing policy was no longer tenable.

“It has been unrealistic to try to cap the long-term yield with the fixed-rate bond-buying operations at 0.25 percent,” he told AFP.

“It seems to me that the bank wanted to create a little bit of a sense of policy flexibility or room for policy choices and pass the baton to the next governor,” he added.

Kuroda’s term ends in April, and over the weekend reports suggested Japan’s government could work with his successor to move away from the longstanding two-percent price target.

The bank’s decision Tuesday sent shockwaves through Asian markets, with stocks falling on regional bourses as investors digested the news.

“In reality the long-term rate will become 0.5 percent. It will reduce the rate gap between Japan and the US,” said Kumano.

Saisuke Sakai, chief economist of Mizuho Research & Technologies, said the move would help address the weaker yen caused by the growing gulf between US and Japanese central bank policy.

But “unlike rate hikes by the Fed and European central banks aimed at cooling down overheated economies… this is aimed chiefly at stabilising market function,” he told AFP.

“Japan’s economy has not recovered to the pre-pandemic level yet, in contrast to the US economy,” he noted.

Twitter users voted on Monday to oust owner Elon Musk as chief executive in a highly unscientific poll he organized and promised to honor, just weeks after he took charge of the social media giant.

A total of 57.5 percent of more than 17 million accounts voted for him to step down. Musk, who also runs car maker Tesla and rocket firm SpaceX, has not yet reacted publicly to the results.

“The question is not finding a CEO, the question is finding a CEO who can keep Twitter alive,” the South African-born billionaire tweeted before the vote closed.

In a response to another tweet, he added: “No one wants the job who can actually keep Twitter alive. There is no successor.”

Musk has fully owned Twitter since October 27 and has repeatedly courted controversy as CEO, sacking half of its staff, readmitting far-right figures to the platform, suspending journalists and trying to charge for previously free services.

Analysts have also pointed out that the stock price of Tesla has slumped by one-third since Musk’s Twitter takeover. The share price briefly rallied by 3.3 percent on Monday before fading.

“It’s hard to ignore the numbers since [the Twitter] deal closed,” tweeted investment expert Gary Black, saying he reckoned Tesla’s board was putting pressure on Musk to quit his Twitter role.

In discussions with users after posting his latest poll, Musk renewed his warnings that the platform could be heading for bankruptcy.

– ‘Won’t happen again’ –

Resorting to Twitter’s polling feature has been a favorite strategy of Musk’s to push through policy decisions, including the reinstatement of the account of former president Donald Trump.

Paris-based Reporters Without Borders, which defends press freedom around the world, said the polls were a “crude and cynical” ploy.

“These methods appear to be democratic procedures, but in reality they are… the opposite of democracy,” said the group’s head, Christophe Deloire.

Unpredictable entrepreneur Musk posted his latest poll shortly after trying to extricate himself from yet another controversy.

On Sunday, Twitter users were told they would no longer be able to promote content from other social media sites.

But Musk seemed to reverse course a few hours later, writing that the policy would be limited to “suspending accounts only when that account’s *primary* purpose is promotion of competitors.”

“Going forward, there will be a vote for major policy changes. My apologies. Won’t happen again,” he tweeted.

The attempted ban had prompted howls of disapproval and even bemused Twitter cofounder Jack Dorsey, who had backed Musk’s takeover.

Dorsey questioned the new policy with a one-word tweet: “Why?”

– ‘Perfect storm’ –

Musk has generated a series of controversies in his short reign, one which analyst Dan Ives from Wedbush described as a “perfect storm.” 

He noted that “advertisers have run for the hills and left Twitter squarely in the red ink potentially on track to lose roughly $4 billion per year.”

Shortly after taking over the platform, Musk announced it would charge $8 per month to verify account holders’ identities, but had to suspend the “Twitter Blue” plan after an embarrassing rash of fake accounts. It has since been relaunched.

On November 4, with Musk saying the company was losing $4 million a day, Twitter laid off half of its 7,500-strong staff.

Musk also reinstated Trump’s account — though the former US president indicated he had no interest in the platform — and said Twitter would no longer work to combat Covid-19 disinformation.

In recent days, he suspended the accounts of several journalists after complaining some had published details about the movements of his private jet, which he claimed could endanger his family.

Employees of CNN, The New York Times and The Washington Post were among those affected in a move that drew sharp criticism, including from the European Union and the United Nations.

Washington Post executive editor Sally Buzbee said the suspension of journalist Taylor Lorenz’s account “further undermines Elon Musk’s claim that he intends to run Twitter as a platform dedicated to free speech.”

Some of the suspended accounts have since been reactivated.

On Monday, the head of the European Parliament, speaker Roberta Metsola, sent a letter to Musk inviting him to testify before the legislature, her spokesman said.

The parliament has no power to compel Musk to turn up, and his response was not immediately known.

Japan’s central bank tweaked its longstanding monetary easing programme on Tuesday, in a surprise move that saw the yen strengthen quickly against the dollar while Tokyo stock markets fell.

After a two-day policy meeting, the bank said it would widen the band in which it would allow rates for 10-year Japan government bonds to move, saying it would “improve market functioning”.

“The Bank will expand the range of 10-year JGB yield fluctuations from the target level: from between around plus and minus 0.25 percentage points to between around plus and minus 0.5 percentage points,” it said in a statement.

The move saw the yen strengthen rapidly against the dollar, with the greenback falling from a daily high of 137 yen to 133 within minutes of the decision.

The announcement came during the morning break in Tokyo trade, but the key Nikkei 225 index plunged as it reopened, falling more than two percent.

The Bank of Japan left the rest of its longstanding loose monetary policy intact, including its years-old inflation target of two percent.

Governor Haruhiko Kuroda, whose term ends next spring, has for years struggled to steer the world’s third largest economy towards sustained two percent inflation, seen as necessary for growth.

Prices in Japan have risen sharply this year, with the consumer price index in October at 3.6 percent, the highest in four decades.

But Kuroda and the central bank consider the increases temporary, citing a lack of strong demand and wage rises.

Still, the BoJ has come under pressure to move away from its ultra-loose policy as central banks in other major economies hike interest rates to tackle inflation.

The resulting differential has seen the yen nosedive about 20 percent against the dollar this year.