THIS WEEK ECONOMY

Growth Forecast

On June 4, the World Bank maintained its forecast for global growth in 2017 and 2018 unchanged at 2.7 percent and 2.9 percent, respectively, as manufacturing and trade are picking up and confidence is improving.

“A bright spot in the outlook is a recovery in trade growth to 4 percent [in 2017] after a post-financial crisis low of 2.5 percent last year,” said the World Bank in its flagship Global Economic Prospects report released on June 4.

The recovery in trade growth in 2017 is supported by stronger demand from major advanced economies, increased trade flows to and from China, and the diminished drag of weak demand from commodity exporters, said the World Bank.

Stronger trade also reflected the improved outlook for global growth. According to the forecast, advanced economies are expected to grow 1.9 percent in 2017, accelerating from the 1.7-percent growth seen in 2016.

However, the World Bank expects the growth in advanced economies to slow to 1.8 percent in 2018 and 1.7 percent in 2019, in line with its forecasts in January.

In emerging market and developing economies, growth is expected to accelerate to 4.1 percent in 2017 from 3.5 percent in 2016. The growth is projected to pick up pace in 2018 and 2019, and will reach 4.5 percent and 4.7 percent respectively.

“After a prolonged slowdown, recent acceleration in activity in some of the largest emerging markets is a welcome development for growth in their regions and for the global economy,” said Ayhan Kose, Director for the Global Economic Prospects program at the World Bank.

Growth among the world’s seven largest emerging market economies, namely China, Brazil, India, Indonesia, Mexico, Russia and Turkey, is expected to surpass its long-term average by 2018.

“Recovering activity in these economies should have significant positive effects for growth in other emerging and developing economies and globally,” said the report.

The World Bank expects the Chinese economy to grow 6.5 percent this year and 6.3 percent in 2018 and 2019, in line with its January forecast.

Fish Farming Helper

A staff member examines equipment for deep-sea fish farming in Qingdao, east China’s Shandong Province, on June 3. The 69-meter-tall equipment facilitates fish reproduction in the deep sea with its smart farming and operation management systems, and will be delivered to a buyer from Norway.

Energy Giants in Merger Talks

China’s largest coal miner and a coal-fired power giant are reported to be in merger discussions, as their listed units halted share trading on June 5.

China Shenhua Energy Co. said in a filing on June 4 to the Hong Kong Stock Exchange that it was informed by parent company—China’s largest coal miner, Shenhua Group Corp.—of a“significant matter containing substantial uncertainty which is subject to the approval of the relevant authorities.”

On the same day, Guodian Technology and Environment Group, the listed unit of China Guodian Corp., one of the nation’s largest coal-fired power generators, issued a similar statement, saying it was informed of the “proposed planning of a significant event.”

A merger of the energy giants would see the creation of a bigger and more competitive state-owned enterprise in the global market, said Zhou Dadi, a senior researcher at the China Energy Research Society.

Economies participating in the Belt and Road Initiative see massive shortages in power generation and supply, and the merger will help the Chinese company better penetrate foreign markets, said Wu Qi, an analyst from the research institute of Hengfeng Bank.

Shrinking Gap

A key report has disclosed that the regional development gap between Beijing, Tianjin and Hebei Province is shrinking.

In a far-reaching survey, more than 60 percent of the 1,200 people questioned felt integrated transport links, such as rail, road and air, have made significant progress since 2005, and have brought the regions closer together.

Along with the survey, detailed government data are contained in the Index Report for Beijing-Tianjin-Hebei Integrated Development, published by a think tank under the Chinese Academy of Social Sciences on June 5.

“This is the first substantial research into the integrated development of Beijing-Tianjin-Hebei,” said Zhao Jianying, Director of China Social Sciences Press, the publisher of the report. “This helps to assess its development status.”

In 2014, President Xi Jinping proposed plans to integrate development between Beijing, Tianjin and Hebei. A year later, the Outline Plan of Beijing-Tianjin-Hebei Integrated Development was approved by the Political Bureau of the Central Committee of the Communist Party of China.

The report shows that the three regions saw rapid development in 2005-15 in fields such as innovation and environment issues.

Green development has increased in 2005-15 in the three regions, the report revealed.

But residents were still suffering from pollution, according to the survey.

About 59 percent of those polled believe air quality in the area is not improving, but is instead deteriorating. Up to 65 percent say pollution controls are not effective enough, the report shows.

More than 90 percent also believe that moving Beijing’s manufacturing sector out of the capital is a correct decision.

Time to Pick Cherries

Tourists pick cherries at an orchard in Haigang District of Qinhuangdao, north China’s Hebei Province, on June 3. The district has been actively developing the cherry industry to increase local farmers’ incomes. Over 3,500mu(233 hectares) of cherries have been planted in the district, with eachmugenerating over 10,000 yuan ($1,472) of income for farmers.

Autonomous Driving

Chinese artificial intelligence (AI) giant Baidu has partnered with German automotive suppliers Bosch and Continental AG on smart automobile research and development.

Baidu will cooperate with the two firms on self-driving systems and vehicles, smart transportation and the Internet of Vehicles.

Application of AI technologies has great potential for powering social development, and the smart automobiles is one of the most promising sectors, according to Lu Qi, President of Baidu.

Baidu launched Apollo in April, an open, complete and reliable software platform for the automotive and autonomous driving industry.

The Chinese firm has been investing in research and development of autonomous driving technology since 2015. It conducted successful road tests for its fully autonomous cars on Beijing roads in late 2015 and finished the open trial operation of its autonomous car fleet in late 2016 at the World Internet Conference in Wuzhen, east China’s Zhejiang Province.

Smart Bus

A Chinese rail maker announced on June 2 that it had developed a type of smart bus to tap China’s lucrative urban transit market.

The ART, Autonomous Rail Rapid Transit, was developed by the research institute of CRRC Zhuzhou Locomotive Co. Ltd., which produces key parts for China’s bullet trains.

A standard ART bus is about 30 meters long and equipped with sensors that can read the dimensions of roads and plan its own route, said Feng Jianghua, chief engineer of the institute.

“It is like having a virtual rail for the bus,” said Feng.

A standard bus has three carriages with a capacity of 300 people. A five-carriage bus can hold as many as 500 passengers. Feng said it holds more people and is easier to maneuver than a regular bus.

“There is huge demand for urban transit systems with China’s urbanization drive,” Feng said.

Most small and medium-sized cities cannot afford expensive subway systems, or the systems take too long to build, he said.

It costs around 400 million to 700 million yuan ($58 million to $102 million) to build a kilometer of metro.

A standard-length ART bus costs around 15 million yuan ($2.2 million), or even less, said Feng.

According to the government of Zhuzhou in central China’s Hunan Province, a 6.5-km ART line will be built through downtown Zhuzhou, and operations will start in 2018.

Private Equity Forum

Visitors walk through the 11th China International Private Equity Forum in north China’s Tianjin on June 5. More than 4,000 people attended the forum.