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Tim Cook, CEO, Apple
Brendan McDermid | Reuters
Apple CEO Tim Cook said he was much more optimistic in China than he was three months ago – and that he is not the only one.
Mr Cook told reporters Tuesday on Apple's results that the improved trade dialogue between the US and China, as well as the stimulus measures adopted by Beijing were improving consumer confidence in the country "positively". The comments add to the growing list of CEOs, policy makers and investors expressing more optimism about the prospects of the Chinese economy.
"We're definitely feeling a lot better than it was 90 days ago," Cook said.
In January, China announced that its official economic growth rate was 6.6% for 2018, its slowest pace since 1990. Faced with weakening growth, the Chinese government launched a series of fiscal and monetary stimulus, including a reduction in value added tax. rates for key sectors such as manufacturing, transportation and construction. In addition, the Chinese central bank has reduced the cash ratio that banks must keep as reserves.
Business leaders and policymakers say the measures are paying off. David Solomon, CEO of Goldman Sachs, said on Monday "There is no doubt that China has responded better to the stimulus package." The International Monetary Fund (IMF) has raised its growth forecast for China last month to 6.3% for the year, citing fiscal and monetary stimulus and increased prospects for a deal. commercial.
"China has done a fantastic job of stabilizing its economy through fiscal policy, and we remain optimistic about China," BlackRock CEO Larry Fink told CNBC's Hadley Gamble. last week.
In early 2019, US companies ranging from Ford to Tiffany, warned that billions of dollars in tariffs on goods traded between the United States and China cast a shadow over sales prospects. The first quarter results now show that some companies already have a better way to go.
Take Apple, which lowered its revenue forecast in January, due to weak demand from Chinese consumers and trade tensions. On Tuesday, the company announced sales of $ 10.22 billion in the Greater China region in March, down 22 percent from a year ago, but an improvement over the previous quarter.
"While we recognize that a 22% drop in business turnover in China is far from a recovery, Tim Cook pointed out that the decreases recorded on the iPhone over the The last weeks of March were significantly smaller than they were at the beginning of the quarter, "wrote Jefferies badysts in a statement. note Wednesday.
Other mainstream brands also announced strong growth in China in the second quarter. Starbucks has reported stronger-than-expected sales growth in its China stores, while Yum China has announced strong sales growth in its KFC division in the country.
Everyone is not so optimistic. General Motors announced a slowdown in vehicle sales in the first quarter. Mary Barra, CEO, said she saw "more downside risk than short-term upside risk" in China. 3M attributed China's poor results to headwinds in China.
Ric Deverell, chief economist and global head of macro strategy at the Macquarie Group, said the economic indicators show that it is "very clear" that the low point of growth in China was in December.
"I think the recovery is continuing, it's happening gradually," Deverell told Capital Connection.
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