IMF sees China, India as larger global growth sources...Intel to announce layoff plans...China expands service sector liberalisation pilot

IMF sees China, India as larger global growth sources

The International Monetary Fund expects China and India—the world’s most populous countries—to play a bigger role driving the global economy, as it downgrades growth forecasts due to an escalating trade war, reports Bloomberg. The IMF cut its global projection for this year to 2.8% in the updated World Economic Outlook released Tuesday, down from the 3.3% it was expecting in January. The Fund’s team had to rapidly revise country forecasts due to high levels of uncertainty, after US President Donald Trump announced sweeping worldwide tariffs and then dialed some of them back, at least temporarily.

Compared to the forecasts it made in October, the IMF now expects a bigger share of growth to come from China and India, according to projections published this week based on purchasing power parity. Meanwhile, the expected contribution from the US was revised downward.

China will be the top contributor to global growth over the next five years, with a 23% share—up from 21.7% six months ago—according to Bloomberg calculations based on the IMF numbers published Tuesday. India is now expected to add more than 15% of additional output through 2030, while the US share drops to 11.3% from a prior estimate of 11.6%.

Intel to announce layoff plans

Intel is poised to announce plans this week to cut more than 20% of its staff, aiming to eliminate bureaucracy at the struggling chipmaker, according to a person with knowledge of the matter, reports the South China Morning Post. The move is part of a bid to streamline management and rebuild an engineering-driven culture, according to the person, who asked not to be identified because the plans are private. It would be the first major restructuring under new chief executive officer Tan Lip-Bu, who took the helm last month.

The cutbacks follow an effort last year to slash about 15,000 jobs—a round of lay-offs announced in August. Intel had 108,900 employees at the end of 2024, down from 124,800 the previous year.

Tan is aiming to turn around the iconic chipmaker after years of Intel ceding ground to rivals. The Santa Clara, California-based company lost its technological edge and has struggled to catch up with Nvidia in artificial intelligence (AI) computing. That contributed to three straight years of sales declines and mounting red ink.

China expands service sector liberalisation pilot

China’s commerce ministry has released a plan to expand a pilot program to further open its service industries across 15 provincial regions, aimed at liberalizing sectors from telecom to healthcare and finance, through opening them up to greater foreign business involvement reports Caixin. “Amid rising global unilateralism and protectionism, China’s accelerated opening of its service sector is practical action to inject more certainty and stability into the world,” Vice Minister of Commerce Ling Ji said at a press conference on Monday.

Key liberalization measures will apply to sectors including telecom, health care, finance, transportation, commerce and tourism.

Ling, who also serves as deputy international trade negotiator at the ministry, stated the plan demonstrates China's resolve to expand opening-up despite current challenges and its commitment to economic globalization and the multilateral trading system.

Payments in yuan growing in popularity

Enterprises are growing more keen on using the yuan in the settlement of international payments—a trend emerging as the safety and credibility of US assets are questioned, according to survey results released by Renmin University’s International Monetary Institute on Sunday, reports the South China Morning Post. And a weakening of the US dollar’s dominance, particularly exacerbated by a series of policies from the new US administration, has created a favourable opportunity for the yuan’s internationalisation, according to economists.

Renmin University’s findings for the yuan’s internationalisation in the final quarter of 2024 show consistency with the results from the first three quarters—the percentage of enterprises planning to increase yuan settlements rose from about 21.5% in the second quarter to about 23% in the fourth quarter, and further increased to nearly 24% for the first quarter of this year.

About 68% of surveyed enterprises said they were using the yuan for cross-border trade settlements, while 53% were using the currency for foreign exchange trading.

‘China Track’ system reducing visibility of Russia-China trade

Major Russian banks have set up a netting payments system dubbed "The China Track" for transactions with China, aiming to reduce their visibility to Western regulators and mitigate the risk of secondary sanctions, according to banking sources, reports Reuters. Russia's trade with China hit a record $245 billion last year despite payment problems and commissions running as high as 12%, as Chinese banks had grown too cautious to do business with Russia and jeopardise their ties with the United States.

The issue had become so important that Russian President Vladimir Putin and China's leader Xi Jinping discussed it during Putin's visit to China in May 2024, which was aimed at cementing the two countries' 'no limits' partnership.

Xi is set to take part in Russia's Victory Day parade on May 9, but his visit is now taking place amid China's trade war with the United States, making the booming trade with Russia and other non-Western nations more important.

Growth goals

The International Monetary Fund expects China and India to play a bigger role driving the global economy, as it downgrades growth forecasts due to an escalating trade war. Compared to predictions from last October, China and India will see an increased share, contributing 23% and 15%, respectively, while the US number has been revised downwards to 11.3% from 11.6%.

The global economy, with the US currently at its heart, is roiling due to the tariff war, and the US is set to lose out in some areas, as many critics of the tariffs have previously pointed out could happen. The question for China is whether it can withstand the impacts of the tariffs long enough to reshape its economy into one that can continue to drive global growth, something that will perhaps get easier both with time and a weakening of the US economy.

Beyond that, although still likely a ways off, there is the question of whether India could start to pull ahead of China. Time will tell.