Finance

The International Monetary Fund raised its forecast Wednesday for China’s growth this year to 5%, from 4.6% previously, due to “strong” first quarter figures and recent policy measures.
China’s economy grew by a better-than-expected 5.3% in the first quarter, supported by strong exports.
Recent real estate policy moves are “welcome,” but more comprehensive action is needed, Gita Gopinath, the IMF’s first deputy managing director, said in a statement.

A worker rides a bicycle past a housing complex under construction in Beijing on May 17, 2024. 
Jade Gao | Afp | Getty Images

BEIJING — The International Monetary Fund on Wednesday raised its forecast for China’s growth this year to 5%, from 4.6% previously, due to “strong” first quarter figures and recent policy measures.
The upgrade followed an IMF visit to China for a regular assessment. The organization now expects China’s economy to grow by 4.5% in 2025, up from the previous forecast of 4.1%.

But by 2029, they anticipate China’s growth will decelerate to 3.3% due to an aging population and slower productivity growth. That’s down from the IMF’s prior forecast of 3.5% growth in the medium term.
China’s economy grew by a better-than-expected 5.3% in the first quarter, supported by strong exports. Data for April showed consumer spending remained sluggish, while industrial activity picked up.
About two weeks ago, Chinese authorities announced sweeping measures to support the struggling real estate sector, including removing the floor on mortgage rates.

The policy moves are “welcome,” but more comprehensive action is needed, Gita Gopinath, the IMF’s first deputy managing director, said in a statement.
“The priority should be to mobilize central government resources to protect buyers of pre-sold unfinished homes and accelerate the completion of unfinished presold housing, paving the way for resolving insolvent developers,” she said.

“Allowing for greater price flexibility, while monitoring and mitigating potential macro-financial spillovers, can further stimulate housing demand and help restore equilibrium.”
The IMF release said that during her visit to China this month, Gopinath met with People’s Bank of China Governor Pan Gongsheng, Ministry of Finance Vice Minister Liao Min, Ministry of Commerce Vice Minister Wang Shouwen, PBOC Deputy Governor Xuan Changneng, National Financial Regulatory Administration Vice Chairman Xiao Yuanqi.
“Near-term macroeconomic policies should be geared to support domestic demand and mitigate downside risks,” Gopinath said.
“Achieving high-quality growth will require structural reforms to counter headwinds and address underlying imbalances,” she added.
In a meeting Monday, Chinese President Xi Jinping stressed the need to promote “high-quality, sufficient employment,” according to state media.
“Xi specifically stressed improving employment support policies for college graduates and other young people,” Xinhua reported. More

Only 14% of high-income households that traveled internationally last year would go abroad again in 2024, according to a survey released this month by consulting firm Oliver Wyman.
Local governments outside China’s big cities have been stepping up their efforts to attract tourists, primarily through social media.
Within mainland China, smaller cities such as Yangzhou, Luoyang, Qinhuangdao, Guilin and Zibo saw the fastest growth in tourism bookings during the May holiday, Oliver Wyman said.

A night in China’s Guizhou province at the Cliff Hotel, pictured here, starts around $83, according to Trip.com, which says the hotel was built in 2023 with 34 rooms.
Nurphoto | Nurphoto | Getty Images

BEIJING — Chinese travelers are increasingly opting for cheaper domestic destinations over foreign tourist spots.
Only 14% of high-income households that traveled internationally last year plan to go abroad again in 2024, according to a survey released this month by consulting firm Oliver Wyman. The segment covers families in mainland China earning at least 30,000 yuan a month ($4,140, or about $50,000 a year).

The top reason for preferring their home country was “abundant domestic travel options,” the survey found, followed by “too costly” international travel.
The average cost per person for traveling within mainland China is less than 1,000 yuan, versus several thousand yuan for a trip to Hong Kong or Japan, Oliver Wyman said.
Local tourism has been a bright spot in China’s recovery from Covid-19 controls that ended in late 2022. Travel booking site Trip.com said that in 2023, bookings for rural destinations in China grew by 2.6 times versus pre-pandemic levels.

During a public holiday this year from May 1 to May 5, domestic tourism trips and revenue surged versus pre-pandemic levels in 2019, official data showed. International trips were slightly below 2019 levels, according to CNBC analysis of official figures.
Within mainland China, smaller cities such as Yangzhou, Luoyang, Qinhuangdao, Guilin and Zibo saw the fastest growth in tourism bookings during the May holiday, Oliver Wyman said.

“This year, domestic tourism will surpass pre-pandemic levels,” said Ashley Dudarenok, founder of China digital consultancy ChoZan.
She expects recovery in Chinese traveling internationally to take longer, partly as “the feeling that the rest of the world is mad and unsafe is even higher than in 2023.”
In contrast, a record number of people in the U.S. in the last two years have applied for passports to travel abroad. A Skyscanner report said 85% of U.S. travelers plan to take at least as many international trips this year as in 2023, if not more.
U.S. and Chinese officials held a summit in Xi’an city last week to promote tourism between the two countries.

The moment you go viral you will have thousands of tourists at your doorsteps.

Ashley Dudarenok
ChoZan, founder

It’s unclear as to what extent tourist interest in less developed parts of China will persist, and whether it will translate into sustainable growth. But the near-term impact on some localities is significant.
The southern Guangxi autonomous region, home to Guilin’s famous limestone hills, issued a plan for boosting consumption this year by increasing publicity and tourist subsidies.
In the first quarter, officials said the region’s tourism revenue rose by nearly 24% year on year to 258.18 billion yuan. Local authorities said performing arts subsidies from the local governments helped generate 48.3 million yuan in ticket sales to 230,000 people, stimulating about 460 million yuan in economic activity.
About 2.5-hour-long flight to the east of Guangxi is the Nanjing city wall tourist site. It received nearly 1.3 million visitors in the first quarter, generating a revenue of 19.2 million yuan — double that of 2019, according to local media.

Competition for media eyeballs

Local governments outside China’s big cities have been stepping up their efforts to attract tourists, primarily through social media.
Guangxi officials earlier this month said its promotional videos on apps such as ByteDance’s Douyin and Xiaohongshu, known in English as “Little Red Book” or “Red,” had millions of viewers.
“They try to go viral, they try to involve their community, cultural heritage, put it all online,” Dudarenok said. “The moment you go viral you will have thousands of tourists at your doorsteps.”
People have flocked to the town of Zibo in the eastern province of Shandong after its barbecue skewer culture took off on social media last year. Similarly, three million visitors poured into Harbin city over the three-day New Year’s Eve holiday after its ice sculptures and unique northern customs gained traction on social media.
TV Shows featuring specific regions have also helped boost tourism.
Thanks to a television drama set in Altay, the remote part of Xinjiang province in the far west saw a nearly 38% surge in visitors from a year ago during the first three days of this year’s May holiday, according to iQiyi, which released the mini-series.
“The TV shows are a great draw,” Dudarenok said, adding that “food is always the most important reason for Chinese tourists to travel.”
China’s expansive network of high-speed trains and flights has made it easier for people to visit small towns, even for just two or three days.
Domestic air ticket bookings on Trip.com surged by 30% in the first quarter from a year ago, the company said last week. It noted that Chinese consumers are now placing greater emphasis on “emotional fulfillment,” prompting interest in personalized trips.
“Intensifying marketing efforts in many provinces effectively encouraged travelers to explore diverse destinations,” Trip.com management said on its earnings call, according to a FactSet transcript.
Businesses and local governments are collaborating in other ways to boost attention, if not revenue.
Officials from tourist spots and local governments have reached out to Miss Tourism Asia pageant for promotions, said Yang Hua, president of the organizing committee.
“Right now, China’s domestic tourism industry is relatively scattered,” Yang said in Mandarin, translated by CNBC. He hopes to create destination-specific events for cities that can attract visitors for the next several years.
Miss Tourism Asia filmed a promotional fashion video last year of contestants in the desert around Xinjiang’s Aral city, and held the pageant’s finals on Jan. 1, 2024, in the southern city of Dongguan in Guangzhou province.
Chinese consumers’ current preference for domestic travel means that a full recovery in international travel to 2019 levels likely won’t come until late 2025, half a year later than previously forecast, according to Oliver Wyman.
In the longer-term, Dudarenok expects that international tourist destinations will need to upgrade their experience to match the rise of stylish, modern hotels and other travel services in China.
“Chinese tourists [are] not so easy to please,” she said.
— CNBC’s Greg Iacurci and Yulia Jiang contributed to this report. More

Starting Tuesday, trades of stocks and several other securities will need to be settled by the end of the next business day.
For most retail traders, the change is expected to be seamless.
The change comes after the GameStop mania in 2021 put the settlement process under closer scrutiny.

The New York Stock Exchange in New York, March 28, 2023.
Victor J. Blue | Bloomberg | Getty Images

Years of work on Wall Street to pick up the pace of trading will be put to the test this week. If all goes well, most people won’t notice the difference.
Starting Tuesday, trades of stocks and several other securities will need to be settled by the end of the next business day. Settlement involves the actual swap of money for a security. This so-called T+1 settlement accelerates the previous process that allotted two business days.

The move is the latest evolution to make the plumbing of Wall Street look more like the front end, which is increasingly moving toward trading apps and around-the-clock markets.
“For everyday investors who sell their stock on a Monday, shortening the settlement cycle will allow them to get their money on Tuesday. Shortening the settlement cycle also will help the markets because time is money and time is risk. It will make our market plumbing more resilient, timely, and orderly,” Securities and Exchange Commission Chair Gary Gensler said in a statement on May 21.
For most retail traders, the change is expected to be seamless. As physical paper versions of equity shares are all but extinct, most brokerage firms handle settlement automatically for their customers.
It could be trickier for large dollar trades and funds, especially those that hold international stocks since not all markets are aligned on settlement time frame.
“When you start talking about larger trades, block liquidity, that’s where you may see the movements in cost depending on the product, depending on the underlying market,” said Tim Huver, managing director at investment bank Brown Brothers Harriman.

This is not the first time that the SEC has shortened settlement time on trades, with the move to T+2 from T+3 happening in 2017. The SEC officially adopted the change to T+1 in February, though many industry experts had long expected the move.
The latest change comes after the GameStop mania in 2021 put the settlement process under closer scrutiny. The wild swings in so-called meme stocks meant that the agreed-upon price for trades was significantly different from the market price when the trade was actually settled. Additionally, there were increased instances of “failure to deliver,” or trades where settlement did not occur, during that period.
The excitement around GameStop and other meme stocks has had a resurgence in 2024. Shares of the video game retailer surged on Tuesday after disclosing that it had raised more than $900 million through an additional stock sale.

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The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, a group that produces 40% of the world’s crude, wants to keep oil prices high and stable. Lately they have certainly been stable, even if not that high. Despite the recent death of Iran’s president and the escalating war in Gaza, prices of Brent crude, the global benchmark, have stayed within $2 of $82 a barrel since the start of May.Part of the reason why OPEC is failing to keep prices high is because its members are failing to keep to their output targets. In March the group’s leaders and Russia extended production cuts, vowing a reduction of 2.2m barrels a day (b/d), or 2% of global supply, until the end of June, on top of 3.7m b/d of previously agreed cuts for 2024. Yet the cartel is now overproducing so much that its daily output in 2024 is little changed from the last quarter of 2023. This will create tensions when members get together to decide their strategy at OPEC’s ministerial meeting on June 2nd. More

A top exchange-traded fund provider is betting on the long-term popularity of GLP-1 weight loss drugs.
Roundhill Investments’ GLP-1 & Weight Loss ETF (OZEM), which began trading last week, pairs leaders Eli Lilly and Novo Nordisk with players developing new treatments for weight loss and diabetes. CEO Dave Mazza said his firm is capitalizing on explosive growth potential in the industry.

“The ability to have active management to overweight companies that are actually in market producing the drugs and then go down the line to identify those that are in particular phases is powerful,” Mazza told CNBC’s “ETF Edge” last Monday.
Eli Lilly and Novo Nordisk each hold a roughly 20% weighting in the ETF, per Roundhill’s website as of Friday. The three next largest positions are Zealand Pharma, Amgen and Chugai Pharmaceutical, each of which have a weighting under 5%.
In the past year, Eli Lilly is up 90%, while Novo Nordisk has gained 68%, as of Friday’s market close. Mazza waived concerns that investors have missed out on the rally, noting the weight loss drug industry is still in its “early days.”
“The marketplace has plenty of room for growth with other companies coming in, whether they’re with more powerful drugs or with things that actually you don’t need to have an injectable.”
He also sees GLP-1 drugmakers following a similar trajectory to AI-linked stocks.

“It’s a little bit like thinking about Nvidia with AI. They just have a head start,” Mazza said. “[Eli Lilly and Novo Nordisk] pivoted to focus on diabetes and weight loss drugs a few years ago, were able to get in market and produce results that are remarkable.”
After last Tuesday’s launch, shares of Roundhill’s GLP-1 & Weight Loss ETF ended the week down by almost 2%.

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Soccer star David Beckham has signed his latest advertising deal with Alibaba’s international e-commerce platform AliExpress, the business unit said Monday.
The deal comes against the backdrop of China-based rivals PDD Holdings’ Temu and online fashion startup Shein’s rapid global expansion.
AliExpress has joined several Chinese companies in sponsoring the UEFA European soccer championship that kicks off in mid-June.
“AliExpress is helping fans get even closer to UEFA EURO 2024™ this summer, by offering them great prizes as the action takes place on the pitch,” Beckham said in his only statement in the press release.

Alibaba’s international e-commerce platform AliExpress is a UEFA Euro 2024 sponsor and has signed David Beckham as its global brand ambassador.
AliExpress

BEIJING — Soccer star David Beckham will promote Alibaba’s international e-commerce platform, AliExpress, in its biggest global brand ambassador partnership to date, the business unit announced Monday.
The deal comes against the backdrop of China-based rivals PDD Holdings’ Temu and online fashion startup Shein’s rapid global expansion, with the former also advertising at the Super Bowl to gain traction with U.S. customers.

AliExpress, which did not disclose how much it was paying Beckham to be its global brand ambassador, has joined several Chinese companies in sponsoring the UEFA European soccer championship that kicks off in mid-June.
“AliExpress is investing millions of Euros in discounts, deals and engagement during the games,” the company said in a statement, adding that planned promotions include a chance for AliExpress app users to win tickets to games.
“AliExpress is helping fans get even closer to UEFA EURO 2024™ this summer, by offering them great prizes as the action takes place on the pitch,” Beckham said in his only statement in the press release.
Beckham’s company, DRJB Holdings, said in its latest available filing it made 72.6 million pounds ($92.5 million) in revenue in 2022.

Alibaba’s international e-commerce business, which includes AliExpress, is called Alibaba International Digital Commerce Group.

The international unit’s sales surged by 45% year on year in the first three months of 2024 to 27.45 billion yuan ($3.79 billion). That contrasts with 4% growth in revenue during that time from China-focused Taobao and Tmall Group to 93.22 billion yuan, according to Alibaba.
However, the international business unit reported an increase in losses to 4.1 billion yuan, compared with 2.2 billion yuan a year earlier.
The company “made aggressive investments” in the Middle East and other emerging markets in the first three months of the year, Jiang Fan, co-chairman and CEO of the international unit, said in an earnings call earlier this month.
AliExpress said in 2022 it had spent about $7 million in South Korea to attract local consumers with lower product prices. Last year, AliExpress signed actor Don Lee as its first brand ambassador in South Korea.
Other China-based companies have also increased their efforts to expand overseas amid slowing growth at home.
Chinese sponsors of UEFA Euro 2024 include Alibaba-affiliate Alipay, electric car company BYD, home appliance brand Hisense and smartphone company Vivo.
Hisense became the first Chinese sponsor for the European championship in 2016. Three other Chinese businesses subsequently signed partnerships for the games in 2020. More

Baby-boomers were born between 1946 and 1964—and are the luckiest generation in history. Most of the cohort, which numbers 270m across the rich world, have not fought wars. Some got to see the Beatles live. They grew up during strong economic growth. Not all are rich, but in aggregate they have amassed great wealth, owing to a combination of falling interest rates, declining housebuilding and strong earnings. American baby-boomers, who make up 20% of the country’s population, own 52% of its net wealth, worth $76trn (see chart 1).Now the generation is moving into retirement, what are they going to do with their money? The question matters for more than just suppliers of cruises and golf clubs. Since they have deep pockets, boomers’ spending choices will exert a huge influence on global economic growth, inflation and interest rates. And it turns out boomers are remarkably stingy—not just in America but across the rich world. They are not spending their wealth, but trying to preserve or even increase it. The issue for the economy in the 2020s and 2030s will not be why boomers are spending so much, as many had anticipated. It will be why they are spending so little. More

More businesses are offering financial incentives to consumers who pay with cash rather than credit card.
Consumers may save 2% to 4% on their purchase by using cash. They’ll also often save with a debit card, experts said.
Businesses charge more for credit card purchases due to fees they incur per transaction.

Ryanjlane | E+ | Getty Images

Sometimes, it pays to pay with cash.  
More merchants are offering a lower price to customers who use cash rather than credit card for a purchase. That means opting for paper over plastic may save you money in some cases.

Just how much?
Typically, cash discounts run about 2% to 4% on purchases, though savings can be higher, experts said.
The share of cash payments with a discount is still low — in fact, only about 3% of all cash payments in 2022, according to data from the Federal Reserve Bank of Atlanta.
However, that share is up more than 60% from 2015, when 1.8% of all cash transactions had a discount, Atlanta Fed data shows. While not yet the norm, cash incentives are likely to become more widespread, experts said.

Meanwhile, other businesses add a surcharge when customers use credit cards for purchases. In such cases, paying with cash would also yield savings.

Nearly 7 in 10 cardholders said a business has charged them extra for paying with a credit card, according to a recent LendingTree survey.
The trend comes as consumers have steadily shifted away from using cash for purchases: Consumers made 18% of payments with cash in 2022, down from 31% in 2016, according to the Federal Reserve. Meanwhile, credit cards’ share grew to 31% from 18% during that period.
More from Personal Finance:How many credit cards should you have?People hate budgeting. Here’s how to reframe itThe myth about credit cards and credit scores that’s costing you
“Sometimes, it can make sense to just go ahead and pay cash,” said Matt Schulz, chief credit analyst at LendingTree.
That may be the case even after accounting for credit card rewards, Schulz said. The largest general cash-back return on most credit cards is 2%, for example — a percentage often exceeded by cash discounts, he said.
“If the merchant establishes a discount that’s high enough, even if you have the best rewards card in the world you may still end up paying less if you use cash,” said Adam Rust, director of financial services at the Consumer Federation of America, a consumer advocacy group.

Why businesses give cash incentives

Businesses that offer a break on cash purchases generally do so to reduce costs they incur for credit card transactions.
Credit card-processing companies like Visa and Mastercard generally charge merchants 2% to 4% for each transaction, according to the National Retail Federation. These swipe fees are the second-highest cost for most businesses, behind labor costs, the trade group said.
“The merchant is looking at your dollar and getting 98 cents in the end because you’ve chosen to use a card,” Rust said.

Businesses can take two routes to save money: offering a discount for cash purchases (thereby sidestepping those card fees), or putting a surcharge on credit card transactions to offset those fees.
Either way, such practices may yield lower prices for cash users.
Surcharges aren’t legal in all states, though.
As of May 2023, Connecticut and Massachusetts had outlawed surcharging, while Colorado and Oklahoma limited the maximum surcharge to 2%, according to the North Carolina Restaurant and Lodging Association.
Visa also capped surcharges at 3% in April 2023, down from 4%, the trade group said.
“It’s really important to understand what the cost of that surcharge is going to be, if there is one, before you go ahead and buy,” Schulz said.

When to pay with cash

Consumers are often swayed by cash incentives, even “significantly likely” to switch to cash payments “specifically because of cash discounts offered,” according to research by Joanna Stavins, a senior economist and policy advisor at the Federal Reserve Bank of Boston.
When a cash discount is offered, the odds increase by 19.2% that a consumer who prefers noncash payments will instead opt to pay with cash, Stavins wrote in a 2018 paper. This research controls for transaction value and merchant type.
In addition, small, independent businesses are more likely to offer cash discounts than big national chains, Consumer Federation of America’s Rust said.

Sometimes, it can make sense to just go ahead and pay cash.

Matt Schulz
chief credit analyst at LendingTree

Gas stations have long offered cash incentives to customers. But a rising number are now doing so, and “some major retailers are starting to implement the ability to do this in the future,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
The average cash discount has been about 5 cents to 10 cents per gallon, De Haan said.
Meanwhile, more stations are also offering their own payment platform — like branded debit and credit cards — that yield even more savings than cash, he added.
Discounts are also “very prevalent” when paying for health care, said Carolyn McClanahan, a certified financial planner and physician based in Jacksonville, Florida.
McClanahan is also a member of the CNBC Financial Advisor Council.
Some big-ticket spending — like tax bills and college tuition — is also generally best accomplished with cash, said Schulz. The IRS and many universities pass on payment-processing costs to the consumer. (In these cases, that might mean writing a check.)
“There are certainly some bigger times when you should probably not use credit cards because of the fees involved,” he said.

Credit cards sometimes have advantages

There are times when credit cards have distinct advantages to cash, Rust said.
For example, unlike cash, credit cards carry certain protections related to fraud and product returns, Schulz said.
That’s why using a card may make more sense — even if there are fees involved — if consumers are first-time shoppers at a particular store, are buying something they may want to return in the future or if purchasing something fragile they’re having delivered, he added.
Additionally, a credit card may be better for those who want to more closely track their spending, or just generally prefer the ease and convenience of using a card, Schulz said.
However, consumers who have trouble paying off their credit card bills in full and on time each month may be better served via another payment method to avoid racking up interest charges, especially as those rates are near record highs.
There’s also a workaround to both cash and credit cards: debit cards. Merchants generally can’t add a surcharge to debit card transactions.
“By and large, debit cards can be a better and cheaper choice in instances where there’s a credit card surcharge,” Schulz said.

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