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Why Malaysia is Becoming a Semiconductor Powerhouse

Malaysia has become a winner amidst the ongoing chip war between the U.S. and China, and here's why.

This video is based on publicly available data and analysis. It represents the author’s perspective and should not be taken as professional or financial advice.

Bursa Malaysia chairman Tan Sri Abdul Wahid Omar

 KUALA LUMPUR: Malaysia is in a “sweet spot” for economic growth and investment, with the “stars aligning” in its favour, according to industry leaders and market analysts.

This optimism stems from the country’s robust macroeconomic fundamentals, improving investment climate and strategic positioning in the global supply chain.

Maybank Investment Bank head of regional equity research Anand Pathmakanthan highlighted Malaysia’s acceleration in gross fixed capital formation, driven by a blend of domestic direct investment (DDI) and foreign direct investment (FDI).

“The good news is it’s not just FDI, it’s also DDI, which is far more important in terms of job creation and tax generation,” he said during his presentation at the Institute of Chartered Accountants in England and Wales Economy Insight Conference 2024 yesterday.

Anand said for the last 10 years, local companies have not been investing, which has a lot to do with political instability.

“They’ve been investing less and less in Malaysia, which is always a bad sign for any country,” he said.

But in the last two years, he said Malaysia is seeing a recovery in DDI.

“The recovery in DDI reflects the confidence that domestic businesses are feeling better about the environment. That (DDI) is going to be a key support when issues about trade crop up next year with Trump 2.0,” he said.

Meanwhile, Anand said Budget 2025 is “very well-balanced,” emphasising initiatives to crowd-in private sector investments.

He projected continued economic growth, supported by a civil service pay hike, minimum wage increases and enhanced cash handouts, which would sustain domestic consumption in 2025.

“Malaysia is in a very sweet spot, especially when it comes to attracting supply chain relocation and FDI,” he said.

Anand projected Malaysia’s gross domestic product (GDP) to conclude at 5.2% in 2024 and 4.9% in 2025, outpacing the Asean-6 regional average of 4.8% in 2024 and 4.7% in 2025.

Affin Bank Bhd president and chief executive officer Datuk Wan Razly Abdullah echoed the optimism, projecting GDP growth of 5.2% in 2025, up from the bank’s projection of 5% for this year.

He attributed this to stable oil prices, elevated crude palm oil (CPO) prices and active construction and technology sectors.

“The elevated price of oil and CPO will provide good income streams,” he said, adding that Johor and Klang Valley developments would boost the property sector.

“The stars are aligning for Malaysia thanks to our stable political environment and strong FDI flows.”

Wan Razly also expressed bullishness on the ringgit, predicting it to strengthen to RM4.10 against the US dollar by end-2025, supported by the US Federal Reserve interest rate cuts.

Adding to the optimism for Malaysia’s economic prospects, Bursa Malaysia chairman Tan Sri Abdul Wahid Omar highlighted the robust performance of the local bourse, driven by a favourable investment environment and strong macroeconomic fundamentals.

“Malaysia has been a vibrant market for initial public offerings (IPOs) this year. Up to the end of November, we had 47 listings that raised a total of US$1.5bil. By year-end, we expect to close with 54 or 55 listings,” he said.

He noted that the average daily trading value for 2024 has increased by over 50% year-to-date, reaching approximately RM3.1bil.

Abdul Wahid believes this momentum will be sustained into 2025, with 19 IPO approvals in hand for next year.

“Looking at the pipeline, I think 2025 should be another good year,” he said.

He said “the overall good macroeconomics are being translated into the real world and capital markets,” coupled with a shorter processing time for IPO listings of just three months.

Separately, Abdul Wahid said Malaysia should further tap into the Asean market and leverage its strategic advantages, as the regional bloc is well-positioned amidst global uncertainties, particularly ahead of the United States’ tariff threats on China.

Abdul Wahid urged Malaysia to continue to pursue its relationship with Asean in a pragmatic and constructive manner to further capitalise on the bloc’s 670 million consumers.

“The biggest potential that we have is in Asean. Our trade and investments (in the bloc) is relatively low compared to other trade partners and that can be enhanced further,” he said.

Abdul Wahid also emphasised that Malaysia should not be mutually exclusive to any specific trade groupings, trade talks or bilateral agreements and should focus on further strengthening trade relationships.

In the realm of inflation, both Anand and Wan Razly anticipate a rise to 3% in 2025, up from the current 1.9%, mainly due to the targeted petrol subsidy scheduled to take effect mid next year.

Despite the projected uptick, both of them said Malaysia’s inflation rate will stay within a healthy range, underpinned by strong macroeconomic fundamentals and effective policy measures.

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Malaysian teens are shorter than the rest

 

 

 

Undernutrition among our adolescents is causing them to be stunted, making them shorter on average than some of our regional neighbours.

` MALAYSIAN teenagers are a short lot – and not because of genetical predisposition.

` One in six local teens are considered stunted at 6-7cm shorter than the World Health Organization’s (WHO’S) standard height reference for adolescents between 10 and 17 years old.

` This is as they are not consuming adequate amounts of the nutrients needed for growth.

` Given that the window for the adolescent growth spurt is very short, yet provides the biggest growth opportunity during our lifetime, this problem of undernutrition needs to be addressed so that our teens can attain their maximum potential height.

` Stunted growth and development caused by undernutrition is common in many regions, especially poorer ones.

` Data from our 2019 National Health and Morbidity Survey (NHMS) showed that one in five Malaysian children aged five and under are stunted.

` This reflects an increasing trend, with 21.8% in 2019 from 17.7% in 2015 and 16.6% in 2011.

` Meanwhile, data from the 2017 NHMS revealed that the adolescent stunting rate was at 8.5%, or one in 12, in the 10- to 17-years-old age group.

` Increased risk of disease

` “This is a high percentage for an upper middle income country like ours.

` “For developed countries, we want to keep this figure below 5%,” comments Universiti Malaya Faculty of Medicine Department of Paediatrics head Professor Dr Muhammad Yazid Jalaludin.

` The average final adult height of Malaysians is 164.7cm for men and 153.3cm for women.

` “If we plot this on the growth chart, we are in the bottom 10th percentile, which means our average height is at the lowest out of 100 countries for both men and women, i.e. we are 8-9cm shorter than the rest.

` “The fact that we are not achieving as much height as other Asian men and women is worrying.

` “We have fallen behind Singapore, Japan and South Korea, although in the 1940s and 1950s, we were around the same height,” he says.

` The average male height is 170.6cm in Singapore, 171.2cm in Japan and 175.3cm in South Korea. For females, it is 160cm in Singapore, 158.8cm in Japan and 162.6cm in South Korea.

` Interestingly, females in South Korea have recorded one of the biggest height increases among the world’s female population over the last century.

` Prof Yazid adds: “Of course, we also have to look at the parents’ height – teens should be plus or minus 8cm from their dad’s or mum’s height.”

` Studies have shown that countries that consume more dairy products and animal proteins have a taller population, compared to countries that rely on rice and wheat, like most Asian countries.

` Some consequences of stunting include poor cognition, poor educational performance at school, lower income and lower economic opportunity.

` And when stunting is accompanied by excessive weight gain later in childhood, the person will develop an increased risk of nutrition-related chronic diseases in adulthood, including obesity, diabetes and heart diseases.

` “A number of them become obese, as when they start to grow older, they get better nutrition and cannot satisfy their hunger, so they eat a lot,” he says.

` However, stunting recovery intervention may enable undernourished children to catch up on height and other developmental markers.

` The crucial years

` Puberty is the time in life when a boy or girl becomes sexually mature.

` This is also when the growth spurt occurs.

` This short period of rapid growth development in children typically lasts around two to three years.

` Prof Yazid explains: “Boys and girls start at different ages.

` “In girls, puberty is when the breasts develop, which can be as early as eight years old, until menarche, i.e. their first period, which is around two or three years after breast development.”

` He adds that the growth spurt usually occurs at the early stage of puberty, so for girls, it occurs around the time of breast development.

` “Once they get their menses, they don’t grow much until the end of the total pubertal period – the gain is only around 2-5cm.

` “During the first two to three years of puberty, most will gain between 17-22cm in height,” he says.

` For boys, puberty begins later, with testicular enlargement that can begin as early as nine to 10 years of age, although it typically occurs around 12 years of age.

` It then takes another two to three years before puberty ends.

` “Only after puberty will boys have a growth spurt and can achieve a 20-25cm height gain.

` “This is when they start having acne, pubic hair, etc

` `

Start them young

 “They can grow really fast, but to help them grow, we need to intervene immediately and cannot wait until their voice changes,” Prof Yazid points out.

He also notes that nobody usually knows when a boy starts puberty as no one checks for testicular enlargement under normal circumstances.

Only a visit to a paediatric endocrinologist is likely to see their testes size being examined.

Where growth happens

All children have growth plates – areas of smooth, elastic cartilage found at the end of each long bone in the body.

This is where growth takes place. When the bones finish growing, the growth plates close.

Girls generally stop growing and reach their maximum height around the age of 14, and boys, around 16.

Doctors can estimate when growth will be completed by determining a child’s bone age.

They do this by taking an X-ray of the left hand and wrist to see if the growth plates are still open.

The bone age may be different from the child’s actual age.

Prof Yazid says: “Bone age is not the same as chronological age.

“For those that go into early puberty, their bone age may be more advanced than chronological age.

“Height gain should really begin before puberty.

“If the girls are short at the start of puberty, we like to delay puberty, because if they were to start their menses with the height of 130cm, then we cannot do much.

“That’s why it’s important to start nutrition, adequate caloric intake and caloric expenditure from a young age for bone lengthening and thickening, so that the child can gain enough height.”

The adolescent phase contributes to 15-20% of adult height, 45% of adult bone mass increase, and 40-50% of adult weight gain.

Nutritional needs

During early adolescence, children require up to twice or more key nutrients to support accelerated growth and development, compared to a younger child.

These include:

> Calcium – up to 85% increase > Protein – up to 154% increase > Magnesium – up to 200% increase

> Phosphorus – up to 170% increase)

> Zinc – up to 75% increase, and > Vitamin K – up to 133% increase.

Results from the 2017 NHMS showed that:

> 89.4% of adolescents did not meet the required nutritional intake (RNI) for calcium

> 98.8% did not meet the RNI for vitamin D, and

> Over 60% did not meet the RNI for vitamin E.

In addition, the survey found that seven out of 10 adolescents habitually skipped breakfast, while another one in two skipped lunch and dinner.

“I’ve encountered a number of adolescents (13-18 years) who have growth issues; they are underweight so they don’t gain much height.

“At this age, physical activity is important for boys, and if they don’t eat much, they lack energy.

“Three out of four kids also don’t take adequate dairy products,” laments Prof Yazid.

A lack of sleep also affects height.

This is as growth hormones are secreted the most between 10pm to midnight before dropping, then rising a bit between 2am to 4am.

He says: “Most of our adolescents sleep late and have poor quality of sleep, so they don’t get the spurt of growth hormones.

“Another factor is physical activity, which enables the secretion of endorphin and serotonin hormones to make you feel good about yourself. “When you feel good and sleep better, it increases the growth hormone secretions.

“Our adolescents love to sleep late, don’t do regular physical activity and skip meals, so how can they grow well?

“With Covid-19, all kids are equally affected as they don’t do much physical activity and spend more time on gadgets.”

Adolescents should aim to incorporate 30-60 minutes of moderate physical activity daily.

“Walking lazily doesn’t count.

“It’s best to exercise in the evening so they can sleep better at night,” he says.

Parents as role models

Prof Yazid says about half of adolescents perceive that their parents don’t know what they do in their free time.

“What and how you eat matters. “Parents need to try to understand their adolescents’ perspective and look into the kinds of food, timing of their food intake/sleep and exercise patterns.

“It’s better to show than to say, because bugging them doesn’t help when parents themselves don’t lead by example.

“So, when food is put on the table, show them how you would eat it.

“Similarly, exercise with them and sleep early.

“Parents are really the best supporters to encourage their children to do all these,” he says.

In terms of dairy products – which are important for development and bone strength – a number of parents think their children don’t need milk beyond the ages of five or seven, and thus, stop serving it to them.

This is incorrect.

Prof Yazid says: “From dairy products, they can get good nutrients.

“They need at least 600ml of milk a day – 400ml can come from milk and the other 200ml can be obtained from other sources such as cheese or yoghurt.”

When regular meals alone do not meet the increased nutrient requirements for their child’s growth, parents can seek advice from their child’s physician and consider nutritional supplements to help improve nutritional intake during this important growth period.

“The height at the start of puberty is so important to determine the final height.

“If we can reduce stunting rates before the age of five, we can definitely reduce its prevalence among adolescents,” concludes Prof Yazid.

The Star Malaysia 

When parents make mistakes 

 One common parenting mistake is jumping to conclusions about your child’s guilt without even giving them a chance to explain first. — Positive Parenting

 

It may be hard to put aside your pride and apologise to your kids, but it will make you a better parent and show your children good values.

IF you have ever mistakenly raised your voice towards your child or blamed him for something he did not do, you must know how awful that feels like.

Parents commit mistakes too, but as authority figures and role models in the family, they may find it hard to right their wrongs.

Mistakes are bound to happen, whether due to stress, overwork, lack of sleep, poor judgement or carelessness.

However, this is not an excuse to be ignorant or dismissive of one’s missteps.

What we can do is to learn from our mistakes today so that we can be better parents tomorrow.

It may not be easy to overcome our ego and admit our mistake to the kids.

But by role-modelling such behaviour, we can teach our kids (and ourselves) to be better human beings.

Common parenting mistakes

To learn from your mistakes, you will first need to accept that a mistake has been made.

It may occur unintentionally or due to past ignorance.

Here are some common mistakes:

> Breaking promises

You promised to take your daughter to her favourite restaurant after she did well in her test, but you were too busy and ended up not going.

Parents promise all kinds of things to their kids, but it can be hard to fulfil all of the promises made.

> Telling lies

White lies are common for various reasons – as an excuse, to avoid difficult topics, and often, to calm children.

Parents may also tell a lie to another person in front of their kids.

Even if the lie seems harmless, it teaches the kids that it is okay to lie – and this is not okay.

> Jumping to conclusions

Some parents tend to blame or scold their kids without giving them a chance to explain things first.

By assuming that our kids’ past behaviours and choices dictate present and future ones, it limits how we view our kids and can cause us to judge them unfairly.

> Using bad words

Rising anger tends to blind us. You may not realise the bad words being uttered and there is no way to retract them once they are said.

It is bad enough when said to another person, but worse when said to your own kids.

> Comparing and criticising

Constructive comments are okay, but belittling your child, comparing him with others, and criticising his weak spots, all with the intention of “building up his character” are not.

> Too much teasing

Joking, teasing and kidding with your kids are some of the ways to have a laugh and fun with them.

However, you may be taking things too far if they are not laughing.

Even worse is if you press them for not being able to take the joke. > Forgetting things

Having a busy schedule may lead to occasional slip-ups, causing you to forget simple errands (e.g. to pick up your child from tuition), or even important events and dates (e.g. your child’s birthday or school sports day).

> Being hypocritical

Parents are the main role model for their kids.

When parents do not practise what they preach, they risk confusing the kids with conflicting messages.

> Hurting them physically

Parents may accidentally inflict physical harm onto their children, e.g. injuring your daughter’s finger while closing the car door.

Some parents also tend to take out their anger or frustrations on their kids (including yelling, cursing and hitting).

Righting the wrong

After realising that you have made a mistake, what can you do?

> Don’t be too hard on yourself

No parent is perfect, so do not beat yourself up too long for being a “horrible parent”.

Instead, focus on correcting your mistake and finding a solution. >

Admit mistakes and apologise

Once you and your child have calmed down somewhat, gently talk about what you regret and apologise for your mistake.

Ask for a “do over” and try to make things right.



This can be a great opportunity to demonstrate forgiveness and humility to your child. > Reconnect with your child

Let your child express how he feels.

Be open, present and willing to listen and engage with him.

Try to put yourself in his shoes and see (and feel) from his point of view.

This will build empathy and a deeper understanding to reconnect with one another.

> Aim to be better

Focus on self-improvement as a person and parent.

Learn to regulate your own emotions by practising self-compassion and learning to stay centred whenever there is a crisis in your household.

Loving your child starts with loving yourself.

It is part of human nature to make mistakes.

In our lifetime, we will (or should) exchange apologies and forgiveness countless times, including as a parent.

The important thing is to acknowledge that a mistake has been made and to learn from it, make amends, reconcile and gradually develop to be a better parent and individual.

- Alexius Cheang is a behavioural psychologist. This article is courtesy of the Malaysian Paediatric Association’s Positive Parenting programme in collaboration with expert partners. For further information, please email starhealth@ thestar.com.my. The information provided is for educational and communication purposes only, and it should not be construed as personal medical advice. Information published in this article is not intended to replace, supplant or augment a consultation with a health professional regarding the reader’s own medical care. The Star does not give any warranty on accuracy, completeness, functionality, usefulness or other assurances as to the content appearing in this column. The Star disclaims all responsibility for any losses, damage to property or personal injury suffered directly or indirectly from reliance on such information. 

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Budget 2021 – Great expectations

 

LAST Friday, the Finance Minister tabled what is now known as Malaysia’s largest-ever budget.

The excellently-crafted and well-written budget was presented in a couple of hours and after it was presented, the social media, mainstream media, economists, consulting firms and investment banking strategists gave their views on the measures, especially those related to taxes, incentives or grants.

Now that Budget 2021 has been tabled, lawmakers will debate on the merits and vote on it. Having covered budgets for more than two decades, the devil is in the details and this year is not an exception.

Let’s look at the gross domestic product (GDP) estimate first. The government expects GDP growth for 2020 to contract by 4.5% and for next year, it is estimated to grow by between 6.5% and 7.5% in real terms. For the economy to close the year with the projected contraction, the second half of 2020 has a very small room to contract by only 0.7% as the economy shrank 8.3% in the first half.

This is a tall order as economic data remains largely weak as seen in several indicators, which include the industrial production index as well as the poor reading in the retail sub-segment.

With almost the entire nation under the conditional movement control order, economic growth, if any, will be challenging.

Meanwhile, in nominal terms, the government expects GDP growth to be -4.7% this year and to rise significantly by almost 9% in 2021, as inflation is expected to return with a reading of 2.5%, mainly due to the low base effect from 2020.

Perhaps when the Bank Negara releases the third quarter GDP data on Friday, we can then assess if the full year GDP assumption still holds water or otherwise.

For 2021, the government expects GDP growth to be driven by domestic demand, in particular growth from private consumption while the external sector may post some drag as imports are forecast to grow even faster than exports.

On the supply side, the government expects the services and manufacturing sectors, which account for 80% of the economy, to grow by 7% each while construction is expected to bounce back with a near 14% leap in 2021 after the forecast drop of 18.7% this year. From here, we can observe that one of the key drivers of the economy next year is public investment, as the government has bumped up development expenditure to the tune of RM69bil for 2021 from the adjusted figure of RM50bil this year (which was previously forecast to be at RM56bil).

The government’s total expenditure is now broken into three main buckets – other than operating expenditure and development expenditure, we now have a new line item called the Covid-19 Fund with an allocation of RM38bil this year and RM17bil next year.

In essence, since the pandemic outbreak, the government has introduced various economic stimulus packages under its Prihatin package series and the Penjana package, which in total amounted to RM305bil, while the actual direct fiscal injection totaled RM55bil.

However, under the Temporary Measures for Government Financing (Coronavirus Disease 2019) Act, the Parliament had only approved a ceiling of RM45bil for the fund and hence the Minister has proposed, taking into consideration the nation’s need up to 2022, an amendment that will be tabled to raise the fund to RM65bil, an increase of RM20bil.

This increase that was mentioned in the budget speech is meant for the RM10bil Kita Prihatin package, additional assistance for people’s well-being, as well as to secure the supply of the much-needed vaccine. The table above summarises the government’s revenue projection for this year and the next.

The expected revenue for the second half of the year and into 2021 will be challenging for the government, given the level it had achieved in the first half. As it is, the second half forecast is 23.3% higher than the first half.

In addition, for 2021, revenue and expenditure are expected to increase by 4.2% and 4.3% respectively, which will likely be tough given the tax breaks that the government is proposing, in particular, company income tax (CITA) and personal direct taxes.

Based on government’s estimate, taxes from the two sources are expected to fall by 6.8% and 7.2% this year but will bounce back strongly in 2021 with a growth of 8.8% and 18.2% respectively.Interestingly, the 2021 forecast for CITA and personal direct taxes at RM64.6bil and RM42.4bil is higher than 2019’s figure by 1.3% and 9.7% respectively.

As for expenditure, as total federal government debt stood at RM874.3bil mark or 60.7% of GDP as at end of September 2020, the government’s Debt Service Charges (DSC) too have deteriorated.

From an estimated level of 15.4% of GDP this year, DSC is expected to drop further to 16.5% in 2021, mainly driven by 11.6% increase in absolute DSC to RM39bil.

Although both the DSC ratio in 2020 and 2021 will be higher than the self-imposed fiscal limit ratio of 15%, it is hoped that by beyond 2021, this ratio will be brought under control when the economy is expected to expand further.

All in, Budget 2021 measures are holistic and inclusive for all levels of society and have been cleverly crafted to address the challenges faced by Malaysians, especially those severely impacted by Covid-19.The government has largely listened to the voices of hope in addressing the pandemic world.

Having said that, the expected government’s revenue and GDP projections are rather optimistic, resulting in a much lower budget deficit figure while the forecast government tax revenues too are on the high side. While the DSC has now surpassed the self-imposed ceiling, the government’s debt to GDP ratio is expected to remain elevated for at least this year and in 2021.It is important for the lawmakers to approve this budget as the government has taken steps in keeping the economy going.

While there are some shortcomings in the terms of budget allocations, it is hoped that this can be ironed out during the parliamentary debate stage and all lawmakers come to an consensus to approve the gigantic budget.

Pankaj C. Kumar is a long-time investment analyst. Views expressed here are his own. 

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The FM really got SHOCKED when LGE asked him whether the budget was approved by the cabinet. Watch the video.

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Malaysia's economy: Fine growth with minimal inflation

Click to enlarge:  http://clips.thestar.com.my.s3.amazonaws.com/clips/business/Business%20Pg6-0305.pdf

The economy continues to chug along just fine even as it recorded the first inflation of the year in March. The consumer price index (CPI) rose 0.2% in March 2019 from the previous year.

The recovery away from a deflation in the previous two months was driven by the transport and the food & non-alcoholic beverages components of the CPI.

MIDF Research said in its report that the country's consumer inflation is likely to stay low following the lower capped prices of RON95 and Diesel at RM2.08 and RM2.18 per litre respectively.

Nevertheless, it said that the demand-push factor remains firm amid stable job market and steady wage growth.

Meanwhile, labour force growth has maintained at 2.1% year-on-year (yoy) in Feb 2019 while employment growth inched down to 2.1% yoy while jobs added in the economy was recorded at 34,000.

It noted that the number of unemployed people officially increased by 1.6% yoy.

But it noted also that growth in both the labour force and employment continued to outpace unemployment growth for the last 24 months since Mar 2017.

"The stable job market reflects healthy development of Malaysia’s economy and provides solid support to domestic demand," the research house said.

Meanwhile, exports dropped 5.3% yoy in Feb 2019, the lowest in more than two years mainly due to a short calendar month on top of the long Chinese New Year (CNY) holidays.

Imports also fell and it declined more than exports at 9.4% yoy.

During the CNY holidays, all Chinese factories were shut down with most of them closed one or two weeks prior to the festive holidays. As the celebration put a halt to mass production, it disrupted the global supply chain resulting in a weak trade performance.

All sectors recorded a negative exports growth: agriculture (-13.7% yoy), manufacturing (-4.3% yoy) and mining (-5.5% yoy).

Despite the poor exports and imports figures, trade surplus maintained at above RM11bil in Feb 2019.

When compared with the previous month, both exports and imports contracted by 22% and 24.8% 
respectively.


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Chinese economy expands 6.9% in 2015, slowest growth in 25 years

Video: http://t.cn/R4QD2R0China’s economy posted a 6.9 percent GDP growth in 2015, which is within people’s expectations. Faced with suspicions, the National Bureau of Statistics (NBS) emphasized that the figure – 6.9 percent – is real.

On the one hand, with an increasing number of “struggling” companies, the economic downturn has become a heated subject of public opinion. On the other hand, other fields, for instance, tourism, railways and online shopping, are seeing robust growth. So, taken together with the affirmation by the NBS, we can have confidence in the accuracy of the figure.

It is safe to say that people still have much confidence in the economy. Despite an economic downturn, people’s willingness to spend is witnessing an upward trend. Consumption is contributing more to GDP growth. Compared with some pessimistic comments, an increase in consumption can better reflect public confidence. In addition, citizens’ plans for their families and their futures are positive as a whole. Admittedly, the loss of confidence in the stock market has exerted negative effects. Society has varying degrees of confidence in the economy.

The 6.9-percent increase in GDP will not strike a blow to the confidence of Chinese society. Even if the figure were slightly lower, there is still a lot to sustain people’s confidence. In fact, different from Western society, politics carries some weight in how confident Chinese people feel.

There are a number of factors contributing to the public’s confidence in the economy. First of all, people believe in the government. As long as the government’s determination and confidence to develop the economy can be seen, the public will be reassured. The government has made many commitments regarding economic development and people's living standards. It is becoming increasingly honest about the difficulties as well. The government’s backbone is not weakening. Yet, there is increasing dissatisfaction with the laziness of some officials. This new phenomenon is worth paying attention to.

The Chinese people are confident about the country’s market potentials. They know that the country lags behind in many aspects and that great efforts are needed. People tend to believe that it will be an arduous task to narrow the gap of people’s livelihood between China and developed countries. Despite the long road ahead, few people believe the process will break down.

Since the Communist Party of China launched the anti-graft drive and pushed forward reforms, many people expected the country to make greater achievements. But China is in a full-fledged transitional period. Its 1.4 billion population is to China’s advantage.

Complaints can be heard in China, and many concerns are well grounded. Some people try to seek a sense of security by applying for a foreign green card and transferring their assets overseas. But China’s status as the world’s biggest emerging market and potential for opportunities is as significant as ever.

China has plenty of tasks. Many cities still lag behind in basic infrastructure. Many roads need to be rebuilt. The key for change is economic growth. In addition, medical care cannot meet public demand. Many parents have sent their children abroad due to the low quality of education. The Chinese people’s concept of consumption is changing fundamentally and people long for improved living standards. These will all serve as a robust foundation for sustainable economic growth.

There should not be any fear that the 6.9 percent growth will upset Chinese society. The Chinese people will remain confident. The government needs to achieve concrete results and need not rush to adjust its policies. Many problems will be solved as long as China is on the right path. - Global Times

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US key interest rate unchanged as global economy worries

U.S. Federal Reserve Chair Janet Yellen attends a press conference in Washington D.C., the United States, Sept. 17, 2015. The Federal Reserve announced on Thursday that the federal funds rate will stay unchanged considering the weak global economy and low inflation. (Xinhua/Yin Bogu)

WASHINGTON, Sept. 17 (Xinhua) -- The U.S. Federal Reserve on Thursday kept its benchmark interest rate unchanged, saying the rising uncertainty abroad and low inflation were the key reasons behind the decision.

After concluding a two-day monetary policy meeting, the Fed said in a statement that the economic activity is expanding at moderate rate with labor market approaching maximum employment but inflation staying muted.

However, in light of the heightened uncertainties abroad and a slightly softer expected path for inflation, the Fed judged it appropriate to wait for more evidence, including some further improvement in the labor market to bolster its confidence that inflation will rise to 2 percent in the medium term, Fed chairwoman Janet Yellen said at the press conference on Thursday.

In regard to foreign developments, the central bank is paying more attention to the developments in China and emerging economies, according to Yellen.

China's economy is growing at a slower pace as it rebalances its economy, which has no surprise, said Yellen, but adding that developments in financial markets in August, in part, reflected concerns that there was down-side risk to Chinese economic performance.

In addition, the substantial downward pressures on oil prices and commodity markets have significant negative impact on resources-exporting emerging markets and advanced economies. Important emerging markets have seen significant outflows of capital, pressures on their exchange rates and concerns about their future performance.

Besides the rising uncertainty in emerging markets, the low inflation is one of the reasons holding the Fed back in raising interest rates.

The core personal consumption expenditure (PCE) price index, an inflation gauge preferred by the Fed, only went up 1.2 percent year on year in July, far below the central bank's 2 percent. The index has been below the Fed's target for over three years.

The recent drop in oil prices and the further appreciation of U.S. dollar have put some downward pressure in the near-term on inflation, which means that it will take a bit more time for these transitory effects to fully dissipate, said Yellen.

According to the Fed officials economic projections released on Thursday, they expected the core PCE price index won't meet the Fed's target until 2018, while the unemployment rate will drop to 4.8 percent, below 4.9 percent, the level the Fed considered as full employment.

Yellen said that as the labor market heals, there will be further upward pressure on inflation. But She said the process is slow and is characterized by lags, and that is why it takes a few years as the inflation to get back to 2 percent, while the unemployment rate falls and even overshoots its longer-run normal level.

The Fed still leaves door open to a rate hike sometime this year. Most Fed officials still expect a first rate increase this year, Yellen said, noting that 13 out of the 17 Federal Reserve Board members and Federal Reserve Bank presidents are looking for a move in 2015.

The Federal Open Market Committee, the monetary policy decision body, will hold two policy meetings this year, in October and December. According to Yellen, every meeting has possibility for a rate increase.

Yellen reiterated that market should pay less attention to the timing of the first interest rate increase and more attention to the expected path of rates.

"The stance of monetary policy will likely remain highly accommodative for quite some time after the initial increase in the federal funds rate," said Yellen.

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