The Chinese economy is expected to have slipped into deflation amid signs of a faltering post-pandemic recovery, according to market forecasters. Chinese consumer price inflation data is due to be released on Wednesday, and a Reuters poll of economists suggests it will show that prices fell by 0.4% year-on-year in July, having been flat on an annual basis in June. That would be China’s first negative inflation reading since early 2021, when prices were weaker as the Covid-19 pandemic hit demand, and pork prices fell. Chinese retailers have been hit…
Tag: Economics
Italy approves 40% windfall tax on banks; China’s trade slumps – business live
From 1h ago Italy approves 40% windfall tax on banks The Italian government is hitting the country’s banks with a new windfall tax, to help families through the cost of living squeeze. Italy’s cabinet yesterday approved a 40% “windfall tax” on bank profits this year, with the proceeds earmarked to help mortgage holders and cut taxes. Deputy prime minister Matteo Salvini told a news conference that the levy will hit the profits reaped from higher interest rates: “One only has to look at the banks’ first-half 2023 profits, also the…
China’s race for growth is fading. So too is its dream of middle-class security | Rana Mitter
Rishi Sunak and Keir Starmer are both putting faith in a five-point plan. Never knowingly undersold, China’s government announced last week that it’s going for a 31-point strategy. Last week, there were alarmed faces in Beijing at the news that its GDP had improved by just 0.8% in the second quarter of 2023, prompting a sense that China’s economy needs a rapid boost. For the past few years, the private sector has been a target for high-profile crackdowns by the Chinese Communist party (CCP), worried that companies such as Tencent…
China GDP growth falls short of expectations as sinking property prices hit economy
China’s economy expanded 6.3% in the second quarter, falling short of market expectations as export demand remained tepid and sinking property prices sapped consumer confidence. Compared with a year earlier, China’s GDP in the April-June period was 6.3% larger, the national bureau of statistics said on Monday, quickening from the 4.5% annual growth pace for the first three months of 2023. Economists had forecast growth to accelerate to 7.3%, according to a Reuters survey. For the June quarter alone, growth slowed to 0.8% from a 2.2% quarter-on-quarter clip in the…
Economic ‘headwinds’ lead IEA to cut global oil demand forecast
Global oil demand will reach an all-time high this year, but “persistent macroeconomic headwinds” mean it will not grow as quickly as had previously been expected, the International Energy Agency (IEA) has said. The Paris-based global energy watchdog said that demand was expected to rise by 2.2m barrels a day in 2023, leading to an average of 102.1m barrels a day. But that prediction is 220,000 barrels a day lower than its previous expectations – the first time the agency has lowered its forecast for growth this year. China, boosted…
US and China are on a collision course that could risk conflict | Nouriel Roubini
After the May G7 summit in Hiroshima, the US president, Joe Biden, claimed that he expected a “thaw” in relations with China. Yet, despite some recent official bilateral meetings – with the US secretary of the Treasury, Janet Yellen, expressing hopes for a visit to China soon – relations remain icy. In fact, far from thawing, the new cold war is getting colder, and the G7 summit itself magnified Chinese concerns about the US pursuing a strategy of “comprehensive containment, encirclement and suppression”. Unlike previous gatherings, when G7 leaders offered…
China’s war chest: how the fight for semiconductors reveals the outlines of a future conflict
Signs of the burgeoning conflict between the US and China can be spotted in many different places, from balloons in the sky to videos on TikTok. But nowhere is it more apparent than on the microscopic wafers of silicon, otherwise known as semiconductors. Semiconductors, or microchips, are tiny pieces of technology that power everything from microwaves to military weapons. The industry is worth more than $580bn (£466bn), but even that figure belies their importance to the global economy. Their existence powers several trillion dollars’ worth of goods and processes; without…
Sunak to urge G7 support for collective action against ‘economic coercion’
The UK and other G7 countries are planning collective action against Russia and China if they threaten trade boycotts for political reasons, announcing a new body to deal with “economic coercion”. Rishi Sunak will urge “bold and pragmatic collective action” against hostile states that stop trading with other countries when they disagree with their geopolitical decisions. He will cite Russia’s stranglehold on European gas supplies last year as a situation that could have been met with a collective response. Other examples include China’s punitive tariffs on Australian wine after Canberra…
The US-China relationship is still moving slowly towards a collision
I recently attended the China Development Forum (CDF) in Beijing, an annual gathering of senior foreign business leaders, academics, former policymakers, and top Chinese officials. This year’s conference was the first to be held in person since 2019, and it offered western observers the opportunity to meet China’s new senior leadership, including new premier Li Qiang. The event also offered Li his first opportunity to engage with foreign representatives since taking office. While much has been said about the Chinese president, Xi Jinping, appointing close loyalists to crucial positions within…
The Guardian view on US-China chip wars: no winners in zero-sum battles | Editorial
Rishi Sunak is readying a billion pounds to subsidise the UK’s fledgling microchip industry. It sounds big. But the British government is merely reacting to US economic warfare against China. Behind the talk of “friendshoring” and resurgent industrial policy is a struggle to avoid collateral damage in the battle between China and the US for tech supremacy. The EU plans almost to match the US promise of $52bn (£42bn) in chip subsidies. India is spending $30bn (£25bn) on its semiconductor mission. Mr Sunak looks to be bringing a peashooter to…