Why a once-in-a-century pandemic and a stock market bubble spell trouble
It is alarming that today’s bubble has inflated in the face of the worst recession in decades. While the pandemic has been less damaging to markets than the 2008 crisis, there’s huge uncertainty about the strength of the recovery The bigger danger is that the deployment of vaccines is not fast and effective enough to help counter the increasing economic damage wrought by the virus, a risk that is particularly acute in Europe, but also threatens America.Indeed, what is most alarming about today’s financial bubble is that it has inflated in the face of the worst recession since the Great Depression. At least previous major bubbles occurred during periods of brisk growth. While the pandemic has been less damaging to markets than the 2008 financial crisis, there is huge uncertainty about the strength of the recovery, and what the “new normal” will look like. More worryingly, asset prices are incomparably higher today than they were in the final stages of previous bull markets, and higher than their already lofty levels just before the eruption of Covid-19. Calling an end to a bull run is a mug’s game. What is clear, however, is that an asset price bubble and a once-in-a-century pandemic make a dangerous combination.
https://www.msn.com/en-xl/news/other/why-a-once-in-a-century-pandemic-and-a-stock-market-bubble-spell-trouble/ar-BB1cYvR8
China’s small businesses in ‘urgent need’ of support to protect jobs and boost domestic demand, State Council says
Small and medium-sized enterprises are the foundation of China’s economy, accounting for the vast majority of non-government jobs Alleviating hardships facing SMEs is now higher on government’s agenda, largely due to risks they pose to social stability and the country’s future development The 20 million SMEs and 90 million self-employed individuals remain a weak link in the Chinese economy, despite the country reporting a year-on-year economic growth rate of 6.5 per cent in the fourth quarter – equivalent to the pre-pandemic growth rate a year earlier. Economic growth for 2021 is widely projected to be around 8 per cent thanks to the low comparison base, but many state researchers warned that small businesses will have a tough year ahead. “Service sectors such as catering, travel and transport haven’t fully recovered (from the damage caused by the coronavirus outbreak). It means huge pressure on employment,” Wang Yiming, deputy director general of the China Centre for International Economic Exchanges, said at a forum organised by Renmin University on Tuesday. “At the same time, many small and micro firms are still losing money due to insufficient demand and rising costs.”
https://www.msn.com/en-xl/money/other/china-s-small-businesses-in-urgent-need-of-support-to-protect-jobs-and-boost-domestic-demand-state-council-says/ar-BB1cZDzg
podcast : Will China spoil Biden’s reunion with Europe?
The EU wants to mend ties with the US under the Biden administration. But an issue that defined the Trump era could quickly get in the way of trans-Atlantic reunion: relations with China.
https://www.dw.com/en/will-china-spoil-bidens-reunion-with-europe/av-56309607
China’s trade with US failed to meet phase-one deal targets last year, and 2021 is not expected to yield more success
Even bumper sales of soybeans, pork and beef, plus market access for a range of other products, could not get China close to purchase targets Analysts point to unrealistic goals in original deal with United States, and overall trade goals may continue to remain elusive in this year In a press release on Thursday, the ministry said it would “actively consider” joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, in an indication that more multilateral deals are high on Beijing’s agenda. But analysts are sceptical as to whether there will be fresh US-China trade talks any time soon.”There will almost certainly not be another agreement that focuses on purchase requirements, as the Trump administration’s phase-one trade deal has clearly not achieved its goal. It’s unclear what policies the (Biden) administration may pursue, but it is clear that tackling what it views as China’s unfair trade practises will be a priority for the new administration,” read a note from Beacon Policy Advisers this week.
https://www.msn.com/en-xl/money/other/china-s-trade-with-us-failed-to-meet-phase-one-deal-targets-last-year-and-2021-is-not-expected-to-yield-more-success/ar-BB1cZGsb
Chinese purchases of US exports fall far behind trade deal pledge
China has purchased less than three-fifths of the US goods projected under the “phase one” trade deal that paused a tariff dispute between the two countries a year ago, reported the Financial Times.
Under the terms of the deal, China agreed to buy $200 billion more of US goods and services than it did in 2017, before the start of the trade dispute, over a two-year period to the end of 2021, said the FT. According to analysis from the Peterson Institute for International Economics, Beijing has purchased just 58% of the US exports expected under its projections, based on data to the end of last month. China’s imports of US products covered by the trade deal’s purchase commitments amounted to $100 billion by the end of December, compared with a prorated target of $173.1 billion, the institute said.
https://chinaeconomicreview.com/chinese-purchases-of-us-exports-fall-far-behind-trade-deal-pledge/
Global Trade Trends: What Will 2021 Unwrap?
2021 is a handful of oliebollen away in the rearview mirror and it’s time to prepare for new events. What will global trade unwrap? A number of nuggets below. Lead by retail growth at a high rate of ~20-23% until 2020, ecommerce exploded last year (Forbes noted the May 2020 year-over-year growth was 77%) and will stay a part of every company’s selling strategy. Forced or accelerated by the pandemic, companies have adjusted their customer interactions, and ecommerce strategies will remain an integral part of all global businesses. No longer confined to specific market segments, this change drastically affects how global trade is conducted and where resources will be spent. Shipping directly to customers affects many aspects of the global supply chain and companies now must account for shipping and compliance aspects that are different from previous models. All in all, 2021 will not allow companies to take a breather. If anything, the agility of supply chain strategies will be tested further this year.
https://www.globaltrademag.com/global-trade-trends-what-will-2021-unwrap/
Are the brakes on inflation about to be released?
At the same time, China, the main source of excess demand for commodities in the 2010s, is leading the global race back to growth. China’s economy grew by 2.3% last year, owing largely to the country’s decisive handling of the pandemic. Exports and investments in China’s infrastructure and real estate development made substantial contributions to the nation’s growth, a pattern that could continue into 2021
https://www.fidelity.co.uk/markets-insights/markets/global/are-brakes-inflation-about-be-released/
China’s tech landscape
China is well on its way to achieving its goal of becoming a leading global technological superpower by 2050
https://www.theweek.co.uk/business/951619/chinas-tech-landscape
Chinese phone maker Honor partners with key chip suppliers after Huawei split
Chinese budget phone maker Honor has signed partnerships with major chip suppliers such as Intel and Qualcomm after being spun off from under-fire parent Huawei Technologies in a bid to save it last year, it said on Friday.
https://www.channelnewsasia.com/news/business/chinese-phone-maker-honor-partners-with-key-chip-suppliers-after-huawei-split-14018886
Why China’s central bank leads antitrust drive and how this may affect Alipay, WeChat Pay
The People’s Bank of China’s draft antitrust regulation forms part of its campaign to curb the rise in risks to the nation’s financial system The central bank has said its antitrust initiative was aimed at closing regulatory loopholes in payment services
https://www.msn.com/en-xl/news/other/why-china-s-central-bank-leads-antitrust-drive-and-how-this-may-affect-alipay-wechat-pay/ar-BB1cZKLY
Ant Group’s architect of mutual aid platform quits as insurance chief amid industry shake-out in world’s largest fintech market
Yin Ming is the first member of Ant senior management to quit after the suspension of its listing in November Ant Group’s insurance business, including the Xianghubao mutual aid platform, reported 52 billion yuan in premium income in the 12 months ended June 2020
https://finance.yahoo.com/news/ant-groups-architect-mutual-aid-093000055.html
China’s hi-tech hub Guangdong sees higher education investments boom in bid to rival Silicon Valley with home-grown talent
Guangdong province in China’s Greater Bay Area is seeing billions of yuan allocated to build several new universities and colleges in the next few years Technological decoupling with the United States has helped fuel a sense of urgency in Beijing to close the gap between Chinese higher education institutions and those in the West
https://www.msn.com/en-xl/money/other/china-s-hi-tech-hub-guangdong-sees-higher-education-investments-boom-in-bid-to-rival-silicon-valley-with-home-grown-talent/ar-BB1cZRZp
Warren Buffett-Backed BYD Raises $3.9B In Hong Kong
Chinese carmaker BYD Company (OTC: BYDDF) (OTC: BYDDY), backed by Berkshire Hathaway Inc (NYSE: BRK-A) (NYSE: BRK-B) Chairman Warren Buffett, raised $3.9 billion from a secondary stock sale in Hong Kong on Thursday, the Wall Street Journal reports.
https://finance.yahoo.com/news/warren-buffett-backed-byd-raises-124503267.html
Tencent is in talks with banks to borrow US$6 billion in Asia’s biggest syndicated loan for a Chinese firm since 2019
Tencent’s five-year deal would pay an interest margin of 80 basis points over Libor and offer all-in pricing of 85 basis points, according to people familiar with the deal The proceeds are for general corporate purposes
https://www.scmp.com/business/companies/article/3118913/tencent-talks-banks-borrow-us6-billion-asias-biggest-syndicated
Tencent Made Big Bets On Domestic Gaming Firms In 2020
In 2020, Tencent accelerated investments in gaming assets. During the year, it made 33 investments. In the last two months of 2020, it rushed to ink 14 deals with domestic game manufacturers, covering two-dimensional, leisure and tower defense game makers.
https://www.chinamoneynetwork.com/2021/01/22/tencent-made-big-bets-on-domestic-gaming-firms-in-2020?
Chipmaker MediaTek launches new chipsets as smartphone-makers drive demand boom
MediaTek launched new flagship chipsets on Wednesday amid record-high demand for its cheaper products from Chinese smartphone-makers scrapping for the market share left behind by besieged giant Huawei,reported Caixin. The Taiwan chipmaker’s Dimensity 1100 and 1200 5G chipsets both feature advanced 6-nanometer processing technology from industry leader Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), said Caixin.
https://chinaeconomicreview.com/chipmaker-mediatek-launches-new-chipsets-as-smartphone-makers-drive-demand-boom/
China’s space programme plans to launch first mission to the sun next year
Satellite will monitor solar activity for several years, including the peak of a new cycle Probe will be able to send early warning of damage to the Earth’s electromagnetic atmosphere
https://www.msn.com/en-xl/news/other/china-s-space-programme-plans-to-launch-first-mission-to-the-sun-next-year/ar-BB1cZHB3
Will A Reboot In China-US Relations Help Luxury?
It’s expected that Biden will select a more measured style when dealing with China. How will this new approach affect luxury brands? The European luxury sector is particularly vulnerable right now. Artisans, skilled workers and SMEs don’t have access to long-term income support or the same opportunities as established luxury brands; thus, they need to increase their capital options. Facing the new reality, the EU might select to strengthen the cooperation with capital rich China to save the small and medium-sized businesses (SMBs) operating in the creative fields. Considering that China’s investment in European luxury has increased proportionally over the past three decades, we anticipate a continuation of the trend. The buyouts and investments are not limited to the notorious ones like the acquisition of Sonia Rykiel by Hong Kong-based First Heritage Brands or the acquisition of Cerruti 1881 by Chinese clothing retailer Trinity Limited. Occasionally, Chinese investors have selected to become silent or minority partners, investing only capital in European businesses.
https://jingdaily.com/china-us-relations-luxury-brands/
Erik Solheim: China should apply stricter standards along the Belt and Road
The former chief of the United Nations Environment Programme believes China should phase-out coal and apply higher standards in its overseas investments
https://dialogochino.net/en/climate-energy/erik-solheim-china-should-apply-stricter-standards-along-the-belt-and-road/
China Trade Row Has Cost Australia $3 Billion in Lost
Australia’s trade fight with China cost it about $3 billion in commodities sales last year, and that relatively small impact suggests there’s little economic need for the country to bow to Beijing’s pressure. That’s the value of Australian exports Australian exports lost in 2020 compared to the prior year, and covers commodities from copper and coal to wine and lobsters that are now subject to trade restrictions by Beijing, according to Chinese customs data. The impact on some of those industries has been savage as exporters are forced to abandon their biggest market and seek customers elsewhere
https://www.bloombergquint.com/global-economics/china-trade-row-has-cost-australia-3-billion-in-lost-exports
Rescuers say two more weeks needed to free miners
Rescuers believe it could take at least another two weeks to free miners trapped underground in eastern China, dashing hopes of an imminent retrieval for a group that has already spent 12 days entombed by an explosion.
https://news.rthk.hk/rthk/en/component/k2/1571792-20210122.htm
Winning: How China Does It
Chinese warship construction continues at a rapid pace, building large numbers of destroyers and amphibious (LPS and LHD) assault ships. The maritime version of the new Silk Road is there to ensure access to areas outside Eurasia. More importantly the new Chinese fleet can dominate shipping lanes worldwide and force other nations to worry about their own access to the seas. All this depends on continued Chinese economic and technological growth. That is less certain that Chinese plans for military expansion. It was the rapidly growing economy that enabled the Chinese to pay for their new fleet and modern ground forces. Chinese leaders and foreign economists both note several serious flaws in the Chinese financial and political systems. Chinese leaders are trying to use a tightly controlled and high-tech police state to fix these economic problems and it is unclear if their Big Brother approach will work. If it does it will change the world as well as China.
https://www.strategypage.com/htmw/htwin/20210122.aspx
China passes bill allowing coast guard to use weapons in its waters
China on Friday passed a bill that allows its coast guard to use weapons when foreign ships involved in illegal activities in waters claimed by the country fail to obey orders, state-run media reported, in a move that would complicate relations with its neighbor Japan. As Beijing claims that the Senkaku Islands, administered by Tokyo, in the East China Sea are part of its territory, the legislation could target Japanese vessels navigating around the uninhabited islets called Diaoyu in China.
https://english.kyodonews.net/news/2021/01/4f256476ba96-update2-china-passes-bill-allowing-coast-guard-to-use-weapons-in-its-waters.html
Team Biden assures Japan that Senkakus fall under security treaty
Washington’s defense treaty with Tokyo applies to the Japan-administered Senkaku Islands, the new U.S. national security adviser confirmed Thursday, in an early show of support for an ally regarding a source of regional tension.
https://asia.nikkei.com/Politics/International-relations/Team-Biden-assures-Japan-that-Senkakus-fall-under-security-treaty
Tokyo 2020 Olympics: Vaccine rollout will help us stage rescheduled event, says chief executive
Olympic organisers hope the Covid-19 vaccine will mean the rescheduled Tokyo 2020 Games can take place in July – despite a newspaper report on Friday casting doubt on their going ahead.
https://www.bbc.com/sport/olympics/55762303
China’s Disputed Virus Theory Has Shoppers Shunning Foreign Food
China has stirred controversy with claims it has detected the coronavirus on packages of imported frozen food. At an upscale supermarket west of Beijing, a box of disposable gloves stands in front of a glass counter selling Australian beef. Next to it is a sign saying: “Please buy this with peace of mind.” “All the imported meats here have undergone nucleic acid testing. Consumers need not worry,” promises Li Xingzhen, a manager at Ole supermarket, which imports about 70% of its groceries. Her pledge offers a look at the new challenges facing retailers as many Chinese shoppers grow reluctant to buy overseas food products after COVID-19 infections were reported among people handling such items.
https://sg.finance.yahoo.com/news/chinas-disputed-virus-theory-has-shoppers-shunning-foreign-food-061311838.html
Lessons from a Covid-19 year: wise leadership, of countries and companies, is about trust
The success of New Zealand and Vietnam in containing the coronavirus pandemic shows that the richest countries aren’t necessarily the best at managing a crisis Amid the political turmoil and shortcomings of global governments, the private sector has, in many areas, risen to the occasion
https://www.scmp.com/comment/opinion/article/3118499/lessons-covid-19-year-wise-leadership-countries-and-companies-about
Wuhan lockdown: A year of China’s fight against the Covid pandemic
A year ago on 23 January 2020 the world saw its first coronavirus lockdown come into force in Wuhan, the Chinese city where the pandemic is believed to have started.
https://www.bbc.com/news/world-asia-china-55628488
Migrant Workers Need COVID-19 Tests for Spring Festival Travel, China Says
Some are already worried the new precautionary measure could overwhelm hospitals and laboratories.
https://www.sixthtone.com/news/1006731/
Bribes, fake factories and forged documents: the buccaneering consultants pervading China’s factory audits
A perfect storm of quick-fire, one-off factory inspections and insatiable Western demand for cheap goods is leading to fraud among Chinese manufacturers Cottage industry of consultants has popped up in China, helping low-end factories meet high-end Western standards, for a cost
https://sg.news.yahoo.com/bribes-fake-factories-forged-documents-085049929.html
EU Parliament condemns China deal over Hong Kong crackdown
MEPs overwhelmingly pass resolution saying the EU has lost credibility on human rights by sealing the investment pact and calling for targeted sanctions The opinion of EU lawmakers is important as they will need to approve the German-backed deal that was agreed in principle last month after years of talks
https://news.abs-cbn.com/overseas/01/22/21/eu-parliament-condemns-china-deal-over-hong-kong-crackdown
EU – China Comprehensive Agreement on Investment (CAI): list of sections
We have published the text of the EU-China Comprehensive Agreement on Investment
https://trade.ec.europa.eu/doclib/press/index.cfm?id=2237
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