KazPost

Kazakhstan News
Friday, Mar 29, 2024

Coronavirus, trade war, US-China relations dominate top 2020 economy stories

Coronavirus, trade war, US-China relations dominate top 2020 economy stories

The impact of the coronavirus on China’s economy topped the list of most read economy stories of the year, with China’s trade war with the United States also featuring on the list.
1. Coronavirus: China’s economy suffers dramatic collapse in January, February in warning to rest of world


(Finbarr Bermingham and Orange Wang – March 16, 2020)

* Combined data for January and February showed that industrial production, retail sales and asset investment all declined far more than analysts expected

* Lockdowns to control the coronavirus proved to be a constraint to economic growth, but with China now in recovery, data suggests what rest of the world could expect

The coronavirus’ impact on China’s economy was made plain in new numbers released on Monday, which showed a dramatic collapse across the board.

Amid a widespread shutdown of manufacturing operations, industrial production – a measure of manufacturing, mining and utilities activity – declined by 13.5 per cent over the first two months of the year, combined data for January and February showed.

This was the first decline on record, although ordinarily the data is released monthly. But the numbers were well below expectations of a 3.0 per cent decline.

2. China increasingly worried about ‘losing face’ as Japan bankrolls exodus of firms


(Cissy Zhou – August 5, 2020)

* Japan has offered a group of 87 companies subsidies totalling US$653 million to expand production at home and in Southeast Asia

* The coronavirus pandemic has wreaked havoc on global supply chains, and Japan is officially trying to diversify to make them more resilient

Japan’s decision to offer an initial group of 87 companies subsidies totalling US$653 million to expand production at home and in Southeast Asia has sparked debate over whether the world’s third largest economy is trying to gradually decouple from China.

The coronavirus pandemic has wreaked havoc on global supply chains, with the crisis underlining what many companies and countries have known for some time: they are too reliant on China.

China is Japan’s largest trading partner, and Japan is China’s second largest trading partner, and while not all of the enterprises involved in the initial wave have operations in China, the move by the Japanese government has sparked concerns in China.

3. Hong Kong security law: China weighs risk US will go for ‘nuclear option’ and cut Beijing from the dollar payment system


(Karen Yeung and Zhou Xin – June 1, 2020)

* Risks of US financial sanctions emerge for China after National People’s Congress approves national security law for Hong Kong

* Beijing wonders whether Washington will cut it off from US dollar payment system and hasten the demise of dollar hegemony in the process

A new and troubling question is suddenly looming for Beijing: will the Trump administration abuse the power of the US dollar to hurt China following Beijing’s plan to impose a new national security law in Hong Kong?

While the probability remains very low that China will be treated like Russia or Iran, and US President Donald Trump has not mentioned sanctions against Hong Kong or Chinese financial institutions, the risk of a financial war – including being cut off from the US dollar system – is no longer “unthinkable” for China.

If Washington were to sever China’s corporate and financial system from the US dollar payments system, which is underpinned by infrastructure such as the Swift international payments messaging system and the Clearing House Interbank Payments System (Chips), it could start a financial tsunami that would lead global finance into unchartered territory, officials and analysts said.
Read the full story here.

4. China bought more US debt in May despite talk of financial war amid rising trans-Pacific tensions


(Orange Wang – July 21, 2020)

* China added US$10.9 billion of US Treasury securities in May, the first purchase since February, although the US$1.08 trillion total is slightly down from 12 months earlier

* Tensions have been rising between Beijing and Washington over the coronavirus, Hong Kong and Xinjiang, with questions raised over China’s access to the US dollar

China modestly increased its holdings of US Treasury securities in May, the first purchase in three months, despite rising trans-Pacific tensions and growing talk of a financial war between the world’s two largest economies.

China added US$10.9 billion of US Treasury securities in May from a month earlier, after cutting its holdings in each of the previous two months, according to a report released by the US Treasury Department last week.

The modest growth comes amid increased that confrontation between Beijing and Washington over the coronavirus pandemic, the Hong Kong national security law and Xinjiang could spill over into the financial sector.
Read the full story here.

5. US semiconductor giant shuts China factory hailed as ‘a miracle’, in blow to Beijing’s chip plans


(Sidney Leng – May 20, 2020)

* US chip giant GlobalFoundries confirms it has ceased operations at its only Chinese facility, with industry experts saying the poorly-planned project was doomed to fail

* Closure deals blow to China’s plans to move up semiconductor value chain, amid increasingly hostile tech rivalry with the United States

US chip giant GlobalFoundries has halted operations at a joint venture factory in China, the company has confirmed, dealing a potential blow to China’s bid to own a bigger slice of the global semiconductor market.

The closure of the firm’s only China facility comes just three years after it announced plans to make chips in the mainland, and comes amid an escalating tech war with the United States.

The winding down, however, has little to do with the fierce superpower rivalry. It comes after two years of speculation as to what was actually happening at the US$100 million facility, which was hailed as “a miracle” by local media when announced to fanfare in 2017, but which never got off the ground.
Read the full story here.

6. Is China rich or poor? Nation’s wealth debate muddied by conflicting government data


(Zhou Xin – May 29, 2020)

* Premier Li Keqiang said this week that China has 600 million people with a monthly income of 1,000 yuan (US$140), stoking ongoing debate about China’s wealth

* Alternative government data sets have painted a different picture, with one saying urban households have on average on 3.2 million yuan in assets

A long-standing debate over whether China is a rich or poor nation has been reignited in recent weeks after the government released a series of diverging data sets on wealth in the world’s second biggest economy.

Premier Li Keqiang added fuel to the discussion on Thursday, saying that China has 600 million people living on a monthly income of 1,000 yuan (US$140).

“It’s barely enough to cover monthly rent in a mid-sized Chinese city,” Li told a press conference in Beijing.
Read the full story here.

7. Trade war: China to make huge purchases of US goods as details of phase one deal revealed


(Finbarr Bermingham, Ben White and Doug Palmer – January 14, 2020)

* Sources confirm that China has committed to making large scale purchases of US$200 billion of American goods as part of the phase one trade deal

* Purchase target for manufactured goods of around US$75 billion, with China also committing to buy huge amounts of energy, agriculture and services

The trade deal to be signed this week will include pledges by China to buy US$200 billion of US goods over two years in four industries, a Trump administration official and two other sources briefed on the matter said.

The target for manufactured goods purchases will be the largest, worth around US$75 billion. China will also promise to buy US$50 billion worth of energy, US$40 billion in agriculture and US$35 billion to US$40 billion in services, the three people said.

On Monday night, meanwhile, the United States removed China from a list of currency manipulators, a sign that the relationship between the world’s two largest economies was thawing slightly in the lead up to the signing of the phase one deal.

8. China debt: how big is it and who owns it?


(Amanda Lee – May 19, 2020)

* The Institute of International Finance (IIF) estimated that China’s total domestic debt rose to 335 per cent of gross domestic product (GDP) in the third quarter of 2020

* This follows an estimate of 335 per cent in the second quarter of 2020

What is the nature of China’s debt?


Broadly speaking, China’s debt can be divided into domestic debt and foreign debt.

China’s domestic debt, denominated in yuan, consists of three components: corporate, household and government debt. Corporate debt includes borrowings by private sector and state-owned companies, while China’s public debt is a combination of national and local government debt. Household debt, meanwhile, is the combined debt of all people in a household, including consumer debt and mortgage loans.

China’s foreign debt in currencies other than the yuan includes private sector firms’ borrowing from foreign banks, trade-related credit to Chinese firms from foreign trading partners and debt securities issued by Chinese state-owned and private sector firms to foreign investors.

9. Trade war: China to travel to US on January 13 to sign phase one deal


(Zhou Xin – January 5, 2020)

* China delegation reschedules US trip after US President Donald Trump unilaterally announced January 15 date for ‘high representatives’ from Beijing to sign deal

* The eagerness from the US president to claim a big ‘win’ from the phase one deal contrasts with Beijing’s more measured approach

China’s trade delegation tentatively plans to travel to Washington for four days from January 13 for the signing of the phase one deal that would herald a truce in the costly trade war between the world’s two largest economies, a source briefed on the matter has told the South China Morning Post.

Led by Vice-Premier Liu He, the delegation had originally planned to set off earlier in the month but had to change their travel schedule after US President Donald Trump sent a tweet on New Year’s Eve claiming that he would sign the deal with “high representatives” from Beijing on January 15 in the White House.

While the two sides had been expected to wrap up their phase one negotiations by January, the Chinese side had not expected Trump to make a unilateral announcement about the date, or to say that he would be willing to sign the deal – even if President Xi Jinping was not available.

10. Coronavirus: China could cut US debt holdings in response to White House Covid-19 compensation threats, analysts say


(Karen Yeung – May 6, 2020)

* US news reports suggest White House officials have already considered the idea of cancelling all or part of the US$1.1 trillion debt owed to China

* In response to the debate over the highly unlikely ‘nuclear option’, China could cut its holdings as the US ramps up borrowing to pay coronavirus-related costs

China may move to reduce its vast holdings of US Treasury securities in the coming months in response to a resurgence in trade tensions and a war of words between the world’s two largest economies over the origins and handling of the coronavirus outbreak, analysts said.

US news reports indicated that White House officials have debated several measures to offset the cost of the coronavirus outbreak, including cancelling some or all of the nearly US$1.1 trillion debt that the United States government owes China.

While analysts added that the US was highly unlikely to take the “nuclear option”, the mere fact that the idea has been discussed could well prompt Beijing to seek to insulate itself from the risk by reducing its US government debt holdings.

Newsletter

Related Articles

KazPost
0:00
0:00
Close
It's always the people with the dirty hands pointing their fingers
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
Historic Moment: Edgars Rinkevics, EU's First Openly Gay Head of State, Takes Office as Latvia's President
An Ominous Shift in Warfare: Western Powers Risk War Crimes and Violate International Norms with Cluster Bomb Supply to Ukraine
Bye bye democracy, human rights, freedom: French Cops Can Now Secretly Activate Phone Cameras, Microphones And GPS To Spy On Citizens
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
Meta Copy Twitter with New App, Threads
The New French Revolution
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner
Corruption in the European Parliament - Business as usual
UK Crypto and Stablecoin Regulations Become Law as Royal Assent is Granted
Paris Suburb Grapples with Violence as Curfew Imposed: Saint-Denis Residents Express Dismay and Anger
A Delaware city wants to let businesses vote in its elections
Alef Aeronautics Achieves Historic Milestone with Flight Certification for World's First Flying Car
Google Blocked Access to Canadian News in Response to New Legislation
French Politicians Advocate for Pan-European Regulation on Social Media Influencers
×