Newsletter 123 - July 17, 2022
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Welcome to the 123rd edition of Trade War.
China’s second quarter GDP barely grows. Missing Xi Jinping reappears in Xinjiang. Mortgage boycotts spread amidst property sector crisis. And “V-shaped” and “illusory” economic rebound expected later this year.
Beijing tries ‘list diplomacy’ and threatens the US. Reviews of outbound investment gaining steam in Washington. Deeply reliant on China market, global chip companies front and center in US-China competition.
Surging consumer boycotts fanned by Chinese authorities. Why a US investment treaty with Taiwan could help prevent an invasion. And India soon to surpass China as world’s most populous country.
A big miss for China GDP
China’s economy grew just 0.4 percent in the second quarter, the slowest pace since the pandemic began, putting the 2022 GDP goal of 5.4 percent far out of reach, reports Bloomberg News.
“China’s outlook remains highly uncertain as President Xi Jinping stays committed to his Covid Zero approach of stamping out infections, with the emergence of the highly-infectious BA.5 sub-variant in several cities raising the threat of new lockdowns,” reports the financial news service.
Along with disappointingly weak property investment, China’s service sector, which makes up over one-half the economy, shrank by 0.4 percent from April through June, compared to a year earlier, while youth unemployment reached a new high of 19.3 percent in June.
“This year, facing increasingly complicated and challenging international environment, as well as multiple and sporadic local outbreak of COVID-19 pandemic, the economic development was extremely unusual with significantly increased adverse impacts, and the economy in the second quarter was under noticeable downward pressure,” China’s National Bureau of Statistics said in a press release.
Goldman Sachs responded to the bad economic news by cutting its forecast for China’s full-year growth from 4 percent to 3.3 percent.
Talking about the same thing
“Yes, they are all talking about the same thing. #China #GDP,” writes Bloomberg News’ Gao Yuan, in a tweet showing China’s state media doing its best to put on a brave face.
(“It's usually a sign of bad data when the Chinese media suddenly starts reporting the cumulative data (in this case, the Jan-June data),” comments Bloomberg’s James Mayger.)
Xi in Xinjiang: ethnic unity like ‘pomegranate seeds’
After almost two weeks where state media did not mention the whereabouts of Xi Jinping, China’s top leader has resurfaced in Xinjiang, where he gave a typically suffocating party speech on ethnic relations.
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