Aurelia Butler

BEIJING (Reuters) -China’s President Xi Jinping met American business leaders at the Great Hall of the People in Beijing on Wednesday, as the government tries to woo back foreign investors and international firms seeking reassurance about the impact of new regulations.Beijing wants to boost growth of the world’s second largest economy after foreign direct investment shrank 8% in 2023 amid heightened investor concern over an anti-espionage law, exit bans as well as raids on consultancies and due diligence firms.Xi’s increasing focus on national security has left many companies uncertain where they might step over the line, even as Chinese leaders make public overtures towards foreign investors.”China’s development has gone through all sorts of difficulties and challenges to get to where it is today,” Xi said, according to state media.”In the past, (China) did not collapse because of a ‘China collapse theory’ and it will also not peak now because of a ‘China peak theory,'” he added.Stephen Schwarzman, co-founder and CEO of private equity firm Blackstone (NYSE:BX), Raj Subramaniam, head of American delivery giant FedEx (NYSE:FDX), and Cristiano Amon, the boss of chips manufacturer Qualcomm (NASDAQ:QCOM) were part of the around 20-strong all-male U.S. contingent. The audience with Xi – organised by the National Committee on U.S.-China Relations, the U.S.-China Business Council and the Asia Society think tank – lasted around 90 minutes, according to a person with direct knowledge of the matter.The source, who declined to be named as they were not authorised to speak to the media, had no immediate comment on what was discussed and the three organisations did not immediately respond to requests for comment on the meeting.The U.S. and China are gradually resuming engagements after relations between the two economic superpowers sank to their lowest in years due to clashes over trade policies, the future of democratically ruled Taiwan and territorial claims in the South China Sea.The gathering took place in the East Hall of the Great Hall of the People, which is reserved for important functions. Attendees sat in a square formation around a large red, orange and green floral installation, a video released by state media showed. Commerce minister Wang Wentao, top diplomat Wang Yi and the head of China’s state planner, Zheng Shanjie, sat alongside Xi.The audience with Xi comes after Chinese Premier Li Qiang did not hold a meeting with visiting foreign CEOs at the China Development Forum in Beijing on March 24-25. The chance to exchange views with Beijing’s second-ranking leader was a key element of the summit in previous years.Wednesday’s meeting followed on from a dinner in November with U.S. executives in San Francisco, where Xi received a standing ovation. More

The ECB has flagged a possible rate cut for June depending on further good news on wages and the comments from Cipollone, in his first major policy address since joining the board, suggest the process was heading in the right direction. “Wage growth appears on track to gradually moderate in the medium term towards levels that are consistent with our inflation target and productivity growth, in line with the projections,” Cipollone told an event in Brussels.”As our confidence in the timely convergence of inflation to our target grows, it also strengthens the case for adjusting our policy rates,” Cipollone said. Investors now expect the ECB to cut rates in June but they are split on whether two or three more moves would come before the end of this year. The bank has placed an oversized emphasis on first quarter wage data, due out in late May, suggesting that the rate path is unlikely to be clear for some time yet.Compensation per employee declined to 4.6% in the fourth quarter from 5.1% three months earlier but remains well above the 3% level the ECB considers to be in harmony with 2% inflation. Still, Cipollone cautioned against excessive focus on short-term wage developments, arguing that a recovery in household earnings was necessary and even after such a catch up, real wages would still be below levels justified by labour productivity growth since the pandemic.”Excessive focus on short-term wage developments may not take into full consideration the recovery in wages that can – and needs to – take place for the euro area’s currently fragile recovery to gain a stronger footing,” he said. He added economic uncertainty has receded so the ECB is also becoming more confident in its own projections, which show a continued slowdown in inflation with the target hit next year. More

U.S. stock futures traded higher Wednesday, rebounding after a recent pullback, as investors await further cues on the Federal Reserve’s interest rate trajectory.By 05:00 ET (09:00 GMT), the Dow futures contract was 180 points, or 0.5%, higher, S&P 500 futures gained 24 points, or 0.5%, and Nasdaq 100 futures rose by 90 points, or 0.5%.The major indices closed with minor losses Tuesday, the third negative trading day in a row in the case of the broad-based S&P 500 index, but the three averages are still on pace to end the trading month and quarter, which both conclude with Thursday’s closing bell, higher.There is little in the way of U.S. economic data to digest later Wednesday, and trading ranges are likely to be limited ahead of Friday’s release of the Fed’s favorite inflation gauge, the core personal consumption expenditures price index.Federal Reserve Governor Christopher Waller is due to speak later in the session, and investors will be studying his comments on future monetary policy.GameStop (NYSE:GME) stock slumped premarket after the troubled video game retailer reported disappointing fourth-quarter earnings amid softer sales over the important holiday period.At 05:00 ET, GameStop fell 15% premarket, set to add to the near 12% losses year-to-date.Net sales fell by about 24% in the fourth quarter from a year earlier, driven by a nearly 30% slump in its software business, of which gaming software, digital software and PC entertainment software makes up about a quarter of overall revenue.The company responded to these weak numbers by saying it had cut an unspecified number of jobs to reduce costs.”An increasing mix of digital downloads is hurting physical retail, and there is simply no reason to go to the store if a consumer can just order a game and download it immediately,” Wedbush Securities analyst Michael Pachter said, in a note.”Revenues are highly unlikely to rebound unless management figures out a way to drive store traffic.”The Bank of Japan raised interest rates earlier this month for the first time since 2007, but this has done little to support the yen, which fell to its weakest level against the U.S. dollar since 1990 earlier Wednesday.At 05:00 ET, USD/JPY traded marginally lower at 151.50 having earlier in the session climbed as high as 151.97.The BOJ’s landmark exit from negative interest rates had been highly anticipated, and thus largely priced in, and the Japanese central bank has continued to stress the need for an accommodative monetary policy for the time being.  The yen is the lowest-yielding G10 currency, making it ideal for carry trades, and investors who had trimmed such trades before the BOJ meeting, as well as other central bank gatherings, have been rebuilding their positions.With the BOJ unlikely to hike again soon, officials have resorted to intervention threats to try and stem the yen’s fall.Japan’s finance minister warned, earlier Wednesday, of “decisive steps” to tame “disorderly” moves, echoing his comments before the central bank intervened in late 2022 to prop up the yen.Bitcoin has seen a dramatic recovery from its 2022 lows, including strong gains this year, but this has resulted in massive losses for short sellers of crypto-related stocks, according to data compiled by S3 Partners.The world’s biggest cryptocurrency has recorded a nearly five-fold recovery from 2022 lows when Bitcoin fell as low as $15,000, gaining over 60% this year so far, and recently clocked record highs of over $73,000. These recent gains were largely driven by the U.S. approval of exchange-traded funds that directly track the token’s price.However, this recovery has led to nearly $1.9 billion in mark-to-market losses for short sellers of crypto-related stocks, S3 Partners revealed this week.The total short interest in crypto-related stocks stands at $10.7 billion, with MicroStrategy (NASDAQ:MSTR) and Coinbase (NASDAQ:COIN) Global account for 84% of this short interest, short-sellers of MicroStrategy, the world’s largest corporate holder of Bitcoin, leading the downturn with $1.4 billion in mark-to-market losses.Despite Bitcoin’s bullish run, the total short interest in the sector has increased by $3.67 billion to $10.71 billion in 2024, suggesting continued skepticism or strategic hedging by short sellers. Oil prices fell sharply Wednesday after the release of industry data showing a hefty increase in U.S. inventories. By 05:00 ET, the U.S. crude futures traded 1.2% lower at $80.66 a barrel, while the Brent contract dropped 1.1% to $84.67 per barrel.Data from the American Petroleum Institute, released Tuesday, showed that U.S. crude inventories saw a build of 9.3 million barrels in the week to March 22, substantially above expectations for a draw of 1.2 million barrels. The official U.S. inventory data, from the Energy Information Administration, is due later Wednesday, but the API reading has raised questions over just how tight U.S. crude markets were, especially as oil production remained at record highs of over 13 million barrels per day. Expectations of tighter global oil supplies- following Russian supply curbs, geopolitical disruptions in the Middle East and increased U.S. refinery activity- powered oil prices to four-month highs earlier in March.    More

China’s economy has not “peaked” and its growth prospects remain “bright”, Xi Jinping told visiting US chief executives on Wednesday as Beijing sought to revive foreign investor confidence in the world’s second-largest country. Meeting the group of about 20 US business figures, who included Chubb’s Evan Greenberg, Blackstone’s Stephen Schwarzman and Qualcomm’s Cristiano Amon in the Great Hall of the People in Beijing, Xi insisted that Beijing remained committed to reform. “China’s reforms will not stall, and our opening up will not stop,” he said, according to state media.The meeting, which included a group photo, comes as concern is growing among China’s trading partners that Beijing is investing heavily in manufacturing to overcome a deep property slowdown, leading to oversupply and potential dumping in international markets.China has set a growth target of 5 per cent this year, the same as last year’s figure and the lowest in decades, but analysts believe it will be difficult to achieve without an increase in domestic demand.“China’s development, having overcome various difficulties and challenges, has not collapsed . . . in the past, nor will it ‘peak’ now,” Xi told the executives.China’s President Xi Jinping, centre, with US chief executives and business group leaders in Beijing on Wednesday More

Credit for the construction and purchase of residential and commercial real estate tanked 31% in 2023 from 2022, VDP said, but the final three months of 2023 revealed a 5.2% increase in lending from the same period a year earlier.This “suggests that the financing business is beginning to stabilize,” said VDP’s chief executive Jens Tolckmitt.”We expect new real estate financing business to pick up slightly in the current year.” More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The first customs duties on digital products such as online films and software downloads will hit consumers and businesses in 2026, increasing prices in some countries, the head of the World Trade Organization has predicted. Ngozi Okonjo-Iweala said some governments would refuse to extend a 30-year exemption when it expired in two years’ time. A further extension requires unanimity among members. “I don’t think the membership is prepared to continue arguing over this every couple of years. So they’ve agreed on this date. It sends a signal to business on what they need to do,” the WTO’s director-general told the Financial Times. “Two years is a very reasonable timeframe.”Some developing economies such as India, Indonesia and South Africa hope online tariffs will significantly raise their tax revenue but other WTO members argue that the move will increase costs and reduce competitiveness as the levies are passed on to consumers. Business groups, which lobbied to extend the so-called ecommerce moratorium at the WTO’s biennial ministerial conference (MC13) this month, still hope WTO members will continue it at the next meeting in Cameroon in 2026.“Customs duties on electronic transmissions would lead to higher costs for all digitally enabled trade and decrease competitiveness for businesses adopting digital tools, especially small and medium-sized businesses,” said the Global Services Coalition, a pan-sectoral business group. But Indonesia only agreed to the two-year extension after a late-night call between Okonjo-Iweala and finance minister Sri Mulyani Indrawati as the conference was closing on March 2, according to officials in the room. The two are former World Bank colleagues.India, which has consistently called for the moratorium to end, also only acquiesced to the extension in the final hours. Along with other developing countries such as South Africa and Pakistan they believe they are losing tax revenue because most digital products are imported from richer countries. Indonesia is already designing a system to impose duties on digital goods. Okonjo-Iweala stressed that most governments would continue to exempt ecommerce duties even after 2026. The US, China, EU member states and most of Latin America are among more than 80 countries negotiating a voluntary moratorium. “Those that wish to continue . . . not charging customs duties on electronic transmissions can do that. Nothing stops them.”She urged member governments through their WTO missions in Geneva to advance work on which ecommerce products should face duties. “Decisions should be made based on facts,” she said. Studies by the OECD and other groups suggest that developing countries would suffer more than developed ones if duties were introduced as they would lose access to productivity enhancing online tools. Okonjo-Iweala suggested annual ministerial meetings would help avoid the climactic horse-trading witnessed at MC13 in Abu Dhabi. “The long gap leads to more drama,” she said.Ministers must also find time “to discuss the issues that affect trade”. These include not only digital trade but also climate change and the rise of states using economic security concerns to restrict trade.However, she rejected criticism of MC13, which failed to achieve breakthroughs on issues such as a ban on subsidies for overfishing and a reduction in agricultural subsidies, pointing out that members had agreed to phase in tariff increases for poorer countries that exit “least developed country” status to aid their development.Okonjo-Iweala said she was “optimistic” about hitting a year-end deadline for reforming the WTO’s dispute resolution function. The US in 2019 blocked appointments of arbitrators to appeal panels, allowing member states to avoid binding penalties.After elections in India and the US later this year, she was optimistic there would be “overall much more leeway and a more constructive approach” on the appeals body and other issues. More

As Xi Jinping toured China’s central Hunan province last week, local officials were called forward to inform the nation’s powerful leader on their plans to accelerate the development of “new quality productive forces”.The slogan, rooted in 19th-century Marxist thinking, has in early 2024 become shorthand for Xi’s vision of economic growth underpinned by China’s increasingly advanced manufacturing industries. This month the phrase was used nine times in a 6,000-word essay published by state news agency Xinhua, which also elevated the importance of Xi’s economic reform programme to that of Deng Xiaoping, whom many regard as the architect of modern China. It was also listed as the government’s top economic priority for 2024 by Xi’s number two, Premier Li Qiang, when he confirmed China’s economic growth target of about 5 per cent earlier in March. He Shujing, an analyst with Beijing advisory group Plenum China, says the emergence of the term is “a clear signal that China’s top leaders believe that the country needs to enter a new stage of structural transformation”. The requirement to adopt a “new path” of original innovation is a departure from its previous path of technological advancement through emulation, she adds.However, Xi’s pivot towards high-technology manufacturing, rather than relying on incentives to boost consumer-led growth, is drawing scrutiny at home and abroad. Economic growth has slowed since the pandemic, the country’s 1.4bn citizens are hoarding savings rather than spending and foreign direct investment has waned. That weak domestic demand has raised fears that many of the high-tech products Xi espouses will end up being dumped on to export markets. “For this to work, China must expand its share of global manufacturing. That needs to be accommodated by the rest of the world. The rest of the world is unlikely to do that,” says Michael Pettis, a finance professor at Peking University and senior fellow at think-tank Carnegie China.Xi’s administration has won praise for finally calling time on the unsustainable build-up of trillions of dollars in debt by China’s real estate developers and most of its provincial governments. But his administration’s failure to find new consumer-focused drivers of economic growth has raised more fundamental questions about the economic direction chosen by the country’s most powerful leader since Mao Zedong. You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Never in the post-Mao era has the Chinese Communist party pursued a growth path where property and infrastructure were not among the leading drivers of investment, economists say. Nor has a major modern global economy ever orchestrated a soft landing from decades of debt-fuelled growth without providing significant support for households and consumers.Twelve years into his leadership, Xi appears clear-eyed about the challenge as he steers the world’s second-biggest economy into uncharted territory. “This is an unprecedented path, but we will continue to explore it and forge ahead with courage,” he was quoted by state media as saying.China, experts say, is an outlier when it comes to the proportion of economic growth it derives from investment. According to World Bank data, investment as a percentage of global gross domestic product has for decades hovered around 25 per cent. In high-investing countries, usually in the developing world, it generally varies between 30 and 34 per cent. In China, it has held above 40 per cent for two decades, Pettis points out. About two-thirds of that investment has gone into property and infrastructure. But while these remain big parts of the Chinese economy, they are no longer expected to underpin growth. In 2021, in what is now regarded as a landmark moment, Beijing imposed its “three red lines” on real estate companies to address skyrocketing leverage in the property sector. Housing is for living, Xi declared, not for speculation.Three years later, there is mounting evidence that similar treatment is being meted out to those provincial and local governments that spend unsustainable amounts on unproductive infrastructure. According to a document viewed by the FT, the State Council, China’s cabinet, has barred 10 debt-laden provinces and regions and two big cities from building highways, government buildings and other new projects. A further 19 regions have been encouraged to report their most indebted cities, so the central government can work out further debt reduction plans.Electric cars are parked at a distribution centre in Chongqing. The US and EU have launched probes into China’s EV industry, the former targeting security risk and the latter over claims of unfair state support More

The Australian dollar eased 10 ticks to $0.6525 and three-year bond futures bounced from earlier lows to be steady at 96.40, while markets continued to bet that any rate relief would likely start in August or September. Data from the Australian Bureau of Statistics on Wednesday showed its monthly consumer price index (CPI) rose at an annual pace of 3.4% in February, unchanged from January and under forecasts of 3.5%. For the month, CPI rose 0.2%. The three-month annualised pace is 2.4%, within the central bank’s target band of 2% to 3%. However, a closely watched measure of core inflation, the trimmed mean, rose an annual 3.9%, up slightly from 3.8% in January. Policymakers had forecast the gauge to fall to 3.6% by June. Holiday travel and accommodation prices fell by a sharp 9.3% in February from a month earlier due to lower demand following the end of the school holiday period.Slowing inflation is one reason that the Reserve Bank of Australia (RBA) kept interest rates unchanged at 4.35% for a third straight meeting this month and softened its stance by dropping a tightening bias. RBA Governor Michele Bullock has not ruled anything in or out on policy, saying risks are “finely balanced”. Markets had long wagered the tightening campaign is over but only a modest amount of 40 basis points in easing is expected this year.Weakness in the labour market in December and January appeared overstated as data showed the economy added a staggering 116,500 jobs in February and the jobless rate ticked down to 3.7% from a two-year high of 4.1%. The February CPI report, which provided an update on more services in the first quarter of the year, showed rent inflation accelerated to 7.6% in February from 7.4% the previous month while insurance prices rose 8.4% from a year ago, speeding up from 8.2% in January. More