Aurelia Butler

WASHINGTON (Reuters) – Republicans who control the U.S. House of Representatives said they do not expect to move forward this week on a stopgap funding measure to keep federal agencies open, even with a possible government shutdown just 10 days away.Instead, House Speaker Mike Johnson was due to present at least three options for a stopgap known as a continuing resolution, or “CR,” to lawmakers at a closed-door Republican conference on Tuesday morning, the lawmakers said.Funding for government operations is due to expire on Nov. 17 unless Congress agrees on a temporary spending measure that President Joe Biden can sign into law before the deadline. Otherwise, federal agencies will have to close their doors for an indefinite period. But with this week already shortened by a Veterans Day observance on Friday, three Republican lawmakers who spoke on condition of anonymity said the House was unlikely to approve a CR this week. One lawmaker said a Republican policy of waiting three days before voting on legislation left little time to act this week.House Republicans are due to focus the agenda for the week on passing their own partisan appropriations bills for 2024. Another lawmaker said Republicans are considering at least three options for structuring a CR, including a “laddered” option that would assign separate deadlines in December and January by which time the House and Senate would hammer out compromise legislation on specific 2024 appropriations bills. Details were uncertain. Republicans will also consider a more conventional CR that would run to a Jan. 19, leaving December for lawmakers to work on appropriations bills and supplemental funding requests including Israel, Ukraine and other priorities.The lawmaker said a third option would be to negotiate with the Democratic-led Senate on a CR that can pass both chambers quickly.The House has passed seven of 12 appropriations bills for 2024 and will try to pass another two this week, aimed at funding transportation, housing and urban development; and financial services. The Senate has passed three appropriations bills in a package known as a minibus.While the Senate legislation enjoys strong bipartisan support, the House has passed only partisan Republican measures opposed by Democrats. Only one category of appropriations legislation, covering military construction and veterans benefits, has passed both chambers in markedly different forms. More

The IMF has raised its forecasts for China’s economic growth, citing stronger policy support from Beijing, as Chinese regulators used a gathering of top Wall Street heads in Hong Kong to push back against investor gloom over the country.The fund said China’s gross domestic product would grow 5.4 per cent in 2023, upgrading its previous forecast of 5 per cent. It came as China released weaker than expected export data, adding to recent mixed readings on retail spending, manufacturing and consumer prices.“The authorities have introduced numerous welcome measures to support the property market,” the IMF’s first deputy managing director Gita Gopinath said in a statement. “But more is needed to secure a quicker recovery and lower economic costs during the transition.” Beijing has been battling to improve confidence in the economy, which has struggled to rebound after stringent Covid-19 lockdowns last year, a property sector meltdown and weakness in export industries.Foreign investors have dumped tens of billions of dollars worth of Chinese stocks and bonds this year, a trend exacerbated by much higher interest rates in the US.The IMF said it had also upgraded its forecast for China’s growth next year from 4.2 per cent to 4.6 per cent but cautioned that weakness in the property sector and subdued external demand would persist.Over the medium term, GDP growth was projected to decline gradually to about 3.5 per cent by 2028 because of weak productivity and an ageing population, said Gopinath.“A strategy to contain the risks from the ongoing property sector adjustment and manage local government debt is needed to lift sentiment and boost near-term prospects,” the fund said. “Supportive macroeconomic policies should complement these efforts.”But at a Hong Kong investor conference on Tuesday, one of the territory’s flagship events for the global financial community, China’s top officials said they were not “too” worried about the country’s economy. He Lifeng, China’s vice-premier and a powerful Communist party official overseeing China’s economic and finance affairs, said in a pre-recorded message that China would achieve its official growth target of 5 per cent this year.“You may ask me, are you worried?” said another official, Zhang Qingsong, deputy governor at the People’s Bank of China, who attended in person, on China’s economy. “Not too much,” he told the event, which was attended by some of the most powerful executives in global finance, including Morgan Stanley’s James Gorman, Goldman Sachs’s David Solomon, Citadel’s Ken Griffin and Mark Rowan of Apollo Global Management.Zhang said China’s economic fundamentals were stable and its government debt was “lower than [in] many other advanced economies”. Many of China’s largest developers have defaulted on their debts, prompting calls for a sector-wide bailout. But Zhang described this as “a natural selection and market-clearing process”.“Having said that, we need to carefully manage the pace to avoid a sharp downturn and unintended consequences . . . I prefer to let the market play its role, but do policy adjustments if necessary,” Zhang said. “We are quite optimistic about the future of China’s property market.” The positive messaging from regulators came after one-third of listed Chinese companies reported third-quarter results that fell short of expectations — the most in half a decade, according to an analysis by Morgan Stanley.China’s benchmark CSI 300 index has fallen more than 6 per cent this year.But Wang Jianjun, vice-chair of the China Securities Regulatory Commission, the market watchdog, said the domestic debt and equity markets were “full of opportunities right now”.“It’s never too late to catch the China train — you can still ride the dragon to heaven,” Wang said.China’s exports dropped 6.4 per cent in October compared with the same period a year earlier, the sixth consecutive month of declines and worse than a Reuters survey of analysts that forecast a 3 per cent fall. In one positive sign, however, China’s imports expanded year-on-year for the first time since February, rising 3 per cent.“The disappointing exports point to external headwinds to the still fragile recovery, while the much-better-than-expected imports suggest domestic demand could be bottoming out on policy support,” said Citi analysts in a note.Additional reporting by Chan Ho-him in Hong Kong and Tom Hale in Shanghai More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Australia’s central bank has raised interest rates for the first time since June in response to persistent inflation.The Reserve Bank of Australia increased interest rates by a quarter of a percentage point to 4.35 per cent and raised its inflation expectations for 2024. It said that while inflation had peaked this year, it was still “too high” and was returning to a target range of 2 to 3 per cent — which it is now expected to reach in 2025 — more slowly than anticipated.The action by the Australian central bank, which raised interest rates 12 times between April last year and June to an 11-year high, runs contrary to decisions by global peers including the Bank of England, the Federal Reserve and the European Central Bank, which all opted to hold rates in the past month.The increase was the first under Michele Bullock, who replaced Philip Lowe as governor of the RBA in September. The tightening was widely anticipated after data showed inflation and consumer spending had risen over the past month.Bullock said growth in the Australian economy was below its historical trend but had been stronger in the first half of the year, with house prices rising and the labour market still tight.“If high inflation were to become entrenched in people’s expectations, it would be much more costly to reduce later, involving even higher interest rates and a larger rise in unemployment,” she said in a statement.Analysts had put an 80 per cent chance on the prospect of an increase this time, but they were split over whether the RBA would raise rates again in December ahead of new inflation data in February.Paul Bloxham, chief economist for Australia and New Zealand at HSBC, said: “We see the RBA as now in ‘calibration mode’ . . . we expect that a follow-up hike in December is unlikely.”Citi’s Josh Williamson noted that the RBA had increased its inflation forecast and lowered its unemployment prediction despite the rise in interest rates, meaning it appeared comfortable with the economy running “even hotter” as long as productivity increases matched wage growth. Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, said the return to tightening would add to the “tightrope” for businesses in the country as they sought to manage higher costs, maintain competitive pricing and cope with changes to industrial relations and laws. “Though the hike is intended to combat inflation, it adds another layer of stress on businesses grappling with high input costs and emerging wage pressures,” McKellar said. More

Chinese businesses are retreating from the US as relations between the world’s two largest economies deteriorate.Chinese investment plunged to $2.5bn in the US last year — the lowest in more than a decade and down from a record $48bn in 2016, according to an analysis by Rhodium Group, a think-tank. Business activity, including revenue and local employment, at Chinese companies that were already present in the US market has also declined.“The environment in the US has become more challenging for Chinese investors,” says Adam Smith, a partner at law firm Gibson Dunn and a former US Treasury adviser. “Being concerned about China has become a real bipartisan issue upon which almost everybody can agree, rightly or wrongly.”More than 80 per cent of Chinese companies cited the stalemate in bilateral relations as the leading challenge for business, according to the latest survey conducted by the China General Chamber of Commerce, which represents Chinese investors in the US. More than one-third reported unstable US policies towards foreign investment as a concern.“We used to be a panda . . . We were liked by everybody but, then, we became the skunk, and people are afraid of getting close to you,” says Pin Ni, president of Wanxiang America, a subsidiary of China’s largest auto components manufacturer.Ni adds that, while the company is a US legal entity and has operated in the country for nearly 30 years, potential business partners have become wary of its Chinese connections. “People still say, ‘Oh, as long as you carry the name, it looks like you’re Chinese. If you’re Chinese, then we’re concerned.’”After former president Donald Trump imposed tariffs on billions’ worth of Chinese goods, his successor Joe Biden has banned outbound investment in strategic sectors and created historic subsidies for domestic semiconductor and clean tech manufacturing. These include provisions that exclude Chinese companies or sourcing.While other East Asian countries have announced dozens of large-scale cleantech and chips projects in the past year, Chinese companies that have attempted to make large US investments have faced backlashes and divided local towns that need jobs and new business.Last month, Republican presidential candidate Vivek Ramaswamy criticised Chinese battery company Gotion’s planned factory in Big Rapids, Michigan, arguing “we will not let our children become Chinese serfs”.“It’s tearing us apart . . . The community is divided really in a bad way, and I have friends on both sides of the issue,” says Fred Guenther, mayor of Big Rapids, who has received death threats for his support of Gotion’s factory, which promises to create more than 2,000 jobs in the community.The Committee on Foreign Investment in the United States — the federal agency responsible for screening — reviewed a record number of transactions in 2022, with Singapore and China among the top investing countries. China filed 36 notices last year, down from 44 in 2021 but more than double the number in 2020.State governments are also moving to crack down on foreign investment. About three dozen states have proposed bills that would restrict foreign ownership of land this year, up from 12 proposals last year. Some 24 states have enacted bans, primarily targeting agricultural land and foreign adversaries such as China, according to the National Agricultural Law Center.Micah Brown, a senior attorney at the NALC, says the majority of laws enacted in 2023 are targeted at “foreign adversaries” and have become “political flashpoints” for national security.“This is about where your loyalties lie,” Arkansas Republican governor Sarah Huckabee Sanders said last month when she announced an agricultural land ban directed at nine foreign entities, including China, and forced Swiss seed company Syngenta to sell 160 acres of its land because of its Chinese ownership. ChemChina, a Chinese state-owned enterprise, purchased Syngenta in 2017.Saswato Das, a spokesperson for Syngenta, calls the announcement a “shortsighted action” that “hurts Arkansas farmers more than anyone else”. All of Syngenta’s land holdings have been examined by the US government, and no one from China has ever directed the company to “buy, lease, or otherwise engage in land acquisition in the United States”, says Das.Syngenta has had to sell land More

Deep in rural Minnesota, surrounded by fields of corn and soyabeans, Joe Biden tried to explain the phrase he hopes will kick start his bid for re-election next year.“Folks, ‘Bidenomics’ is just another way of saying the American dream,” he said last week at a farm in Northfield. One year out from an election that many analysts believe could be a defining moment in the country’s history, Biden is persistently behind in the polls and under growing pressure within his party. Over the weekend David Axelrod, who was chief strategist for Barack Obama’s presidential campaigns, suggested it might not be “wise” for Biden to even run in 2024, in part because of his age. Yet Biden is still pressing ahead with a re-election bid and is betting everything on his personal economic blueprint. In recent months, he has embraced the term Bidenomics to promote his ambitious agenda, which is rooted in trillions of dollars’ worth of public investments, a focus on middle-income workers and an aggressive approach to competition policy. Biden insists his policies represent a decisive break from 40 years of “trickle-down economics [which] limited the dream to those at the top”. A new $25mn advertising blitz in key battleground states tries to drive home the point. “Today, inflation is down. Unemployment the lowest in decades. There is more to do, but President Biden is getting results that matter,” the narrator says.But worryingly for Biden and his Democratic party, voters remain overwhelmingly downbeat on the US economy — and place the blame squarely on him. Even if the US is doing better than most of its peer economies, ordinary Americans do not feel that way about their living standards. You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.That leaves Biden vulnerable to attacks from Republicans, who relentlessly accuse him of leaving Americans worse off. For them, Bidenomics is synonymous with acute sticker shock on food and other everyday necessities as inflation remains historically high post-pandemic. “Bidenomics has made everything more expensive for Minnesota farmers, workers, and families,” the Republican National Committee said ahead of the president’s trip to the Midwestern state. “As the cost of farmland and diesel continues to surge, Biden’s policies are crushing those who feed America.” Opinion polling suggests the attacks are working — putting the president on shaky political ground heading into an election year. “The economy perhaps matters less than it used to in determining the outcome of national elections, but for many people, the kitchen table issues, the bread and butter issues, those are still extremely important,” says Maxwell Shulman, a non-partisan policy analyst at Beacon Policy Advisors.A poll from the Associated Press and NORC at the University of Chicago last month showed that nearly three in four American adults describe the national economy as poor. About two-thirds said their household expenses had risen over the past year, and only a quarter said their incomes had increased during the same period.Most worryingly for Biden, a New York Times/Siena poll, published this week, found that just 19 per cent of voters in the battleground states that are likely to determine the outcome of next year’s presidential election — Arizona, Georgia, Michigan, Nevada, Pennsylvania and Wisconsin — said economic conditions were “good” or “excellent”. Joe Biden is welcomed by Minnesota governor Tim Walz in Northfield. where the president told voters: ‘Folks, “Bidenomics” is just another way of saying the American dream’ More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.California’s largest cities plunged in popularity with foreign direct investors last year as an uncertain global economic outlook, high taxes, and Chinese restrictions on outbound deals squeezed capital flows into the Golden State.Los Angeles slumped 10 places in the annual FT-Nikkei ranking of the best cities for foreign businesses, coming 37th out of the 91 largest US cities in this year’s ranking. The largest city in California attracted 51 investment projects by foreign-owned enterprises last year, the lowest figure in five years. In the first seven months of 2023, only 20 such projects were announced, according to fDi Markets data.The state, if it were a country, would be the world’s fifth-largest economy. Yet no major Californian city was ranked among the top 20 US hubs for luring foreign businesses in our listing. A handful of notable deals, such as by Beijing-based TikTok owner ByteDance, which leased premises for its new headquarters in San Jose, and an announcement by Italian electric vehicle battery maker Italvolt that it would build a gigafactory in southern California’s Imperial Valley, failed to energise dealmaking by foreign investors in some of the bigger cities.The state has been criticised for its high cost of living and tax rates, as well as its more demanding regulatory environment and social policies that, in some cases, have pushed businesses elsewhere, notably Texas and Florida. On a statewide basis, however, California recovered some of the pandemic hit to foreign direct investment (FDI) inflows in 2022, gaining 271 foreign-owned enterprises, compared with a drop of 500 the year before. The bulk of investment into the state has come from Japan, the UK, France and Canada, as well as an in­creasing sum from Germany. In August, German auto parts maker Bosch acquired the chipmaking facilities of TSI Semiconductors in Roseville, a suburb of Sacramento, and said it planned to invest $1.5bn in the site.The FT-Nikkei ranking showed that investor sentiment had soured for some Californian cities. San Francisco was ranked the 31st most attractive city in the US for foreign investment, down three spots on the previous year. FDI in the wider Bay Area fell sharply in the wake of the Covid-19 pandemic, plunging from 98 deals in 2019 to around 47 in 2021, according to fDi Markets.Meanwhile, San Diego, in southern California, fell four places to 29th in the ranking. Other Californian cities, such as Sacramento (the state capital), Irvine and Anaheim, improved their scores last year, but all still lingered in the bottom half of the ranking overall.This ranking is a compilation of data on the economic, regulatory and social characteristics of US cities with more than 250,000 citizens, using more than four dozen metrics, including business environment, workforce and talent, and quality of life. Los Angeles suffered a sharp drop after a decade-long boom in its economy during which Asian and European capital flooded into its entertainment, aerospace and tourism industries. Chinese companies were some of the biggest investors in LA hotels, office buildings and other commercial real estate in the past decade. However, China has limited outflows of investor cash in recent years and growing geopolitical tensions between Washington and Beijing have halted even more deals.The number of Chinese foreign-owned-enterprises in California has fallen 14 per cent since 2021, according to the World Trade Center Los Angeles, a body that supports business between LA and foreign companies.“After 2008, LA became a primary destination for multibillion-dollar investments from China,” says Stephen Cheung, chief executive of the LA Economic Development Corporation. “Now, we’re definitely seeing the fluctuation. When the Chinese government switched its policy to capital flow restriction, we saw a sharp decline.” Investment from Chinese businesses is still happening, Cheung adds, but at far lower values.A string of Chinese property developers, which had invested heavily in the city, defaulted on loans in the past two years, forcing them to halt developments and put land up for sale. China Oceanwide spent $1.1bn on a project downtown LA where it planned to build a Park Hyatt hotel and 500 condos, but ran out of cash and needed to stop construction in 2019.A view of the unfinished Oceanwide Plaza in Los Angeles in 2019 More

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