Aurelia Butler

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In March, Tim Cook was among the first batch of foreign executives to land in Beijing to court high-level officials after the lifting of pandemic-era restrictions, with Apple’s chief lauding how the company and China had grown together in a “symbiotic relationship”.Six months on, that relationship is under strain. Apple is facing new competitive pressures in a country that is not only its largest manufacturing hub but also its biggest international market, responsible for nearly 20 per cent of sales in its last quarter.A share sell-off cut almost $200bn from Apple’s market capitalisation this month after news that various government agencies had imposed bans on the use of Apple products in government departments and state-owned enterprises. The Ministry of Foreign Affairs on Wednesday denied any formal prohibition but alluded to iPhone-related “security incidents” and told smartphone makers to comply with the law.The US was “watching with concern”, a spokesperson for the White House’s National Security Council responded, adding that China’s actions appeared to be in line with retaliation against other US companies as tensions increased between the two superpowers. Apple declined to comment.Thus far, the company has retained an exalted status in China, avoiding the fate of other US tech titans, including Google, Meta, Twitter and Micron, which have seen products restricted or outright banned.Cook, chief executive since 2011, has been praised as the “architect” of Apple’s production shift to China after originally being hired by Steve Jobs in 1998 to run worldwide operations. Under Cook’s leadership, years of investment, marketing and careful corporate diplomacy allowed Apple to orchestrate a manufacturing powerhouse while generating more China-based profit than any other company, western or Chinese.Paul Triolo, an associate partner at advisory group Albright Stonebridge, said the company “invested a lot in its relationships with both the central . . . and municipal governments, particularly in Zhengzhou”, where it has partnered with Foxconn and created hundreds of thousands of jobs. He added that Apple had been “very careful” to abide by local regulations, taking down politically sensitive apps.Along with concerns over possible curbs on Apple products, a fresh competitive threat has emerged with the unexpected launch of a new Huawei smartphone in China at the end of August. The Mate 60 Pro sold out immediately on a patriotic wave of enthusiasm, as teardown experts revealed it was running advanced Chinese chips inside. US sanctions against Huawei had previously crippled the capabilities of its handsets and enabled Apple to dominate sales of high-end smartphones in China.Apple shares fell further after the less than overwhelming launch on Tuesday of the iPhone 15 series, but industry experts said the recent share falls due to events in China were overdone.Gene Munster, managing partner at Deepwater Asset Management, said a “worst case” was that the ban inside government would cut global iPhone sales by 2 per cent and overall revenues by 1 per cent in 2024. The Financial Times previously reported that restrictions on government employees using Apple devices already stretched back several years.“Beijing will be very reluctant to take further actions that weaken Apple’s position in China because this would have a very negative impact on the business climate,” said Triolo.The Apple-China relationship had been a “win-win” for both parties, he added. Apple had upgraded Chinese manufacturers’ production standards and processes while protecting its intellectual property by diversifying its supply chain to ensure no one supplier could replicate its products.Three former Apple employees with experience in China suggested the company was unlikely to be worried and suggested that Beijing appeared to be engaging in some tit-for-tat action to counter the US’s hardening anti-China policies.“This shot across the bow wasn’t really to Apple,” one of the people said. “It was to the US government. This is China flexing.”China’s lack of any public directive against Apple also contrasts its explicit stance when it banned US memory-chip maker Micron from key infrastructure in May, saying it posed “serious network security risks”.Even so, Cook faces a “delicate balancing act” to diversify more production outside of China while maintaining close ties with Beijing, said one former executive of Foxconn, the Taiwanese company that assembles the bulk of Apple’s iPhones in China.Apple has 14,000 direct employees in China, but experts estimate it supports more than 1.5mn jobs in the country. Under the strain of US-China tensions, Apple has begun shifting parts of its production to Vietnam and India.Against this backdrop, experts said Beijing would be keen to support homegrown alternatives to Apple such as Huawei — which was briefly the biggest-selling phonemaker in the world before US sanctions banned it from accessing certain foreign components, forcing it to discontinue sales of its 5G smartphones.The Shenzhen-based company’s China sales are now supported by its perceived status as a “national champion” by consumers, but even its top-of-the-range Mate Pro still lags the iPhone in technical aspects.“Huawei has delivered something that is a generation behind. They’re going to be playing catch-up for a long time,” said Ivan Lam, analyst at Counterpoint Research in Hong Kong, who added that Apple had 80 per cent of the market for phones priced at more than $800.“For Huawei to convert that back to 50:50 will be very challenging, or not even possible.”Additional reporting by Joe Leahy in Beijing More

Her comments were among the first by a senior member of Prime Minister Justin Trudeau’s Liberal administration to acknowledge the scale of the challenge. Polls show the Liberals trailing their Conservative rivals, who blame Ottawa for high inflation and soaring home prices.Housing is mainly the responsibility of the 10 provinces as well as major municipalities, with Ottawa’s role limited to policy advice and financial incentives.”It will take all of us — the federal government and the provinces, cities and towns, the private sector and non-profits … working together in common cause, not for weeks or months, but for years,” Freeland said.”Building the homes a growing Canada needs will require another great national effort,” she told a Montreal conference, saying the country would have to build homes at a speed and scale not seen since the 1940s and 1950s.In a bid to boost supply, the government has said it will remove the federal 5% consumption tax on the construction of new rental apartment buildings and is telling cities to do more to address the issue. More

“On November, we think that further labor market rebalancing, better news on inflation, and the likely upcoming Q4 growth pothole will convince more participants that the FOMC (Federal Open Market Committee) can forgo a final hike this year, as we think it ultimately will,” the investment bank’s strategists wrote in a report. Goldman’s strategists, however, wrote that they expect the Fed’s “dot plot,” which reflects policymakers’ interest rate projections and will be updated on Wednesday, to show “a narrow 10-9 majority still penciling in one more hike, if only to preserve flexibility for now,” they wrote. As market participants try to gauge the Fed’s monetary policy trajectory, some big investors, including J.P. Morgan Asset Management and Janus Henderson Investors, have said the central bank is likely done hiking rates, following the most aggressive monetary policy tightening cycle in decades. Futures tied to the Fed’s benchmark overnight interest rate were factoring in a 98% chance that the central bank would leave rates unchanged at the end of its Sept. 19-20 meeting, according to CME Group’s (NASDAQ:CME) FedWatch Tool. The odds for the policy rate, which is currently in the 5.25%-5.50% range, staying unchanged at the Oct. 31-Nov. 1 gathering stood at roughly 72% on Saturday, CME’s data showed. Next year could see “gradual” rate cuts if inflation continues to cool, Goldman’s strategists added. They also said the central bank could raise its estimates for 2023 U.S. growth to 2.1% from 1%, when policymakers update their economic projections on Wednesday, reflecting the economy’s resilience.Goldman’s strategists also expect the Fed to lower the estimate for the 2023 unemployment rate by two-tenths of a percentage point to 3.9%, and reduce the estimate for core inflation by four-tenths of a percentage point to 3.5%. More