Aurelia Butler

What will Chinese GDP data reveal about the economic rebound?Chinese economic growth will take centre stage next week when Beijing releases its first-quarter data on the country’s gross domestic product — and markets are primed for a strong reading.Customs figures released on Thursday showed Chinese exports rose almost 15 per cent year on year in March, snapping a five-month run of contraction and registering a substantial jump where economists had expected a drop of 7 per cent. That, combined with decent manufacturing and services sector activity readings, has bolstered expectations of first-quarter GDP, which is slated for publication on Tuesday, beating recent forecasts.A median forecast from analysts polled by Bloomberg points to expectations of a 3.9 per cent rise compared with a year ago. But some economists have pencilled in a substantially higher figure — such as those at Standard Chartered, who expect growth to clock in at 4.9 per cent.Markets will also be on alert for higher-than-expected March readings on China’s industrial production and retail sales, which are tipped to clock in year-on-year growth of 4.7 and 8 per cent, respectively.“Next week’s Q1 GDP data will reflect the extent of China’s reopening rebound,” said Khoon Goh, head of Asia Research at ANZ. Goh added that strong readings from the latest Chinese purchasing managers’ indices “certainly points to upside risk to the Q1 GDP data”. Hudson LockettWill UK inflation finally fall significantly?Economists expect UK inflation to finally decelerate significantly in March, reversing the unexpected acceleration to 10.4 per cent in February and in line with the declining trend seen in other major economies.Analysts polled by Reuters forecast that headline inflation, released on Wednesday, will have dropped to 9.8 per cent in March. They expect core inflation, which strips out volatile food, energy, alcohol and tobacco prices, to have fallen back to 6 per cent after rising from 5.8 per cent to 6.2 per cent between January and February.“Following the significant upside surprise in the February numbers, we expect a clear easing back to have taken place in March,” said Sandra Horsfield, economist at Investec. She explained that the fall would be largely due to lower petrol prices, “but lessening supply chain disruptions and lower shipping costs may have led goods price inflation lower too”. This is particularly the case for goods such as clothing and furniture.In March, inflation slowed to a 13-month low in the eurozone and to the lowest rate in nearly two years in the US.The Bank of England’s Monetary Policy Committee will also pay close attention to the labour market data, released on Tuesday. Analysts forecast a slight pick-up in the unemployment rate and further slowing in wage growth.Together the figures will help policymakers decide on interest rates at their next meeting, on May 11. Markets are currently split between the BoE raising the benchmark rate by another quarter point or leaving it at the current level of 4.25 per cent. Valentina RomeiWhat will bank earnings tell us about the health of the US financial system?The fallout from the March turmoil for the banking industry — and for the financial system more broadly — should be evident in the coming week as the first-quarter earnings season gathers pace. It kicked off for the financial industry on Friday with reports from JPMorgan, Citigroup, Wells Fargo and BlackRock, and there is a wider array on the docket for next week. Among other big banks, Bank of America and Goldman Sachs report on Tuesday and Morgan Stanley on Wednesday. Broker and investment group Charles Schwab reports on Monday and super-regional banks such as US Bancorp and Citizens report on Wednesday. US banks with big consumer businesses, like Bank of America, are expected to show a wave of deposits coming in after the failure of Silicon Valley Bank and Signature led fearful customers to pull out of smaller institutions. But that trend is unlikely to have offset the millions in outflows in the first weeks of the year as customers pulled deposits out of banks and into higher yielding alternatives such as money market funds. Though big banks benefited from some of the deposit outflows from smaller banks, the move out of bank accounts more broadly has continued, and companies with big money market businesses, like Goldman Sachs, are expected to have benefited from the surge. Schwab, whose shares have fallen more than 30 per cent since the collapse of SVB on fears it too could face a run on deposits, could recover some territory if it posts strong earnings. Across all these institutions, investors will be on the lookout for any signs of distress — due to deposit flight or interest rate risk management — or changes to lending or trading businesses. Kate Duguid More

Companies have committed more than $200bn to US manufacturing projects since Congress passed sweeping subsidies last year, as president Joe Biden’s effort to spark a new industrial revolution gains momentum.The investment in semiconductor and clean tech investments is almost double the commitments made in the same sectors in the whole of 2021, and nearly twenty times the amount in 2019, according to data compiled by the Financial Times. While the FT identified four projects worth at least $1bn each in these sectors in 2019, there were 31 of that size after August 2022. There has been more than $40bn in planned capital spending since the start of the year. Asian giants LG, Hanwha, and LONGI have all announced deals in the past month, taking total large-scale investments to $204bn on April 14.“We see right now the tectonic plates are shifting with respect to investment in the United States,” said US energy secretary Jennifer Granholm this week, referring to the surge of investment in recent months.The Inflation Reduction Act, which became law last August, includes $369bn of tax credits for clean technologies as the Biden administration of pledges to decarbonise the US economy. Another law passed last August, the Chips and Science Act, includes $39bn in funds to stimulate semiconductor manufacturing and $24bn worth of manufacturing tax credits. Both are also designed to break US dependence on Chinese supply chains.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

The industrial policies have drawn fire from European and Asian allies, who have claimed their deep subsidies and made-in-America requirements amount to protectionism. Emmanuel Macron, president of France, who visited China last week in an attempt to improve Paris’s relations with Beijing, has said the IRA could “fragment the west”.The EU unveiled a rival industrial strategy last month with provisions to match subsidies for projects at risk of going abroad. While most US manufacturing commitments since August have come from domestic suppliers, roughly a third are from foreign-headquartered companies, according to the FT’s data. Taiwan, South Korea and Japan make up the bulk of the foreign investment. The FT tracked more than 75 manufacturing projects worth at least $100mn each for plants to make semiconductors, electric vehicles, batteries, and renewable energy components, that have been announced since the bills became law in August. The announcements would create about 82,000 jobs, according to the analysis. More projects are expected to be announced in the coming months as the US government provides more guidance on the tax credits.“The magnitude of these investments together is pretty staggering,” said Cullen Hendrix, senior fellow at the Peterson Institute for International Economics. “This is attempting to go from zero to 100 miles an hour in terms of supply chain development in a way that we haven’t seen in quite a while.” More

WASHINGTON (Reuters) – U.S. House Republicans will try to agree on a plan to lift the federal $31.4 trillion debt ceiling and cut government spending when Congress returns this week, after being stymied for months by Democratic President Joe Biden’s demands they do so without conditions.House of Representatives Speaker Kevin McCarthy in a Monday speech at the New York Stock Exchange will lay out the conditions Republicans want Democrats to agree to in exchange for movement on the debt ceiling. He has offered few specific details ahead of the talk, but Republicans have proposed holding annual spending growth to 1% for a decade, reducing regulation and boosting energy production.Members of McCarthy’s sometimes-fractious caucus, who hold a narrow 222-213 majority, have yet to agree on actual legislation. Any proposal Republicans introduce would need to be negotiated with Biden’s Democrats, who control the Senate, before it could become law.The White House, which is leading the Democrats’ approach to the debt ceiling, has dismissed the Republican proposals as unrealistic.Nonpartisan forecasters have warned the federal government could face a historic default this summer if Congress fails to act. A default could cripple the U.S. and world economies and force a downgrade of the U.S. credit rating, as occurred in a 2011 standoff over the debt.But McCarthy’s speech, which Republicans say is intended to draw Wall Street’s support for negotiations on spending, could spark movement after months of inaction. Biden has insisted that Congress pass a “clean” debt hike without conditions, noting that it did so three times under his predecessor, Republican Donald Trump.”At this point, I think there’s no choice for Republicans and the speaker but to bring forward some type of proposal,” Representative Tom Emmer, the No. 3 House Republican, told Reuters.The prospective legislation, which conservatives hope to pass by the end of April, could lift the borrowing limit until May 2024, according to a source familiar with the matter. That would set the stage for another debt ceiling debate in the closing months of the 2024 presidential campaign.But first, Republicans must agree on a proposal that can win the support of at least 218 of their 222 members.”Getting us all on the same page is a challenge. But it’s not impossible and I’m optimistic that we’ll get there. This is an issue we’ve been talking about for some time,” said Republican Representative Ben Cline.Cline, a member of the hardline House Freedom Caucus, sits on both the House Budget and Appropriations Committees and is helping to craft a budget plan for the conservative Republican Study Committee, the biggest caucus in Congress. RISKSThe White House has dismissed the proposals so far.”Speaker McCarthy is adopting the extreme MAGA House Republican position: threatening our economic recovery, hardworking Americans’ retirement, and catastrophic default in order to force devastating cuts,” said White House spokesperson Andrew Bates.House Republicans maintain that their proposals would win enough public support to force Biden and the Democrats into negotiations, just as the party’s bill to overturn changes in the Washington, D.C., criminal code passed Congress last month, despite initial Democratic opposition.Biden and McCarthy met at the White House in February to discuss the standoff, but they have not held further talks as the administration has called on House Republicans to release a budget proposal.The White House in March unveiled its own budget proposal that it said would cut U.S. deficits by $3 trillion over the next 10 years. But with the House Budget Committee not expected to produce a spending plan anytime soon, the Republican focus has shifted to the debt ceiling plan.Republican Representative Garret Graves, a top McCarthy adviser who has led debt ceiling talks within the Republican conference, said legislation could follow the outline set in a March 28 McCarthy letter to Biden. “We’re continuing to discuss both strategy and putting a little more meat on the bones or translating the speaker’s letter into legislation,” Graves said in an interview.While McCarthy’s letter contained few details, Republicans are considering proposal that could reset nondefense discretionary spending to fiscal 2022 levels, hold annual spending at 1% for a decade, reduce regulation, boost energy production and reset the debt ceiling to a ratio of debt to gross domestic product.’FIVE FAMILIES’The Republican conference is divided by ideological caucuses known internally as “the five families,” a reference to the warring mafia clans of “The Godfather” movies.The five families, who are expected to take up the plan early next week, run the gamut from members of the bipartisan Problem Solvers Caucus, who have floated the idea of reaching a deal with Democrats to avoid default, to the hardline conservative House Freedom Caucus, whose members insist on deep spending cuts and say Biden will be responsible for any default.Some Republicans also favor the clean debt ceiling increase that Biden has demanded. More