Aurelia Butler

The government will fend off risks for high-quality property firms and reduce the burden of interest payments for local governments, the outgoing premier said in his work report to the opening of the annual meeting of China’s parliament.”We need to deepen reform of the financial system, improve financial regulation, and see that all those involved assume their full responsibilities to guard against regional and systemic financial risks,” the premier said. China has stepped up its efforts to cope with financial risks as the economy grew by just 3% last year, one of its worst showings in decades. The economy was squeezed by three years of COVID restrictions, a crisis in its property sector, a crackdown on private enterprise and weakening demand for Chinese exports.The premier also gave greater emphasis to institutional reform compared with last year. This came after state media reports on Tuesday that President Xi Jinping plans for an “intensive” and “wide-ranging” re-organisation of state-owned enterprises (SOEs) and Communist Party entities. Xi, who secured a precedent-breaking third leadership term in October, is planning to resurrect the Central Financial Work Commission, two people briefed on the matter told Reuters. That signals Xi’s push to increase oversight of the financial sector. To promote economic growth, China’s top planning agency also said on Sunday the country will advance reforms in key areas and continue to open up to foreign investment.     “We will carry out critical reform tasks to remove institutional barriers that stand in the way of promoting development,” the National Development and Reform Commission (NDRC) said.     China will formulate and implement a plan for another round of state-owned enterprise reform, and move faster to help Chinese companies to become “world-class”, the NDRC said.     China seeks to “create a positive environment in which SOEs show great initiative, private enterprises are not afraid to blaze new trails, and overseas companies feel free to make investment,” it said.     The NDRC also said China will make better use of foreign investment and accelerate China’s transformation into a “powerful trading nation”.   More

China has set its 2023 growth target for its economy at around 5%, according to a government work report released at the opening of the country’s annual meeting of parliament on Sunday. That compares with its 2022 target of around 5.5%. The Chinese economy expanded 3% last year, significantly missing the 2022 target and marking one of the slowest rates of growth in almost half a century. A 2023 government budget deficit target of 3.0% of gross domestic product has been set, according to the report, widening from a deficit goal of around 2.8% last year.In the report, China has set a 2023 target of around 3% for its Consumer Price Index (CPI), unchanged from its 2022 target. The CPI rose 2.0% last year. More

Last week Tokyo was teeming with fund managers from around the world eager to establish how Japan will fare as its biggest trading partners square up for a new cold war. The Daiwa Investment Conference provided the venue and the bento lunch boxes; robots, via their human advocates, provided the most convincing part of the answer. Geopolitics, runs an argument that particularly favours a cohort of Japanese companies, is increasingly colliding with labour shortages. If we really are entering a phase where the manufacturing arrangements of companies in the US, China, Japan and elsewhere (South Korea and Taiwan in particular) are impelled to relocate by a new set of deglobalised carrots and sticks, then automation will be everyone’s best bet when it comes to deglobalised donkey-work. To a significant extent, their slide into this role is already under way: factory automation has always looked like the future, but more so now that cold war-style tensions are forcing a grand reset of manufacturing. Even before the pandemic, Beijing had been deploying the rhetoric of Made in China 2025 to cover a broad range of efforts to secure greater self-sufficiency in tech and specialist manufacturing. The impetus of that campaign has been accelerated by Covid-19, emerging with a much sharper nationalistic edge.As relations between the world’s two biggest economies deteriorated, the US was also free to harden in favour of decoupling. The passage of the nakedly dirigiste Inflation Reduction Act and the Chips and Science Act last year meant that the US and China both entered 2023 with clear and oppositional industrial policies. Japan, whose industrial policy in the 1970s and 80s was both bogeyman and beacon to the world, has been left looking the least interventionist of the trio and, perhaps, best placed to play chief roboteer to the others.All of this has enshrined concepts such as “reshoring”, “nearshoring” and “friend-shoring” as part of the new geopolitical toolkit. However deep the scepticism within the corporate world, the consensus for now is to play along, especially when there are generous incentives to move manufacturing bases and to create shorter and less globalised supply chains.No one is sure how long this period will last, and it may be safest to assume that it is permanent. But as long as geopolitics are in the driving seat, the economic calculations that previously shaped global manufacturing will merely be passengers. Specifically, the pressure on companies to build multiple supply chains and reduce dependency on China creates new constraints on the ability to chase cheap labour wherever it is available. In many cases, moving manufacturing to the US or Japan will explicitly put it in places where labour and skills shortages are the most acute. The same dynamics are true in China, where the labour supply and demand gap has been widening steadily.This, of course, is where robots and factory automation jump in. In the case of brokers trying to sell Japan, it re-enforces the “buy” recommendations on (among many others) robot maker Fanuc and factory automation supremo Keyence. The latter is now the country’s second most valuable company behind Toyota and arguably the one that more clearly represents Japan’s industrial cutting edge. Since last year, the export volumes of industrial robots from Japan to the US have been rising at an unprecedented rate, with shipments in October and December at record highs. Research by the Association for Advancing Automation found robot sales to North American companies at a record $2.38bn in 2022, up 18 per cent from the year before.Critically, says Morten Paulsen, a robotics analyst at CLSA, the composition of those exports is changing. The US auto industry remains the dominant source of robot demand but the balance is now shifting towards other industries including semiconductors, food and metals production.The idea that the politics of deglobalisation will continue to favour the robots has also produced some eye-catching forecasts. A recent report by Grand View Research found that the global market for machine vision — the cameras, sensors and readers that empower robots and other automation technology — reached $16.9bn last year. Grand View forecast that the industry will exceed $40bn by the end of the decade. Goldman Sachs recently hit clients with a weighty report outlining the investment case for humanoid robots. In its “blue sky” scenario, the US labour shortage gap could be 126 per cent filled by 2030 if humanoids can be made to toil for a solid 20 hours a day. That is a mere trifle compared with the workload of brokers currently attempting to sell investors on the great robot [email protected] More

The report surfaced as President Joe Biden’s administration weighs restrictions on outbound investments, and the president prepares to release his proposed budget for the next fiscal year that starts in October. U.S. lawmakers have been pushing the administration to boost oversight of investments by U.S. companies and individuals in other countries, particularly China, citing concerns over national security and supply chain issues, and have urged the president to issue an executive order.Congress sought the analysis from the Treasury Department, which would lead any such program’s implementation, as well as a review by the U.S. Commerce Department, which would coordinate with Treasury. In its analysis, Treasury said it would need about $10 million to set up the program for fiscal year 2023 and that it anticipated Biden would ask for additional resources in his proposal, scheduled to be released on Thursday.While the president can request resources, it is up to Congress to pass any funding into law.”I am excited we should expect to see support for outbound investment review reflected in the president’s … budget,” Rosa DeLauro, the ranking Democrat on the U.S. House of Representatives Appropriations Committee, said in a statement. She added that she would seek to support any executive action on outbound investment through legislation.The Treasury report did not cite China specifically.”As currently contemplated, the program would … focus on investments that could result in the advancement of military and dual-use technologies by countries of concern. The investments that would be subject to the program are of a nature that they are not presently captured by export controls, sanctions, or other related authorities,” it said. Commerce Secretary Gina Raimondo, speaking at a Bloomberg News event on Thursday, said any ultimate restrictions on U.S. investors should not “be overly broad,” and added that the department was considering a “pilot program” on outbound investment controls.Asked by Reuters after the event how long it would take to put restrictions in place, Raimondo said: “months not years for sure. We’re on it every day working it. We’re talking to industry, talking to stakeholders, talking to Treasury whose going to have to administer this.”The Commerce Department, in a separate report to Congress seen by Reuters on Saturday, said it would need adequate resources to take action but did not cite a specific amount, adding that it expected Biden’s budget to seek additional funding. More