Aurelia Butler

(Reuters) – Nearly 85,000 households and businesses were without power in the Los Angeles area on Saturday, as storms continued to pummel parts of California, bringing snow to higher elevations and dumping rain and hail in the flatlands.Interstate 5, the largest highway leading north out of the city, remained closed at the steep grade known as the Grapevine due to heavy snow, while several more southern points of the freeway in and around Los Angeles were closed due to flooding, the California Department of Transportation said.In Northern California, San Francisco was expected to experience record cold temperatures on Saturday, and the National Weather Service warned residents of the state capital of Sacramento to avoid travel from Sunday through Wednesday as rain and snow started up again after a reprieve on Saturday.”Extreme impacts from heavy snow & winds will cause extremely dangerous to impossible driving conditions & likely widespread road closures & infrastructure impacts!” the agency said on Twitter.The next set of storms, expected to hit on Sunday, will bring wind gusts of up to 50 miles per hour (80 kph) in the Sacramento Valley, and up to 70 miles per hour in the nearby Sierra Nevada mountains. Yosemite National Park was closed through Wednesday due to severe winter conditions. A massive low-pressure system driven from the Arctic was responsible for the unusual conditions, said Bryan Jackson, a forecaster at the NWS Weather Prediction Center in College Park, Maryland.In Southern California, “this is a rare case of a cold, significant storm event,” Jackson said.In a sight that must have delighted many Angelenos on Friday, snowflakes even fell around the Hollywood sign atop Mount Lee in the hills above the city, known for its sunny days and palm trees.On Saturday, scattered showers and isolated thunderstorms were expected to bring rain, hail and a mixture of snow and moisture called “graupel” to the area, the National Weather Service said.A separate storm that clobbered the U.S. Plains, Midwest and Great Lakes regions earlier this week blew out to the Atlantic on Friday after passing over New England, the weather service said. More than 400,000 customers of Detroit based DTE Energy (NYSE:DTE) remained without power on Saturday, the Detroit News reported.Even before the latest storm, much of California had experienced an unusually rainy, chilly winter, starting with a spate of deadly “atmospheric river” storms that unleashed widespread flooding, felled trees and triggered mudslides in a state long plagued by drought and wildfires. More

Inflation is running at a 32-year high of 7.8% is only expected to slow to the top of the Reserve Bank of Australia (RBA)’s target range of 2-3% by mid-2025. Speaking from India, where he has been attending the G20 financial leaders’ meet in Bengalaru, Chalmers said the global economy was on an “incredibly narrow path” with “the inflation challenge on one side, and a big global downturn on the other”.”Everybody here is trying to navigate that narrow and perilous path, we do have a big inflation problem in the global economy and in our own economy,” Chalmers told Sky News television, according to a government transcript.”Even though the peak of inflation is likely to be behind us, it will still be higher than we’d like for longer than we’d like,” he said, citing the conflict in Ukraine as a key driver.The RBA has recently revised up its forecasts for core inflation and wage growth, and warned further hikes in interest rates would be needed to head off a damaging wage-price spiral.Australia’s central bank this month lifted its cash rate for a ninth straight time to a decade-high of 3.35%, taking total tightening since last May to 325 basis points, in a bid to curb surging prices.Inflation was the “defining challenge” in the Australian and global economy, said Chalmers, who warned against complacency.”At some future point, the focus will shift from inflation to growth, but for the time being inflation is the main game. It’s true of the world and it’s true of us.” More

For years wages have been slow to grow in Japan as cautious firms hoarded a record cash pile, while curbing labour costs, despite government pressure on companies to raise pay.The government has put a strong focus on wage hikes to stimulate private consumption that makes up more than half of the economy, hoping to stoke a positive cycle of economic growth and wealth distribution under Kishida’s new capitalism agenda.”Above all, wage hikes that beat price hikes are needed,” Kishida told an annual gathering of his ruling Liberal Democratic Party (LDP), which lays out its policy agenda for this year.”The wave of wage hikes must spread to small firms and local areas to enhance competitiveness amid heated competition to attract workers” amid labour shortages, Kishida said.While achieving “structural wage hikes,” Kishida pledged to continue to take steps to curb energy and food prices to ease the pain of inflation on households.Masakazu Tokura, head of Japan’s biggest business lobby Keidanren, expressed support for the wage push. “Now is the crucial stage to revive a strong economy,” he said. “Structural wage hikes and human capital investment are vital…”At this year’s labour talks, large firms are expected to offer the biggest pay hikes in 26 years, or an average of 2.85%, a poll of 33 economists by Japan Economic Research Center (JERC) shows.Still, that pace would fall short of consumer inflation which is running at 4.2%, and the 5% targeted by Rengo, Japan Trade Union Confederation. Moreover, the small companies that provide most of Japan’s jobs generally can’t increase pay, business owners, economists and officials say. More

As Shanghai re-emerges from a Covid-19 outbreak and three years of restrictions that hampered travel and trade, the financial hub is doing so without much evidence of what made it China’s most cosmopolitan city: foreign visitors. Before the pandemic, its iconic Bund was usually thronged with foreign travellers and business delegations. But on a recent blustery February day the tourists marvelling at the colonial architecture and soaring buildings were all from mainland China.The revival of China’s biggest and most international city will be a test of the country’s engagement with the outside world, as policymakers embark on a reopening years later than western counterparts. Shanghai was among the cities most afflicted by the government’s zero-Covid policy, enduring a draconian two-month lockdown in 2022 that strangled the economy.Last month, the city’s mayor Gong Zheng told reporters that foreign investment last year reached a record $23.5bn, which he argued “shows Shanghai is still one of the most attractive places for foreign investment in the world”. But after the uncertainty of navigating the zero-Covid regime, international business remains reluctant about an immediate return in force, as it continues to face visa delays and other frustrations. One exporter suggested some businesses still harboured doubts about travelling to the country, given its recent Covid wave.“Shanghai has a window of opportunity to rebuild the trust eroded over the past three years,” said Bettina Schön-Behanzin, chair of the Shanghai chapter of the European Chamber of Commerce in China, calling on the city’s government to take “tangible steps to build a business environment that is transparent and predictable”.Queues are forming outside restaurants again in Shanghai as the city reopens to domestic travellers © Qilai Shen/BloombergWhile domestic trade has taken off in the wake of Beijing scrapping pandemic restrictions late last year, Shanghai’s full global reintegration lags behind.Last month, the city welcomed just 180,000 international air arrivals, compared with 2.7mn in January 2019, according to data from the airport authority. Foreign tourists are also not yet permitted to enter China.Shanghai will be a crucial engine for reviving robust growth across China as consumption drags with the delayed reopening. The city contributes more to China’s economy than any other, but in 2022, its output declined 0.2 per cent, compared with a 3 per cent rise nationally. Exports, which buoyed the economy through much of the pandemic, have also been declining amid an uncertain global economic picture.Shanghai’s former Chinese Communist chief Li Qiang, the official responsible for overseeing Shanghai’s lockdown, is set to be named China’s premier at the National People’s Congress, making him the number two official to President Xi Jinping, with responsibility for the national economy.

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Observers expect international business to begin to return in earnest from March, when Apple chief executive Tim Cook is expected to visit China. After three years of isolation, Shanghai is eager to court foreign business. But many have a litany of gripes, including the difficulty of enticing staff to relocate from overseas after witnessing the hardships of lockdowns.“It’s about trying to convince European and American CEOs that China is still investable,” said one attendee at a recent private event in Shanghai for international business leaders.The Shanghai chapter of the European Chamber of Commerce in China this month made a series of recommendations to the local government, including fewer barriers to market access. Its position paper was deleted on WeChat, the Chinese social media platform, shortly after publication.“The European consumer is a massive job creation force in the Chinese economy,” said Jörg Wuttke, president of the chamber. “But the open accessible market for us is very small. In 2021, EU companies sold 23 per cent more into Switzerland than into China.”PCR testing booths that previously dotted nearly every street corner in Shanghai are being disassembled, with some even appearing for sale online © Alex Plavevski/EPA-EFEYang Jianwen, an economist at the Shanghai Academy of Social Sciences, said property and consumption were the “two biggest issues” China needed to solve. Shanghai was well placed to tackle both, he said, adding that the city’s real estate market was “not under great pressure”.Across Shanghai, the visible signs of China’s apparatus to deal with Covid are disappearing. Mobile booths, where the city’s 26mn residents underwent compulsory PCR tests almost daily, are being listed for sale on Xianyu, a second-hand shopping app. Queues are again forming outside restaurants, and face masks, ubiquitous in December and January as the virus again swept through the city, have almost disappeared from its streets.“It’s more bustling than I imagined,” said Zhang Yang, a university student in the nearby city of Hangzhou, who was visiting Shanghai for the first time with two friends. Only one of the trio was wearing a mask, but she said it was because she was not wearing any make-up.Shanghai Metro data showed an uptick in daily passengers in February to 9.5mn, closing in on pre-pandemic levels of more than 10mn.

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“The virus has died down, the children can go to school and we can travel,” said Zhang Baolian, a 70-year-old former electrical worker, who was visiting a bakery on Nanjing Road, the city’s most famous shopping street. “There’s nothing to be afraid of now.”

There have been nascent signs of returning business activity. Canadian coffee group Tim Hortons has partnered with Popeyes to relaunch the American fried chicken brand in China.Lei, a 37-year old Shanghai resident, plans to open a restaurant in March and rented his shop at the peak of the outbreak late last year. He says rents for similar shops have now increased 30 per cent. In a group on WeChat, he saw a villa on a popular road rented out within an hour of it being listed this week. “Although the city has not fully recovered, the queues for restaurants are back,” he said.A few doors down from a Popeyes location in central Shanghai last week, a long lunchtime line had formed outside Guang Ming Cun, a restaurant renowned for its local fare and popular with the city’s elderly.“This is my first time queueing like this in three years,” said Ma, 80, a retiree who was wearing a mask. “The queue will be about half an hour,” he added. “It used to be longer”. More

The next few months put Japan in line for a series of anniversaries it would probably prefer to forget. But these are dates which the leadership in China may be wise to mark: the detonation of timebombs with counters set ticking by a property bubble.For these are, some would argue, distinctly echoey times. New research suggests that, if it is not careful, China may be on track for a new wave of Japanification.Back in 2003, Japan could no longer fool itself that all was well. The 1990s had pitched the country off a trajectory on which it once seemed capable of overtaking the US. Its subsequent mishandling of the bad loan mountain built during its 1980s vainglory days put paid to the notion that the country could easily recover.Vast banking mergers, encouraged by Tokyo over the previous three years, were not enough to disguise a collection of interlocking and unresolved crises. In March 2003, Sumitomo Mitsui Financial Group conducted a panicky reverse merger with a subsidiary amid huge losses. In April, the first signs began to emerge that one of the country’s largest lenders, Resona, was flailing. By May, taxpayers had rescued it with a $17bn nationalisation programme. Later that year and with the emergency klaxons sounding, a once top-tier regional lender, Ashikaga, went bankrupt. All of these events were deferred explosions which might have done far less damage, had they gone off earlier.The problem, as a team of Citigroup analysts declared last week, is that China today looks “strikingly similar” to Japan in its post property bubble era. The countries’ respective demographic profiles, with China’s population now shrinking as Japan’s did years earlier, provide a reminder that after 1990, Japan’s housing price index fell as the 35- to 54-year-old cohort decreased. The report focuses its warnings on the potential risks for China’s banking system.Citigroup identifies several areas of similarity. Both countries entered extended phases of strong GDP growth (Japan’s began in the postwar era and China’s after joining the World Trade Organization in 2001) via investment in infrastructure and the encouragement of exports. Between 2010 and 2020, capital formation represented an average 43 per cent of Chinese GDP growth, according to the World Bank. When its bubble burst in 1990, Japan’s capital formation proportion was at roughly 36 per cent, and considered very high. Japan and China also financed their growth in a similar way. Japan’s bubble era was fuelled by indirect financing provided by commercial banks, which were nudged by the authorities into funnelling soft loans towards favoured industrial sectors. Similarly, says Citigroup, China has developed a financial system mainly dependent on indirect financing. As well as the tools available to the People’s Bank of China, the government can direct the lending activities of commercial banks via a series of mechanisms.Japan’s 1987-89 property and stock bubble expanded most rapidly after the authorities introduced easing policies to promote domestic demand. Borrowing expanded dramatically and liquidity was funnelled into stock and property until the point where, for companies, financial speculation became more profitable than actually running a business. China, decades later, has also allowed the real economy and the financial system to decouple. The country’s clearly bubbly property market, Citi estimates, hit $65tn by 2020, exceeding that of the US, EU and Japan combined. By 2021, 41 per cent of the total assets in China’s banking system were accounted for by property-related loans and credit. The run-up to the property bubbles of both countries was accelerated by the existence of a vast shadow banking market, which evolved to bypass state-imposed lending limits and other restrictions. Citi analysts even see a parallel between the two nations’ relationships with the US. As Japan’s trade surplus ballooned, competitive friction with America escalated to an outright trade war in the 1980s, with technology, intellectual property and security concerns at its heart. There are parallels in the way that, for example, recent legislation and other measures in the US have sought to restrict non-American access to advanced technology.These similarities may not be exact equivalents, but their overall effect could be. Twenty years ago, Japan was only just getting to the bottom of its post-bubble slump. Zombie company debt colonised the balance sheets of strained financial institutions, corporates and households were in a phase of long-term deleveraging and interest rates were kept low. This is Japanisation with Chinese characteristics, concludes Citi — and the risks investors should heed are those in the banking system. [email protected] More