Aurelia Butler

China will add 19 new policies on top of the existing steps unveiled in May, including raising the quota on policy financing tools by 300 billion yuan ($43.69 billion), state media cited the cabinet as saying after a regular meeting chaired by Premier Li Keqiang.The country would make good use of carryover special bond quotas of 500 billion yuan and would support centrally owned power generations firms to issue 200 billion yuan in bonds, the cabinet was quoted as saying.”Currently, the economy continues the recovery trend in June, but the foundation of recovery is not solid,” the cabinet was quoted as saying.Authorities will take “timely and decisive measures, maintain a reasonable policy scale and make good use of policy tools in the toolkit, and intensify efforts to consolidate the foundation for economic recovery,” the cabinet added.The cabinet, while reiterating that China will avoid excessive stimulus, has sent officials to provinces to check the implementation of the policy steps, state media said.China will reduce funding costs and will approve a batch of infrastructure projects, the cabinet was quoted as saying.On Monday, China cut its benchmark lending rate and lowered the mortgage reference by a bigger margin, as Beijing boosts efforts to revive an economy hobbled by a property crisis and a resurgence of COVID-19 cases.China will unveil policies to support private firms and the platform economy which includes tech companies, it said.It will allow localities to use city-based credit policies to reasonably support rigid housing demand, it said.China has allocated 10 billion yuan in funds to support rice production amid drought, and will issue 10 billon yuan in subsidies for farm materials, the cabinet said.China’s economy narrowly escaped a contraction in the June quarter. Economic activity rebounded in June but slowed in July, raising pressure on policymakers to step up support.In May, the cabinet announced a package of 33 measures covering fiscal, financial, investment and industrial policies to revive the COVID-ravaged economy.Authorities have given policy banks 800 billion yuan in new credit quotas to fund infrastructure projects, and allowed policy banks to issue 300 billion yuan in bonds to help some key projects meet the minimum capital requirement.($1 = 6.8666 Chinese yuan) More

Ethiopia requested debt relief from its creditor governments in early 2021 under a new G20 framework for debt restructurings, but progress has been complicated by a 21-month civil war that began in the northern Tigray region.Ethiopia’s creditor committee, which is co-chaired by representatives of the Chinese and French governments, first met only in September 2021.In a statement issued on Wednesday, the creditor committee said that members had discussed the latest macroeconomic developments at its most recent meeting on July 19.”The creditor committee for Ethiopia will pursue its work to find an appropriate solution to external debt vulnerabilities of Ethiopia, in a timely, orderly and coordinated manner,” the committee said.The committee said it welcomed talks in June between the government and International Monetary Fund staff and looked forward to further discussions about an IMF support programme, which is necessary for debt relief.An IMF mission to the country is due next month to follow up on the June visit, a senior advisor to the country’s finance ministry said on Tuesday.The IMF, the World Bank and others are pushing China, Ethiopia’s biggest creditor, and private creditors to accelerate work on debt treatments sought by Ethiopia, Chad and Zambia under the G20 joint debt restructuring framework.Ethiopia’s finance ministry said in a statement it appreciated the IMF’s engagement and that it had shared all the relevant data about its debt stock and its strategy for managing its debt over the long term in four meetings with the creditor committee.”The Government of Ethiopia thanks the Creditor Committee for their commitment and looks forward to an expeditious conclusion of the debt treatment discussion,” it added. More

UK imports of goods from Russia have collapsed to a record low as a result of economic sanctions over the war in Ukraine, according to official data. Imports of goods from Russia totalled £33mn in June, down 96 per cent year on year and the lowest since comparable data was first published in 1997, the Office for National Statistics said on Wednesday.For the first time on record, there were no imports of fuel from Russia. UK goods exports to Russia also fell 67 per cent compared with the monthly average of the year to February 2022.The data come as Russia’s invasion of Ukraine and the decision to cut gas supplies in retaliation for sanctions exacerbate the cost of living crisis by driving up soaring household energy and food costs.“The war in Ukraine has resulted in a collapse in the UK’s trade flows with Russia,” said Ruth Gregory, senior UK economist at Capital Economics, a consultancy.She added that the war’s far bigger effect on the British economy was “via the worsening in the UK’s terms of trade caused by the surge in energy and food prices, which has significantly eroded household and corporate incomes”.Wednesday’s figures were in stark contrast to the overall UK trend: goods imports and exports rose by an annual rate of about 35 per cent in June. ONS data showed that imports from other oil-producing countries, such as Norway and Qatar, soared compared with the monthly average of the year to February 2022, compensating for the lack of Russian energy imports. US goods imports from Russia also collapsed by an annual rate of 76 per cent in June, while EU imports from the country were up 43 per cent. This reflects continuing imports of Russian gas, on which the bloc is heavily dependent. Exports to Russia from both the US and the EU fell sharply because of sanctions. The ONS figures showed UK exports of most commodities to Russia had fallen substantially in June, with machinery and transport equipment contracting 91 per cent, or £118mn, over the same period. UK exports of cars to Russia have ceased completely.

One exception was UK exports of medicinal and pharmaceutical products, which are unaffected by the sanctions for humanitarian reasons. They jumped 62 per cent in June compared with the prewar period.More than 96 per cent of goods imported from Russia are subject to restrictions, as well as 60 per cent of goods exported to the country. Goods subject to export bans include those that can be used for both civilian and military purposes, and aviation and space-related equipment. There is also an export ban on machinery. But the ONS said it was “likely that some traders are ‘self-sanctioning’”, meaning that traders are being cautious in dealing with Russian groups.Following this week’s rise in the benchmark European gas price to a record high of €292.50 per megawatt hour, asset manager PGIM Fixed Income on Wednesday revised down its forecast for the UK economy to an annual 0.1 contraction for next year from a 0.8 per cent expansion. “The economy’s momentum fell sharply in Q2, and the costly pass-through of energy prices to consumers is expected to weigh heavily on consumption,” said Katharine Neiss, chief European economist at PGIM Fixed Income. More

Apple is in talks to make Apple Watches and MacBooks in Vietnam for the first time, marking a further win for the south-east Asian country as the US tech giant seeks to diversify production away from China.Apple suppliers Luxshare Precision Industry and Foxconn have started test production of the Apple Watch in northern Vietnam with the aim of producing the device outside China for the very first time, three people with direct knowledge of the matter told Nikkei Asia.Vietnam is already Apple’s most important production hub outside China, producing a wide range of flagship products for the American company, including iPad tablets and AirPods earphones.The Apple Watch is even more sophisticated, according to industry experts, who say that squeezing so many components into such a small case requires a high degree of technological skill. Producing the device would be a win for Vietnam as the country attempts to further upgrade its tech manufacturing sector.Apple has also continued to shift iPad production to Vietnam after Covid-related lockdowns in Shanghai caused massive supply chain disruptions. BYD of China was the first to assist with this shift, though sources told Nikkei Asia that Foxconn, too, is now helping build more iPads in the south-east Asian nation. Apple is also in talks with suppliers to build test production lines for its HomePod smart speakers in Vietnam, the people said.On the MacBook front, Apple had asked suppliers to set up a test production line in Vietnam, two sources said. However, progress in moving mass production to the country had been slow, partly as a result of pandemic-related disruptions but also because notebook computer production involved a larger supply chain, multiple sources said. That network is currently centred on China and very cost-competitive, they added.“AirPods, Apple Watch, HomePod and more . . . Apple has big plans in Vietnam, apart from iPhone manufacturing,” one of the people with direct knowledge of the situation said. “The components for MacBooks have become more modularised than in the past, which makes it easier to produce the laptops outside of China. But how to make it cost-competitive is another challenge.”Apple’s diversification to Vietnam started with AirPods, which went into mass production there in 2020. The earphones were among the first Apple products whose assembly was shifted out of China after a trade war between Washington and Beijing broke out under former US president Donald Trump.The move signalled a change of approach for Apple, which had depended on China for almost all of its production needs for decades.For Vietnam, Apple’s shift — and the US-China tensions more broadly — have been a boon. The number of Apple suppliers with facilities in the country has increased to at least 22 from 14 in 2018, according to Nikkei Asia’s analysis of Apple’s latest available suppliers list and interviews with sources. Many other big electronics manufacturers such as Google, Dell and Amazon have also set up production in Vietnam to diversify beyond China, Nikkei Asia has previously reported.Eddie Han, a senior analyst with Isaiah Research, told Nikkei Asia that electronics makers are trying to strike a balance amid Washington-Beijing tensions.“Geographically, we find major international electronics brands such as Apple and Samsung trying to lower dependence on making products inside China. But on the other hand, these international players have adopted more China-based suppliers such as Luxshare and BYD for Apple, and Huaqin for Samsung to build more of their products,” Han said. “Those are moves to balance the geopolitical impacts.”He added: “China’s role as the world’s most important factory has been challenged since the trade war and then later its energy and zero-Covid policies. That really makes Vietnam, which is close to China, an ideal destination for many electronics makers as the nation gradually grows its supply chain ecosystem.”Apple, Foxconn and Luxshare did not respond to Nikkei Asia’s request for comment. A version of this article was first published by Nikkei Asia on August 17 2022. ©2022 Nikkei Inc. All rights reservedRelated storiesIndia’s Vedanta set to choose site for $20bn tech hub with FoxconniPhone assembler Pegatron announces new co-CEO roleApple warns suppliers to follow China rules on ‘Taiwan’ labellingApple’s patent history reveals a major push into autos More