Raphael Stevens

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    Drugmakers bet billions that targeted radiation could become the next cancer breakthrough

    Bristol Myers Squibb, AstraZeneca, Eli Lilly and other pharmaceutical companies have spent some $10 billion on radiopharmaceuticals acquisitions and partnerships over the past year.
    Drugmakers are trying to replicate the success Novartis has found with Pluvicto and Lutathera.
    Radiopharmaceuticals are currently available for some neuroendocrine tumors and prostate cancer. They could one day be used for numerous cancers.

    Drugmakers are betting that delivering radiation directly to tumors will become the next big cancer breakthrough. 
    Bristol Myers Squibb, AstraZeneca, Eli Lilly and other pharmaceutical companies have spent some $10 billion on deals to acquire or work with radiopharmaceuticals makers. They’ve snapped up smaller upstarts to get their hands on technology that, while in its infancy, could treat numerous cancers. 

    “Any large company that has a business presence in oncology or for whom oncology is an important therapeutic category will probably need exposure in this area one way or another,” said Guggenheim Securities analyst Michael Schmidt.
    Two radiopharmaceuticals from Novartis are already available. Another few dozen are in development, according to Schmidt’s count. It’s hard to estimate the total market opportunity because there are so many possible cancers the drugs could treat, he said.
    Schmidt predicts the category could grow to a low end of $5 billion in revenue if the technology stays limited to treating a few types of cancer like prostate and neuroendocrine tumors, to as much as tens of billions if it’s shown to be effective in more cancers.
    The drugs work by attaching radioactive material to a targeting molecule that searches for and attaches to a specific marker on cancer cells. The trick is finding markers that exist on cancer cells but not healthy cells. That can allow the treatment to deliver radiation to cancer cells and spare the rest of the body from the level of damage that comes with many cancer drugs. 
    Proving the technology could work both scientifically and financially has taken time. The first radiopharmaceuticals were approved in the early 2000s. But interest from large pharmaceutical companies didn’t pick up until recently. 

    An employee works at the NSA radiopharmaceutical plant in Aedea Rome, Italy. 
    Franco Origlia | Getty Images

    Making the drugs requires complex manufacturing and logistics, two major drawbacks. Radioactive material degrades quickly, so patients need to be treated within days of their treatment being made. 
    Pharmaceutical companies proved they could manage complex, time-sensitive drugs like CAR-T for blood cancers or gene therapies for rare diseases. Then Novartis showed those strategies could be applied in radiopharmaceuticals. 
    The Swiss pharmaceutical giant won approval in 2018 for a radiopharmaceutical drug called Lutathera for a rare type of cancer in the pancreas and gastrointestinal tract. Then in 2022, Novartis secured another approval in the treatment Pluvicto for prostate cancer. Combined, the drugs are expected to reach about $4 billion in sales by 2027, according to consensus estimates from FactSet. 
    Those successes sparked broader interest in radiopharmaceuticals. 
    “We took all that together and thought, we should do something, we need to do deals here,” said Jacob Van Naarden, president of Eli Lilly’s oncology business. 
    Lilly acquired radiopharmaceutical maker Point Biopharma last year for about $1.4 billion, and also signed a few partnerships with companies developing the treatments. One of the most important factors during Lilly’s initial search was whether companies were prepared to manufacture the drugs, Van Naarden said. Radiopharmaceuticals aren’t easy to make, and Lilly wanted to make sure any initial acquisition could produce the drugs themselves instead of outsourcing the work. 
    Manufacturing was also a key component in Bristol Myers Squibb’s $4.1 billion acquisition of RayzeBio, said Ben Hickey, RayzeBio’s president. At the time of the acquisition, RayzeBio was nearing completion of a factory in Indiana and had secured its own supply of radioactive material needed to develop the experimental drugs in its pipeline. 
    “It was clearly one of the criteria to make sure that we had our destiny within our own hands,” Hickey said. 
    Novartis has shown why that’s so important, as the company initially struggled to make enough doses of Pluvicto. It’s investing more than $300 million to open and expand radiopharmaceutical manufacturing sites in the U.S. so it can produce the drug and get it to patients quickly. The company is now able to meet demand for the treatment, which involves careful planning to distribute. 
    Each dose carries a GPS tracker to ensure it goes to the right patient at the right time, according to Victor Bulto, president of Novartis’ U.S. business. Novartis drives doses to destinations that are within nine hours from the factory to minimize the risk of disruptions from storms, Bulto said. 
    Doctors and patients on the receiving end also feel the complexity. 
    Bassett Healthcare Network in upstate New York needed to upgrade its medical license to handle radioactive material before administering Lutathera and Pluvicto, said Dr. Timothy Korytko, Bassett’s radiation oncologist-in-chief. A certified specialist needs to administer the drugs, which are given intravenously.
    It can take a few weeks from prescribing a radiopharmaceutical to administering one. For Pluvicto, patients come in once every six weeks for up to six treatments.
    Radiopharmaceuticals start decaying once they’re made, so they’re only good for a few days.

    Ronald Coy and his wife Sharon.
    Courtesy: Ronald Coy

    Ronald Coy knows how important it is to make it in for his appointments. Coy, a retired firefighter who’s been battling prostate cancer since 2015, drives more than an hour through upstate New York to receive Pluvicto at Bassett. Coy hasn’t had any issues so far, but he worries a snowstorm could derail one of his appointments between now and the end of January. 
    “Hopefully we won’t get any major storms between now and then or if we do, it’s a week before I go,” Coy said.
    When Coy comes home from treatment, he needs to take precautions like staying away from his wife Sharon so she’s not exposed to radiation. He drinks plenty of water to remove extra radiation from his body. He doesn’t mind little inconveniences for a few days if it means fighting his cancer.
    For Novartis, investing in the infrastructure to produce and distribute radiopharmaceuticals would be worthwhile for Pluvicto and Lutathera alone, Bulto said. But it’s even more attractive because of the potential to treat more cancers. He gives the example of Novartis’ work to develop a drug for a marker that’s found across 28 different tumors, including breast, lung and pancreatic cancers. 
    “If we were able to put all these learnings that we’ve developed from a manufacturing distribution in service of patients with lung cancer, patients with breast cancer, and potentially show these levels of meaningful efficacy and tolerability, we’re talking about a very big potential impact on cancer care. And, of course, a very viable business as well,” he said. 
    At this point, it’s still an if. The field is in its early days, executives say, and the promise of radiopharmaceuticals beyond the current cancers they treat still needs to be proven.
    “If we can be successful in expanding the target and tumor type repertoire, this could be a very big class of medicines,” Eli Lilly’s Van Naarden said, adding that at this point it’s hard to say if the class will be “super important” or “just important.”
    One opportunity Bristol Myers Squibb sees is combining radiopharmaceuticals with existing cancer drugs like immunotherapy, said Robert Plenge, Bristol’s chief research officer. AstraZeneca shares that vision.
    AstraZeneca spent $2 billion to acquire Fusion Pharmaceuticals earlier this year. Susan Galbraith, the company’s executive vice president of oncology research and development, points to existing regimens that combine immunotherapy with radiation. 
    How large AstraZeneca’s radiopharmaceuticals portfolio ultimately becomes depends on its initial prostate cancer program and other undisclosed targets already in the works, Galbraith said. But she thinks the technology will become an important part of cancer drugs in the next decade.
    It could take years to understand the true potential of the technology, as many experimental drugs are still in the early phases of development. One outstanding question is whether other radiopharmaceuticals are as safe and well-tolerated as Novartis’ Pluvicto, especially ones that use other types of radioactive material, the Guggenheim analyst Schmidt said. 

    Ronald Coy has been battling prostate cancer for almost 10 years. He started taking Novartis’ Pluvicto earlier this year.
    Courtesy: Ronald Coy

    Large pharmaceutical companies aren’t waiting to jump into the race. Stories like those from Coy encourage them that the work will pay off. 
    Over almost 10 years, Coy has undergone multiple treatments for prostate cancer that has spread to his bones. After just one Pluvicto treatment earlier this year, bloodwork showed Coy’s cancer level plummeted. 
    Not everyone responds that well to Pluvicto, and things could always change for Coy. But for now, Coy feels fortunate that he’s among the group that responds well to Pluvicto. That’s worth the drives and the precautions for him. 
    “I feel very fortunate every day that I am – as it stands now – I’m part of the third where this is working really good for me,” he said.
    — CNBC’s Leanne Miller contributed to this report. More

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    China’s local government debt problems are a hidden drag on economic growth

    In understanding China’s persistent consumption slowdown, analysts are looking at the connection between China’s real estate slump and local governments’ financing.
    “Macroeconomic headwinds continue to hinder the revenue-generating power of China’s local governments, particularly as related to taxes and land sales,” said Wenyin Huang, director at S&P Global Ratings.
    Often overlooked is that fact that ” investment is creating weak nominal GDP growth outcomes – pressuring the corporate sector to reduce its wage bill and leading to a sharp rise in debt ratios,” Morgan Stanley’s chief Asia economists Chetan Ahya and Robin Xing said in a September report.

    Local governments in China are still building highways, bridges and railways, as pictured here in Jiangxi province on Sept. 6, 2024.
    Cfoto | Future Publishing | Getty Images

    BEIJING — China’s persistent consumption slowdown traces back to the country’s real estate slump, and its deep ties to local government finances — and debt.
    The bulk of Chinese household wealth went into real estate in the last two decades, before Beijing began cracking down on developers’ high reliance on debt in 2020.

    Now, the values of those properties are falling, and developers have reduced land purchases. That’s cutting significantly into local government revenue, especially at the district and county level, according to S&P Global Ratings analysts.
    They predicted that from June of this year, local government finances will take three to five years to recover to a healthy state.
    But “delays in revenue recovery could prolong attempts to stabilize debt, which continues to rise,” Wenyin Huang, director at S&P Global Ratings, said in a statement Friday to CNBC.

    “Macroeconomic headwinds continue to hinder the revenue-generating power of China’s local governments, particularly as related to taxes and land sales,” she said.
    Huang had previously told CNBC that the financial accounts of local governments have suffered from the drop in land sales revenue for at least two or three years, while tax and fee cuts since 2018 have reduced operating revenue by an average of 10% across the country.

    This year, local authorities are trying hard to recoup revenue, giving already strained businesses little reason to hire or increase salaries — and adding to consumers’ uncertainty about future income.

    Clawing back tax revenue

    As officials dig into historical records for potential missteps by businesses and governments, dozens of companies in China disclosed in stock exchange filings this year that they had received notices from local authorities to pay back taxes tied to operations as far back as 1994.
    They stated amounts ranging from 10 million yuan to 500 million yuan ($1.41 million to $70.49 million), covering unpaid consumption taxes, undeclared exported goods, late payment fees and other fees.
    Even in the relatively affluent eastern province of Zhejiang, NingBo BoHui Chemical Technology said regional tax authorities in March ordered it to repay 300 million yuan ($42.3 million) in revised consumption taxes, as result of a “recategorization” of the aromatics-derivatives extraction equipment it had produced since July 2023.
    Jiangsu, Shandong, Shanghai, and Zhejiang — some of China’s top provinces in tax and non-tax revenue generation — see non-tax revenue growth exceeding 15% year-on-year growth in the first half of 2024, S&P’s Huang said. “This reflects the government’s efforts to diversify its revenue streams, particularly as its other major sources of income face increasing challenges.”
    The development has caused an uproar online and damaged already fragile business confidence. Since June 2023, the CKGSB Business Conditions Index, a monthly survey of Chinese businesses, has hovered around the 50 level that indicates contraction or expansion. The index fell to 48.6 in August.
    Retail sales have only modestly picked up from their slowest levels since the Covid-19 pandemic.
    The pressure to recoup taxes from years ago “really shows how desperate they are to find new sources of revenue,” Camille Boullenois, an associate director at Rhodium Group, told CNBC. 
    China’s national taxation administration in June acknowledged some local governments had issued such notices but said they were routine measures “in line with law and regulations.”
    The administration denied allegations of “nationwide, industrywide, targeted tax inspections,” and said there is no plan to “retrospectively investigate” unpaid taxes. That’s according to CNBC’s translation of Chinese text on the administration’s website.
    “Revenue is the key issue that should be improved,” Laura Li, sector lead for S&P Global Ratings’ China infrastructure team, told CNBC earlier this year.
    “A lot of government spending is a lot of so-called needed spending,” such as education and civil servant salaries, she said. “They cannot cut down [on it] unlike the expenditure for land development.”

    Debate on how to spur growth

    A straightforward way to boost revenue is with growth. But as Chinese authorities prioritize efforts to reduce debt levels, it’s been tough to shift policy away from a years-long focus on investment, to growth driven by consumption, analyst reports show.
    “What is overlooked is the fact that investment is creating weak nominal GDP growth outcomes —pressuring the corporate sector to reduce its wage bill and leading to a sharp rise in debt ratios,” Morgan Stanley chief Asia economists Chetan Ahya and Robin Xing said in a September report, alongside a team.
    “The longer the pivot is delayed, the louder calls will become for easing to prevent a situation where control over inflation and property price expectations is lost,” they said.
    The economists pointed out how similar deleveraging efforts from 2012 to 2016 also resulted in a drag on growth, ultimately sending debt-to-GDP ratios higher.
    “The same dynamic is playing out in this cycle,” they said. Since 2021, the debt-to-GDP has climbed by almost 30 percentage points to 310% of GDP in the second quarter of 2024 — and is set to climb further to 312% by the end of this year, according to Morgan Stanley.
    They added that GDP is expected to rise by 4.5% from a year ago in the third quarter, “moving away” from the official target of around 5% growth.

    The ‘grey rhino’ for banks

    Major policy changes are tough, especially in China’s rigid state-dominated system.
    Underlying the investment-led focus is a complex interconnection of local government-affiliated business entities that have taken on significant levels of debt to fund public infrastructure projects — which often bear limited financial returns.
    Known as local government financing vehicles, the sector is a “bigger grey rhino than real estate,” at least for banks, Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, said during a webinar last week. “Grey rhino” is a metaphor for high-likelihood and high-impact risks that are being overlooked.
    Natixis’ research showed that Chinese banks are more exposed to local government financial vehicle loans than those of real estate developers and mortgages.
    “Nobody knows if there is an effective way that can solve this issue quickly,” S&P’s Li said of the LGFV problems.
    “What the government’s trying to do is to buy time to solve the most imminent liquidity challenges so that they can still maintain overall stability of the financial system,” she said. “But at the same time the central and local government[s], they don’t have sufficient resources to solve the problem at once.” More

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    How China’s communists fell in love with privatisation

    On a recent visit to his hometown of Laixi, in eastern China, Guo Ping received a shock: the local government had sold off a number of state-owned assets, including two reservoirs. The small city’s finances, as well as those in the neighbouring port of Qingdao, were under strain, forcing officials to come up with new sources of revenue. This meant hawking even large bits of regional infrastructure. The sales seemed to be part of what Mr Guo, who asked to use a pseudonym, views as a gradual economic deterioration. More

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    DirecTV, Disney reach deal to end blackout in time for college football

    Disney and DirecTV reached an agreement to end a blackout in time for college football on Saturday.
    Disney’s networks have been dark for DirecTV’s customers for roughly two weeks, leaving them without college football, the U.S. Open and “Monday Night Football.”
    The dispute underscores how valuable live sports is both for the media companies that own rights to air the games and the pay-TV providers who want to show them.

    A Clemson Tigers helmet on the field of last season’s College Football Playoff National Championship Game. Clemson is among the NCAA Division I major conference programs to recently have football players test positive for Covid-19, adding more uncertainty to the planned start of college football season.
    Alika Jenner | Getty Images

    DirecTV and Disney have reached a deal that brings Disney’s ESPN and other channels back to the pay-tv provider’s customers after a roughly two week blackout.
    The deal comes in time for college football this Saturday, which airs on ABC, ESPN, as well as the SEC Network and ACC Network, as well as the Emmy Awards which air on ABC. CNBC earlier reported a deal could be made as early as Saturday.

    Disney’s networks went dark on Sept. 1 after the two sides could not agree to terms on fees and bundle structures. The dispute left DirecTV’s more than 11 million customers without access to the U.S. Open, college football and this season’s opening “Monday Night Football” game.
    DirecTV executives began calling for the ability to offer skinnier, genre-specific bundles to customers in the weeks leading up to the dispute, and again when the Disney networks went dark. Disney had said that DirecTV’s offers did not reflect the value that its networks provide. 
    On Saturday, DirecTV and Disney said they reached a deal that called for “market based terms” on pricing.
    The deal also gives DirecTV the opportunity to offer multiple genre-specific options, such as sports, entertainment and kids and family, inclusive of Disney’s traditional TV networks, along with its streaming services, Disney+, Hulu and ESPN+.
    DirecTV will be able to offer Disney’s streaming services in its packages and a la carte, the company said in a release Saturday. DirecTV also won the rights to distribute Disney’s upcoming ESPN flagship direct-to-consumer streaming service — expected to launch in fall 2025 — at no additional cost to its subscribers.

    The inclusion of Disney’s streaming services and ESPN’s future flagship service echoes the carriage agreement reached between Charter Communications and Disney last year after a similar blackout. Charter and Disney had reached a deal in time for the first week of “Monday Night Football.”
    In a joint statement, DirecTV and Disney called this a “first-of-its-kind collaboration” as it gives “customers the ability to tailor their video experience through more flexible options.”
    The blackout had underscored how valuable live sports is both for the media companies that own rights to air the games and the pay-TV providers who want to show them.
    Since Sept. 1, both sides accused the other of holding up an agreement. DirecTV called Disney anti-consumer, and ESPN Chairman Jimmy Pitaro called the responses DirecTV made to Disney’s package offers “basically hypotheticals.”
    Through the blackout the companies, their customers and other business owners appear to have lost out.
    “We never want to black out. It’s not good for either side. It’s not good for the customer, of course. We did everything we could,” ESPN’s Pitaro said on CNBC last week.
    The amount of customers DirecTV lost during the dispute was not “immaterial,” said DirecTV Chief Marketing Officer Vince Torres at Goldman Sachs’ Communacopia & Technology Conference on Thursday.
    DirecTV offered its customers a $30 credit, financed by stopping payments to Disney as soon as the blackout began, Torres said.
    During the dispute, many small business owners were also unable to offer the full slate of sports that they usually do. Many bars and restaurants rely on DirecTV as a commercial distributor of the NFL’s “Sunday Ticket” package of out of market games — which was unaffected by the blackout — and therein use the pay TV provider for the rest of its TV content, including ESPN.
    Beyond sports, the blackout also occurred during the presidential debate on Tuesday, leaving customers in certain markets without access to Disney’s ABC broadcast network.
    Disney had sought to temporarily allow DirecTV to offer ABC to its customers for that night, but the pay TV provider refused. DirecTV called it a public relations play and said it did not believe it was necessary to open ABC since the debate was also being broadcast on several other news networks.
    Antitrust in media has been closely watched in recent weeks after Venu, the joint streaming venture between Warner Bros. Discovery, Fox Corp. and Disney, was temporarily blocked by a judge on antitrust concerns. Fubo TV initially brought the suit and DirecTV and EchoStar’s Dish have since supported it. 
    DirectTV last week said it filed a complaint with the Federal Communications Commission that said Disney did not negotiate in good faith. The FCC has rules that require broadcast owners to do so. The release on Saturday didn’t state the status of the complaint, but sources tell CNBC it “remains active.”
    The entire pay-tv bundle has been upended in recent years as customers have turned to streaming services and other forms of entertainment in place of the traditional structure. The shift has fragmented the media ecosystem, and live sports — especially Disney’s ESPN — is considered the linchpin holding the bundle together due to its high viewership.
    DirecTV is in the midst of an ad campaign to remind consumers that it is more than a satellite TV company — it has a streaming bundle, too. More

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    Pfizer says its experimental drug for deadly condition that causes appetite and weight loss in cancer patients shows positive trial results

    Pfizer said its experimental drug for a common, life-threatening condition that causes cancer patients to lose their appetite and weight showed positive results in a midstage trial.
    Patients with the condition, called cancer cachexia, who took Pfizer’s treatment saw improvements in body weight, muscle mass, quality of life and physical function.
    The results could pave the way for the drug, a monoclonal antibody called ponsegromab, to become the first treatment approved specifically for cancer cachexia. 

    Kena Betancur | Corbis News | Getty Images

    Pfizer’s experimental drug for a common, life-threatening condition that causes cancer patients to lose their appetite and weight showed positive results in a midstage trial, the drugmaker said Saturday. 
    Patients with the condition, called cancer cachexia, who took Pfizer’s treatment saw improvements in body weight, muscle mass, quality of life and physical function, according to the drugmaker. The results could pave the way for the drug, a monoclonal antibody called ponsegromab, to become the first treatment approved in the U.S. specifically for cancer cachexia. 

    The condition affects about 9 million people worldwide, and 80% of cancer patients suffering from it are expected to die within one year of diagnosis, according to the company.
    Patients with cancer cachexia don’t eat enough food to meet their body’s energy needs, causing significant fat and muscle loss and leaving them weak, fatigued and, in some cases, unable to perform daily activities. Cancer cachexia is currently defined as a loss of 5% or more body weight over the past six months in cancer patients, along with symptoms such as fatigue, according to the National Cancer Institute.
    The symptoms of the condition can make cancer treatments less effective and contribute to lower survival rates, Pfizer said. 
    “We would see ponsegromab fitting into the treatment of cancer patients, really addressing that unmet need in cachexia, and through that, improving their wellness, their ability to care for themselves, and we would also hope their ability to tolerate more treatment,” Charlotte Allerton, Pfizer’s head of discovery and early development, told CNBC in an interview. 
    Pfizer has not disclosed the estimated revenue opportunity of the drug, which could potentially be approved for different uses.

    The company presented the data Saturday at the European Society for Medical Oncology 2024 Congress, a cancer research conference held in Barcelona, Spain. The results were also published in The New England Journal of Medicine. 
    The phase two trial followed 187 people with non-small cell lung cancer, pancreatic cancer or colorectal cancer and high levels of a key driver of cachexia called growth differentiation factor 15, or GDF-15. It is a protein that binds to a certain receptor in the brain and has an impact on appetite, according to Allerton. 
    After 12 weeks, patients who took the highest dose of ponsegromab — 400 milligrams — saw a 5.6% increase in weight compared with those who received a placebo. Patients who took a 200-milligram or 100-milligram dose of the drug saw a roughly 3.5% and 2% increase in body weight, respectively, compared with the placebo group. 
    Allerton said a work group of experts defines a weight gain of greater than 5% as a “clinically meaningful difference in cancer patients with cachexia.” She added that the drug’s effect on other measures of wellness, such as increased appetite and physical activity, is “really what offers us the encouragement.” 
    Pfizer said it did not observe any significant side effects with the drug. Treatment-related side effects occurred in 8.9% of people taking a placebo and 7.7% of those who took Pfizer’s treatment, the company said. 
    The company said it is discussing late-stage development plans for the drug with regulators, and aims to start studies in 2025 that can be used to file for approval. Pfizer is also studying ponsegromab in a phase two trial in patients with heart failure, who can also suffer from cachexia.
    Pfizer’s drug works by reducing the levels of GDF-15. Pfizer believes this can improve appetite and enable patients to maintain and gain weight. 
    “For most of us, we have low levels of GDF-15 in our tissues when we’re healthy, but we really do see this up regulation of GDF-15 in more of these chronic conditions, and in this case, cancer,” Allerton said. More

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    China’s retail sales and industrial data miss expectations in August

    Retail sales rose by 2.1% in August from a year ago, missing expectations of 2.5% growth among economists polled by Reuters. That was also slower than the 2.7% increase in July.
    Industrial production rose by 4.5% in August from a year ago, lagging the 4.8% growth forecast by Reuters. That also marked a slowdown from a 5.1% rise in July.
    Fixed asset investment rose by 3.4% for the January to August period, slower than the forecast of 3.5% growth.

    Pictured here is a shopping mall in Hangzhou, China, on Sept. 9, 2024.
    Nurphoto | Nurphoto | Getty Images

    BEIJING — China’s retail sales, industrial production and urban investment in August all grew slower than expected, according to National Bureau of Statistics data released Saturday.
    Retail sales rose by 2.1% in August from a year ago, missing expectations of 2.5% growth among economists polled by Reuters. That was also slower than the 2.7% increase in July.

    Online sales of physical goods rose by just under 1% in August from a year ago, according to CNBC calculations of official data.
    Industrial production rose by 4.5% in August from a year ago, lagging the 4.8% growth forecast by Reuters. That also marked a slowdown from a 5.1% rise in July.
    Despite the miss, industrial production still grew faster than retail sales, “reflecting the structural imbalance imbedded in China’s economy, with stronger supply and weaker demand,” said Darius Tang, associate director, corporates, at Fitch Bohua.
    The firm expects the Chinese government will likely announce more, gradual stimulus in the fourth quarter to support consumption and real estate, Tang said.

    Fixed asset investment rose by 3.4% for the January to August period, slower than the forecast of 3.5% growth.

    The urban unemployment rate was 5.3% in August, an uptick from 5.2% in July.
    Among fixed asset investment, infrastructure and manufacturing slowed in growth on a year-to-date basis in August, compared to July. Investment in real estate fell by 10.2% for the year through August, the same pace of decline as of July.
    National Bureau of Statistics spokesperson Liu Aihua attributed the uptick in unemployment to the impact of graduation season. But she said that stabilizing employment requires more work.
    This year, the statistics bureau has been releasing the unemployment rate for people ages 16 to 24 who aren’t in school a few days after the wider jobless release. The youth unemployment rate in July was 17.1%.
    “We should be aware that the adverse impacts arising from the changes in the external environment are increasing,” the bureau said in an English-language statement. A “sustained economic recovery is still confronted with multiple difficulties and challenges.”
    This weekend, Saturday is a working day in China in exchange for a holiday on Monday. The country is set to celebrate the Mid-Autumn Festival, also known as the Mooncake Festival, from Sunday to Tuesday. The next and final major public holiday in China this year falls in early October.

    Growth in the world’s second-largest economy has slowed after a disappointing recovery from Covid-19 lockdowns. Policymakers have yet to announce large-scale stimulus, while acknowledging that domestic demand is insufficient.
    Other data released in the last week has underscored persistent weakness in consumption.
    Imports rose by just 0.5% in August from a year ago, customs data showed, missing expectations. Exports rose by 8.7%, beating expectations.
    Beijing’s consumer price index for August also disappointed analysts’ expectations with an increase of 0.6% from a year ago. More

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    Shein and Temu prices are set to get a lot higher as Biden takes aim at retailers linked to China

    Prices on Shein and Temu could rise by as much as 20% if the Biden administration successfully closes the so-called “de minimis loophole.”
    The loophole allows packages valued under $800 to avoid import duties and scrutiny at the border.
    Shein and Temu have said their low prices aren’t related to the de minimis exemption and instead, their innovative business models.

    A man walking past a logo of fast fashion e-commerce company Shein outside its office in Guangzhou in southern China’s Guangdong province. 
    Jade Gao | Afp | Getty Images

    The bottom of the barrel prices that have made Chinese-linked e-tailers Shein and Temu so popular with American consumers could soon rise if the Biden administration curtails their use of a trade law loophole.
    The companies, known for their $5 T-shirts and $10 sweaters, could see prices rise by at least 20% if the so-called de minimis provision is changed, a spokesperson for the Republican majority of the House Select Committee on the Chinese Communist Party told CNBC. The committee made the estimate after launching investigations into Shein and Temu more than a year ago.

    Neil Saunders, a retail analyst and the managing director of GlobalData, agreed the policy change would likely increase prices, but couldn’t say by how much. 
    “If the de minimis exemption is removed, then the cost of products from marketplaces like Shein and Temu will rise. They will still be cheap marketplaces but they won’t have quite the competitive edge on price that they do now,” Saunders told CNBC in an email. “That may lose them some market share or slow their growth, but they will likely respond by pushing into some higher-priced items to balance out their propositions.”
    On Friday morning, the Biden administration announced plans to bar overseas shipments of products that are subject to U.S.-China tariffs from being eligible for the de minimis exemption. 
    An obscure tariff law loophole that’s been around since the 1930s, the exemption allows packages with a value of less than $800 to enter the United States without the shippers paying import duties and with less scrutiny than larger containers. 
    The announcement comes after more than a year of scrutiny into the companies from lawmakers on both sides of the aisle and in particular, the House Select Committee on the CCP. 

    Both Shein and Temu declined to tell CNBC if they will raise prices due the proposed changes. The companies also disputed that their low prices are driven by the de minimis exemption and said their business models allow them to offer their ultra-affordable rates.
    A spokesperson for Shein noted that the company supports de minimis reform and was recently accepted into a voluntary, pilot program with U.S. Customs and Border Protection where it agreed to provide additional data about packages and shipments.

    A risk to their competitive edge 

    Over the last couple of years, the two companies have taken U.S. consumers by storm with their ultra-low prices and their ability to rapidly churn out trending styles far faster than competitors can. Shein is estimated to take in more than $30 billion in revenue annually, but it’s unclear what Temu’s sales are. Its parent company, PDD Holdings, saw $34.9 billion in revenue in fiscal 2023 — a 90% increase from the year ago period.
    As the companies have become go-to shopping destinations, they’ve taken market share from rivals that cater to similar consumer segments, such as H&M, Zara, Target, Walmart and Amazon.
    If Shein’s prices were to rise by 20%, it would put its assortment closer in line with those competitors, which could make it harder for it to compete.
    For example, the average price of a dress on Shein was $28.51 as of June 1, according to data from Edited, a London-based research firm that analyzed the company’s pricing strategy and shared metrics with Reuters.
    At the time, that price was well below the average cost for dresses at H&M and Zara, which were $40.97 and $79.69, respectively, according to Edited’s data. However, if costs were to rise by 20%, that would make the average dress price on Shein $34.21 – far closer to H&M’s average price.
    There’s no guarantee prices would rise 20% if the Biden administration’s proposal takes effect. Still, taken together with the company’s long shipping times, a smaller discount relative to Shein’s rivals may lead some consumers to opt for retailers that are closer to home. 
    “Ultimately, while reforming the de minimis rules makes for a fairer and more level playing field, like any tariff it will end up costing consumers more,” said Saunders. 

    Scrutiny of a digital darling

    Last year, the committee began investigating Shein and Temu for slave labor in their supply chains and zeroed in on their use of the de minimis exemption, claiming in a June 2023 report that both companies didn’t pay any import duties in 2022. Shein disputed that claim and said the company paid millions of import duties in 2022 and 2023. It has, however, acknowledged that cotton from banned regions has been found in its supply chain and said it’s working to rectify the issue. Temu didn’t respond to inquiries about slave labor in its supply chain.
    “As the Select Committee’s investigation into Shein and Temu revealed, the majority of products from Shein and Temu fall under the de minimis exception. This allows them to dodge U.S. Customs and evade the scrutiny other retailers face. The U.S. must urgently curb these shipments and force these companies to correct their anemic compliance practices,” a spokesperson for the committee told CNBC.
    The spokesperson added that “Congress must urgently make de minimis reform law.”
    As scrutiny of Shein intensified, its hopes of pulling off a long awaited U.S. public offering dwindled. 
    Lawmakers, eager to curtail the influence that Chinese-linked retailers were having on the U.S. economy and take steps they said would level the playing field for American companies, were unlikely to propose an outright ban of Shein and Temu, similar to what was done with social media company TikTok. 
    Instead, numerous lawmakers called for the U.S. Securities and Exchange Commission to block Shein’s IPO and targeted the de minimis exemption as the best way to curtail the company’s growth. 
    Now, more than a year into those efforts and Shein’s own sputtering charm offensive, its plans for a New York IPO are all but dead and it has turned to London in hopes of finding a friendlier reception. 
    In June, CNBC reported that Shein had confidentially filed for a public listing in London as it faced backlash in the U.S. 
    It’s unclear what impact the proposed de minimis changes will have on Shein’s IPO plans. More

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    Boeing warns strike will ‘jeopardize’ recovery, hurt aircraft production

    Chief Financial Officer Brian West said the financial impact of the strike will depend on how long it lasts, but noted it will affect the company’s production of its bestselling planes.
    Boeing workers overwhelmingly rejected a tentative labor agreement and walked off the job after midnight on Friday.
    The potential production disruption comes as the plane maker has been facing a slew of issues.

    Union members hold picket signs during a news conference following a vote count on the union contract at the IAM District 751 Main Union Hall in Seattle, Washington, US, on Thursday, Sept. 12, 2024. 
    M. Scott Brauer | Bloomberg | Getty Images

    Boeing CFO Brian West said the labor strike that began just after midnight Friday will hurt aircraft deliveries and “jeopardize” the company’s recovery, hours after factory workers overwhelmingly rejected a new labor contract and walked off the job.
    West said the financial impact of the strike will depend on how long it lasts, but that it will affect the company’s production of its bestselling planes, including its cash cow bestseller, the 737 Max, which is produced in Renton, Washington.

    “The strike will impact production and deliveries and our operations and will jeopardize our recovery,” West said at a Morgan Stanley conference on Friday. “So our immediate focus is to the laser-like focus on actions to conserve cash, and we will.”

    Boeing factory workers gather on a picket line during the first day of a strike near the entrance of a production facility in Renton, Washington, U.S., September 13, 2024. 
    Matt Mills Mcknight | Reuters

    He said Boeing’s priority is to get back to the bargaining table and “reach an agreement that’s good for our people, their families, our community.”
    Boeing shares fell sharply on Friday after Moody’s put all of Boeing’s credit ratings on review for a downgrade and Fitch Ratings said a prolonged strike could put Boeing at risk of a downgrade, actions that could drive up the borrowing costs of a manufacturer that already has mounting debt.
    Boeing shares closed nearly 4% lower Friday.
    West declined to say whether the company could meet a rate of producing 38 737 Max planes per month by the end of the year.

    Jefferies aerospace analyst Sheila Kahyaoglu had previously estimated that a 30-day strike could be a $1.5 billion hit for Boeing.
    West said Boeing’s immediate focus would be “on actions to conserve cash” and added that new CEO Kelly Ortberg would be working to restore relationships with the union.
    Boeing and the International Association of Machinists and Aerospace Workers had unveiled a tentative labor agreement on Sunday that included 25% wage increases over four years and other improvements to health-care and retirement benefits. But workers had been looking for raises of 40% and argued that it didn’t cover the increased cost of living.

    Read more CNBC airline news

    Workers in the Seattle area and in Oregon voted 94.6% to reject the proposal, and 96% voted in favor of a strike.
    They walked off the job after midnight on Friday.
    Boeing machinists last went on strike in 2008, a work stoppage that lasted nearly two months.
    The potential production disruption comes as the manufacturer has been facing a slew of issues. It’s struggled to ramp up production and restore its reputation following safety crises.
    A door plug blowout on a nearly new Boeing 737 Max 9 in January led the Federal Aviation Administration to bar Boeing from increasing output of its Max planes and the FAA to boost inspections at production plants, until the regulator is satisfied with its safety and quality procedures there.
    An FAA spokeswoman told CNBC on Friday that the agency will keep its inspectors at Boeing facilities during the strike.

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