Economy

China has prepared powerful countermeasures to retaliate against US companies if president-elect Donald Trump reignites a smouldering trade war between the world’s two biggest economies, according to Beijing advisers and international risk analysts.Chinese leader Xi Jinping’s government was caught off-guard by Trump’s 2016 election victory and the subsequent imposition of higher tariffs, tighter controls over investments and sanctions on Chinese companies.But while China’s fragile economic outlook has since made it more vulnerable to US pressure, Beijing has introduced sweeping new laws over the past eight years that allow it to blacklist foreign companies, impose its own sanctions and cut American access to crucial supply chains. “This is a two-way process. China will of course try to engage with President Trump in whatever way, try to negotiate,” said Wang Dong, executive director of Peking University’s Institute for Global Cooperation and Understanding. “But if, as happened in 2018, nothing can be achieved through talks and we have to fight, we will resolutely defend China’s rights and interests.” President Joe Biden maintained most of his predecessor’s measures against China, but Trump has already signalled an even tougher stance by appointing China hawks to important roles.China now has at its disposal an “anti-foreign sanctions law” that allows it to counter measures taken by other countries and an “unreliable entity list” for foreign companies that it deems to have undermined its national interests. An expanded export control law means Beijing can also weaponise its global dominance of the supply of dozens of resources such as rare earths and lithium that are crucial to modern technologies.Some content could not load. Check your internet connection or browser settings.Andrew Gilholm, head of China analysis at consultancy Control Risks, said many underestimated the damage Beijing could inflict on US interests.Gilholm pointed to “warning shots” fired in recent months. These included sanctions imposed on Skydio, the biggest US drone maker and a supplier to Ukraine’s military, that ban Chinese groups from providing the company with critical components. Beijing has also threatened to include PVH, whose brands include Calvin Klein and Tommy Hilfiger, on its “unreliables list”, a move that could cut the clothing company’s access to the huge Chinese market. “This is the tip of the iceberg,” Gilholm said, adding: “I keep telling our clients: ‘You think you’ve priced-in geopolitical risk and US-China trade warfare, but you haven’t, because China hasn’t seriously retaliated yet’.”China is also racing to make its technology and resource supply chains more resistant to disruption from US sanctions while expanding trade with countries less aligned to Washington.From Beijing’s perspective, while relations with the US were more stable towards the end of Biden’s presidency, the outgoing administration’s policies had largely continued in the same vein as in Trump’s first term. “Everyone was already expecting the worst, so there won’t be any surprises. Everybody is ready,” said Wang Chong, a foreign policy expert at Zhejiang International Studies University.Some content could not load. Check your internet connection or browser settings.Still, China cannot lightly dismiss Trump’s campaign-trail threat to impose blanket tariffs of more than 60 per cent on all Chinese imports, given slowing economic growth, weak confidence among consumers and businesses and historically high youth unemployment.Gong Jiong, professor at Beijing’s University of International Business and Economics, said that in the event of negotiations, he expected China to be open to more direct investment in US manufacturing or to moving more manufacturing to countries Washington found acceptable.China has been struggling to boost the economy amid doubts about its ability to hit this year’s official growth target of around 5 per cent, one of its lowest targets in decades.A former US trade official, who asked not to be named because of involvement in active US-China disputes, said Beijing had been surgical in using the “arrows” in its quiver, wary of further eroding weak international investment sentiment.“That constraint is still there and that internal tension in China still exists, but if there are 60 per cent tariffs or real hawkish intent by the Trump administration, then that could change,” the former official said.Trump, flanked by then-US trade representative Robert Lighthizer, imposed new tariffs on Chinese imports in 2018 More

WASHINGTON (Reuters) – President-elect Donald Trump’s Republican Party will control both houses of Congress when he takes office in January, Edison Research projected on Wednesday, enabling him to push an agenda of slashing taxes and shrinking the federal government.Republicans will have at least the 218 votes needed to control the 435-seat House of Representatives, Edison projected, with nine races yet to be called. They have had already secured a U.S. Senate majority of at least 52-48 with one race uncalled after the Nov. 5 election. During his first presidential term in 2017-2021, Trump’s biggest achievement was sweeping tax cuts that are due to expire next year. That legislation and Democratic President Joe Biden’s signature $1 trillion infrastructure law both came during periods when their parties controlled both chambers of Congress.By contrast, during the past two years of divided government, Biden has had little success in passing legislation and Congress has struggled to perform its most basic function of providing the money needed to keep the government open.The thin Republican House majority has been fractious, tossing out its first speaker, Kevin McCarthy, and routinely bucking his successor Speaker Mike Johnson. Trump’s grip on the party and particularly its raucous hardliners has been far firmer – as evidenced by his success earlier this year killing a bipartisan deal that would have sharply stepped up border security.His power will also be backed by a Supreme Court with a 6-3 conservative majority that includes three justices he appointed.More immediately, the Republicans’ victory is certain to influence the House’s post-election “lame duck” session. The current Congress faces end-of-year deadlines for funding the government to avoid shutdowns at Christmas and extending Washington’s borrowing authority to avoid an historic debt default.One possible scenario is passing temporary patches to give the incoming Trump administration a say on these two controversial items when it assumes power from the Biden administration on Jan. 20. The new Congress convenes on Jan. 3. More

A finance ministry statement outlining the measures followed pledges by the finance minister to issue relevant tax policies to support the healthy development of the property market in the near term.The ministry will expand the eligibility for the 1% deed tax to include apartments up to 140 square metres, up from the previous 90 square metres, according to the statement, effective from Dec. 1.The minimum pre-collection rate for land value-added tax will be reduced by 0.5 percentage points, the statement said. Residents are exempt from VAT when they sell their homes after two years of purchase and beyond. The rule also applies to four first-tier cities — Beijing, Shanghai, Shenzhen and Guangzhou.The property market is grappling with a prolonged downturn since 2021 and remains a major drag on the world’s second-largest economy.Authorities rolled out a raft of property easing measures at the end of September, including a cut in the minimum down payment ratio to 15% for all housing categories and relaxation in home purchase restrictions.”Stimulus measures announced since late September will likely narrow the decline in national contracted sales value over the next 12-18 months. The effect of a high base in H1 2023 will also fade in 2025,” said Moody’s (NYSE:MCO) Ratings in a research note this week.”Homebuyer sentiment continues to be impaired by a slowdown in economic and income growth and lingering concerns about project incompletion. It is uncertain whether the contracted sales decline can be halted,” said Moody’s Ratings. More

Speaking at the ASIC Annual Forum in Sydney, Bullock said uncertainty over the U.S. economic outlook would keep the bank cautious. She flagged the risk of potentially inflationary policies under Donald Trump. Bullock’s comments furthered bets that Australian interest rates will not rise any further, following similar messaging by the RBA during its recent meetings. “We’re not as restrictive as others (central banks), even as they are lowering their interest rates. We think we’re restrictive enough, and we’re going to stay restrictive enough until we think we’ve definitely got that downward trajectory in demand,” Bullock said.The RBA kept its benchmark cash rate unchanged at 4.35% last week,marking a year since the central bank last raised rates. While the RBA said inflation had cooled in line with its expectations, price pressures still remained high, and interest rates would need to remain steady until it was more confident that inflation risks had abated.The RBA also signaled that it was not ruling anything in or out with regards to future policy decisions. Analysts at ANZ and Westpac said that the RBA was likely to begin cutting rates by the first quarter of 2025, although any upside risks in inflation were likely to delay the cut.Australian consumer price index inflation eased in the September quarter, but core inflation still remained above the RBA’s 2% to 3% target range. More

Shares of the computer networking equipment maker were down 1.4% in extended trading after the company forecast annual revenue broadly in line with estimates.Companies have been ramping up investments in AI technologies which require heavy computing power, creating a spike in demand for data centers, which use Cisco (NASDAQ:CSCO)’s products such as ethernet switches and routers.However, the California-based company has been trying to reduce reliance on its massive networking equipment business, which has suffered in recent years from supply chain issues and a post-pandemic slowdown in demand.The company had announced two rounds of layoffs this year in a bid to cut costs, as it shifts focus to cybersecurity, cloud systems and AI-driven products.Cisco completed its $28 billion acquisition of Splunk (NASDAQ:SPLK) in March, which aims to boost its software business amid an AI boom while also helping to offset a post-pandemic slowdown in demand by enhancing its cybersecurity capabilities.The company expects second-quarter revenue to be between $13.75 billion and $13.95 billion, which was above analysts’ average estimate of $13.73 billion, according to LSEG-compiled data.It forecast quarterly adjusted profit per share of 89 cents to 91 cents, compared with estimates of 87 cents.The company’s revenue fell 6% to $13.84 billion in the first quarter ended Oct. 26, beating estimates of $13.77 billion. Adjusted profit per share of 91 cents also beat estimates of 87 cents.Cisco now expects annual revenue to be between $55.3 billion and $56.3 billion, compared with its earlier forecast of between $55.0 billion to $56.2 billion. Analysts were expecting $55.89 billion.It raised its annual adjusted profit forecast range to $3.60 to $3.66, from $3.52 to $3.58. More

Reeves is under pressure to address massive under-investment by UK pension funds in domestic assets, with a recent collapse in allocations cited among the reasons for Britain’s lacklustre economic growth.Speaking on the eve of her first Mansion House address to the UK financial industry, Reeves said she would consolidate about 60 defined contribution pension schemes and 86 Local Government Pension Schemes, to make them more cost-efficient and large enough to bankroll ambitious projects.”Last month’s budget fixed the foundations to restore economic stability and put our public services on a firmer footing. Now we’re going for growth,” Reeves said in a statement.”That starts with the biggest set of reforms to the pensions market in decades to unlock tens of billions of pounds of investment in business and infrastructure, boost people’s savings in retirement and drive economic growth so we can make every part of Britain better off,” she said.Local Government Pension Schemes and defined contribution pension pots in the UK are expected to collectively manage 1.3 trillion pounds in assets by the end of the decade, but many funds lack scale individually to pursue big-ticket investments like roads, rail and airports. According to government analysis which will be published in the interim report of the Pensions Investment Review, pension funds are better placed to invest in a wider range of assets once their assets under management reach 25-50 billion pounds. Funds holding more than 50 billion in assets can harness even greater benefits, the analysis continued, including investing directly in large scale projects at lower cost.The government said it would consult on measures to facilitate pension fund consolidation via a new Pension Schemes Bill next year, which would also seek to empower fund managers to more easily move savers between schemes.These so-called “megafunds” resemble pension schemes in place in Canada and Australia, where infrastructure investment volumes are respectively four times and three times greater than those managed by UK Defined Contribution schemes. “They (Canada and Australia) probably have the best pension funds anywhere in the world,” Reeves told the BBC. “Our pension funds in Britain are too small to be making the investments that get a good return for people saving for retirement and to help our economy to grow.”The government said the funds would be authorised by the Financial Conduct Authority and subject to heavy scrutiny to ensure performance for savers, including delivering value for money in investment decisions.Tom Frost, head of UK institutional clients at abrdn, said the public was largely in favour of using pension savings to power UK businesses, housing and infrastructure but over-consolidation would usher in different risks.”If the number of schemes is reduced to too low a number, this could limit innovation and lead to decreased competition, thereby resulting in poorer outcomes for current and future pensioners,” he said.($1 = 0.7844 pounds) More

(Reuters) -New York Governor Kathy Hochul will announce on Thursday that the state plans to revive a congestion charge for driving in parts of Manhattan that she indefinitely put on hold in June, a source told Reuters.New York City’s congestion pricing program, the first of its kind in the U.S., was initially to have charged a toll of $15 during daytime hours for passenger vehicles driving in Manhattan south of 60th Street starting June 30.Hochul plans to announce a revised program that is expected to have a base charge of $9 for passenger cars, the source said. The plan was reported earlier by media outlet Gothamist. London implemented a similar charge in 2003.The revised plan will need the fast-track approval of the U.S. Transportation Department and the new toll is expected to be implemented before President Joe Biden leaves office on Jan. 20. The Metropolitan Transportation Authority is expected to vote next week to approve the charge, the source added. A Transportation Department spokesperson declined to comment.Hochul had cited high inflation and a desire to not deter commuters or tourists because of the additional charge for her decision to halt implementation.A spokesperson for Hochul said the governor on Thursday “will announce the path forward to fund mass transit, unclog our streets and improve public health by reducing air pollution.”A group of five New York House Republicans led by Representative Mike Lawler urged incoming President Donald Trump in a letter to kill the charge, asking him to end “this absurd congestion pricing cash grab once and for all.” A Trump spokesperson did not immediately comment.In the aftermath of the delay, the MTA in June said it was putting $16.5 billion in capital projects on hold.MTA has said congestion pricing would cut traffic by 17%, improve air quality and increase mass transit use by 1% to 2%, generate up to $1.5 billion annually and support $15 billion in debt financing for mass transit improvement.In 2019, state lawmakers approved the plan to help fund improvements in mass transit using tolls to manage traffic in New York City, the most congested of any U.S. city.Congestion pricing had been projected to start in 2021 but the federal government under Trump took no action. It was approved under Biden in 2023.New York says more than 900,000 vehicles enter the Manhattan Central Business District daily, which reduces travel speeds to around 7 miles per hour on average.Riders Alliance Executive Director Betsy Plum said “congestion pricing cannot happen soon enough. Once the first tolls are collected, we will finally breathe easier.” More

Speaking at an event hosted by Bradesco Asset Management, Galipolo, who is currently the central bank’s director of monetary policy, but who will take over as governor in January, noted that recent data has shown the Brazilian economy’s resilience. He emphasized that the central bank will continue to assess data on a meeting-by-meeting basis, without providing guidance or reacting mechanically to variables.The central bank accelerated its monetary tightening with a 50-basis-point interest rate hike last week, pushing rates to 11.25%. In the minutes of the decision, policymakers stressed that further deterioration in inflation expectations could prolong the monetary tightening cycle.Annual inflation in Latin America’s largest economy reached 4.76% in October. Even with the central bank hiking rates, economists have raised their inflation forecasts through 2026 due to stronger-than-expected economic activity, a tight labor market and a weaker currency.The recent depreciation of the Brazilian real has been driven by a combination of local fiscal concerns and a stronger U.S. dollar after the nation’s presidential election.With the market awaiting new fiscal measures to support the real and reduce long-term interest rates, Galipolo acknowledged that changes often take longer than the market would prefer, but said he favors the “pains of democracy.”After the central bank sold all $4 billion offered in two dollar-denominated auctions with repurchase agreements on Wednesday, Galipolo said the intervention was related to year-end seasonality, when there is usually “additional demand that tends to cause a bit of stress on the exchange-rate coupon.””I think the action was well understood, well received, and served its purpose,” he added. More