Economic Conditions and Trends

More stories

  • 88 Shares179 Views

    in Economy

    Eurozone Inflation Holds Steady at 5.3 Percent

    by

    The NewsConsumer prices in the eurozone rose 5.3 percent in August compared with a year earlier, sticking at the same pace as the previous month and defying economists’ expectations for a slowdown, according to an initial estimate by the statistics agency of the European Union.While inflation has slowed materially from its peak of above 10 percent in October last year, there are signs that some inflationary pressures are persistent, even as bloc’s economy weakens. Food inflation was again the largest contributor to the headline rate, rising 9.8 percent from a year earlier on average across the 20 countries that use the euro currency.Inflation was also given some upward momentum by a jump in energy costs, which rose 3.2 percent in August from the previous month.Core inflation, which strips out food and energy prices, and is used as a gauge of domestic price pressures, slowed to 5.3 percent, from 5.5 percent in July.By Country: Higher energy prices add to inflation pressures in the region’s largest economies.In some of the eurozone’s largest economies, rebounding energy prices offset slowing food inflation. The annual rate of inflation accelerated to 5.7 percent in France and to 2.4 percent in Spain this month.In Spain, inflation had fallen below 2 percent, the European Central Bank’s target, in June, but has since climbed back above it.Inflation in Germany, Europe’s largest economy, was 6.4 percent in August, slowing only slightly from the previous month, as household energy and motor fuel costs increased.What’s Next: The European Central Bank weighs another rate increase.The acceleration of inflation in some of the region’s largest economies arrives two weeks before the European Central Bank’s next policy meeting. As analysts parse the data, the question is whether the reports are troubling enough to persuade policymakers to raise interest rates again at their mid-September meeting. The central bank has raised rates nine consecutive times, by 4.25 percentage points in about a year, and there is growing evidence that higher rates are restraining the economy, particularly as lending declines.Last month, Christine Lagarde, the president of the central bank, said she and her colleagues had “an open mind” about the decision in September and subsequent meetings. Policymakers are trying to strike a balance between raising rates enough to stamp out high inflation, while not causing unnecessary economic pain.“We might hike, and we might hold,” she said. “And what is decided in September is not definitive; it may vary from one meeting to the other.”On Thursday, before the eurozone data was released, Isabel Schnabel, a member of the bank’s executive board, said that “underlying price pressures remain stubbornly high, with domestic factors now being the main drivers of inflation in the euro area.” This meant a “sufficiently restrictive” policy stance was needed to return inflation to the bank’s 2 percent target “in a timely manner,” she added. More

  • 163 Shares199 Views

    in Economy

    Factories May Be Leaving China, but Trade Ties Are Stronger Than They Seem

    by

    The United States is trying to lessen its dependence on Chinese goods, but research is showing how tough it is to truly alter global supply chains.The United States has spent the past five years pushing to reduce its reliance on China for computer chips, solar panels and various consumer imports amid growing concern over Beijing’s security threats, human rights record and dominance of critical industries.But even as policymakers and corporate executives look for ways to cut ties with China, a growing body of evidence suggests that the world’s largest economies remain deeply intertwined as Chinese products make their way to America through other countries. New and forthcoming economic papers call into question whether the United States has actually lessened its reliance on China — and what a recent reshuffling of trade relationships means for the global economy and American consumers.Changes to global manufacturing and supply chains are still unfolding, as both punishing tariffs imposed by the administration of former President Donald J. Trump and tougher restrictions on the sale of technology to China imposed by the Biden administration play out.The key architect of the latest restrictions — Gina Raimondo, the commerce secretary — is meeting with top Chinese officials in Beijing and Shanghai this week, a visit that underscores the challenge facing the United States as it seeks to reduce how much it depends on China when the countries’ economies share so many ties.These reworked trade rules, along with other economic changes, have caused China’s share of imports into the United States to fall as the share of imports from other low-cost countries like Vietnam and Mexico have climbed. The Biden administration has also pumped up incentives for producing semiconductors, electric cars and solar panels domestically, and manufacturing construction in the United States has been rising quickly.Commerce Secretary Gina Raimondo met with Chinese officials in Beijing on Monday.Pool photo by Andy Wong, Getty ImagesBut new research discussed at the Federal Reserve Bank of Kansas City’s annual conference at Jackson Hole in Wyoming on Saturday found that while global trade patterns have reshuffled, American supply chains have remained very reliant on Chinese production — just not as directly.In their paper, the economists Laura Alfaro at Harvard Business School and Davin Chor at the Tuck School of Business at Dartmouth wrote that China’s share of U.S. imports fell to about 17 percent in 2022 after peaking at about 22 percent in 2017, as the country accounted for a smaller share of America’s imports in categories like machinery, footwear and telephone sets. As that happened, places like Vietnam gained ground — supplying the United States with more apparel and textiles — while neighbors like Mexico began sending more car parts, glass, iron and steel.American Imports Shift Away From ChinaChange in the share of U.S. imports coming from each area between 2017 and 2022

    .dw-chart-subhed {
    line-height: 1;
    margin-bottom: 6px;
    font-family: nyt-franklin;
    color: #121212;
    font-size: 15px;
    font-weight: 700;
    }

    Percentage points
    Source: Analysis of Comtrade data by Laura Alfaro and Davin ChorBy The New York TimesThat would seem to be a sign that the United States is lessening its reliance on China. But there’s a hitch: Both Mexico and Vietnam have themselves been importing more products from China, and Chinese direct investment into those countries has surged, indicating that Chinese firms are setting up more factories there.The trends suggest that firms may simply be moving the last steps in their lengthy supply chains out of China, and that some companies are using countries like Vietnam or Mexico as staging areas to send goods that are still partly or largely made in China into the United States.While proponents of decoupling argue that any move away from China may be a good thing, the reshuffling appears to have other consequences. The paper finds that shifting supply chains are also associated with higher prices for goods.A drop of five percentage points in the share of imports coming from China may have pushed prices on Vietnamese imports up 9.8 percent and Mexican imports up 3.2 percent, based on the authors’ calculations. While more research is needed, the effect could be slightly contributing to consumer inflation, they say.“That is our first caution — this is likely to have cost effects — and the second caution is that it is unlikely to diminish dependence” on China, Ms. Alfaro said in an interview.The research echoes findings from a forthcoming paper by Caroline Freund of the University of California, San Diego, and economists at the World Bank and International Monetary Fund, which examined how trade in specific imports from China had changed since Mr. Trump began imposing tariffs on them.That paper found that tariffs had a substantial impact on trade, reducing U.S. imports of the goods that were subject to the levies, even as the absolute value of U.S. trade with China continued to rise.The countries that were able to capture the market share lost by China were those that already specialized in making the products that were subject to tariffs, like electronics or chemicals, as well as countries that were deeply integrated into China’s supply chains and had a lot of trade back and forth with China, Ms. Freund said. They included Vietnam, Mexico and Taiwan.“They’re also increasing imports from China, precisely in those products that they’re exporting to the U.S.,” she said.Higher import tariffs have not deterred the influx of cars from China.Agence France-Presse — Getty ImagesPresident Biden added tougher restrictions to electric car manufacturers in China.Agence France-Presse — Getty ImagesWhat this all means for efforts to bring manufacturing back to the United States is unclear. The researchers come to different conclusions about how much that trend is occurring.Still, both sets of researchers — as well as other economists at Jackson Hole, the Fed’s most closely watched annual conference — pushed back on the idea that these supply-chain shifts meant that global trade overall was retrenching, or that the world was becoming less interconnected.The pandemic, Russia’s invasion of Ukraine, and tensions between the United States and China have prompted some analysts to speculate that the world may turning away from globalization, but economists say that trend is not really borne out in the data.“We don’t see de-globalization at a macro level,” Ngozi Okonjo-Iweala, the director general of the World Trade Organization, said during a panel at the Jackson Hole symposium. But she pointed to what she characterized as a worrying change in expectations.“Rhetoric on de-globalization is taking hold, and that feeds into the political tensions and then into the policymaking,” she said. “My fear is that rhetoric might turn into reality and we might see this shift in investment patterns.”Others at Jackson Hole warned of other consequences, such as product shortages.A move toward production domestically or in only closely allied countries could “imply new supply constraints, especially if trade fragmentation accelerates before the domestic supply base has been rebuilt,” Christine Lagarde, the head of the European Central Bank, said in a speech on Friday.Global supply chains tend to change slowly, because it takes time for companies to plan, invest in and construct new factories. Economists are continuing to track current changes to global sourcing.Given growing geopolitical tensions with China as well as more recent troubles in the country’s economy, further shifts in global supply chains may be unavoidable.One question for economists now, Ms. Alfaro said, is whether the economic benefits from moving factories back to the United States or other friendly countries — like innovation in the U.S. manufacturing sector — will ultimately outweigh the costs of the strategy, for example, the higher prices paid by consumers.And separately, Ms. Freund said she believed the costs of reshoring had been “really under considered” by the government and others.The typical narrative was that “we’re going to bring it all back and we’re going to have all these jobs and it’s all going to be hunky-dory, but, in fact, it’s going to be extremely costly to do that,” she said. “Part of the reason we had such low inflation in the past was because we were bringing in lower-cost goods and improving productivity through globalization.” More

  • 113 Shares129 Views

    in Economy

    What China’s Economic Woes May Mean for the U.S.

    by

    The fallout is probably limited — and there may be some upside for American interests.The news about China’s economy over the past few weeks has been daunting, to put it mildly.The country’s growth has fallen from its usual brisk 8 percent annual pace to more like 3 percent. Real estate companies are imploding after a decade of overbuilding. And China’s citizens, frustrated by lengthy coronavirus lockdowns and losing confidence in the government, haven’t been able to consume their way out of the country’s pandemic-era malaise.If the world’s second-largest economy is stumbling so badly, what does that mean for the biggest?Short answer: At the moment, the implications for the United States are probably minor, given China’s limited role as a customer for American goods and the minor connections between the countries’ financial systems.In a note published Thursday, Wells Fargo simulated a “hard landing” scenario for China in which output over the next three years would be 12.5 percent smaller than previous growth rates would achieve — similar to the impact of a slump from 1989 to 1991. Even under those conditions, the U.S. economy would shave only 0.1 percent off its inflation-adjusted growth in 2024, and 0.2 percent in 2025.That could change, however, if China’s current shakiness deepens into a collapse that drags down an already slowing global economy.“It doesn’t necessarily help things, but I don’t think it’s a major factor in determining the outlook in the next six months,” Neil Shearing, the chief economist at Capital Economics Group, an analysis and consulting firm, said in a recent webinar. “Unless the outlook for China becomes substantially worse.”A potential balm for inflation, but a threat to factories.When considering the economic relationship between the two countries, it’s important to recognize that the United States has played some role in China’s troubles.The United States is well past a boom in consumption during the pandemic that pulled in $536.8 billion worth of imports from China in 2022. This year, with home offices and patios stuffed full of furniture and electronics, Americans are spending their money on cruises and Taylor Swift tickets instead. That lowers demand for goods from Chinese factories — which had already been weakened by a swath of tariffs that former President Donald J. Trump started and the Biden administration has largely kept in place.How Much America Buys From (and Sells to) ChinaMonthly goods imports have fallen since a pandemic-era boom.

    Source: Census BureauBy The New York TimesFor years, China’s leaders have said they want to rely more on the country’s households to drive economic growth. But they have taken few steps to support domestic consumption, such as shoring up safety net programs, which would persuade residents to spend more of the money they now save in case of emergencies.That’s why some are concerned that China could again fall back on encouraging exports to foster growth. Such a strategy might succeed since the Chinese currency, the renminbi, is very weak against the dollar, and it’s possible to evade tariffs on most items by assembling Chinese parts in other countries — like Vietnam and Mexico.An export surge would have countervailing effects. It could lower prices for consumer goods, which — along with falling Chinese demand for commodities like gasoline and iron ore — would help lower inflation in the United States. At the same time, it could counteract efforts to resuscitate American manufacturing, raising the political temperature as the presidential election approaches.“My fear is that an export-based Chinese recovery will run up against a world that is reluctant to become ever more dependent on China for manufactures, and that becomes a source of tension,” said Brad Setser, a senior fellow at the Council on Foreign Relations.And what about goods flowing the other way, from the United States to China? It’s not a huge volume — China accounted for only 7.5 percent of U.S. exports in 2022. American businesses have long sought to further develop the Chinese market, especially for agricultural products such as pork and rice, but success has been underwhelming. In 2018, the Trump administration negotiated a compact under which China would buy billions more dollars in products from U.S. farmers.Those targets were never met. With appetite fading in China, they may never be. That could mean lower food prices globally, but farmers would be hurt.“If their demand for corn and soybeans is rising, that’s good for everybody who produces corn and soybeans around the world,” said Roger Cryan, the chief economist with the American Farm Bureau Federation. “It is something to be concerned about down the road.”Insulation for American institutions and investors.So much for general trade dynamics. But the U.S. economy is composed of millions of companies with particular concerns, and some may have more to worry about as China’s economy flounders.Tesla, for example, had made inroads in the Chinese market, but its sales there have tumbled in recent months in the face of tough competition from local brands with lower-cost models. Apple generates about 20 percent of its revenue in China, which could also take a hit as residents choose cheaper products.American banks that do business globally have noted slowing growth; Citigroup’s chief executive, Jane Fraser, said on the company’s second-quarter earnings call that China had been its “biggest disappointment.”Chinese tourists also pour money into U.S. cities when they visit, which they might do less of going forward. Glenn Fogel, the chief executive of Booking Holdings — which includes travel websites such as Booking.com and Priceline — said in his earnings call that their outbound business from China had been anemic.“I don’t expect a recovery in China for us for some time, significant time probably,” Mr. Fogel said.Those effects, however, are likely to be muted. Even if the economic picture darkens, the American and Chinese banking systems are separate enough to insulate U.S. institutions and investors, aside from the few who might have invested in property developers like Evergrande or Country Garden.“There aren’t realistic channels for financial contagion from China to the U.S.,” Dr. Setser said. While China’s central bank may hold off on buying U.S. Treasury bonds, he noted, any impact on the overall market could be contained. “There’s no real scenario where China disrupts the bond market in a way that the Fed cannot offset.”On the contrary, there may be some upside for American companies if Chinese investors, lacking domestic opportunities, move more of their money into the United States. China’s direct investment in U.S. assets is relatively low and could face new obstacles as states seek to erect barriers to Chinese purchases of U.S. real estate and commercial enterprises. But places that welcome it could benefit.“Given that the U.S. seems to be doing relatively well, you could have money coming to the U.S., both in search of higher yield and in search of safety,” said Eswar Prasad, a professor of trade policy at Cornell University.The wild card of geopolitics.Aside from any direct financial and economic spillovers, it’s worthwhile to consider whether a faltering China meaningfully alters geopolitical dynamics and American interests.Washington has long fretted that a China-dominated trading bloc could limit market access for American companies by setting rules that, for example, contain weak protections for intellectual property. Such a trade agreement came into force in early 2022 after the United States abandoned its push to form the Trans-Pacific Partnership.But if China appears less mighty, it may lose its attractiveness in a fracturing world. Countries that eagerly took loans from China for large infrastructure projects may turn back toward international lending institutions like the World Bank, despite their more stringent requirements.“The fact that the Chinese economy is seen as being in a rough spot, in addition to more aggressive outreach in Asia and elsewhere by the Biden administration, that has shifted the balance a little bit,” Dr. Prasad said.Could China’s economic condition affect its willingness to undertake any military adventures, such as an invasion of Taiwan? While the Communist Party leadership might seek to stir up patriotic spirits through such an attack, Dr. Prasad thinks a shaky economy would in fact make the use of military force less likely, given the resources required to sustain that kind of engagement.One thing to keep in mind: While China appears to be going through a rough patch, the outlook is uncertain. There’s a debate in think-tank circles about whether the country’s economic structure will be durable over the longer term or fundamentally unsound.Heiwai Tang, an economics professor at HKU Business School in Hong Kong, said it would be unwise to consider China the next Japan, on the brink of prolonged stagnation.“I remain optimistic that the government is still very agile and should be responsive to a potential crisis,” Dr. Tang said. “They know what to do. It’s just a matter of time before they come to some kind of consensus to do something.”Ana Swanson More

  • 138 Shares189 Views

    in Economy

    Raimondo Heads to China to Both Promote Trade, and Restrict It

    by

    The commerce secretary’s trip may be the clearest demonstration yet of the balancing act the Biden administration is trying to pull off in its relations with China.Gina Raimondo, the secretary of commerce, is heading to China on Saturday with two seemingly contradictory responsibilities: a mandate to strengthen U.S. business relations with Beijing while also imposing some of the toughest Chinese trade restrictions in years.The head of the Commerce Department is traditionally the government’s biggest champion for the business community both at home and abroad, promoting the kind of extensive ties U.S. firms have with China, the world’s second-largest economy.But U.S.-China relations have turned chillier as China has become more aggressive in flexing its economic and military might. While China remains an important economic partner, American officials have increasingly viewed the country as a security threat and have imposed a raft of new restrictions aimed at crippling Beijing’s access to technology that could be used to strengthen the Chinese military or security services.The bulk of those restrictions — which have stoked anger and irritation from the Chinese government — have been imposed by Ms. Raimondo’s agency.The Commerce Department has issued extensive trade restrictions on sales of chips, software and machinery to China’s semiconductor industry and is mulling an expansion of those rules that could be issued soon after Ms. Raimondo returns to Washington.Her visit could be the biggest test yet of whether the Biden administration can pull off the balancing act of promoting economic ties with China while clamping down on some trade in the interest of national security.Ms. Raimondo will be the fourth administration official to travel to China in recent months, following John Kerry, the president’s special envoy for climate change; Treasury Secretary Janet L. Yellen; and Secretary of State Antony J. Blinken.Ms. Raimondo is expected to reiterate what her counterparts have told Chinese officials: that there is no contradiction between the administration’s goals for encouraging commercial engagement with China and protecting U.S. national security. They argue that the United States can maintain economic ties with China that benefit both countries and encourage peace, while also setting narrow but tough restrictions on China’s access to advanced technology in the interest of national defense.But the approach faces skepticism in both countries. In the United States, some Republicans argue that even more innocuous business ties with China could undercut U.S. industries and leave the nation vulnerable to influence from Beijing. And in China, many view what the U.S. government describes as narrow, national-security-related actions as a poorly disguised effort to hold back the Chinese economy.“I think the Commerce Department has tried to be very targeted,” said Samm Sacks, a senior fellow at Yale Law School’s Paul Tsai China Center. “Now, the Chinese side won’t see it that way.”For Chinese officials, Ms. Raimondo simultaneously represents some of their best opportunities for engagement with the United States and their biggest source of frustration.Experts say her visit presents a chance for Chinese leaders to strengthen trade relations and signal that their country is still open to international business at a moment when the Chinese economy has stumbled, foreign investment has declined and a series of raids on companies with foreign ties have set executives on edge.But Chinese officials have also harshly criticized the technology curbs issued by her department, a condemnation they are likely to repeat in the week ahead. Officials in Beijing have also been highly critical of the new restrictions on American investment in certain high-tech Chinese industries, which the Biden administration proposed earlier this month.At a summit in South Africa this week, a Chinese official delivered a prepared statement from Chinese leader Xi Jinping that called for the world to avoid “the abyss of a new Cold War” and blamed “some country, obsessed with maintaining its hegemony” for working to cripple emerging markets and developing countries.In addition to export controls, Ms. Raimondo is overseeing the distribution of $50 billion to chip companies that build facilities in the United States. Any company that accepts that funding must agree not to build new factories for making advanced chips in China for at least a decade.“The Biden administration is probing for a way to engage the Chinese in a very difficult environment,” said Myron Brilliant, a senior counselor at Dentons Global Advisors-ASG who was formerly the executive vice president of the U.S. Chamber of Commerce. “It’s a balancing act for sure, between the national security agenda they are enforcing, while also recognizing that a lot of trade between the countries doesn’t touch on national security considerations and should therefore not be restricted.”Ms. Raimondo is set to meet with high-level Chinese officials and representatives of American businesses in Beijing and Shanghai between Monday and Wednesday. People familiar with the government’s planning say those talks may result in the creation of working groups to discuss export controls and commercial issues that arise between China and the United States.American businesses are also hoping that the Biden administration will push for additional intellectual property protections for pharmaceutical companies, more access to the Chinese market for Visa and Mastercard and the completion of a longstanding Chinese order of Boeing airplanes, among other goals, people familiar with the talks said.But those gains, while important for American firms, would still seem trivial compared with the mounting pressures U.S. companies can now face in China.China’s sputtering economy and harsh lockdowns during the pandemic are giving pause to businesses considering their presence in the country. The Chinese government has also restricted companies sending data from China abroad, making it more difficult for multinationals to do business.Chinese authorities have responded to increasing technology restrictions from the United States by barring the U.S. chip-maker Micron from sales to companies that handle critical Chinese information and by scuttling a proposed merger between Intel and an Israeli chip-maker with operations in China. And companies exporting from China still face nearly the full suite of tariffs imposed by the Trump administration, in addition to the new export controls.The port in Yingkou, China. Experts say Ms. Raimondo’s visit presents an opportunity for Chinese leaders to strengthen trade relations and signal that their country is still open to foreign business.Agence France-Presse — Getty ImagesThe Biden administration has acknowledged the tensions in the U.S.-China relationship, saying that China poses a threat to U.S. national security but that it is still one of the country’s most integral economic partners.“This isn’t about, you know, holding China back or denying them commodity technology,” Ms. Raimondo said of the export controls at an event at the American Enterprise Institute in July. “Certainly not about denying U.S. companies revenue. It’s about being honest about the fact that China has a military civil fusion strategy, which includes getting our most sophisticated technology and using it to advance their military. And we’re not going to allow that.”The United States has for decades imposed export controls on the types of technology that can be sent to China, including restricting sales of satellites and other technology following Beijing’s crackdown in Tiananmen Square in 1989.But limits on technology trade with China have increased substantially in recent years, since the Trump administration imposed restrictions on the Chinese telecom firm Huawei. In October, the Biden administration expanded the limits to all firms using advanced chips in China. Chip firms, which earn a third or more of their global revenue through sales to China, have also pushed back, saying that the new restrictions are resulting in less money to invest in new research and innovation.In July, the chief executives of Nvidia, Qualcomm and Intel met with Ms. Raimondo in Washington to make that case.It’s not clear how much influence, if any, their lobbying will have on the rules. Ms. Raimondo, a former venture capitalist and governor of Rhode Island, has a long reputation as a business-friendly and pragmatic political actor. But as commerce secretary, she has repeatedly argued that the United States could not compromise on issues of national security.“We are not seeking the decoupling of our economy from that of China’s,” Ms. Raimondo said in a speech at the Massachusetts Institute of Technology in November. “We want to continue to promote trade and investment in those areas that do not undermine our interests or values.” More

  • 100 Shares129 Views

    in Economy

    A Crisis of Confidence Is Gripping China’s Economy

    by

    China’s economy, which once seemed unstoppable, is plagued by a series of problems, and a growing lack of faith in the future is verging on despair.Earlier this year, David Yang was brimming with confidence about the prospects for his perfume factory in eastern China.After nearly three years of paralyzing Covid lockdowns, China had lifted its restrictions in late 2022. The economy seemed destined to roar back to life. Mr. Yang and his two business partners invested more than $60,000 in March to expand production capacity at the factory, expecting a wave of growth.But the new business never materialized. In fact, it’s worse. People are not spending, he said, and orders are one-third of what they were five years ago.“It is disheartening,” Mr. Yang said. “The economy is really going downhill right now.”For much of the past four decades, China’s economy seemed like an unstoppable force, the engine behind the country’s rise to a global superpower. But the economy is now plagued by a series of crises. A real estate crisis born from years of overbuilding and excessive borrowing is running alongside a larger debt crisis, while young people are struggling with record joblessness. And amid the drip feed of bad economic news, a new crisis is emerging: a crisis of confidence.A growing lack of faith in the future of the Chinese economy is verging on despair. Consumers are holding back on spending. Businesses are reluctant to invest and create jobs. And would-be entrepreneurs are not starting new businesses.“Low confidence is a major issue in the Chinese economy now,” said Larry Hu, chief China economist for Macquarie Group, an Australian financial services firm.Mr. Hu said the erosion of confidence was fueling a downward spiral that fed on itself. Chinese consumers aren’t spending because they are worried about job prospects, while companies are cutting costs and holding back on hiring because consumers aren’t spending.In the past few weeks, investors have pulled more than $10 billion out of China’s stock markets. On Thursday, China’s top securities regulator summoned executives at the country’s national pension funds, top banks and insurers to pressure them to invest more in Chinese stocks, according to Caixin, an economics magazine. Last week, stocks in Hong Kong fell into a bear market, down more than 20 percent from their high in January.From its resilience to past challenges, China forged a deep belief in its economy and its state-controlled model. It rebounded quickly in 2009 from the global financial meltdown, and in spectacular fashion. It weathered a Trump administration trade war and proved its indispensability. When the pandemic dragged down the rest of the world, China’s economy bounced back with vigor. The Global Times, a mouthpiece for the Chinese Communist Party, declared in 2022 that China was the “unstoppable miracle.”China’s president, Xi Jinping, speaking at in Shanghai in 2018, when he gave a rousing defense of the economy: “You have every reason to be confident.”Pool photo by Johannes EiseleOne factor contributing to the current confidence deficit is the prospect that China’s policymakers have fewer good options to fight the downturn than in the past.In 2018, with the economy in a trade war with the United States and its stock market nose-diving, Xi Jinping, China’s leader, gave a rousing speech.Mr. Xi was addressing an international trade fair in Shanghai and sought to quell the uncertainty: No one should ever waver in their confidence about the Chinese economy, despite some ups and downs, he said.“The Chinese economy is not a pond, but an ocean,” Mr. Xi said. “The ocean may have its calm days, but big winds and storms are only to be expected. Without them, the ocean wouldn’t be what it is. Big winds and storms may upset a pond, but never an ocean. When you talk about the future of the Chinese economy, you have every reason to be confident.”But in recent months, Mr. Xi has said little about the economy.Unlike past crises that were international in nature, a convergence of long-simmering domestic problems is confronting China — some a result of policy changes carried out by Mr. Xi’s government.After the 2008 financial crisis, China unleashed a huge stimulus package to get the economy moving again. In 2015, when its real estate market was teetering, Beijing handed out cash to consumers to replace run-down shacks with new apartments as part of an urban redevelopment plan that gave rise to another building boom in smaller Chinese cities.Now, policymakers are confronting a far different landscape, forcing them to rethink the usual playbook. Local governments and businesses are saddled with more debt and less leeway to borrow heavily and spend liberally. And after decades of infrastructure investments, there isn’t as much need for another airport or bridge — the types of big projects that would spur the economy.China’s policymakers are also handcuffed because they introduced many of the measures that precipitated the economic problems. The “zero Covid” lockdowns brought the economy to a standstill. The real estate market is reeling from the government’s measures from three years ago to curb heavy borrowing by developers, while crackdowns on the fast-growing technology industry prompted many tech firms to scale back their ambitions and the size of their work forces.When China’s top leaders gathered in July to discuss the rapidly deteriorating economy, they did not deliver a bazooka-style spending program as some had anticipated. Coming out of the meeting, the Political Bureau of the Chinese Communist Party presented a laundry list of pronouncements — many rehashed from previous statements — without any new announcements. It focused, however, on the need to “boost confidence,” without detailing the measures that showed policymakers were ready to do that.“Whether you have confidence in the Chinese economy is actually whether you have confidence in the Chinese government,” said Kim Yuan, who lost his job in the home decoration industry last year. He has struggled to find another job, but he said the economy was unlikely to worsen significantly as long as the government maintained control.

    .dw-chart-subhed {
    line-height: 1;
    margin-bottom: 6px;
    font-family: nyt-franklin;
    color: #121212;
    font-size: 15px;
    font-weight: 700;
    }

    China consumer confidence index
    Source: China National Bureau of Statistics via CEIC DataBy The New York TimesConfronted with dwindling confidence, the government has fallen back on a familiar pattern and stopped announcing troubling economic data.This month, China’s National Bureau of Statistics said it would stop releasing youth unemployment figures, a closely watched indicator of the country’s economic troubles. After six straight months of rising joblessness among the country’s 16- to 24-year-olds, the agency said the collection of those figures needed “to be further improved and optimized.”The bureau this year also stopped releasing surveys of consumer confidence, among the best barometers of households’ willingness to spend. Confidence rebounded modestly at the start of the year, but started to plummet in the spring. The government’s statistics office last announced the survey results for April, discontinuing a series it began 33 years ago.Instead of giving people less to worry about, the sudden removal of closely followed data has left some on Chinese social media wondering what they might be missing.Laurence Pan, 27, noticed that something was beginning to go awry in 2018 when customers at the international advertising agency in Beijing where he worked started to scale back budgets. Over the next few years, he hopped from one agency to another, but the caution from clients around spending was the same.He resigned from his last employer three months ago. Mr. Pan said that he had secured new jobs quickly in the past, but that he was struggling to find a position this time. He has applied for nearly 30 jobs since last month and has not received an offer. He said he was considering part-time work at a convenience store or a fast-food restaurant to make ends meet. With so many uncertainties, he has cut back on his spending.“Everyone is having a hard time now, and they have no money to spend,” he said. “This might be the most difficult time I’ve ever been through.”The Shanghai skyline. Consumers in China are holding back on spending, and businesses are reluctant to invest and create jobs. Alex Plavevski/EPA, via Shutterstock More

  • 100 Shares149 Views

    in Economy

    Biden Incentives for Foreign Investment Are Benefiting Factories

    by

    Early data suggest laws to increase semiconductor production and renewable energy technology have shifted the makeup of foreign direct investment — but not increased it.Lucrative new tax breaks and other incentives for advanced manufacturing that President Biden signed into law appear to be reshaping direct foreign investment in the American economy, according to a White House analysis, with a much greater share of spending on new and expanded businesses shifting toward the factory sector.Data that include the first months after the enactment of two pieces of that agenda show that a key measure of foreign investment fell slightly from 2021 to 2022, adjusted for inflation.The numbers suggest that, in the early months after the bills were signed, the hundreds of billions of taxpayer dollars that Mr. Biden is directing toward manufacturing have not increased the overall amount of foreign direct investment in the economy. Instead, the laws appear to have shifted where foreign investment is being directed.A new analysis by the White House Council of Economic Advisers shows the composition of what’s known as capacity-enhancing spending on new structures or expansions of existing ones shifted rapidly toward factories, in line with one of Mr. Biden’s top economic goals.The analysis shows that two-thirds of foreign direct investment, excluding corporate acquisitions, was in manufacturing in 2022. That was more than double the average share from 2014 to 2021.The surge is small in the context of the overall economy. But administration officials call it an encouraging sign that multinational companies are being enticed to America by Mr. Biden’s industrial policy agenda. In the last year, the analysis notes, construction spending on new manufacturing facilities in the United States has increased significantly faster than in England, continental Europe or other wealthy Group of 7 nations.Administration officials say a Commerce Department survey of new foreign investment suggests investors pouring money into America’s factories are largely concentrated in Britain and continental Europe, along with Canada, Japan and South Korea. Half of 1 percent of the investment appears to be associated with China.That foreign investment is flowing largely to computer and electronics manufacturing, particularly of semiconductors, which were the centerpiece of a bipartisan industrial policy bill that Mr. Biden signed into law last summer. He also signed a climate, health and tax bill later that summer that included large new subsidies for renewable energy technology manufacturing.Since those laws were signed, companies have announced a flurry of planned investments in the United States. The administration tallies them at more than $500 billion. They include semiconductor plants in Arizona, advanced battery facilities in Georgia and much more. Many of the announced projects are from foreign companies, like Taiwan Semiconductor Manufacturing Company.Administration officials say shifting investment toward factories — even if the overall level of investment does not change — can produce positive spillovers for the economy. The White House analysis cites higher wages in manufacturing jobs and potential increases to productivity from foreign firms sharing knowledge with existing domestic manufacturers.“Foreign direct investment in manufacturing doesn’t just help us build up this critical sector in key focal areas of Bidenomics, such as semiconductors and clean energy,” said Jared Bernstein, the chair of the Council of Economic Advisers. “It also allows us to learn valuable production lessons from international companies in these and other areas.” More

  • 113 Shares189 Views

    in Economy

    Can Affluence and Affordable Housing Coexist in Colorado’s Rockies?

    by

    In the recreation-fueled, amenity-rich economy of Colorado’s Rocky Mountain region, there are two peak seasons: summer, with its rafting, hiking, fishing and biking, and the cold months filled with skiing and other winter activities.And then there is “mud season” — a liminal moment in spring when the alpine environment, slowly then suddenly, begins to thaw and only a trickle of tourists linger.It’s a period that workers in other places might bemoan. But for much of the financially stretched work force serving the assemblage of idyllic mountain towns across the state, a brief drop-off in business this spring was a respite.During a slow shift on a 51-degree day at the Blue Stag Saloon — a nook on Main Street in the vacation hub of Breckenridge — Michelle Badger, a veteran server, half-joked with her co-workers that “this winter was hell.”Crowds were larger than ever. And workers in the old Gold Rush town still enjoy the highs of the easy camaraderie and solid tips that come with service jobs in the area. But it was all sobered by the related headaches of soaring rents and acute understaffing, which left employees, managers and demanding customers feeling strained.Working in mountain towns like Breckenridge and others in Summit County — including Silverthorne, Dillon and Frisco — would feel like a fairer bargain, Ms. Badger and her colleagues said, if they could better afford living close by. Long commutes are common throughout America. But rental prices in hamlets among the wilderness on the outskirts of town are becoming burdensome too.Job growth has severely outpaced the stock of shelter throughout Colorado. Median rent in Frisco — which a decade ago was considered a modest “bedroom community” for commuting employees — is about $4,000 a month, according to Zillow, and 90 percent above the national median. Residential property prices in Summit County are up 63 percent in just the past year, even amid higher interest rates. Cash buyers buttressed by family money abound.The wage floor for most jobs in and around the county — from line cook to ski lift operator — is at least $18 an hour, or roughly $37,000 a year. Yet for those not lucky enough to land a rare slot in subsidized local employee housing, it’s not uncommon to live an hour or more away to attain a livable budget.As that happens, the contingent displaced by the rich ripples outward down rural highway corridors and, in turn, displaces the farther-flung working poor.Inequality has always been rampant within the orbit of popular destinations. But the financial knock-on effects of those ritzy spheres have expanded as the pandemic-induced surge in remote work has supercharged divides.Wanderlust-filled white-collar workers abruptly discovered that multiweek visits or even permanent relocations were possible for them and their families. Those seeking investment properties saw the opportunities of this hybrid-driven land rush as well, and pounced.Longtime residents have had a front-row seat.Matt Scheer — a 48-year-old musician who grew up on a ranch eastward in El Paso County, where “as soon as we could carry the milk bucket we were milking the cow” — is the sort of extroverted jack-of-all-trades who typifies the spirit (and the wistful brand) of Summit County.Matt Scheer feels lucky to have bought a house 11 years ago when homes were more affordable and mortgage rates lower. But he feels unable to move.Having moved near Breckenridge in the early 2000s to ski, hike, fly fish and work around town, he’s relieved that he managed to pick up his place in 2012 for $240,000 with a fixed-rate mortgage. Prices in his tucked-away French Creek neighborhood — a hilly, unincorporated patch with modest double-wide manufactured homes — have more than tripled.Though he’s a loyal resident with little interest in ever moving, Mr. Scheer said he “can’t really leave.”For a payout of tens of thousands of dollars from the local government, he recently signed onto a hefty “deed restriction” for his property, banning its use for Airbnb stays, limiting any potential renter or buyer to the work force of Summit, and limiting any potential resale price. And he did it with pride.It’s part of a growing program led by Breckenridge and other local governments to limit gentrification without licensing a large buildup of new developments. (Deed restrictions in destination areas got off to a quieter start in the 2010s but have ticked up.)Incumbent property owners willing to sacrifice lucrative short-term vacation rental income see it as a fair trade-off, key to keeping long-term residents and the dashing contours of their towns’ terrain. Policy critics, and frustrated local renters fighting over limited spots, say it is an inadequate tool for the scale and source of the problem: a lack of units.Those critics include the governor of Colorado, Jared Polis, who is skeptical that lump-sum payments to owners in exchange for deed restrictions will be a sufficient incentive to broadly move the needle on affordability.“There is no silver bullet,” he said in an interview. “But one of the areas that we have focused on is removing the barriers to additional home construction.” He added that “housing is not a problem that you can solve by throwing more money at the existing housing stock.”His sweeping legislation to ensure “a home for every Colorado budget” by pre-empting local land-use laws and directly loosening zoning rules statewide died in the State Senate in May, after some initial momentum. All but one of the mayors in the state’s Metro Mayors Caucus issued a letter opposing the plan.‘It’s Either Five Mil or Five Jobs’As politicians jockey, many resourceful Coloradans find ways to make do.Mr. Scheer, for instance, has picked up over 30 music gigs through the end of summer, paying about $100 an hour — though he acknowledges it’s his locked-in, lower housing costs that make his lifestyle workable.During a practice jam session and impromptu afternoon party of 20- to 40-somethings at Mr. Scheer’s place in the spring, his pal and fellow guitarist, Bud Hallock (the other half of their occasional duo band, Know Good People), explained the grind people face by echoing the playfully hard-nosed aphorism uttered around town: “It’s either five mil or five jobs.”“If you’re willing to put in the work, you’ll be able to,” argues Mr. Hallock, who moved out West shortly after graduating from St. Lawrence University in 2015. Mr. Hallock has three jobs, he said, adding, “I don’t think it’s the God-given right of anyone to come to a ski town and have it easy.”For many longtime residents and transplants alike, it has become harder to finesse: Even as Summit County adds waves of remote workers, it has experienced net negative migration since 2020. It’s a trend mirrored in the larger urban areas of Denver and Boulder, where the share of people working remotely is among the highest in the country, as homelessness rises.Breckenridge and other local governments are offering payments to some homeowners who agree to restrictions on how their property can be used and sold.Summit County is a draw for residents that enjoy outdoor activities like hiking, skiing and water sports.Seventy percent of residences in the county are second homes that sit vacant most of the year or serve as short-term rentals.Tamara Pogue, a member of Summit County’s governing board, said the mountain towns and valley cities of the Front Range near Fort Collins and Colorado Springs as well as those out by the Western Slope struggled with an “affordability issue” similar to the nation’s big cities for the same reason: “We’re supply-constrained.”“The problem is the average cost of a single-family home in Summit County so far this year is $2.14 million,” Ms. Pogue said. “Not one job makes that affordable.”The stock available is limited: 70 percent of homes in the county are second homes that sit vacant most of the year or serve as short-term rentals, she said, typically Airbnbs.As a single mother of three, Ms. Pogue bought a 1,400-square-foot duplex for $525,000 in 2018 — a rarity, if not an impossibility, now. She said a determination to prevent “mountain communities” from becoming “towns without townspeople” had driven her to become a staunch YIMBY, or a “yes in my backyard” supporter of home-building efforts, against the wishes of perceived NIMBYs, or the “not in my backyard” voices.Ms. Pogue and her allies argue that the relatively slow pace of building in the Rockies, despite the area’s popularity and rising prices, is a subtle form of denial.“Everyone wants to be here, whether they work here or not,” she added, “and so we have this spiral.”If, When, Where and How to Build MoreA few affordable-housing projects visibly chug along in Summit near the airport service road, not far from Kingdom Park Court, one of a handful of mobile home parks in the county with pricey lot rents. But getting middle-income developments greenlit can be a slog. Many proponents of limiting development note that about 80 percent of the county is restricted federal public land, putting a ceiling on what can be done. (There’s a nascent pilot program with the U.S. Forest Service to approve some apartments on leased land.) In the meantime, the well-off are gobbling up much of what’s left.Just north of downtown Silverthorne sits Summit Sky Ranch — a sprawling development with homes starting around $1 million, with a pledge of “bringing modern mountain living to over 400 acres of pristine natural beauty” in the valley. It quickly sold out and many have moved in, lured by a private observatory and private access to a river bend.Laurie Best, the longtime planning manager for housing in the community development department for the Town of Breckenridge, said she had emphasized deed-restriction policies and more generally trying to preserve existing units to reduce the need for new ones.Ms. Best and her backers have acceded to some construction at a slow and steady pace, but they staunchly oppose taller, dense multifamily buildings, which are not, as she put it, “consistent with the character of the town.”In several counties, there has been a swell in “conservation easements” — legal agreements between private landowners and local governments to guard wildlife and scenic open space by permanently banning development. The trend led the state to create a Division of Conservation in 2018 with an oversight commission to authenticate the contracts.A construction site in Silverthorne, Colo. Some officials and residents in the area have acceded to limited construction but are wary of adding taller, dense multifamily buildings.Eric Budd, a leader of a movement in Colorado called Bedrooms Are for People — which favors expanding land use and more widely permitting apartments, duplexes and triplexes — scoffs at the uptick in easements. He contends that what he tartly calls a “xenophobic attitude of ‘there’s only so much to go around’” is self-defeating.Trying to restrict access to a hot commodity — in this case, half of a state — won’t end well for anyone, he said, and a California-level, cost-of-living crisis is only five or 10 years away.Down in the foothills of the Rockies in Boulder, where Mr. Budd lives, school enrollment and the overall population have declined along with affordability, as remote-worker migration has picked up.In some sense, the arguments against restrictionism amount to a water-balloon analogy: squeezing leads to odd bulges in random places.Before the pandemic, Leadville, an old mining town 15 minutes from the trailhead of the highest peak in the Rockies, was an affordable harbor for working-class Hispanic employees of the nearby vacation economies: just out of reach of the affluence around Aspen to the west and resorts near Vail to the north.Since 2020, though, Leadville has become engulfed as those realms of wealth expand and overlap, causing rents and home prices to spike beyond what many can feasibly afford over time, with few other places to go.Second-home owners constituted half of all home sales in 2020 and 2021.The Downside of Good IntentionsKimberly Kreissig, a real estate agent, at a home she was selling in Steamboat Springs. She says an effort to build affordable homes yielded house flippers.Half of Colorado renters are officially defined as cost-burdened — spending more than 30 percent of their income on housing costs. And local economists suggest that the rate has ticked even higher in mountain locales.For Kimberly Kreissig, a real estate agent in Steamboat Springs, a year-round recreation hub with natural hot springs near Wyoming, the affordability crisis in “the high country” has no simple villain. For years, her practice in Steamboat — where the average home price is above $1 million, compared with $580,000 in early 2019 — included both upper-middle-class, first-time home buyers and luxury-market sellers.In 2018, she and her husband, a developer, broke ground on a dense, 50-unit multifamily project in Steamboat designed for people “in that $75,000 range,” she said — “for instance, my office manager here.”“We had grandiose plans that we were going to be able to sell these things for $300,000,” Ms. Kreissig said, but they were foiled by several factors.Even before Covid-19 struck, “the demand was just so through the roof that people were offering us more than list price right out of the chutes,” she said, with precontract bids coming in “twice as high as we anticipated.”Then, once lockdowns in early 2020 ended, the remote-working cohort swooped in — just as labor and material costs shot up for the contractors still finishing some units. Before long, many families she sold units to in 2019 for around $400,000 realized that because of the housing boom they had “over $300,000 in equity” in their homes — and with interest rates so low, they could parlay a different (or additional) purchase. Many apartment owners began independently flipping their units to investors and buyers of second homes who were willing to pay well above the list prices.The Yampa River flows through Steamboat Springs. With the pandemic’s onset, the area became a magnet for remote workers.Diners at a restaurant in Steamboat Springs, a year-round recreation hub with natural hot springs.“For the people that are already ‘in,’ there’s a fair share of folks that are saying, you know, ‘I’m in, we don’t we don’t need any more growth,’” Ms. Kreissig said. “But you can’t stop growth.”“One flip near the end for one of the units was for $800,000,” Ms. Kreissig said. “We tried to be the good guys.”One way to respond to house flippers is through greater deed restriction, which Steamboat has enforced in a few neighborhoods, along with some short-term rental restrictions, not unlike other hot spots. The area has also benefited from the state’s Middle Income Housing Authority pilot program, which has put up a few buildings in town. But Steamboat still has a shortage of 1,400 units, according to a report from local authorities.A big break came when an anonymous donor recently purchased a 534-acre farm property, Brown Ranch, and turned it over to the Yampa Valley Housing Authority, with instructions that it be used for long-term affordable housing for local workers.It came as welcome news to the area’s middle class. And yet the sheer surprise, and luck, of the donation is indicative of broader, underlying tensions that typically drive community-level and state debates: Is more supply a threat to both cultural vibes and property price appreciation, or a win-win opportunity to flourish?Ms. Kreissig thinks it all comes back to “the kind of ‘not in my backyard’ mentality” that a silent majority holds.“For the people that are already ‘in,’ there’s a fair share of folks that are saying, ‘You know, ‘I’m in, we don’t we don’t need any more growth,’” she said. “But you can’t stop growth.”Adrift Between Uphill and DownNancy Leatham and her husband got back on their feet after lean times early in the pandemic. But when looking for a new house, she found that the booming housing market had far outpaced the good labor market. In March 2020, Nancy Leatham, 34, was making just above the minimum wage, living with her husband and their baby daughter in Idaho Springs — a little city above 7,000 feet wedged between a steep crag and an I-70 exit, far downhill from chic resort land.They struggled to get by “right during the height of the pandemic, when everything was shut down,” wiping out their income, she said. It felt like a repeat of her teenage years during the mortgage-induced financial crisis when her family’s business as excavation contractors — preparing sites for home construction — went belly-up, and their house was foreclosed upon.In spring 2020, “I had to start going to food banks and stuff to get food,” she said. “And we had to sell a car, and just stuff like that to, like, to make ends meet.”By 2021, her husband, Austin, had found a job at Walmart making $19 an hour, while she was promoted at Starbucks, becoming a manager at $18 an hour, plus bonus — and “we had our child tax credit,” she added.“I started looking for a house because we had really great income,” roughly $80,000 before taxes, she said. “I grew up in poverty, since 2008 especially, and we’d been living with food insecurity and stuff, so I was like ‘Look at us, we made it!’”But almost as soon as she started house hunting, she realized that, within months, the booming housing market had far outpaced the good labor market. They had been priced out of their sleepy, snowy town, after merely a few bidding wars. The average home price — $340,000 at the start of 2019 — is up 66 percent. Higher mortgage rates hurt, too.The Gold Mountain Village Apartments, where Ms. Leatham and her husband live, about 10 miles outside Idaho Springs, Colo.The Historic Argo Mill and Tunnel, a former gold mining and milling property, in Idaho Springs.Lower-income workers are being priced out of the area and face the prospect of “having to move downhill.”The average home price in Idaho Springs is up 66 percent since the start of 2019.Many of the Starbucks employees Ms. Leatham managed owned their homes rather than rented, she said, and “half left because they were able to sell their house off for considerably more than they were when they bought.”Hoping to buy or rent something bigger than what she called a “closet” apartment, Ms. Leatham, who now has a second child, is preparing for the cold reality of “having to move downhill” — though where exactly is unclear: 15 miles down the corridor, renters and buyers run into coveted areas near Golden and Denver.Recently, a woman visited the Starbucks Ms. Leatham works at, she said, and was dressed very much like an out-of-towner. They chit-chatted at the register, and the woman mentioned she was in town to check on a recent property purchase.Getting her hopes up for a nicer place, Ms. Leatham pried a bit:“I was like, ‘Oh, nice, what are you going to do with it?’ And she’s like, ‘Oh, it’s for rental.’”“And I’m like, ‘Oh, cool.’ And then she goes, ‘Short-term rental.’”“And then, I went ‘Dang it!’ But really loud, and I made her feel awful — I didn’t mean to make her feel that way.”Irresistible Allure, Harsh RealityBack up the I-70 corridor in Frisco, a sprawling Walmart parking lot often occupied by unhoused people living out of their cars and campers is tucked in front of a commercial complex with a high-end furniture store, a Whole Foods and a craft microbrewery.It’s one of the few places for the growing homeless population to go, since overnight parking is widely banned in Summit County, even in sparse hamlets like Blue River, perched just beyond Breckenridge above 10,000 feet.The effects of the global and national wealth parked in the Rockies often cascade downstream like the snow melt that carves the rivers. But it’s a force that can be identified in any direction.For many, if not most, homeowners in high-country counties like Summit, the hard truth is that only so much can be done if the very idea of mountain living — experiencing nature, removed from the bustling downhill hassles of the outside world — is to be maintained.“It’s funny, on our little block, there’s probably, you know, 10 homes — and on a beautiful day, which we have a lot of, you’ll see all of us standing out in our driveway, taking pictures,” said Ms. Best of Breckenridge’s community development department. “I must have the same picture 100 times because it’s so stunning when you go out there, and you’re still in awe of where we live. So I totally get the folks that want to be here.” More

  • 125 Shares99 Views

    in Economy

    Biden Describes China as a Time Bomb Over Economic Problems

    by

    The sharply worded comments are the latest example of the president’s willingness to criticize China even as he tries to ease tensions.President Biden warned on Thursday that China’s struggles with high unemployment and an aging work force make the country a “ticking time bomb” at the heart of the world economy and a potential threat to other nations.“When bad folks have problems, they do bad things,” the president told a group of donors at a fund-raiser in Park City, Utah.Mr. Biden’s comments are the latest example of the president’s willingness to criticize China — often during fund-raising events with contributors to his presidential campaign — even as his administration seeks to ease tensions between the world’s two largest economies.Earlier this summer, at a fund-raiser in California, Mr. Biden called President Xi Jinping of China a “dictator” who had been kept in the dark by his own officials about the spy balloon that flew over much of the United States from late January to early February before being shot down by the U.S. military.On Thursday night, Mr. Biden said he was trying to make sure the United States has a “rational relationship with China,” but he signaled that he continues to view Beijing as America’s biggest economic competitor.“I don’t want to hurt China, but I’m watching,” Mr. Biden said in Utah.The remarks underscore the complicated diplomacy that the president and his administration are engaged in as they attempt to ease tensions with China while limiting the economic and military threats posed by the country and its Communist leadership.Relations between the two countries grew icy after the spy balloon incident and the more recent discovery that China has been inserting malicious computer code deep inside the networks controlling power grids, communications systems and water supplies around U.S. military bases.Mr. Biden has said he seeks “competition, not conflict” with China, taking steps to minimize the possibility of direct military clashes with Beijing over the South China Sea and the future of Taiwan.Top American officials have visited in recent weeks with their counterparts in China. Gina Raimondo, the commerce secretary, is expected to go there in coming weeks.But the president has moved aggressively to contain China’s rise and to restrict its ability to benefit militarily from the use of technologies developed in the United States.Mr. Biden signed an executive order this week banning American investment in some Chinese technology industries that could be used to enhance Beijing’s military capabilities. In response, the Chinese government hinted that it would retaliate and accused the United States of trying to “politicize and weaponize trade.”The president’s comments on Thursday could complicate efforts by both countries to schedule a face-to-face meeting between the two leaders in the coming months. Mr. Biden and Mr. Xi have not met in person since last November, during the Group of 20 summit of world leaders in Indonesia.The White House has not said whether the two men will have an in-person meeting at the Asia-Pacific Economic Cooperation summit, which is scheduled for later this year in San Francisco. Mr. Xi is expected to attend. More