China Chamber of Commerce to the EU (CCCEU) 欧盟中国商会’s Post

Taiwan firms in mainland China turn ‘more cautious’ with investments as cuts and offshoring increase, survey finds Geopolitical tensions, coupled with a weakened and more uncertain business environment on the mainland, keep taking a toll on investor confidence among Taiwanese Analysts have also flagged that higher US tariffs on Chinese exports keep pushing manufacturers toward other Asian manufacturing hubs, including Vietnam https://lnkd.in/gx63_Kds

“Erik Britton, the managing director of the Fathom Consultancy, says it has been apparent for at least a decade that China’s growth rate is slowing and the period of rapid catch-up with the US is over, at least for now.” Read more in The Guardian https://lnkd.in/eggjhjXd #FathomChina #Chinaeconomy #USeconomy

Global tensions prompt UK businesses to seek ‘friendly’ supply chains. Reproduced from the Times. 16th April 2024. Almost a third of UK businesses have plans to bring supply chains closer to home, or shift them to allied nations, as geopolitical tensions drive fresh rounds of “friendshoring”. About one in four companies that have parts of their supply chain located in China also intend to restructure their production network away from the world’s second-largest economy, according to a survey by Santander of 1,025 businesses with income of at least £1 million. The figures underscore how outbreaks of war between Russia and Ukraine, and Israel and Hamas, have prompted companies to seek supplies in regions less exposed to geopolitical risks. While this so-called “friendshoring” can reduce the likelihood of supply-chain disruption caused by conflicts or trade wars, analysts have said it could raise production costs and limit global trade volumes. About a fifth of UK businesses already have a domesticated supply chain, Santander said. Russia’s war with Ukraine exposed Europe’s over-reliance on cheap Russian energy, leading to more expensive imports of liquified natural gas from the United States. Access to comparatively cheap and plentiful labour in China has sparked a mass move of manufacturing from the West to the East over the past two decades and placed strong downward pressure on the cost of imports. There are concerns that a retreat from globalisation is under way, pushing up inflationary risks. The shift comes after the United States restricted exports of high-value technology inputs to China, raising concerns that a trade war between the two economic superpowers is gathering momentum. Such a dynamic could raise pressure on the UK government to tighten restrictions on trade with Beijing. Some 30 per cent of British businesses think that they will raise output over the next three years, Santander said, up from 22 per cent last autumn. Improved business confidence has been driven by the wider UK economy gathering momentum amid falling inflation and expectations for interest rate cuts. GDP expanded by 0.1 per cent in February, signalling an end to the short-lived recession, while timelier business surveys have shown that the UK’s key sectors all returned to growth for the first time in two years. Jane Galvin, head of corporate clients at Santander UK, said: “The latest wave of the Santander Trade Barometer shows that despite a spate of economic challenges, UK businesses are increasingly optimistic about their growth potential.” Expectations for income generated abroad have doubled in the past two years, suggesting that UK businesses think that they will increase their participation in international markets after years of Brexit uncertainty. https://lnkd.in/eMk9pz_H

"As an effective services platform for international trade and business, Hong Kong is a “super connector” and “super value‑adder” between mainland enterprises and the rest of the world and is assisting these enterprises in “going out” to explore new markets and opportunities, including the BRI and other emerging markets." "Hong Kong has always been mainland China’s bridgehead for foreign economic co‑operation as well as mainland enterprises’ preferred platform for “going global”." "Surveyed mainland enterprises with plans to “go global” said Hong Kong is mainland enterprises’ preferred services platform for expanding overseas. Some 77.2% of them see the city as their preferred services platform for developing various types of businesses overseas". "In 2023, mainland China’s FDI outflow to Hong Kong reached US$108.77 billion, up 11.5%, accounting for 61.4% of mainland China’s total FDI outflow."

China's leadership has signaled a shift towards more robust government support for their struggling economy in the coming year, as they anticipate the return of President-elect Donald Trump and the potential for renewed trade tensions. This stance was revealed at the conclusion of the annual Central Economic Work Conference, a key gathering of top officials focused on economic planning. According to a report by China's state broadcaster on Thursday, officials pledged to implement a range of measures to stimulate economic growth. These include cutting interest rates and increasing government borrowing. The leadership is committed to stabilizing stock and real-estate markets, while preparing to mitigate risks from "external shocks" - a thinly veiled reference to Washington over trade and other contentious issues. China's economy faces significant challenges even without the looming threat of increased trade friction with the U.S. Local governments are burdened with high levels of debt, and a prolonged property crisis continues to impact the economy. Additionally, subdued consumer spending coupled with excessive industrial production has raised concerns about potential deflation. The prospect of renewed trade conflicts with Trump threatens to undermine China's export sector, which has been a crucial support for economic growth over the past year. This situation puts pressure on Beijing to revitalize the domestic economy or risk seeing growth rates fall below the approximately 5% annual rate expected for this year. Trump has threatened a 10% tariff on all imports in addition to existing levies, citing concerns over Beijing's alleged failure to control chemicals used in fentanyl production. During his campaign, he even suggested raising tariffs on Chinese imports to as high as 60%, a move that economists warn could significantly impact China's growth if implemented. In response, China has shown readiness for a potential trade confrontation. Recent actions include launching a regulatory investigation into U.S. semiconductor giant Nvidia, threatening to blacklist a prominent American apparel manufacturer, restricting the export of critical minerals to the U.S., and tightening controls on the drone supply chain. The economic strategies announced on Thursday were previewed earlier in the week by the Politburo, China's top decision-making body, indicating a coordinated approach to addressing both domestic economic challenges and potential international trade pressures in the coming year. China's 24-member panel abandoned its previous "prudent" monetary stance in favor of a "moderately loose" approach, language not used since the 2008-09 financial crisis. This change is expected to lead to interest-rate cuts, increased central bank funding for banks, and reduced bank-reserve requirements. Additionally, a $1.4 trillion package was introduced to alleviate local government debt, addressing a key factor in China's economic challenges.

Germany is Europe’s biggest economy and the German trade is experiencing a lower export outlook this year based on a recent industry survey published by Bloomberg. Exports to the US increased in Q1 2024 by 10% while they decreased by 6% to China. Germany exported more within Europe to Poland, the Czech Republic and Hungary than to the US. - Besides unstable demand, geopolitical-linked economic concerns were increasing. - Concerns about the availability of skilled workers rose - Supply-chain worries have reduced since autumn 2023 showing better Risk management strategies from companies. #SupplyChain #Europe

Yesterday, the Commission published a Staff Working Document on significant distortions in the economy of the People's Republic of China for the purposes of trade defence investigations. This detailed, fact-based analysis allows to deepen our understanding of China’s socialist market economy, its Constitution and the role of the Chinese Communist Party. The document reveals “strong governmental interventions into the private economy, a system in which private companies are expected to complement the state-owned sector in pursuing the Government’s industrial policies and, when necessary, to accept the State’s interference in their business conduct.” I encourage my network, especially those keen on economic security matters, to delve into this document for a comprehensive understanding of these critical issues. Here’s why it’s a must-read: ·        It provides the most up-to-date information on the Chinese economy and on specific circumstances of the market. ·        It elaborates on the role of the state in the allocation of resources and identification of economic objectives ·        It highlights the importance of state-owned enterprises within the economy.  ·        It includes specific sections on i) China’s financial system and ii) investment restrictions for Chinese and foreign companies.  Disclaimer: The views expressed in this post are solely my own and do not necessarily reflect the official position of the European Commission. #ChinaEconomy #TradeDefense #EconomicSecurity #investment https://lnkd.in/eGzw-dsX

Market Intelligence | Decoding US-China Political Risk for Business Investments Not only are the US attempts to decouple from China not working, but they are also creating new supply chain patterns and developing other hidden impacts on the Indo-Pacific nations.   Our Chief Analyst, Hanshih Toh, also the author of the book “Is China An Empire,” recently highlighted the implications of the US-China trade war for businesses in these two countries and beyond.   Deep and extensive knowledge of China’s economy is our foundation to turn public information into business intelligence. Follow Headland Intelligence and Melissa Tan to find out more about our due diligence and risk consulting services. https://lnkd.in/eKrqe5a6 #NuancedIntelligence #DueDiligence #PoliticalRiskAnalysis #Investigation #GeopoliticalRisk #USChinaRelationship #Friendshoring #Nearshoring

New! CEP election analysis on Brexit and UK trade. How did leaving the European Union affect UK trade? In this briefing Dennis Novy, Thomas Sampson and Catherine Thomas show that overall, Brexit has had a negative effect on UK trade. But, so far, this effect has been smaller than economists expected. * Total UK exports have grown at a similar rate to exports of other European economies since 2016. This is because strong growth in UK services exports has offset a relative decline in UK goods exports. * But total UK imports have grown more slowly than the imports of other major economies, driven by slower growth in UK goods imports. * In real terms, both UK exports and imports of goods are lower than in 2016, having shrunk by 1% and 2%, respectively. The authors say that Brexit is still playing out, as the UK continues to deviate from EU policy due to active and passive regulatory divergence, which further increases trade costs for UK businesses. New trade agreements with third countries cannot compensate for the reduced access to the EU’s single market. ‘Global Britain’ as a strategy for international trade is a fantasy. The UK’s proximity to the large consumer and input markets in EU countries will always present the greatest opportunity for trade. The UK therefore faces a basic trade-off: move closer to the EU to increase UK trade and living standards or remain distant from the EU and continue paying the price of new and emerging trade barriers. https://lnkd.in/epV4siQM