cross-posted from: https://mander.xyz/post/55231756

The Chinese economy grew at its slowest rate since the height of the COVID-19 pandemic last quarter, as structural problems and geopolitical uncertainty continued to dog efforts to boost domestic consumption.

On Wednesday, the National Bureau of Statistics said the economy expanded by 4.3 per cent in the second quarter of 2026, as measured against last year, falling short of analysts’ expectations and the 5-per-cent growth logged in the first quarter. That’s the slowest rate since 2022.

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Some analysts fear the economy is becoming increasingly unbalanced, however, as heavy state support and private investment pour into high-tech while lower-value manufacturing and the job-creating service sector languish.

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A prolonged property slump has weighed on many families’ willingness to spend. Housing accounts for about 70 per cent of the wealth of Chinese households, far higher than in most other countries.

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Younger people not yet on the property ladder are also facing problems. Youth unemployment has remained high, a legacy of crackdowns in the tech and education sector and new challenges emerging as a result of AI. In coming weeks, another 12.7 million graduates are set to enter the job market.

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[Meanwhile, independent estimates now put China's growth in real terms closer to zero than to the official +4 per cent.]

Web Archive link

cross-posted from: https://scribe.disroot.org/post/10140028

China's use of economic statecraft and espionage on Dutch strategic industries is meant to ensure systemic dependency and Beijing's global industrial leadership, researchers at an influential think tank allege in a recent report, citing pressures applied on chip equipment maker ASML.

China also employs digital operations, legal pressure and physical threats in the Netherlands to achieve its aims, while exploiting the country's open governance, analysts at The Hague Center for Strategic Studies (HCSS) wrote in the report covering the semiconductor, maritime and aerospace sectors.

The authors called for a coordinated national intelligence architecture, mandatory risk-based security screening and proactive use of Dutch economic strengths in sectors on which China is dependent, such as aerospace and semiconductors.

The Netherlands is home to technologies that are difficult or impossible to obtain elsewhere. ASML is the only company worldwide to commercialize extreme ultraviolet (EUV) lithography machines, which are crucial for producing cutting-edge semiconductors that power the best smartphones, data centers and weapons.

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"Gaining access to Dutch know-how or influence over Dutch companies can have outsized strategic value because these firms occupy key positions in global value chains and have international leverage," Hans Horan, strategic analyst at HCSS and one of the report's authors, told Nikkei Asia. "Talent-based espionage relies heavily on human intelligence, coercion of diaspora and academic infiltration, as seen in ASML-related IP theft cases."

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The Dutch semiconductor sector faces the highest risk, with China targeting companies such as ASML and NXP Semiconductors as well as limiting exports of related critical raw materials.

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Vulnerabilities also appear in the Dutch maritime sector. Chinese state-owned companies COSCO Shipping Ports and China Merchants Port Holdings manage substantial cargo capacity in the Port of Rotterdam, a major European hub, as investors and terminal operators.

"For the maritime sector, interference is highly likely to take the form of cyber-enabled espionage, data access and calibrated disruption rather than overt sabotage," Horan said. "Even limited interference will highly likely have cascading effects on energy supplies, industrial production and NATO logistics, such as the delivery of NATO ships."

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To enhance semiconductor resilience, the report urges Dutch policymakers to strengthen personnel vetting for sensitive sites and calls for replacing equipment in critical infrastructure that could expose the Netherlands to sabotage risks, like Chinese-made circuit boards or ship-to-shore cranes.

Beyond threats to the technological edge of the Netherlands, the researchers warn that in a crisis such as a confrontation over Taiwan, Chinese leverage over strategic industries would constrain Dutch policy choices, delay military readiness or limit participation in allied responses.

"The risk is not necessarily immediate disruption, but the gradual narrowing of options available to Dutch decision-makers," Girardi said.

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Archived

cross-posted from: https://lemmy.sdf.org/post/56097731

The country’s latest five-year plan includes measures to build up bailout funds, but it is unclear where the funding will come from.

Archived

[...]

China’s tax revenue goes to the central government, which then allocates funds to regional governments or reserves it for central government initiatives. Yet local governments still carry the cost of the majority of public services such as healthcare, schools, and public safety.

Luckily, there is a convenient loophole: local governments do not have to share non-tax revenue gained through land leases and real estate revaluations. Moreover, auditors brought on to determine land asset values have had to work on behalf of the same local government that controlled their ability to legally remain in business. In turn, the assumption became that every new housing complex on local government balance sheets would soon be a bustling metropolis — and so they were valued as such. As long as housing prices went up and construction of new homes continued, the money would keep flowing.

The party ended between 2020 to 2022, when overleveraged real-estate developers ran out of money for construction and stopped hundreds of uncompleted projects which had already been sold. A survey conducted in early 2022 found 45 percent of homebuyers were waiting on unfinished properties. Many buyers were left with mortgages for homes that didn’t exist, and consumer trust in purchasing housing evaporated.

[...]

In summer 2022, consumer frustration transformed into protests in central China. That same summer, several Henan banks experienced a bank run, prompting more regional protests by depositors. In parallel with the flagging housing market, a rural banking crisis had begun.

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The 15th Five-Year Plan [...] gives direct instructions to prepare bailout funding by refilling The Financial Stability Protection Fund (金融稳定保障基金) — created in 2022 to allow direct lending between the central bank and struggling enterprises in cases where failure could create a domino effect devastating the economy; and the Deposit Insurance Fund (存款保险基金), set up in 2015 to cover all deposits made at banking institutions within China, including rural credit cooperatives.

[...]

How these rainy-day funds will be financed is not yet clear. The 15th Five-Year Plan directs local governments to curb debts, forcing them into ongoing austerity mode. Even prior to these instructions, public employees such as schoolteachers, bus drivers, and the like, have had to deal with salary cuts. Fines and penalty fees are increasing as regional governments look for different sources of revenue. Local police offices have taken to crossing into other jurisdictions to extract fines, a practice so rampant Netizens have termed the practice “offshore fishing”.

It is unclear what revenue options are available to local governments without a major overhaul of the national tax revenue distribution system.

[...]

An economic crunch will not mean China will stop being a major global power [...] China will still have the world’s largest population and second largest economy.

[...]

But economic shocks create aftershocks across the world, and even after a decade of rising trade tensions the U.S. and China are still among one another’s top trading partners.

We should all take note that China’s economy is in a tenuous situation right now. The 15th Five-Year Plan is preparing for a financial crisis. We should be mentally preparing for one too.

cross-posted from: https://scribe.disroot.org/post/10121466

Archived link

Canadian companies that disclose their climate-related risks and impacts have a considerable advantage over those that don’t when it comes to attracting financing from European institutional investors, according a recent report for the Institute for Sustainable Finance at Queen’s University (opens pdf).

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European investors increasingly need credible sustainability information to meet their own reporting obligations, and Canadian companies that lag on climate disclosure risk shutting themselves out of European capital markets altogether.

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Under the EU’s sustainable finance rules, financial market participants are required to disclose sustainability indicators, such as greenhouse gas emissions, carbon footprint, biodiversity, water, waste and social factors. The data must be collected either directly from investee companies or through research that may include third-party data and experts.

When investing in jurisdictions that operate under a mostly voluntary reporting regime, like Canada, disclosure has unique value to European institutional investors because it helps them meet their own reporting obligations.

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Several major capital hubs are already strengthening their sustainability disclosure regulations, including Japan, Singapore, Australia, Chile and Mexico. In the U.S., California and New York are among several states pressing ahead with their own emissions-reporting rules despite the federal pullback on climate policy.

Savvy Canadian companies have so far been able to retain the interest of European institutional capital through voluntary disclosure. But Canadian securities regulators have the opportunity to follow Europe’s example and mandate climate disclosures for larger Canadian public companies.

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Climate change doesn’t care about whether sustainability is in fashion, and the risks are growing. Among other benefits, expanding disclosures could help keep Canadian firms competitive in international capital markets going forward.

cross-posted from: https://lemmy.sdf.org/post/56076148

Archived

[...]

Each year, millions more graduates are thrust into China’s already saturated jobs market. The situation for this year’s cohort, flooding into an increasingly crowded pool of applicants fighting for an insufficient number of positions, is arguably the bleakest yet.

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China’s youth employment has been a “persistent issue since 2020” which has “not meaningfully improved”, according to an Economist Intelligence Unit (EIU) researcher, who did not wish to be named. The researcher says this trend was initially fuelled by China’s move towards a “productivity- and manufacturing-driven growth model” of high-value industries such as electric vehicles, batteries, semiconductors and robotics.

“As the economy shifted, a mismatch emerged between the skills being supplied by graduates and those demanded by the labour market,” the researcher says, adding that the problem has been exacerbated more recently by AI’s “transformative impact”.

“Entry-level jobs are often easier to automate or replace, making young workers particularly vulnerable,” the researcher says. “Even graduates with backgrounds in IT services have seen some entry-level tasks increasingly automated by AI.”

[...]

While the move towards AI- and tech-focused degrees is a universal trend, the speed at which it is unfolding in China’s universities is unique, according to Charles Jeffery Sun, the founder of the consultancy China Education International.

“China’s higher education is centrally governed. When Beijing sets a strategic direction, implementation across hundreds of universities happens rapidly,” he says.

In response to directives from Beijing for degrees to better match labour demands, Chinese universities culled 12,200 undergraduate programmes, mostly in the arts and humanities, between 2021 and 2025, while introducing 10,200 in emerging fields. It is a situation Sun describes as “painful for many graduates”, but part of a “long‑overdue reckoning”.

[...]

Further hindering the jobs market is China’s slowing economy, with Beijing adjusting its GDP growth target to the lowest since 1991 – a range of 4.5% to 5% – as it grapples with aggressive global tariffs, weak domestic consumption, and a shrinking and rapidly ageing population.

[It must be noted here that many economist question the official narrative of a Chinese 5% GDP growth.]

[...]

cross-posted from: https://mander.xyz/post/55134497

Op-ed by Ruchir Sharma, Head of International business at Rockefeller Capital Management, an asset management company.

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Though many forecasters keep expecting China to surpass the US as the world’s leading economy, its growth peaked in 2021. Since then, China’s share of global GDP has fallen in nominal terms from 18 to 16.5 per cent, while the US share has risen to 26 per cent. China’s growth rate has dropped below the rest of the world, including the US. In real terms, independent estimates now put China’s growth in real terms closer to zero than to the official target of 4.5 to 5 per cent.

Even by the official numbers, AI is not providing a lift big enough to overcome other forces weighing on China, including its shrinking workforce, rising indebtedness, a broken property market, the revival of a meddlesome regulatory state and the resulting exodus of capital and people.

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The debt problem is partly a hangover of the great property bubble. Beijing responded to the global crisis of 2008 by pumping credit into real estate, which was the main contributor to growth in the last decade. Then the bubble popped, also in 2021.

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As property wealth shrivels so does consumer confidence, and retail sales are falling.

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Meanwhile, the government has moved on from property to pumping credit into new manufacturing industries, in effect replacing one debt bubble with another.

In late 2020, China launched a stunning regulatory crackdown on its big tech firms. Now, after retreating for a couple of years, an index tracking regulatory pressure is surging again. Giving up on making money in China, multinationals are scaling back operations. Net foreign direct investment is negative. Last year a record $425bn in capital flowed out of Chinese financial markets.

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People are leaving as well. The immigrant share of the population is stuck at just 0.1 per cent, a fraction of the share in India (which is just as populous). The number of western expats living in China has fallen markedly. It is historically unusual for a major power to have so little allure for foreigners and foreign money.

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The growing hype around Chinese AI doesn’t change the fact that 2021 was peak China. Given its demographic challenges and heavy debts, Beijing can’t do much to prop up domestic growth. It has shifted instead to dumping manufactured exports, but the resulting backlash is spreading fast. And AI isn’t a fix for everything. Its impressive powers may be the answer to many problems, but they can’t reverse the forces driving China’s decline.

Archive Today link

cross-posted from: https://scribe.disroot.org/post/10116417

The European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) should build a lasting cooperation platform, which could be named the Free and Fair Trade Club, in order to achieve various geostrategic aims, researchers at the German Economic Institute in Cologne say.

In addition to free and fair trade, its guiding principles should include voluntary cooperation, variable geometry and open plurilateralism, a report says (opens pdf).

Pooling the economic weight of Free and Fair Trade Club members’ markets would create a power base that these middle powers could leverage in relations with the great powers, the United States and China, in the medium to longer term.

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The US and China are undermining the rules-based international order by using power politics and by employing coercive measures. The US uses blunt tariff and security threats, and thus projects the power of its market size and military might in order to force one-sided and unbalanced trade and investment concessions from partners with an aggressive focus on “America First” objectives.

China also uses coercive measures by exploiting its near monopoly in the production of important and often critical raw materials to the serious detriment of affected partners. Moreover, China’s state capitalism undermines the world trading order by using loopholes in the multilateral trade rules framework. Massive economic distortions – that emanate from outsized direct and indirect subsidies in the Chinese economy and from a large undervaluation of its currency – contribute to the record merchandise trade surplus of China. This beggar-thy-neighbour policy comes at the costs of its trading partners and hollows out their industrial bases.

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Furthermore, the US and China defy international law: the US does so in Venezuela and Iran, and China does so by acting aggressively in the South China Sea and by threatening Taiwan. Both countries propagate a world in which might makes right.

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The CPTPP is a plurilateral trade agreement with 12 members: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United Kingdom and Vietnam. CPTPP members represent about 13% of world GDP and about 15% of global trade.

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On top of this, several additional countries are currently interested in joining the CPTPP. However, China’s accession plea does not appear very promising as Beijing used coercive trade measures in recent political conflicts with Australia and Japan, two important CPTPP members. From the perspective of the EU, several free trade agreements (FTAs) have already been concluded with most CPTPP members except Brunei, while negotiations are ongoing with Malaysia.

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cross-posted from: https://lemmy.sdf.org/post/56028522

Archived

The country’s pivot from low-end manufacturing towards advanced technology may leave millions of workers behind.

cross-posted from: https://lemmy.sdf.org/post/56029120

Latest five-year plan omits figure for jobs growth, a fixture of economic planning, for first time in decades.

Archived

China has declined to set a target for urban employment for the next half-decade, the first time it has not done so in decades, amid signs of growing pressures across the world’s second-largest economy.

A five-year plan released by the Ministry of Human Resources and Social Security on Thursday said only that China would “maintain” new urban job jobs of “a considerable scale”, without offering a specific number.

The previous six such plans set targets of new urban jobs in the tens of millions for each five-year period. The most recent plan, for 2021-2025, aimed for more than 55mn new jobs.

The omission of the target, a fixture of economic planning since the 1990s, comes amid a sharp slowdown in overall urban employment growth in recent years.

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Urbanisation has been a critical engine of China’s growth for decades, as the economy shifted away from agriculture and the factories and construction sites of its booming cities swelled with migrant workers.

But the country’s roaring property sector entered a slump in 2021 from which it has yet to emerge, and persistent deflationary pressures have reflected weak consumer demand.

[...]

Labour market indicators, such as urban vs rural jobs, point to wider challenges across the job market.

One such indicator from the National Bureau of Statistics showed that out of about 180mn rural migrant workers who sought work last year — probably mainly in cities — 49mn returned to their villages, a sign that they could not find work in urban areas.

“The share of the workforce engaged in agriculture rose for only the second time in decades, as fewer urban job opportunities pushed more people into farming,” said Gavekal Dragonomics analyst Ernan Cui in a report.

Chris Beddor, deputy China research director at Gavekal, said: “When we look at these other ancillary indicators, very clearly it shows that there’s been a shock to the labour market.”

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In 2023, China also discontinued reporting of youth unemployment data after the metric rose to 21 per cent. It later reinstated the data series under a new methodology and at a lower rate.

The gig economy has also drawn scrutiny, where an estimated tens of millions pursue informal work such as ride-hailing and delivery driving.

Shenzhen, the southern tech hub, said at the end of May its ride-hailing industry was saturated.

[...]

cross-posted from: https://scribe.disroot.org/post/10060462

The European Commission ... has approved definitive anti-dumping duties on imports of certain tires from China used on passenger cars and light trucks and buses.

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The duties range from 4.3% to 45.3%, depending on the manufacturer. The Commission said the measures are intended to offset the effects of dumping and help ensure fair competition for tire makers operating within the EU.

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The measures were adopted under the European Union’s trade defense framework, which permits anti-dumping duties when imported goods are found to be priced below their normal value and to have caused harm to producers in the bloc.

The decision comes amid broader trade frictions between Brussels and Beijing, with both sides pursuing trade-related investigations and other measures affecting a range of industrial products.

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Archived

cross-posted from: https://lemmy.sdf.org/post/55881996

Wuhan Z-Bank becomes latest target due to 'severe credit risks'

Archived

A state-directed takeover of a small private lender in China's inland province of Hubei has underscored lingering pressures in the banking system of the world's second-largest economy.

Beijing has been guiding bigger banks to take over and eventually absorb smaller institutions based in rural areas in a piecemeal manner over the past year or so. The latest case came Friday evening.

In the joint statement, the National Financial Regulatory Administration and the Hubei provincial government approved a takeover of Wuhan Zhongbang Bank (Z-Bank) for one year, effective the same day, by a special team led by the province's financial watchdog and the government of its capital, Wuhan. The Chinese state financial regulator cited the "emergence of severe credit risks" at the local online lender, without elaborating.

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The latest move turns a fresh spotlight on the vulnerability of China's smaller financial institutions amid a yearslong property downturn and economic slowdown. Government policies aim to contain fallout from cases like this, protecting the wider banking system and preventing the sort of bank runs that have occurred sporadically in some communities.

[...]

The latest move turns a fresh spotlight on the vulnerability of China's smaller financial institutions amid a yearslong property downturn and economic slowdown. Government policies aim to contain fallout from cases like this, protecting the wider banking system and preventing the sort of bank runs that have occurred sporadically in some communities.

[...]

The [Chinese] regulator guaranteed that the bank's daily operations will continue as normal and that the rights of depositors and clients are legally protected. Hankou Bank, another Wuhan-based lender, has been chosen to eventually take control of Z-Bank's assets, liabilities, operations and personnel during the one-year management period under the special team.

Hankou Bank came firmly under the local authorities in Hubei after a capital injection in March 2025. Wuhan Financial Group Holdings, fully owned by the municipal government, became the top shareholder, surpassing Legend Holdings, the parent of PC maker Lenovo.

[...]

Elaine Xu, director of financial institutions at Fitch Ratings, [...] warned that "the highest risks are still among smaller and unrated banks in China's banking system."

[...]

cross-posted from: https://lemmy.sdf.org/post/55735178

• As elsewhere, gig economy work mitigates the income shock of losing a formal job. In China, however, it heightens long-term risks to an inadequately funded welfare system.
• The gig economy increasingly hires educated youth and white-collar workers squeezed by weak domestic demand and AI adoption.

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China's gig economy has become a crucial employment buffer as the property crisis wipes out construction jobs and manufacturers shed workers through automation and cost-cutting ​amid tariffs, overcapacity and price wars.

Increasingly, it hires educated youth and white-collar workers squeezed by weak domestic demand and AI adoption.

"The proportion is extremely high," said Yang Zhan, a cultural anthropology expert at the Hong Kong Polytechnic University. "It's no longer ​limited to rural migrants and has spread to the middle class and university graduates."

"China is upgrading manufacturing, and many industries that used to absorb large numbers of workers are being phased out. ⁠Then there is AI," Zhan said.

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As elsewhere, gig economy work mitigates the income shock of losing a formal job.

But ​in China, one government adviser said the rise of gig jobs - where social insurance contributions are not mandatory - heightens long-term risks to an inadequately funded welfare system.

A 2019 Chinese Academy of Social Sciences report warned that the national pension fund could run out by 2035 ​as the population ages. A 2024 update said delaying retirement could push depletion back eight to nine years.

"It may not be easy to find a solution," due to unstable incomes and contracts in the gig sector, said the adviser, suggesting Beijing should support the formal services industry to create better jobs.

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Although China's unemployment rate has hovered around 5%-6% for a decade, gig work has helped keep those numbers in check because anyone working even one hour a week is considered employed.

Yet an influx of gig workers is increasingly outpacing demand in some sectors, slowing incomes.

The think-tank report said China's 16 million food delivery riders saw their income rise 11% on average to 37.3 yuan per hour in 2025, but wages shrank 1.8% for the 37.2 million ride-hailing ⁠drivers.

At least four ​cities, including the tech hub of Shenzhen, have issued warnings of ride-hailing market "saturation" since April.

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A government adviser said authorities only meant to raise awareness and ​not to prevent people from taking more such work, as "that would become a social stability issue."

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