5 July 2023
New power plant leaves Jordan indebted to China, raising fears of Beijing’s influence
Jordan’s Attarat power plant, a $2.1 billion project that promised to meet the country’s energy needs while solidifying ties with China, has become a cautionary tale about the country’s involvement in China’s Belt and Road Initiative, leading to tensions between the two countries. The plant is no longer needed due to other agreements reached, leaving Jordan billions of dollars in debt to China.
7 July 2023
US renews audit inspection of Chinese companies: Report
U.S. audit officials have launched a new round of inspections of a dozen New York-listed Chinese companies, including Tencent Music Entertainment Group, Didi Global Inc, and NetEase Inc, Bloomberg News reported on Thursday.
The inspection, part of an agreement signed last year, comes amid growing tensions between the US and China, including the US consideration of controls on the export of artificial intelligence chips to China.
The US Public Company Accounting Oversight Board (PCAOB) sent a team to Hong Kong last month to review 2022 audit reports of some of the most prominent US-listed Chinese securities, according to the report, which cites people familiar with the matter.
In May, the PCAOB found unacceptable deficiencies in audits of US-listed Chinese companies by KPMG in China and PricewaterhouseCoopers in Hong Kong. The PCAOB, Tencent Music Entertainment Group, Didi Global and NetEase did not immediately respond to Reuters’ requests for comment.
No second chance” to save Sri Lanka, central bank warns
Chinese debt has been politically controversial, as Rajapaksa and his older brother Mahinda, also a former president, have been accused of using Beijing’s money to fund expensive vanity projects. Weerasinghe said the delays in the IMF package were understandable because Beijing was a “relatively new player” in bilateral lending.
Sri Lanka will face one of its biggest economic crises and default against China.
11 July 2023
UK economy shrinks by 0.1% in May: ONS
Britain’s economy contracted less than expected in May, a month that saw an extra bank holiday to mark the coronation of King Charles, figures from the Office for National Statistics (ONS) showed on Thursday. Economic output fell 0.1 per cent in May from April, the ONS said. A Reuters poll of economists pointed to a 0.3 per cent contraction from April.
17 July 2023
China’s youth unemployment hits record high as recovery stalls
The unemployment rate for 16-24 year olds in urban areas rose to 21.3 per cent last month, according to official data. The world’s second-largest economy grew by just 0.8 per cent in the three months to June. Analysts say the weak pace of growth has raised expectations that the authorities will soon announce new measures to boost the economy. China’s National Bureau of Statistics said the data “showed good recovery momentum”.
According to official figures released on Monday, China’s economy grew by 6.3 per cent in the second quarter on an annual basis. It outpaced growth in the first quarter, but fell short of analysts’ expectations. “The disappointment is especially evident in retail sales and housing investment,” Qian Wang, chief Asia-Pacific economist at investment firm Vanguard, told the BBC.
“This, together with previous reports on trade, inflation and credit, reaffirmed our view that underlying growth momentum remains very weak,” he added.
Evergrande: Crisis-hit Chinese real estate giant reveals $81 billion loss
Crisis-hit Chinese property giant Evergrande has revealed that it lost a total of 581.9bn yuan ($81.1bn; £62bn) in 2021 and 2022. The company, which defaulted on its debts at the end of 2021, told investors in Hong Kong its long overdue results. Evergrande has been struggling with an estimated $300bn (£229bn) of debt. The huge losses highlight the extent to which the developer has been shaken in recent years by the property market crisis in the world’s second-largest economy.
In statements to the Hong Kong Stock Exchange late on Monday, the company said it lost 476 billion yuan in 2021 and 105.9 billion yuan last year. Revenue more than halved over the two-year period. Evergrande explained that the losses were due to several reasons, including falling property and other asset values, as well as rising borrowing costs.
The shares of the company, once China’s best-selling property developer, have been suspended from trading since March last year.
23 July 2023
The UK Treasury is to meet with bank chiefs over the Farage row. Minister Andrew Griffith said there was “significant concern” over claims that accounts are being closed because of people’s political views. NatWest boss Dame Alison Rose has apologised to Farage, who has called for MPs to question her. Farage claims her account at Coutts, owned by NatWest, was closed because of her views.
The government was already considering whether to close or suspend accounts of individuals because of their public views, but the scandal involving the former Ukip leader has focused public attention on these allegations.
In a letter to the banks, seen by the BBC, finance minister Andrew Griffith says recent allegations of “unbanking customers” have “raised serious concerns in both Houses of Parliament”. He said the government would “take the necessary steps” to protect freedom of expression.
The BBC understands that Griffith’s letter will be sent to 19 banks and financial services companies on Monday. Griffith said he would convene a meeting with bank executives “at the earliest opportunity”. The latest government response comes after the Treasury announced plans to subject UK banks to stricter rules on closing customer accounts. Banks will have to explain why they are closing accounts, and will have to give 90 days’ notice before closing an account, to give people more time to appeal against the decision.
26 July 2023
US economy beats expectations with spring rebound
The world’s largest economy grew at an annual pace of 2.4 per cent in the first three months of June, an acceleration from 2 per cent in the previous quarter. Growth was much better than expected, driven by rising business investment. Consumer spending rose at an annual rate of 1.6%, slowing from a rebound earlier in the year. Analysts have been warning for months of the impending slowdown as the US central bank, the Federal Reserve, raises interest rates sharply to try to stabilise prices, which soared last year.
But businesses and households have continued to spend, despite rising borrowing costs, confounding analysts’ expectations. This may help the US economy avoid a recession, but some economists also warn that it may make it more difficult to fully eradicate inflationary pressures, which could lead to even higher interest rates in the coming months.
27 July 2023
Eurozone interest rates reach a joint record high
The bank raised the deposit rate in the 20-nation bloc for the ninth consecutive time, to 3.75 per cent from 3.5 per cent. The ECB said inflation continued to decline, but was still expected to remain “too high for too long”. On Wednesday, the US central bank raised rates to their highest level in 22 years in its attempt to control prices.
In the UK, where inflation fell to 7.9% in June, the Bank of England’s base rate stands at 5%. In its next decision, on 3 August, the Bank is expected to raise rates to 5.25%. The idea of raising rates is to make borrowing more expensive and thus reduce demand and make it more difficult to pass on price rises.
As in other regions, the euro area has been affected by rising food and energy prices, which have weighed on households. Inflation in the euro area stands at 5.5%. Food price inflation has continued to decelerate, but stood at 11.6% in June.
The ECB said it was determined to ensure that inflation returned to its 2 per cent medium-term target “in a timely manner”. The eurozone slipped into recession last winter, revised figures recently showed, as consumers were hit by rising prices. The eurozone economy contracted by 0.1 per cent between January and March, after also contracting in the last three months of 2022. The ECB said on Thursday that developments since its last meeting supported the expectation that “inflation will continue to fall in the remainder of the year, but will remain above target for an extended period”.
31 July 2023
UK house prices record biggest fall in 14 years, says Nationwide
The building society said prices had fallen by 3.8 per cent, the biggest annual decline since July 2009. Nationwide said mortgage rates remained high, making affordability difficult for homebuyers. Mortgage costs hit a 15-year high in July as lenders grappled with uncertainty over interest rates set by the Bank of England. The average price of a home in the UK is £260,828, according to Nationwide, which is about £13,000 lower than the peak in August last year. Many first-time buyers should welcome a fall in house prices, which have risen in recent years, including during the Covid pandemic.
However, Nationwide says that despite July’s fall, rising mortgage rates are still making it harder to get a home. Nationwide’s chief economist, Robert Gardner, said that a first-time buyer on an average salary, who had saved a 20% deposit, would see mortgage payments account for 43% of their take-home pay. This is based on a mortgage rate of 6%. Last year, these new homeowners were spending just over a third of their salary on mortgage repayments.
What is happening to house prices?
New figures released on Tuesday show that mortgage rates continue to rise. According to the financial information service Moneyfacts, the interest rate on a two-year fixed mortgage is now 6.85%, up from 6.81% the previous day. The five-year fixed rate is 6.37%, up 0.03% from Monday. Mr Gardner said the housing market had moderated in recent months as people found it difficult to buy. There were 86,000 housing transactions in June, down from more than 100,000 last year.
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In Madrid, 31 July 2023
International Trade and Sanctions Department
