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The performance of the world’s second-largest economy exceeded market forecasts when gross domestic product figures were finally released on Monday, but the third-quarter data did not come close to allaying concerns about China’s direction after decades of underpinning global growth.
Delayed by almost a week without explanation — although a clash with China’s Communist party congress is suspected — the announcement of 3.9 per cent GDP growth came with little fanfare. It was better than the forecast of 3.3 per cent from analysts polled by Bloomberg but still short of China’s full-year target of 5.5 per cent, already set at its lowest in three decades.
Other data, also delayed, painted a more nuanced picture of the predicament facing Chinese policymakers. House prices in the secondary market fell by the highest month-on-month rate since 2014, reflecting a property crisis.
Growth in retail sales, just 2.5 per cent, missed forecasts as strict Covid lockdowns continued to hold back consumption. “The actual economic recovery momentum is not strong,” said Ting Lu, chief China economist at Nomura. Despite the latest outperformance, he expects growth of just 2.8 per cent in the fourth quarter.
Markets news: Chinese stocks popular with big fund managers have been hammered by a significant sell-off following Monday’s GDP data and the confirmation of President Xi Jinping’s third term in power.
China’s wealthy: Rich citizens are pulling the trigger on exit plans from their homeland as pessimism builds over the future of the world’s second-largest economy under Xi.
Five more stories in the news
1. Sunak warns UK facing ‘profound economic crisis’ Rishi Sunak yesterday became Britain’s third prime minister in the space of two months and immediately started to assemble a “unity cabinet”. Sunak, who was invited to form a government by King Charles on Tuesday morning, said he would prioritise “economic stability and confidence” but said: “This will mean difficult decisions to come.”
2. Uyghur activists sue UK over Xinjiang cotton imports Uyghur rights activists are suing the UK government over its failure to investigate imports of cotton products made using forced labour from Xinjiang. The case, filed by the World Uyghur Congress, is the first of a wave of lawsuits across Europe aimed at blocking imports from Xinjiang, taking advantage of recently tightened laws on companies’ supply chain liability.
3. Musk signals Twitter deal on track to close this week Elon Musk has confirmed on a video call with his advisers that he intends to close his $44bn acquisition of Twitter on Friday, according to people briefed about the matter. In another sign that the deal will close by the week’s end, Musk’s lawyers sent paperwork to equity investors in the deal, according to two investors and a person close to the Tesla boss.
4. Renminbi hits 2007 low after Xi unveils leadership China’s currency has hit its weakest level against the dollar since 2007 as concerns over President Xi Jinping’s appointment of a harder line leadership team and a struggling economy spread from equities to currency markets.
5. Saudi Arabia willing to pump more oil if needed Saudi Arabia’s energy minister Prince Abdulaziz bin Salman has signalled a willingness to pump more oil if the global energy crisis worsens, while describing this month’s decision by the Opec+ cartel to cut crude supply during a period of high prices as a “mature” decision.
The day ahead
Japan PPI inflation rate data Japan will publish its September producer price index data today. Producer prices have climbed nearly 10 per cent over the past year. The Bank of Japan, has maintained its ultra-low interest rates — which it is expected to stick to when it meets later this week. (NYT, FT)
Have you changed your spending habits due to rising inflation where you live? Tell us in our poll below.
Biden welcomes Israel’s president US president Joe Biden will host Israeli president Isaac Herzog at the White House a week before Israel holds its November 1 elections. (Politico)
German chancellor and French president meet in Paris Olaf Scholz and Emmanuel Macron will meet today aiming to calm rising Franco-German tensions after turmoil between the two nations was laid bare at last week’s EU summit in Brussels, when Macron said Berlin risked “isolating itself” in Europe.
Earnings The torrent of corporate earnings continues today with Banco Santander, Barclays, Bloomsbury Publishing, Boeing, Deutsche Bank, Ford Motor Company, Harley-Davidson, Heathrow airport, Heineken, Kraft Heinz Company, Mercedes-Benz, Meta, Puma, Standard Chartered, Telenor, Thales, UniCredit and more set to report.
What else we’re reading
China’s limitless presidency means limited diplomacy While Xi Jinping seems unassailable at home, foreign diplomacy will only become more difficult. If all policy ultimately originates with the leader, and if he is infallible, then there can be no admission of mistakes, no apologies, no compromises — in short, no diplomacy, writes Yuan Yang.
India’s IT outsourcers crack down on moonlighting employees Fears that staff will share corporate secrets with rivals has led outsourcers to crack down on the practice. The biggest warning has come from Wipro, which claimed it dismissed 300 workers who were caught moonlighting. The company’s chair has called the practice “cheating — plain and simple” even though it is not illegal.
Why Sony wants to win over Tesla despite Honda tie-up The success of this deal for Sony will hinge on whether it can convince Tesla as well as a majority of the 14 other carmakers on its future client list that its image sensors are good enough for their fully electric and self-driving vehicles, writes Kana Inagaki.
The US legal move letting corporations off the hook 3M, the conglomerate, is part of a recent trend whereby US corporations make use of the bankruptcy court not because they are insolvent but to manage tort claims. The manoeuvre is known as the Texas two-step and seeks to exploit loopholes in the legal system but judges are beginning to crack down.
‘Clunky’ Bidenomics proves a tough sell Under the Democrats’ watch, the US economic recovery has generated 10mn jobs and lowered unemployment to 3.5 per cent since January 2021. But months of unrelentingly high inflation have made “Bidenomics” a difficult sell on the campaign trail.
The problem with men’s trousers is that they rarely fit. FT’s Rob Armstrong shares his top tips and the three deadly sins to avoid in the search for pants that are both comfortable and look good.
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