Foreign companies in China are reaching a “tipping point” on investing in the world’s second-largest economy as market access barriers, low growth and fierce competition cloud the outlook, according to the EU chamber of commerce in the country.

European companies complain that operating in China is becoming tougher because of a growing web of ill-defined data, cyber security and anti-espionage laws while a weak domestic economy means lower profits.

“For some companies, a tipping point has been met,” said Jens Eskelund, president of the EU Chamber of Commerce in China, which released its annual position paper on Wednesday.

“Companies are beginning to conclude that, considering supply chain risks, considering anticipated lower profits in China, considering the continued barriers… that maybe other markets are becoming more competitive, more attractive,” Eskelund said.

China’s policymakers are grappling with a two-speed economy in which a property market slowdown has undermined domestic demand and created deflationary pressures, while exports have risen, helped by cut- throat competition among manufacturers.

Foreign businesses have long complained about barriers to market access in China, particularly in government procurement procedures, but in the past rapid economic growth encouraged them to continue investing.

Beijing has set a 5 per cent target for real GDP growth this year, still high for a large economy, with state banks supporting investment in high-tech industries.

But many foreign investors worry they are not seeing the benefits of this growth, with 70 per cent of respondents to a chamber survey saying overcapacity in their industries had driven down prices. About 44 per cent of respondents were also pessimistic about their likely profitability over the next two years, a record high.

Source: Financial Times

President-Elect Prabowo Subianto, who will soon start leading the country next month, has set an ambitious goal of building 2 million houses in Indonesian villages annually during his presidency.

The exretired army general also wants to build 1 million apartment units in cities annually, according to Prabowo’s younger brother and Gerindra Party’s advisory board deputy chairman Hashim Djojohadikusumo.

These ambitious programs are in response to the lack of adequate housing for Indonesians across the archipelago. Hashim reported that almost 11 million Indonesian families were still waiting for proper housing. The country also has 27 million houses that Hashim classifies as “unfit for living”, meaning that they lack access to clean water and electricity.

“People are skeptical and doubt whether we will be able to achieve this program. Let me tell you, it is possible because the funding will be there. We will build these houses,” Hashim, who also chairs Golden Indonesia Community Forum, said in Jakarta over the weekend.

Hashim claimed that he had flown to China and Qatar to meet potential investors for this program. He claimed that Chinese investors were “ready to build houses for the people in need in Indonesia.”

The politician admitted that land acquisitions would be a major challenge in this program. In response, the government would use the land belonging to the Jakarta provincial government-owned market management company PD Pasar Jaya. The government will transform 153 markets under Pasar Jaya into market-housing complexes.

According to Hashim, the program would be beneficial to the economy. The property sector can be a major growth driver. As a case in point, the construction and property sectors represent 25 percent of China’s gross domestic product (GDP).

“[The property sector] makes up 14 percent [of Indonesia’s GDP]. This program will boost the sector’s contribution to 25 percent. We are very optimistic about that,” Hashim said.

Source: Jakarta Globe

China’s export growth faces increasing risks as pressure to raise import tariffs spreads beyond advanced countries to less-developed ones amid tit-for-tat retaliations and concerns about excess capacity, according to analysts.

The world’s second-largest economy, long seen as the so-called workshop of the world, has been on the receiving end of measures targeting its solar panels, electric vehicles (EVs), steel, aluminium and even low-value retail goods. Mounting tariffs on Chinese exports could pressure growth because trade is so crucial to the world’s second-largest economy, said Christopher Beddor, deputy China research director with Gavekal Dragonomics in Hong Kong.

“Strong exports are papering over severe weaknesses in the Chinese economy,” Beddor said. “If external demand starts to flag because of tariffs, officials will suddenly need to start making some very uncomfortable trade-offs between controlling debt and maintaining relatively high growth.”

The list of countries raising tariffs includes the US, the EU and Canada, as well as emerging markets such as Brazil, Mexico, Turkey and India. Japan has also launched an anti-dumping investigation into a type of rubber product.

US President Joe Biden’s administration intends to impose a raft of new and raised tariffs on China on September 27, vowing to protect strategic industries from its state-driven industrial practices.

Source: SCMPChina trade tased from all sides, backing Beijing into an economic bind: analysts

China’s export growth faces increasing risks as pressure to raise import tariffs spreads beyond advanced countries to less-developed ones amid tit-for-tat retaliations and concerns about excess capacity, according to analysts.

The world’s second-largest economy, long seen as the so-called workshop of the world, has been on the receiving end of measures targeting its solar panels, electric vehicles (EVs), steel, aluminium and even low-value retail goods. Mounting tariffs on Chinese exports could pressure growth because trade is so crucial to the world’s second-largest economy, said Christopher Beddor, deputy China research director with Gavekal Dragonomics in Hong Kong.

“Strong exports are papering over severe weaknesses in the Chinese economy,” Beddor said. “If external demand starts to flag because of tariffs, officials will suddenly need to start making some very uncomfortable trade-offs between controlling debt and maintaining relatively high growth.”

The list of countries raising tariffs includes the US, the EU and Canada, as well as emerging markets such as Brazil, Mexico, Turkey and India. Japan has also launched an anti-dumping investigation into a type of rubber product.

US President Joe Biden’s administration intends to impose a raft of new and raised tariffs on China on September 27, vowing to protect strategic industries from its state-driven industrial practices.

Source: SCMP