All articles tagged with #de risking
US Treasury Secretary Scott Bessent criticizes China as an unreliable partner and emphasizes the need for the US to reduce dependence on Chinese control of rare earth minerals, amid ongoing trade tensions and a tentative framework deal between the US and China.
The German government is urging companies to "de-risk" from China, but many businesses, particularly in the manufacturing sector, are hesitant to sever ties with the world's largest market. While some companies have experienced difficulties with Chinese suppliers, others, like Pfeifer Group, believe that avoiding contact with China is impossible and that understanding China's approach is crucial. Despite political rhetoric, German businesses continue to expand in China, and there is a disconnect between the government's stance on de-risking and the actions of entrepreneurs who have long dealt with risk in business.
Premier Li Qiang of China has expressed a commitment to building closer supply chain partnerships with all countries, as part of China's efforts to retain foreign investment amid concerns of over-reliance on the country. The remarks were made during the opening ceremony of the China International Supply Chain Expo in Beijing. The expo, which includes global brands like Apple and Tesla among its exhibitors, aims to showcase China's role as the world factory and provide a window for assessing opportunities in the Chinese market. Foreign chambers of commerce see the event as an opportunity to gain insights into China's position in global supply chains and its approach to trade and globalization. China has been implementing measures to address waning confidence, including the removal of investment barriers and the expansion of visa-free entry. However, the country reported its first-ever quarterly deficit in direct investment liabilities in the third quarter.
The European Union (EU) is taking a harsher stance on China ahead of an upcoming summit, with European Commission President Ursula von der Leyen warning of an "explicit element of rivalry" in the EU-China relationship. She criticized China's push for a systemic change in the international order and accused it of supporting destabilizing forces. Von der Leyen also highlighted concerns about unfair trade practices and called for China to play a role in promoting stability in the Middle East. The EU's top diplomat, Josep Borrell, raised the possibility of a trade war and warned that European companies are finding it increasingly difficult to work in China. European businesses are expressing frustration with the situation and are considering diversifying their supply chains away from China.
China has recorded its first-ever quarterly deficit in foreign direct investment (FDI), with direct investment liabilities reaching a deficit of $11.8 billion during the July-September period. This deficit reflects the challenges Beijing faces in attracting overseas companies amid Western governments' "de-risking" moves and growing geopolitical tensions. Factors such as multinational companies repatriating earnings and interest rate differentials between China and developed countries have contributed to the decline in China's inward FDI. The deficit in FDI, along with other economic pressures, is expected to prompt a strategic response from Chinese authorities, including interventions to support the currency and curb yuan selling.
Banks are suddenly closing down customer accounts, leaving individuals and small-business owners unable to pay rent or make payroll. The explanations provided lack detail, and customers often discover their accounts are closed while attempting to make transactions. This practice, known as "exiting" or "de-risking," is part of a larger effort to crack down on fraud, terrorism, money laundering, human trafficking, and other crimes.
The relationship between China and the European Union (EU) is at a critical juncture, with the EU's trade chief calling for more openness and fairness from Beijing. The EU registered a record bilateral trade of 865 billion euros with China in 2022, but the trade deficit of almost 400 billion euros has raised concerns. The EU recently opened an investigation into Chinese subsidies to electric car manufacturers, which Beijing criticized as "protectionist." The EU aims to de-risk its strategic dependencies on China without decoupling, emphasizing the need for fair trading practices. Both sides are urged to engage in constructive dialogue to resolve the issues.
German Economy Minister Robert Habeck is proposing a new law to tighten the process for reviewing foreign investments in order to enhance economic security. The move comes as Germany seeks to reduce its reliance on China and address concerns about Chinese expansion in the Indo-Pacific region. The proposed law would include auditing investments where an investor gains access to a domestic company's goods or technologies through contractual agreements, as well as checking the security significance of new factories built in Germany by foreign companies. The government is also considering scrutinizing security-critical research cooperation deals.
Hedge funds have been de-risking in July at levels close to record levels for the past decade, with short covering being the main driver. Long/short hedge funds experienced a nine-day streak of negative returns, the longest since January 2017, and are expected to face the worst monthly alpha drawdown since May 2022. Goldman Sachs' prime brokerage report indicates signs of capitulation emerging. Meanwhile, US stocks show modestly positive levels, with Adobe experiencing significant gains and Apple and Amazon preparing to report earnings.
Premier Li Qiang delivered a keynote speech at the World Economic Forum's Annual Meeting of the New Champions, highlighting China's positive economic outlook and predicting faster growth in the second quarter. He also criticized the West for their calls to "de-risk" from China.
China's Premier criticized the West's de-risking drive at the 'Summer Davos' forum, stating that it is a form of protectionism and that China will continue to open up its markets. He also emphasized the importance of multilateralism and cooperation in the face of global challenges.
Chinese Premier Li Qiang accused Western nations, particularly the US, of "sowing division and confrontation" and politicizing economic issues at the World Economic Forum's Annual Meeting of the New Champions in Tianjin. He criticized the strategy of de-risking and urged governments not to stretch the concept of risk to turn it into an ideological tool. Li sought to restore confidence in the Chinese economy, which is struggling to recover due to weak consumer spending, slow property sales, and rising unemployment.
Chinese Premier Li Qiang's visit to Germany and France may help reset EU trade ties, but the EU's de-risking push with China casts a shadow over the trip. De-risking with China is an overarching trend that will continue to deepen, according to observers.
China's Premier Li Qiang has criticized the European Union's plan to "de-risk" supply chains, stating that dependency is a must in today's economic globalization. Li argued that the EU was not particularly dependent on China, but rather the EU's dependency on high-end technology was even deeper. The comments come ahead of an EU leaders' summit to discuss relations with Beijing, where economic security will be a key topic.
German Chancellor Olaf Scholz faces a tricky balancing act in maintaining good ties with Germany's largest trade partner, China, while complying with a G7 pledge to "de-risk" from Beijing. The Chinese premier Li Qiang is visiting Germany for the first time since the COVID-19 pandemic, and the talks come amid concerns in the West about rising Communist party control over society and the economy, unfair competition, and Beijing's territorial ambitions. Scholz's government is divided between the more hawkish junior coalition partners, the Greens and Free Democrats, and his center-left Social Democrats. The Chinese delegation is expected to lobby the German government directly and indirectly via big business to press the European Union not to go too far in regulating business in China.