Le relations of China with USA they should improve “very soon”. President's word Joe Biden who, on the plane that brought him home from Japan, said he expected ties with China to improve "very soon" by dismissing the "stupid" crisis that erupted after the shooting down of an alleged Chinese spy balloon at the beginning of this The year derailed relations between the two superpowers. Speaking to reporters Sunday at the end of the Group of Seven summit in Japan, Biden said his administration was considering lifting sanctions on Chinese Defense Minister Li Shangfu, whom Defense Secretary Lloyd Austin is trying to meet at an event in June in Singapore.
US-China challenge: Beijing hunts Micron…
Not long enough to land in Washington before a note from Beijing dampened so much optimism: the powerful administration of cyberspace which supervises (and censors) the Internet in the Celestial Empire has decided to ban the use of chips of the American Micron because these components represent a serious risk for the security of banks and Telecom. A bad blow for the company from Boise in Idaho, the first US producer (third in the world) in the field of memories, which is posting a drop of more than 5% in the pre-Stock Exchange. But, above all, an almost unprecedented political torpedo by Xi Jingpimg.
In reality, Beijing will not have major problems replacing Micron memories with products from Samsung or the other Korean SK Hinix. But, for the first time, it is not Washington that imposes a technology embargo on China, but Beijing that renounces purchases from the West.
Yesterday, another eloquent sign of the Dragon's desire for emancipation from the decoupling imposed by the West arrived.
…but welcomes Syngenta's IPO in Shanghai and prepares for the electric car offensive
La Shanghai Stock Exchange has decided to accept the public offer of a share quota Syngenta, the giant of seeds and agricultural chemicals based in Switzerland but controlled since 2017 by the Chinese ChemChina (majority shareholder of Pirelli) which took it over for 43 billion euros. The deal involves the placement of securities worth 65 billion yuan ($6,5 billion). Beyond the raising of capital, the IPO, the third in the world in 2023, represents a qualitative leap for the ambitions of the Chinese financial centre. It is not just a question of attracting the interest of local investors, but of promoting Shanghai among reliable markets by Western standards, at least in terms of size and liquidity.
Another step towards full maturity, the one that has by now been acquired by the electric car industry which is putting the leadership of Volkswagen need Tesla on the internal market. Just today, the Stock Exchange greeted the launch of the latest Nio +8% with a strong increase, one of the cars that are about to conquer the European market.
The markets restart from the US-China challenge but the accounts are worse than expected
In short, three signs of maturity in one day which, however, do not fully convince i financial markets. Unlike what is happening for Japan, rewarded by the purchases of large Western investors (promotion among all Warren Buffett), the post-pandemic take-off of the Chinese economy encounters unexpected difficulties: since last April 18, when the growth data were published first quarter Chinese, the capitalization of Chinese stocks is down more than $500 billion. The statistics show a much less solid reality than expected by the big investment houses who bet on the role of Beijing as a new locomotive for recovery. On the contrary, from industrial production to retail sales, lower-than-expected data multiplied. And an indirect confirmation of the economic weakness China also comes from imports, which contracted in April, while data on retail sales and industrial production came out in recent days well below expectations.
The first ailments of the Dragon: the overtaking of the USA slips
Other signals are even more alarming: the youth unemployment it is now at 20%, fueling frustration and social tensions, while the regime invites young people not to be picky and to get busy in the factory, in the fields or in the itinerant trade even if they have a degree that is currently useless. And it won't take backreal estate, in the past the growth lung, still afflicted by the collapse of the giants, starting with Evergrande. The result is a chiaroscuro picture. Of course, China is the second largest economy on the planet. But, as Nial Ferguson writes, the overtaking towards the United States it is no longer so certain. The technological strength and geopolitical growth of the Dragon is unquestionable, but the country is suffering from the after-effects of excessive financial leverage linked to the real estate bubble aggravated by an alarming demographic situation. And it doesn't seem likely to accelerate beyond its 5% annual growth target, which is already more difficult than expected. Even the Dragon suffers from ailments.
