Reuters Econ World: Chinese diplomacy
By Carmel Crimmins
Nov 21 -While the world analyses Donald Trump’s cabinet picks, China’s President Xi Jinping is quietly going on a diplomatic offensive with the Global South and Asian neighbours.
The outreach is urgent for Beijing – it is bracing for U.S. tariffs and needs all the allies it can get.
Trump has pledged to impose taxes on Chinese imports in excess of 60%, and a Reuters poll of economists found they expected the U.S. would impose tariffs of nearly 40%, potentially slicing up to 1 percentage point off growth in the world's second-biggest economy.
Developing countries are unlikely to make up for that loss and even though Chinese tech companies are far less reliant on U.S. imports, the strain is there. China's Huawei, at the heart of the trade friction between Beijing and Washington, is still struggling to make enough chips due to U.S. restrictions.
Despite the challenges ahead, Chinese government advisers are recommending that Beijing should maintain an economic growth target of around 5.0% for next year, pushing for stronger fiscal stimulus to mitigate the impact of the expected U.S. tariff hikes.
Howard Lutnick’s exposure to China is coming under the spotlight now that he has been named to lead Trump’s trade strategy as head of the Commerce Department.
The financial services firms helmed by Lutnick have profited from ties to China - from BGC Group, which has a joint venture in Beijing with state-owned China Credit Trust, to Cantor Fitzgerald, which has helped take Chinese firms public in the United States.
Over in the United States, Nvidia’s rush to get chips out the door is proving more costly than expected. The company is at the heart of the AI revolution, a topic we tackle on this week’s Reuters Econ World. I talk to Craig Mundie, former chief research and strategy officer for Microsoft, about how we might navigate a not-so-distant future where the machines are smarter than us. Listen here.
And finally, maybe things aren’t quite as bad as we think in the UK. A think tank reckons Britain's official labour market statistics may be failing to count almost 1 million people who are in work.
The Resolution Foundation said the official methodology - which is being overhauled - might also be overestimating the number of workers who have dropped out of the jobs market.
As always, I'd love to hear from you by hitting reply on this email or finding me on LinkedIn.
The headlines
Russia fires intercontinental ballistic missile in attack on Ukraine, Kyiv says
ICC issues arrest warrants for Israel's Netanyahu, Gallant and Hamas leader
Indian tycoon Gautam Adani charged in US over $265 million bribery scheme
Nvidia's supply snags limit deliveries even as demand booms
The chart
One of the main punts on Donald Trump's macroeconomic policies is that they will be inflationary. The yield on 10-year U.S. government debt has risen from 3.6% in September to around 4.4% on fears that the Fed will have to keep interest rates high and investors’ desire to be paid more to compensate for the risk of higher debt levels.
The podcast
"I think we have to come to grips with the idea that, you know, we're not alone at the top of the intelligence pyramid on Earth anymore."
Craig Mundie on the latest episode of Reuters Econ World.
The real world
Valverde: The Spanish island that is Europe's new migration frontline
Sinjar: Iraq’s missing Yazidis: Inside the long search for Islamic State captives
Socorro: In New Mexico, a Democratic stronghold battling poverty and fentanyl backs Trump
The week ahead
Nov 22: ECB President Christine Lagarde speech
Nov 27: U.S. jobless claims
Nov 27: U.S. PCE Price Index
Bond vigilantes keep yields high as Trump 2.0 nears https://reut.rs/4ezcyaU
Editing by Catherine Evans
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