Get ready! From Nov. 16-19, the New Economy Daily will be coming to you direct from the fourth annual Bloomberg New Economy Forum in Singapore, where world leaders will gather to discuss the biggest issues facing the planet, from Covid-19 to income inequality and the climate crisis, and the progress being made to overcome them. For more info, click here.
Today we look at Chinese President Xi Jinping’s hits and misses, concerns U.S. inflation will keep accelerating and the thread of rising food prices.
Wealthier, but more uneven
When Xi Jinping became leader of the Communist Party in 2012, he pledged to spearhead the “great rejuvenation” of the Chinese nation.
As Xi publishes a doctrine this week at a landmark Communist Party summit that sets him up to potentially rule for life, Bloomberg News looked back at the hits and misses of his first near-decade in power, judged against the ambitions he laid out early in his term.
The government declared it had eliminated “extreme poverty” last year and turned China into a “moderately prosperous society,” despite the economic contraction early in 2020 due to the Covid-19 outbreak.
That success came partly from doubling per capita gross domestic product and household income from the level in 2010, a target set under Xi’s predecessor. While critics say the size of the economy has been overstated, decades of uninterrupted annual growth have propelled it from accounting for less than 3%of the global economy in 1977 to more than 17% last year.
While debt is at a higher level than when Xi took office, it’s beginning to stabilize due to a crackdown on financial risk. That’s created pressures in the housing market, where a crisis that began at over-leveraged developer China Evergrande Group has reached state-owned firms.
While the economy has boomed under Xi, as in many other nations, the benefits have not been distributed evenly. The 2017 party congress made it clear that tackling inequality was becoming as important as growth, but in the four years since the income gap has only widened.
This year, Xi’s honed in on economic redistribution and equality of opportunity under the Mao Zedong-era slogan “common prosperity.” While that’s prompted a sweeping overhaul of the $100 billion for-profit education industry, a reform plan for health-care costs in public hospitals and a top court ruling against labor abuses in the private sector, it’s still unclear how it will be prosecuted long term.
For the full run down of Xi’s hits and misses, click here.
The Economic Scene
After U.S. prices climbed by the most in three decades, there’s even worse news ahead for households and policy makers: Inflation likely has further to rise before it peaks.
October’s annual rate was 6.2%, the highest since 1990, as price increases spread well beyond the parts of the economy most disrupted by pandemic closures. Key drivers, like hot housing markets and a global energy crunch, show few signs of fading away soon — leading economists to predict even bigger jumps in the coming months.
“We’re going to see the inflation picture get worse before it gets better,” said Sarah House, senior economist at Wells Fargo & Co.
She doesn’t expect much relief before next spring.
And it’s a global phenomenon: Even in Japan, the home of stagnation for the past few decades, new data showed key measure of costs for Japanese companies jumped to the highest level since January 1981.
Read more here.
Today’s Must Reads
- Coming Up | Mexico, Peru and Uruguay are forecast to raise their benchmark interest rates on Thursday in response to above-target inflation and gradually strengthening consumer demand.
- Transitory inflation | Euro-area inflation will slow sharply in 2023 as energy costs stabilize and the supply-chain disruptions that are currently stoking prices fade, according to the European Commission.
- Climate deal | China and the U.S. vowed to work together to slow global warming, issuing a surprise joint statement Wednesday that injects new momentum into the last days of global climate negotiations.
- India’s price | India has named its price in high-stakes climate talks: if the rich countries want it to cut planet-warming emissions, they need to come up with $1 trillion of public cash by the end of the decade. Perhaps because solving climate change could still hurt the poor the most.
- Lockdown hangover | Australian unemployment jumped in October as the economy unexpectedly shed jobs, signaling a delay in the labor market’s bounce-back from lockdowns.
- ECB bond buying | The European Central Bank could stop buying bonds as early as next September if inflation looks to have sustainably returned to target, Governing Council member Robert Holzmann said.
Need-to-Know Research
The rise in energy prices has been so dramatic that the risk of a sustained spillover onto other sectors is high, according to a new report from economists led by Rob Subbaraman at Nomura.
“It’s in food prices where the seeds of the next crisis may already be sown,” they write.
Using its vulnerability index of 110 countries, Nomura says 49 of the 50 most vulnerable countries are in emerging markets. At the other end of the spectrum, New Zealand, the Netherlands, Ireland and Norway are among the least exposed to a further food price surge.
On #EconTwitter
Read more reactions on Twitter
Enjoy reading the New Economy Daily?
- Click here for more economic stories
- Tune into the Stephanomics podcast
- Subscribe here for our daily Supply Lines newsletter, here for our weekly Beyond Brexit newsletter
- Follow us @economics
The fourth annual Bloomberg New Economy Forum will convene the world’s most influential leaders in Singapore on Nov. 16-19 to mobilize behind the effort to build a sustainable and inclusive global economy. Learn more here.
— With assistance by James Mayger
What's Happening in the World Economy: Xi's Hits and Misses in China - Bloomberg
Read More
No comments:
Post a Comment