HSBC will hand more than $3bn (£2.5bn) to shareholders, after higher interest rates helped to more than double quarterly profits, despite taking a financial hit on China’s property crisis. The London-headquartered bank said it was launching the share buyback, and pay a dividend worth 10 cents a share, after what its chief executive, Noel Quinn, hailed as “three consecutive quarters of strong financial performance”. The move came as HSBC revealed it had made $7.7bn in pre-tax profits between July and September. While it fell short of average analyst forecasts for…
Tag: Economics
Have we reached peak China? Inside the 15 September Guardian Weekly
Often depicted as an angry dragon, China’s current circumstances called for a more melancholic take on the Guardian Weekly’s cover this week. Much of the world’s attention towards the world’s second-biggest economy of late has focused on its geopolitical ambitions, but a picture is emerging from within the country that could have equally profound consequences. A Covid-battered economy – tainted by slowing demand and a deepening property crisis – coupled with an ageing population, have left many analysts wondering if China’s economic rise is stalling. Set against increasingly cool relations…
Chinese economy out of deflation but faces threat of relapse
China’s consumer price index rebounded in August as the world’s second-largest economy emerged from deflation, official data released on Saturday suggested, despite sluggish domestic consumption that is complicating its post-Covid economic recovery. Last month’s CPI, the main gauge of inflation, rose 0.1% year on year, the national statistics bureau said. China briefly slipped into deflation in July for the first time in more than two years, with prices falling 0.3% year on year. Analysts surveyed by Bloomberg had anticipated a rebound in August of 0.2% year on year. Deflation indicates…
Global economic fears deepen as service sector dips in China and Europe
Fears about the health of the global economy have intensified following downbeat news about service sector activity in China, the eurozone and the UK. Share prices fell in Asia and the pound dropped to a 12-week low against the US dollar after fresh signs of weakness in China triggered speculation that its post-lockdown recovery was running out of steam. Meanwhile, there were signs the steady rise in interest rates is leading to weaker service sector activity in both the UK and the 20-country eurozone. Markets were particularly rattled by news…
Country Garden shares jump after Chinese developer strikes debt deal
The share price of the ailing Chinese developer Country Garden has jumped by as much as a fifth after its creditors agreed a delay on debt repayments, offering some respite from the country’s crisis-hit property market. The company agreed over the weekend to extend the payment dates on a 3.9bn yuan (£430m) private bond, to the relief of investors who had thought it would default on payments due on Saturday. Country Garden will instead have three years to repay the debt, after it won a narrow vote with the backing…
How can the US and China prevent a war? | Nouriel Roubini
The US and China remain on a collision course. The new cold war between them may eventually turn hot over the issue of Taiwan. The “Thucydides trap” – in which a rising power seems destined to clash with an incumbent hegemon – looms ominously. But a serious escalation of Sino-American tensions, let alone a war, can still be avoided, sparing the world the cataclysmic consequences that would inevitably follow. There will always be at least some tensions when a rising power challenges the prevailing global power. But China is facing…
A US growth-inflation ‘soft landing’ is vital to solving the global economy puzzle | Mohamed El-Erian
The global economy this year is full of puzzling surprises. Japan’s GDP growth is currently surpassing that of China, and July retail sales in the US were double the consensus forecast, despite the US Federal Reserve pursuing one of the most concentrated rate-hiking cycles in decades. In the UK, wage growth has risen to an annualised rate of 7.8% and core inflation has remained high, even after 14 consecutive rate increases by the Bank of England (with more to come). Meanwhile, Brazil and Chile have cut interest rates, diverging from…
China’s economic model is faltering – does it have the political will to fix it? | George Magnus
The long days of summer are proving to be rather too long for the government in Beijing. In an attempt to stabilise the faltering real estate market, the authorities announced earlier this week a modest decline in interest rates that was underwhelming in scale and intent. Those who recall the bad old days in which the west was buffeted by successive crises such as those involving Northern Rock, Bear Stearns and Lehman Brothers will recognise the futility of lower interest rates in stemming systemic problems in real estate and finance…
The Guardian view on the Chinese economy: it looks bad. What we can’t see may be worse | Editorial
A spate of recent statistics shows that the Chinese economy is faring poorly. The country was supposed to rebound after ditching its draconian “zero Covid” policies, but, after an initial revival, things have gone awry. Earlier this month it slipped into deflation. Key indicators, including industrial production, investment and retail sales, came in well below expectations. The most concerning figure, however, is the one that we can’t see. The youth unemployment rate was suspended from the monthly economic data release, having reached a record 21.3% in June – suggesting not…
Chinese economic slowdown is a result of debt supercycle | Kenneth Rogoff
The 2008 financial crisis in the US kicked off a debt supercycle, which spread to Europe in 2010 and has recently engulfed many of the world’s low-income and lower-middle-income countries. Could the debt woes of Country Garden, the behemoth Chinese real estate developer now facing billions of dollars in losses, augur the cycle’s next turn? The answer remains unclear. While the Chinese authorities have a remarkable track record when it comes to containing economic crises, the challenges posed by a significant growth slowdown, combined with high debt levels – especially…