Trade

Shady export leaks suggest Russian sanctions work

29 Aug 2023

A suspicious bump in European exports to countries like Kazakhstan may be helping Moscow evade Western bans. The G7 price cap on Putin’s oil is also porous. But these cracks are marginal and help demonstrate the embargoes’ effectiveness – and why they can be tightened.

India is warming up to a cooling China

28 Aug 2023

Narendra Modi’s meeting with Xi Jinping in South Africa signals some thawing of financial ties hamstrung since 2020 by border tensions. Investments from the People’s Republic into its neighbour shrivelled thanks to a screening policy. That now looks ripe for fine-tuning.

Italy faces bumpy round trip on the Silk Road

23 Aug 2023

Prime Minister Giorgia Meloni may quit Chinese President Xi Jinping’s infrastructure club. Like other European fans, Italy gained little economic benefit from signing up to the Belt and Road Initiative. Yet leaving may provoke retaliation, perhaps against its luxury industry.

India’s laptop ban hints at limits of onshoring

18 Aug 2023

Modi’s government is restricting the import of the hardware while incentivising manufacturers to make more in the giant emerging market. It’s late, though. Dell, HP and others have diversified from China to Southeast Asia. By pushing hard, India risks upsetting its neighbours.

Capital Calls: European steel

21 Jul 2023

Concise views on global finance: Sweden’s $6 bln group SSAB misses profit forecasts as Europe’s demand tanks and steel prices shrink.

West is sleepwalking off healthcare cliff

17 Jul 2023

Europe is scrambling to end its reliance on Chinese raw materials for green energy and chips. But policymakers forget the region sources 80% of ingredients for top medicines in the East. Producing them at home may prevent a crisis but it risks exacerbating public debt piles.

Old Cold War tool could help in new era of tension

17 Jul 2023

The US and allies created a committee to vet exports to the Soviet Union during their long conflict. This gave its partners a say in setting policy and ensured they stayed aligned. The G7 should set up something similar to handle the quasi-Cold War with China, says Hugo Dixon.

Germany’s China policy caps pain for its companies

14 Jul 2023

Europe’s biggest economy has a new strategy to limit exposure to China and align more with Brussels and Washington. Yet a previous version of the plan was tougher. Big China-focused corporates like BASF and Volkswagen will be relieved they can de-risk at their own pace.

China’s rare metals swipe has more bark than bite

4 Jul 2023

Beijing is imposing export controls over gallium and germanium, used in chips, fibre optics and military equipment. This confirms Western fears that the country might leverage its strategic metals dominance to push back on sanctions. Yet market realities blunt China’s edge.  

EU phase-out of Huawei, ZTE is tricky but vital

20 Jun 2023

Commissioner Thierry Breton wants EU countries to end use of Chinese telecoms gear on national security grounds. Some states have already cut Huawei and ZTE from 5G networks. The EU survived decoupling from Russian energy, and it can manage this. But it requires German buy-in.

US and China are decoupling, and it is permanent

19 Jun 2023

Forget de-risking or containment. In this Exchange podcast, Gavekal research director Chris Beddor explains the political framing of the slogans, unpicks changing trade and financial flows between the world’s two biggest economies and explains why China hasn’t retaliated more.

Dutch chip export saga exposes EU shortcomings

13 Jun 2023

The Netherlands is limiting exports of high-end semiconductor gear to China, after a US push to curb Beijing’s AI and military prowess. While the EU will soon unveil a plan, it looks hard to strike the right power balance in the defense arena. Brussels needs a clearer role.

Pirelli CEO pivots from globalisation to trade war

5 Jun 2023

Marco Tronchetti Provera teamed up with a Chinese buyer to take the tyremaker private in 2015. Now Sinochem’s 37% stake poses business and governance risks for the $5 bln company. An appeal to Italy’s nationalist government may help the veteran industrialist maintain control.

Securonomics is fuzzy new lodestar for investors

2 Jun 2023

Globalisation, which lowered barriers for trade and financial flows, is in retreat. Taking its place is a doctrine that places national security above economic efficiency. Felix Martin argues the shift for money managers is profound – and throws up some big policy contradictions.

China thesis lurches from one lazy extreme to next

25 May 2023

Investors that piled into Chinese tech stocks and high-yield bonds are fleeing on worries about President Xi Jinping’s agenda, as the yuan slumps and commodities retreat. The People’s Republic is a tricky trade, but now is a better time to rebalance portfolios than abandon them.

EU will go easy on Indian resale of Russian fuel

23 May 2023

Fuelled by imports from Moscow, oil products sales to Europe from refiners including Reliance and Nayara have nearly doubled to $15 bln. The trend shows anti-Russian sanctions are not watertight. Yet, risks of an energy inflation revival make a European Union ban a tough call.

China’s Micron hit sets up repeat strikes

22 May 2023

The $72 bln US memory-chip maker says Chinese restrictions will probably reduce revenue less than 10%. Perhaps, but similar measures taken against database firms like Oracle and IBM a decade ago had a bigger long-term effect, helping domestic manufacturers to catch up.

G7 says “de-risking”, China hears “containment”

22 May 2023

Wealthy democracies argue they’re diversifying, not decoupling, from the world’s second-largest economy. Yet Beijing sees them hobbling strategic industries, undercutting its global leadership and boosting defence budgets. “Escalation” or “retaliation” are more accurate synonyms.

Russia sanctions become a high return investment

19 May 2023

As older penalties lose their bite, Western powers are preparing a new round of measures to tighten the screws on Vladimir Putin. That will hurt the Kremlin and be a marginal sacrifice for Europe, which no longer depends on Moscow for its energy – a good cost-benefit balance.

Ukraine rebuilding would be small wager for Europe

16 May 2023

The Ukrainian economy shrank by 30% last year but the war didn’t break it. Reconstruction will cost $410 bln over a decade, according to the World Bank. The European Union could fund the bulk of those efforts by spending just 0.1% of annual GDP. That would be a shrewd investment.