Trade

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.

Rich world has three ways to win over global South

15 May 2023

Leaders from the Group of Seven, who gather this week, need to develop a stronger pitch to poorer non-aligned nations. A strategy based on peace, prosperity and protecting the planet could work. It’s more effective than delivering lectures on democracy, says Hugo Dixon.

Capital Calls: Disney, Thyssenkrupp

24 Apr 2023

Concise views on global finance: The CEO of the $180 billion entertainment company has to thread the needle between layoffs and degrading value as he finds a successor; the 4 bln euro German steel-to-cars group’s shares tanked after CEO Martina Merz left.

How US and allies can find common ground on China

17 Apr 2023

Emmanuel Macron is not the only US partner wary of being drawn into a Taiwan crisis. But America and its allies will be stronger if they can agree more about dealing with the People’s Republic. Part of the answer is to focus on de-risking rather than decoupling, says Hugo Dixon.

China reluctantly keeps sanctions powder dry

12 Apr 2023

President Xi Jinping is swatting some firms like Micron but is deferring harsher retaliation against US export restrictions. If he scapegoats American capital, he risks pushing other countries into Washington’s camp. China’s soft economy means Xi can’t afford to lose his temper.

OPEC’s oil cut is less surprising than it looks

3 Apr 2023

The producer group’s shock call to slash output by another 1 mln daily barrels will annoy Joe Biden and spur inflation fears. But de facto leader Saudi Arabia had already shown it would ignore US wishes. And Chinese demand is sufficiently uncertain to justify pre-emptive action.

Israel hits tech sector cash cow while it’s down

3 Apr 2023

Prime Minister Benjamin Netanyahu has delayed a controversial plan giving the state power to override court decisions. Foreign investors in Israel’s key tech sector, which accounts for half its exports, were already getting stingier. They’ll get even more so if the idea returns.

China sanctions red line has shifted westward

21 Mar 2023

President Xi Jinping’s visit to Moscow has rekindled concerns Beijing could get too cosy with Vladimir Putin. Arming Russia would likely trigger a joint Western diplomatic response even in the absence of a Chinese invasion of Taiwan. Beijing is walking a thinning tightrope.

Economic asphyxiation puts Russia in China’s orbit

20 Mar 2023

Moscow needs up to $90 bln to fund its budget deficit this year. As sanctions keep biting, financing the shortfall will slowly add to the economy’s woes. Russia’s need to use the yuan for trade and payments will also increase Vladimir Putin’s dependence on Beijing.

EU and US green arms race misses bigger picture

16 Mar 2023

The European Union’s response to Joe Biden’s Inflation Reduction Act gives member states leeway to push back with their own green subsidies. Yet plans for production targets are misguided. To decarbonise while managing China risks, it’s better to seek common ground with the US.

Middle East pivot to Asia is strategic this time

14 Mar 2023

A restoration of diplomatic ties between Saudi and Iran is a big win for its broker China. After prior false starts, the Middle East and Asia have a growing mutual interest in helping each other advance their energy and trade security. For bankers, financial deals will follow.