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Saturday 9th September 2023
Welcome to the Nèijuǎn 内卷 World Economy ...
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| | Hi Friend,
Welcome to the Nèijuǎn 内卷 World Economy ... "An economy twisting inward without real progress ...... Neijuan has featured in analyses of life
in China in the recent years, due to the uneven distribution of social,
economic, and educational resources and ongoing economic malaise in
terms of higher education, labor markets and youth unemployment.
Neijuan
reflects a life of being overworked, stressed, anxious and feeling
trapped. A lifestyle where many face the negative effects of living a
very competitive life for for apparently little gain. "a prevalent sense of being stuck in an ever so draining rat race where everyone loses.”
Nèijuǎn 内卷
is made of two characters which mean “inside” and “rolling”. Ian
Johnson, senior fellow at the council on foreign relations translates
this as "life twisting inward without real progress".
A world economy, twisting inward without real progress ....
At
the moment, it feels like the world economy is moving toward "Nèijuǎn
内卷 ... a world economy, twisting inward without real progress.
World
trade growth is slowing. World growth is stagnating. A world which
includes the UK post Brexit, European stagnation in the face of energy
cost acceleration, China and the U.S. decoupling and a setback for
globalization as a cold war mentality returns with an East West axis.
"Guns
or Butter" takes in a new meaning as Moscow barters maize for munitions
with Pyongyang. China develops BRICS Plus, a new trading block no
longer to be Dollar dependent.
This week news of the China ban on
iPhone use for government workers in a Tik for Tok reaction to U.S. and
European restrictions on Huawei, sent tech stocks tumbling.
Huawei
launched a new smartphone which appears to have bypassed or surpassed
chip restrictions by the Biden administration. CNN reports, the United
States government is seeking more information about the Huawei Mate 60
Pro, a Chinese smartphone powered by an advanced chip which China cannot
have produced!
The new flagship phone, includes a 5G Kirin 9000s
processor developed specifically for Chinese manufacturer Huawei.
Industry experts could not understand how the company would have the
technology to make such a chip following sweeping efforts by the United
States to restrict China’s access to foreign chip technology.
SMIC
makes waves of progress and Huawei demonstrates the futility of
sanctions. Lessons to be learned from the 12th century when Canute
demonstrated his inability to control the progress of tides. |
| | The Futility of Sanctions ...
The futility of trade sanctions is
adequately demonstrated by the experience of the Trump administration.
Trump’s tariffs have cost Americans tens of billions of dollars. Despite
claims that China will pay, border taxes were passed on to consumers by
import agents.
Following the imposition of tariffs on Chinese
imports. The goods trade deficit with China did dip when Trump launched
his tariff campaign in 2018. At the same time, however, the deficits
with Mexico and the rest of the world went up.
Since 2017, when
Mr. Trump entered the Oval Office, goods imports to the U.S. in nominal
dollars have increased 174% from Vietnam, 116% from Taiwan, 96% from
Bangladesh, 89% from Thailand, 76% from India, and 62% from South Korea.
China Exports are falling this year ...
There are some suspicions China product is being redirected from Vietnam and Mexico to bypass restrictions.
China’s
exports fell by 8.8 per cent in August compared with a year earlier,
while imports fell by 7.3 per cent last month. Exports to most of
China’s major trading partners continued to shrink in August, though the
declines narrowed from July.
Export values continued to contract but export volumes continued to hold up well and are still above their pre pandemic trend.
Trade Surplus Remains ...
China’s
total trade surplus in August stood at US$68.4 billion, down from
US$80.6 billion in July. The surplus narrowed as imports accelerated
more than exports.
China’s customs authorities highlighted an
expanding trade surplus with the Asean bloc, while China’s trade surplus
with the US and European Union declined.
Analysts expect China’s
exports to decline over the coming months before bottoming out toward
the end of the year. Expect further consolidation with the ASEAN bloc
and BRICS+.
In Europe ...
In
the Euro area growth in the second quarter was up buy just 0.1%. There
was zero growth in Germany and a 0.5% drop in Italy. France appeared to
be the bright spot with 0.5% growth.
In the UK, the latest
signals from the PMI Markit surveys suggest a slowdown into the third
quarter from growth of around 0.4% in the first half.
We eagerly
await the Chancellor's Autumn statement on the 22nd November. By then
there should be good news on inflation and the direction of monetary
policy.
We don't expect much from the November statement. Little
suggestion of growth plans for the UK economy to indicate we can escape from Nèijuǎn, an economy twisting inward without real
progress ... |
| That's all for this week! Have a great weekend,
John
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| Want to friends and colleagues to know more ...
They too can stay
up to date with our Friday Forward Guidance Features on Rates and our
Monday Morning Markets updates on equities, bond yields, exchange rates,
and commodity prices. Available on The Saturday Economist web site ...
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| To understand the markets, you have to understand the economics ... and we do
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| | References This Week
"China’s “Involuted” Generation" A new
word has entered the popular lexicon to describe feelings of burnout,
ennui, and despair. By Yi-Ling Liu The New Yorker May 14, 2021.
'Involution': The anxieties of our time summed up in one word Zhou Minxi CGTN December 4th 2020
The US government is investigating China’s breakthrough smartphone Samanthan Murphy CNN Business September 6th 2023
According
to What's On Weibo, The popular use of the Chinese translation of
‘involution’, nèijuǎn 内卷, started to receive attention in Chinese media
in 2020. It is meant to explain the social dynamics of China’s growing
middle class. References include "Involution": The Anxieties of Our Time
Summed Up in One Word” by Zhou Minxi (CGTN) and "China’s “Involuted”
Generation" a new word to describe feelings of burnout, ennui, and
despair and by Yi-Ling Liu*.
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