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Foreign Companies Bailing on China Over Economic Fears

Foreign Companies Bailing on China Over Economic Fears

A spokesman for China’s statistics bureau stated on Tuesday that there is no deflation in China and that there would be no deflation in the future. The Chinese economy is facing hurdles, according to National Bureau of Statistics spokesperson Fu Linghui at a press conference in Beijing.

Nonetheless, according to Fu, the bureau expects the decrease in the producer price index to reduce further. According to official data, China’s consumer sector entered deflation in July, and factory-gate prices continued to fall.

Fu also stated that policy optimisation might eventually resolve risks for property developers. China launched a strategy to recruit more foreign investment and revive its stagnant economy, a rare admission of weakness.

The 24-point plan intends to improve the FDI climate, which has suffered as a result of the Communist Party’s unpredictable and sometimes antagonistic policies towards foreign enterprises.

In the second quarter of 2023, new foreign investment in China sank to its lowest level in 25 years. At the same time, China’s economy is suffering from deflation, local government debt, and a shrinking real-estate industry.

Watch Ian Bremmer’s discussion with Shaun Rein, founder and managing director of the Shanghai-based China Market Research Group, on this week’s GZERO World here and read our explainer here for more on China’s economic difficulties.

China Offering Tax Incentives

Beijing’s new strategy offers tax breaks and incentives to important businesses such as biopharmaceuticals and telecommunications. It also makes it easier for foreign firms to apply for visas and residency permits.

However, this comes at a time when international companies are increasingly wary about investing in China, especially since new anti-espionage rules give authorities broad authority to access and manage foreign corporate data.

US companies are fleeing China in droves, citing concerns about employee safety and escalating tensions between Washington and Beijing in the aftermath of a string of US-based consulting firms raided in China this spring.

Foreign firms are transferring investments and Asian headquarters out of China as confidence falls following the expansion of an anti-spying law and other hurdles, according to The Associated Press.

The European Union Chamber of Commerce in China report notes that this is one of several symptoms of growing pessimism, despite the ruling Communist Party’s efforts to rekindle interest in the world’s second largest economy following the repeal of anti-virus measures.

Foreign Business Confidence in China Plummeting

According to the European Chamber of Commerce, companies are concerned about security measures, government protection of their Chinese competitors, and a lack of progress on reform commitments. They are also under pressure from weakening Chinese economic growth and rising costs.

Business confidence in China is “pretty much the lowest we have on record,” according to Jens Eskelund, president of the European Chamber of Commerce, ahead of the report’s release.

“There is no expectation that the regulatory environment will improve significantly in the next five years,” Eskelund added.

President Xi Jinping’s government is attempting to attract foreign corporations to invest and bring in technology in order to boost economic growth, which fell to 3% last year. They are concerned, though, about security regulations and attempts to establish competitors for worldwide providers of computer chips, commercial jetliners, and other technology.

Subsidies and market restrictions are frequently involved, which Washington and the European Union claim violate Beijing’s free-trade pledges.

Doing business in China has become more difficult for two-thirds of the 570 companies that responded to the European Chamber’s study, up from fewer than half before the outbreak. Three out of five respondents stated the corporate environment is “more political,” up from half the year before.

Western Nations Cutting Ties With Businesses

Companies are on edge after police raided the offices of two consulting firms, Bain & Co. and Capvision, as well as a due diligence firm, Mintz Group, without providing an explanation. Authorities have stated that corporations are required to follow the law, but have provided no evidence of alleged infractions.

Companies are also concerned by Beijing’s goal of national self-sufficiency. Xi’s government is pressuring businesses, hospitals, and other organisations to hire Chinese suppliers, even if it means increasing their expenses. Foreign firms are concerned about losing access to their home markets.

The government barred using components from Micron Technology Inc., the largest manufacturer of memory chips in the United States, in computers that handle sensitive information last month. It stated that Micron has undisclosed security issues but provided no further information.

According to the European Chamber poll, one out of every ten enterprises has relocated their investments away from China. Another one-fifth is deferring or considering moving investments. In the aviation and aerospace industries, one out of every five corporations has no plans to invest in China in the future.

Because of its large and developing consumer market, China has long been a popular investment destination, but corporations have complained about market access limitations, pressure to pass over technology, and other annoyances. Since Xi seized office in 2012, the ruling party has tightened control, pressuring international enterprises to grant the party board seats and a direct say in hiring and other decisions.

Moving Headquarters Out of China

The European Chamber of Commerce observed that it is not only foreign enterprises that are relocating: According to its survey, two out of five Chinese clients or suppliers are transferring investments out of the nation.

The British Chamber of Commerce in China, a separate organisation, warned last month that its members were waiting for “greater clarity” on anti-spying, data security, and other restrictions before making fresh investments.

The ruling party’s broadening of its concept of national security to include the economy, food, energy, and politics is the most concerning, according to Eskelund.

“What constitutes a state secret?” “Where does politics begin and the business world end?” Eskelund explained. This “creates uncertainty” about “where we can operate normally as businesses.”

According to the European Chamber poll, Singapore was the leading destination for companies shifting their Asian headquarters out of China, with 43% of enterprises moving, followed by Malaysia. Only 9% have visited or intend to visit Hong Kong.

Leaders, notably China’s top economic leader, Premier Li Qiang, have promised to improve operating conditions, but firms report little tangible changes.

“Our members are not really convinced that we are going to see tangible results,” Eskelund remarked.

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Google’s Search Dominance Is Unwinding, But Still Accounting 48% Search Revenue

Google

Google is so closely associated with its key product that its name is a verb that signifies “search.” However, Google’s dominance in that sector is dwindling.

According to eMarketer, Google will lose control of the US search industry for the first time in decades next year.

Google will remain the dominant search player, accounting for 48% of American search advertising revenue. And, remarkably, Google is still increasing its sales in the field, despite being the dominating player in search since the early days of the George W. Bush administration. However, Amazon is growing at a quicker rate.

google

Google’s Search Dominance Is Unwinding

Amazon will hold over a quarter of US search ad dollars next year, rising to 27% by 2026, while Google will fall even more, according to eMarketer.

The Wall Street Journal was first to report on the forecast.

Lest you think you’ll have to switch to Bing or Yahoo, this isn’t the end of Google or anything really near.

Google is the fourth-most valued public firm in the world. Its market worth is $2.1 trillion, trailing just Apple, Microsoft, and the AI chip darling Nvidia. It also maintains its dominance in other industries, such as display advertisements, where it dominates alongside Facebook’s parent firm Meta, and video ads on YouTube.

To put those “other” firms in context, each is worth more than Delta Air Lines’ total market value. So, yeah, Google is not going anywhere.

Nonetheless, Google faces numerous dangers to its operations, particularly from antitrust regulators.

On Monday, a federal judge in San Francisco ruled that Google must open up its Google Play Store to competitors, dealing a significant blow to the firm in its long-running battle with Fortnite creator Epic Games. Google announced that it would appeal the verdict.

In August, a federal judge ruled that Google has an illegal monopoly on search. That verdict could lead to the dissolution of the company’s search operation. Another antitrust lawsuit filed last month accuses Google of abusing its dominance in the online advertising business.

Meanwhile, European regulators have compelled Google to follow tough new standards, which have resulted in multiple $1 billion-plus fines.

google

Pixa Bay

Google’s Search Dominance Is Unwinding

On top of that, the marketplace is becoming more difficult on its own.

TikTok, the fastest-growing social network, is expanding into the search market. And Amazon has accomplished something few other digital titans have done to date: it has established a habit.

When you want to buy anything, you usually go to Amazon, not Google. Amazon then buys adverts to push companies’ products to the top of your search results, increasing sales and earning Amazon a greater portion of the revenue. According to eMarketer, it is expected to generate $27.8 billion in search revenue in the United States next year, trailing only Google’s $62.9 billion total.

And then there’s AI, the technology that (supposedly) will change everything.

Why search in stilted language for “kendall jenner why bad bunny breakup” or “police moving violation driver rights no stop sign” when you can just ask OpenAI’s ChatGPT, “What’s going on with Kendall Jenner and Bad Bunny?” in “I need help fighting a moving violation involving a stop sign that wasn’t visible.” Google is working on exactly this technology with its Gemini product, but its success is far from guaranteed, especially with Apple collaborating with OpenAI and other businesses rapidly joining the market.

A Google spokeswoman referred to a blog post from last week in which the company unveiled ads in its AI overviews (the AI-generated text that appears at the top of search results). It’s Google’s way of expressing its ability to profit on a changing marketplace while retaining its business, even as its consumers steadily transition to ask-and-answer AI and away from search.

google

Google has long used a single catchphrase to defend itself against opponents who claim it is a monopoly abusing its power: competition is only a click away. Until recently, that seemed comically obtuse. Really? We are going to switch to Bing? Or Duck Duck Go? Give me a break.

But today, it feels more like reality.

Google is in no danger of disappearing. However, every highly dominating company faces some type of reckoning over time. GE, a Dow mainstay for more than a century, was broken up last year and is now a shell of its previous dominance. Sears declared bankruptcy in 2022 and is virtually out of business. US Steel, long the foundation of American manufacturing, is attempting to sell itself to a Japanese corporation.

Could we remember Google in the same way that we remember Yahoo or Ask Jeeves in decades? These next few years could be significant.

SOURCE | CNN

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2024 | Supreme Court Won’t Hear Appeal From Elon Musk’s X Platform Over Warrant In Trump Case

trump

Washington — Trump Media,  The Supreme Court announced Monday that it will not hear an appeal from social media platform X about a search warrant acquired by prosecutors in the election meddling case against former President Donald Trump.

The justices did not explain their rationale, and there were no recorded dissents.

The firm, which was known as Twitter before being purchased by billionaire Elon Musk, claims a nondisclosure order that prevented it from informing Trump about the warrant obtained by special counsel Jack Smith’s team violated its First Amendment rights.

The business also claims Trump should have had an opportunity to exercise executive privilege. If not reined in, the government may employ similar tactics to intercept additional privileged communications, their lawyers contended.

trump

Supreme Court Won’t Hear Appeal From Elon Musk’s X Platform Over Warrant In Trump Case

Two neutral electronic privacy groups also joined in, urging the high court to hear the case on First Amendment grounds.

Prosecutors, however, claim that the corporation never shown that Trump utilized the account for official purposes, therefore executive privilege is not a problem. A lower court also determined that informing Trump could have compromised the current probe.

trump

Trump utilized his Twitter account in the weeks preceding up to his supporters’ attack on the Capitol on January 6, 2021, to spread false assertions about the election, which prosecutors claim were intended to create doubt in the democratic process.

The indictment describes how Trump used his Twitter account to encourage his followers to travel to Washington on Jan. 6, pressuring Vice President Mike Pence to reject the certification, and falsely claiming that the Capitol crowd, which battered police officers and destroyed glass, was peaceful.

musk trump

Supreme Court Won’t Hear Appeal From Elon Musk’s X Platform Over Warrant In Trump Case

That case is now moving forward following the Supreme Court’s verdict in July, which granted Trump full immunity from criminal prosecution as a former president.

The warrant arrived at Twitter amid quick changes implemented by Musk, who bought the company in 2022 and has since cut off most of its workforce, including those dedicated to combating disinformation and hate speech.

He also welcomed back a vast list of previously banned users, including Trump, and endorsed him for the 2024 presidential election.

SOURCE | AP

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The Supreme Court Turns Down Biden’s Government Appeal in a Texas Emergency Abortion Matter.

Supreme Court

(VOR News) – A ruling that prohibits emergency abortions that contravene the Supreme Court law in the state of Texas, which has one of the most stringent abortion restrictions in the country, has been upheld by the Supreme Court of the United States. The United States Supreme Court upheld this decision.

The justices did not provide any specifics regarding the underlying reasons for their decision to uphold an order from a lower court that declared hospitals cannot be legally obligated to administer abortions if doing so would violate the law in the state of Texas.

Institutions are not required to perform abortions, as stipulated in the decree. The common populace did not investigate any opposing viewpoints. The decision was made just weeks before a presidential election that brought abortion to the forefront of the political agenda.

This decision follows the 2022 Supreme Court ruling that ended abortion nationwide.

In response to a request from the administration of Vice President Joe Biden to overturn the lower court’s decision, the justices expressed their disapproval.

The government contends that hospitals are obligated to perform abortions in compliance with federal legislation when the health or life of an expectant patient is in an exceedingly precarious condition.

This is the case in regions where the procedure is prohibited. The difficulty hospitals in Texas and other states are experiencing in determining whether or not routine care could be in violation of stringent state laws that prohibit abortion has resulted in an increase in the number of complaints concerning pregnant women who are experiencing medical distress being turned away from emergency rooms.

The administration cited the Supreme Court’s ruling in a case that bore a striking resemblance to the one that was presented to it in Idaho at the beginning of the year. The justices took a limited decision in that case to allow the continuation of emergency abortions without interruption while a lawsuit was still being heard.

In contrast, Texas has been a vocal proponent of the injunction’s continued enforcement. Texas has argued that its circumstances are distinct from those of Idaho, as the state does have an exemption for situations that pose a significant hazard to the health of an expectant patient.

According to the state, the discrepancy is the result of this exemption. The state of Idaho had a provision that safeguarded a woman’s life when the issue was first broached; however, it did not include protection for her health.

Certified medical practitioners are not obligated to wait until a woman’s life is in imminent peril before they are legally permitted to perform an abortion, as determined by the state supreme court.

The state of Texas highlighted this to the Supreme Court.

Nevertheless, medical professionals have criticized the Texas statute as being perilously ambiguous, and a medical board has declined to provide a list of all the disorders that are eligible for an exception. Furthermore, the statute has been criticized for its hazardous ambiguity.

For an extended period, termination of pregnancies has been a standard procedure in medical treatment for individuals who have been experiencing significant issues. It is implemented in this manner to prevent catastrophic outcomes, such as sepsis, organ failure, and other severe scenarios.

Nevertheless, medical professionals and hospitals in Texas and other states with strict abortion laws have noted that it is uncertain whether or not these terminations could be in violation of abortion prohibitions that include the possibility of a prison sentence. This is the case in regions where abortion prohibitions are exceedingly restrictive.

Following the Supreme Court’s decision to overturn Roe v. Wade, which resulted in restrictions on the rights of women to have abortions in several Republican-ruled states, the Texas case was revisited in 2022.

As per the orders that were disclosed by the administration of Vice President Joe Biden, hospitals are still required to provide abortions in cases that are classified as dire emergency.

As stipulated in a piece of health care legislation, the majority of hospitals are obligated to provide medical assistance to patients who are experiencing medical distress. This is in accordance with the law.

The state of Texas maintained that hospitals should not be obligated to provide abortions throughout the litigation, as doing so would violate the state’s constitutional prohibition on abortions. In its January judgment, the 5th United States Circuit Court of Appeals concurred with the state and acknowledged that the administration had exceeded its authority.

SOURCE: AP

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Scientists Awarded MicroRNA The Nobel Prize in Medicine.

US Inflation will Comfort a Fed Focused on Labor Markets.

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