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China's economy had a surprisingly good start to the year, but it may not last – CNN

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Hong Kong (CNN Business)China’s economy started the year on a bright note, with several major indicators beating forecasts. But as Covid cases in the country spike, keeping up the same pace of growth in the coming months may prove difficult.

Retail sales rose 6.7% in the first two months of 2022 compared to a year ago, according to data released by the National Bureau of Statistics (NBS) on Tuesday. That was well above the estimated 3% increase in a Reuters poll of economists.
Industrial production jumped 7.5% during the same period, surpassing the forecast of 3.9%. And investment in fixed assets, such as infrastructure and machinery, jumped 12.2% from a year earlier.
“Under the combined effect of macro policies and the efforts of businesses, the momentum of China’s economic recovery has improved in January and February, laying a solid foundation for a good start in the first quarter of this year,” said Fu Linghui, a spokesperson for the NBS, at a press conference in Beijing on Tuesday.
On the policy front, China has significantly boosted its spending on infrastructure, with many local governments kicking off big projects in areas such as electric mobility and semiconductors, Fu added.
Tuesday’s data showed that investment in manufacturing surged 21% during January and February from a year ago, much faster than the 13.5% year-on-year growth recorded in the same period in 2021.
This is not the first time this year that Chinese authorities have underscored the importance of infrastructure expenditure. Earlier this month, Chinese Premier Li Keqiang said the government would ramp up fiscal and monetary support for the economy this year, including spending more on infrastructure and conducting more interest rate cuts.
The government has increased the broad fiscal deficit this year, implying growth in infrastructure investment, wrote Larry Hu, chief economist for Greater China at Macquarie Group, in a report on Tuesday.
However, experts warn that there are multiple challenges on the horizon, including Covid and the war in Ukraine.

The worst Covid-19 surge in two years

China is fighting its worst Covid surge since the original outbreak in Wuhan in early 2020.
“With officials ditching targeted containment measures in favor of wholesale lockdowns, this has the potential to be even more disruptive than the Delta wave last Summer, which led to a sharp contraction in economic output,” wrote Julian Evans-Pritchard, senior China economist for Capital Economics, on Tuesday.
Even the government acknowledges that new Covid outbreaks could weigh on the economy in the coming months.
“The recent spread of the coronavirus in many parts of the country may restrict consumption further, and the foundation of the consumption is still not strong,” Fu said. “Sporadic outbreaks in some regions will also affect industrial growth.”
China reported 5,154 locally transmitted cases on Monday, the highest number in two years, according to the National Health Commission (NHC).
To contain the spread of the virus, authorities have taken strict measures in multiple cities and placed tens of millions of people under various forms of lockdowns.
The southern city of Shenzhen, which borders Hong Kong, has imposed a week-long lockdown since Monday. All businesses — apart from those deemed essential or engaged in supplying Hong Kong — have suspended operations or have implemented work-from-home policies. The city is home to Chinese tech giants Huawei and Tencent.
Apart from Shenzhen, local authorities in the northeastern province of Jilin have banned residents from leaving or traveling since Monday. The province, with 24 million people, is home to the industrial hub of Changchun, where Toyota (TM) and Volkswagen (VLKAF) run their car factories in partnership with state-owned car maker FAW Group.
Shanghai, the country’s largest business center, has also imposed stringent measures after a spike in Covid cases, closing schools and cinemas and restricting travel into the city.
“Indeed, Covid-19 is the biggest uncertainty this year,” Hu from Macquarie Group said.
He predicts that China will grow at 4% in the current quarter. For 2022, he expects the world’s second largest economy to grow at 5%, lower than the government’s target.
Earlier this month, Premier Li set China’s economic growth target at around 5.5% for 2022, the lowest official goal in decades.

Inflation pressure from the Ukraine crisis

China growth may be hit even further by the war in Ukraine.
Russia’s invasion of its neighbor is pushing up commodity prices and roiling the global economy, at a time when policymakers are already racing to get high inflation under control.
Fu from the NBS said the direct impact of the tensions in Europe on China is “limited,” as its trade exposure to Russia and Ukraine is “small.”
But he said the impact on global commodity prices is “obvious,” which could increase the pressure of “imported inflation” on China.
Several food and beverage companies in China have recently hiked prices of their products, including dairy giants Yili and Mengniu.
“The recent acceleration in commodity prices as a result of the Russia-Ukraine conflict has exacerbated the margin pressure on packaged food companies,” analysts from Morningstar wrote in a report on Tuesday. “Various food and beverage companies in China have engaged in price hikes since the third quarter last year to mitigate margin compression.”
China and Russia have forged close ties in recent years, and signed a number of commodities deals during Russian President Putin’s visit to Beijing last month. But Russia’s invasion of Ukraine has put their friendship to the test.
Beijing has not rushed to help Russia after the latter’s economy was slammed by sanctions from all over the world. The complicated messaging from Beijing suggests Chinese leaders are walking “a very difficult tightrope” on Ukraine, analysts say.

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Business

A timeline of events in the bread price-fixing scandal

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Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 250 points, U.S. stock markets also higher

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TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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