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China's economy grew 6% in fourth quarter as demand stabilized – BNNBloomberg.ca

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China’s economy stabilized last quarter after slowing to the weakest pace in almost three decades, with the first acceleration in investment since June signaling that a firmer recovery could be underway.

  • Gross domestic product rose 6 per cent in the final quarter of 2019 from a year earlier, the same as in the previous three-month period and the median estimate
  • Fixed-asset investment rose 5.4 per cent in the year, increasing its pace in the final month particularly through a jump in manufacturing expenditure

The world’s second-largest economy expanded by 6.1 per cent in 2019, slower than 6.6 per cent the previous year but in line with the government’s target. The signing of the phase-one trade deal with the U.S. this week combined with recovering global demand has improved the outlook for Chinese factories and exporters in 2020, though uncertain implementation of that deal and domestic financial fragility remain risks.

Chinese stocks inched higher and the offshore yuan gained, trading at US$6.8715 at 10:48 a.m. in Shanghai.

Industrial output rose 6.9 per cent in December from the same period the previous year, versus the median forecast of 5.9 per cent. Some of that may be due to the effects of Chinese New Year. That holiday is earlier this year than in 2019, and companies may have increased production in December ahead of a shutdown later this month. Retail sales rose eight per cent versus an estimate of 7.9 per cent.

“The latest GDP and IP data provides a very positive start to the Chinese New Year for China’s economy,” said Rajiv Biswas, Asia Pacific chief economist at IHS Markit in Singapore. “The outlook for 2020 is for continued robust growth, boosted by the Phase One trade deal with the U.S. and the continued positive impact of government monetary and fiscal policy stimulus measures.”

The surveyed unemployment rate ticked up to 5.2 per cent in December from 5.1 per cent, signaling that the manufacturing-led slowdown in 2019 may be filtering through to the labor market.

What Bloomberg’s Economists Say…

Stronger-than-expected activity in December points to further stabilization in early 2020. The signing of the ‘phase-one’ trade deal takes China out of the most turbulent waters, but it will hardly be smooth sailing ahead — sizable U.S. tariffs will continue to weigh on the external sector, and sentiment is weak.

Chang Shu and David Qu, Bloomberg Economics

About 58 per cent of China’s growth in 2019 was due to consumption, with investment adding 31 per cent and the remaining 11 per cent from net exports, Statistics Bureau head Ning Jizhe told journalists after the data was released Friday in Beijing. That contribution of consumption was lower than in 2018, indicating that efforts to rebalance the economy away from reliance on an investment-led model still have a way to go.

One factor in that is likely to be the weak growth in incomes in 2019. Per capita incomes grew 5.8 per cent in the year, below the 6 per cent real growth of the economy. The slower growth in real incomes was partly due to higher inflation, according to Ning, who said he expects personal income and consumption to continue growing this year.

Long-Run Uncertainty

Policy makers have signaled they are prioritizing economic stability in 2020, with stimulus to be kept basically unchanged. Data released Thursday showed that overall credit growth held up in December and a gauge of borrowing costs fell, indicating that policy makers are beginning to see some progress in channeling credit to the economy.

“All we can say is that China’s economy is stabilizing. It’s hard to forecast if the trend will continue in 2020 and if there will be a rebound,” said Betty Wang, senior economist at Australia &New Zealand Banking Group. “The trade deal provided some short-term support for the economy, but there still exists great uncertainty in the long run.”

The number of births per 1000 people declined to 10.48, the lowest level on record according to National Bureau of Statistics data going back to 1949 when the Communist Party took power. China’s working-age population — thoseaged 15 to 59 — declined by 890,000, the figures released Friday showed. The number of newborns in 2019 fell to 14.65 million, a decrease of 580,000 from the year before.

That underlines the longer-term challenges that the economy faces, from demographics to an increasingly heavy debt load. Policy settings agreed by the top leadership last month are due to be signed off by the nation’s legislature in March.

For now, officials remain wary of boosting monetary stimulus and are focusing on the effectiveness of fiscal policy. Economists see the growth target for 2020 being set at “about 6 per cent,” signaling an acceptance of the long-term slowdown that the nation is on.

December’s data provides support to the argument that the current policy mix is the right one, according to Michelle Lam, greater China economist at Societe Generale SA in Hong Kong.

“Retail sales growth were steady, indicating still pretty resilient consumers despite growing downward pressure on the labor market,” she said. “This, together with the “phase one” deal, surely reduces the downside risks to the economy for 2020, offering comfort to policy-makers to stick with a measured easing approach.”

–With assistance from Tomoko Sato, Lin Zhu and Kevin Hamlin.

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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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