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China's Rebounding Economy Now Hinges on Global Recovery – BNN

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(Bloomberg) —

China’s economic recovery is vulnerable to losing momentum as key trading partners from Japan to the U.S. struggle with resurgences of the deadly coronavirus and resort to fresh measures to control its spread.

While the world’s second-largest economy returned to growth in the second quarter amid relative success in containing the virus, much of that momentum relied on state-driven industry as consumers remain cautious.

“The Covid-19 situation continues to deteriorate in parts of the world,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Plc. “This may weaken demand for China’s goods and services and is a main risk facing China’s economy.”

Officials nodded at the global risks after a slew of data Thursday showed a steady but uneven recovery.

Gross domestic product expanded 3.2% in the three months to June from a year ago, reversing a 6.8% decline in the first quarter and beating the median forecast of 2.4%. Output in the first half was still down 1.6% on the same period in 2019.

In an indication of the mixed recovery, industrial output rose 4.8% in June from a year earlier — matching estimates — yet retail sales shrank 1.8%, much weaker than a projected 0.5% increase. At the same time fixed-asset investment shrank 3.1% in the first half of the year, versus a forecast drop of 3.3%.

Liu Aihua, spokeswoman for the National Bureau of Statistics in Beijing, told reporters that the continued spread of the virus globally will remain a key constraint on any domestic recovery.

“It is difficult to restart the world economy and trade,” she said, adding that “the recovery of domestic demand is restricted to a certain extent currently.”

To be sure, exports and imports both rose in June, signaling a firmer footing at home and abroad and which some analysts say points to an improving picture still to come.

“I think the economic recovery in China will continue in the next few quarters, even when export growth is facing some headwinds.” said Bo Zhuang, chief China economist at research firm TS Lombard.

Still, data on global growth continues to disappoint. The U.K. economy’s 1.8% expansion in May was much weaker than expected. While a ZEW gauge of current conditions in Germany improved in July, confidence for the next six months slipped. The Bank of Japan warned that the economy remains in an “extremely severe situation.”

Hopes for containing the virus are being strained as infections continue to spread around the world, including places like Australia and Hong Kong where it had been brought under control, pushing global cases above the 13.5 million mark.

Australia’s second most populous state — Victoria — recorded its biggest spike in coronavirus cases Thursday, a week after it was placed into partial lockdown as it’s gripped by a second wave of infections.

New Lockdowns

The virus continues to flare across the U.S., with Texas reporting a record Covid-19 deaths and almost 11,000 new cases, and California seeing near-record surges.

None of which bodes especially well for China, which needs export growth to return to a sustainable expansion.

Private and external demand are the two biggest sources of uncertainty for the second half of the year.

Private companies cut back on investment in the first six months while spending by state-owned firms saw a big jump in June, rising 2.1% in the first six months after falling 1.9% through May. Manufacturing investment was down almost 12%.

A drop in the surveyed jobless rate drew caution that the reading doesn’t capture the full labor market and that tens of millions may still be out of work due to the pandemic.

What Bloomberg’s Economists Say

China’s economy bounced back strongly in 2Q – but now the challenge will be to sustain the recovery. “Continued momentum in June production bodes well for growth in 2H. But weak consumer spending remains a serious, persistent drag.”

— Chang Shu and David Qu

See full note here

Simmering geopolitical tensions with the U.S. are another risk to both China’s exports and manufacturing investment, while the risk of a second wave of the virus cannot be ruled out.

“A bumpy and uneven reopening in other countries implies weaker external demand, which will likely become a drag on industrial activity growth in China,” said Helen Qiao, chief Greater China economist at Bank of America.

©2020 Bloomberg L.P.

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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)

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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)

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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.

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