COVID Restrictions Lifted, China's Businesspeople Hit the Road to Revive Export Economy | Canada News Media
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COVID Restrictions Lifted, China’s Businesspeople Hit the Road to Revive Export Economy

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Yiwu, a city in China’s Zhejiang province, produces more than half the world’s Christmas ornaments purchased by the billions of people who celebrate the holiday.

China’s “zero-COVID” policy, coupled with global pandemic fears, dulled the local export-fueled year-round glitterfest. Christmas orders fell by 50% in 2020, according to the official Global Times with raw material costs and labor shortages hindering a recovery in 2021, which saw only a 10% to 20% increase in sales over the previous year.

Then, faster than elves could hitch those nine reindeer to Santa’s sleigh, a day after Beijing began lifting zero-COVID restrictions on December 3, a Zhejiang trade delegation departed for Germany and France to launch the “Thousand Missions and Ten Thousand Enterprises to Expand the Market and Grab Orders Action.” The goal: Sell enough stuff to help spark China’s economy back to pre-pandemic growth.

They hit a snag. “It seems like the Europeans’ and Americans’ purchasing power is so weak now. If the markets there are weak, China’s economy is definitely suffering too,” said Steven Gao, a businessman in Zhejiang province who exports Christmas ornaments and other trinkets to Europe and the U.S.

Beyond pandemic aftereffects such as not-yet-normal supply chains, Gao blames the bleak economic prospect on President Xi Jinping’s recent policies, particularly his focus on “common prosperity” during the 20th party congress, which met in October in Beijing and gave him a third term. The phrase refers to an official effort to address income inequality, a push often linked to personal wealth accumulated by founders and executives in sectors such as tech.

“Many of my rich friends are thinking about moving to other countries,” said Gao, 45, who asked to use a pseudonym to avoid attracting official attention when he spoke with VOA Mandarin on Tuesday. “They are afraid their wealth will be seized. This lack of faith, combined with pandemic control, led to the slide of economic growth.”

According to a CNBC report on December 4, U.S. manufacturing orders in China are down 40%, according to the latest CNBC Supply Chain Heat Map data, and Chinese factories are expected to shut down two weeks earlier than usual for the Lunar New Year that falls on January 22, 2023.

When Xi presided over a December 6 meeting of the Politburo of the Communist Party, China’s second-highest decision-making body, he emphasized the need to stabilize the economy and to attract foreign investment.

After the gathering, the official Securities Times reported on December 7 that the Suzhou Bureau of Commerce planned to charter flights to France and Germany after a “successful trip” to Japan returned with guaranteed orders worth more than 1 billion yuan, or $142 million.

A similar flight organized by the Suzhou province government took off for Europe on December 9. “Racing against time, grabbing more orders and opportunities … these are the most crucial tasks the Chinese companies took on when boarding the plane,” editorialized the official Global Times news outlet which pointed out “Yiwu… has been the starting point of numerous international trade channels linking the entire world.”

Alibaba, China’s biggest e-commerce platform, recently launched a special operation code-named “Digital Hybrid Trade Show” to start at least 100 overseas exhibitions in the near future, Securities Times reported on December 12. The exhibitions cover more than 10 important foreign trade target markets, including the United States, Germany, Britain, Japan, Singapore and Australia.

Some analysts, however, believe that China’s response to the pandemic may have made it less attractive to foreign businesses for manufacturing and investing.

The state news agency Xinhua reported that those in the December 6 meeting stressed that stability is Beijing’s top priority in an international economic environment marked by “high winds and waves.”

Zhao Chunshan, chief adviser of the Asia-Pacific Peace Research Foundation, a private think tank in Taiwan, told VOA Mandarin that “Capitalists are running away. No one dares to invest, causing economic instability. If there is a problem in the economy there is no way to stabilize.”

Zhao says that local governments with high debt loads must look outside China rather than to the central government for stability.

“China’s central government has no way to solve local debts,” he said. “The central government’s allocation alone is not enough. They have to attract foreign investment and business on their own. To some extent, the central government also gives localities such authority.”

In an interview with VOA Mandarin, Lai Rongwei, an assistant professor at the Center for Liberal Studies at Taiwan’s Longhua University of Science and Technology, said the fact that provinces and cities are scrambling to form groups to go abroad reflects the fears of local officials.

“China’s measures to seal off cities have led to a severe shortage of supplies, including medicine,” Lai said. “The debt of local governments is already huge, and the lack of revenue in the past years has made the situation even worse. People actively going abroad shows a great deal of panic, fearing that the economic downturn can’t be alleviated, and the risks are becoming bigger.”

But Lai said that after the pandemic lockdowns, China is no longer as attractive to foreign investors as it used to be.

“Foreign investors must take into account the cost of investment,” Lai said. “Cities could be shut down and power cut off any time when there’s an order from higher authorities. … Private enterprises find it hard to survive, and now the governments are looking for solutions from foreign investors.”

Bo Gu contributed to this report.

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Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.

Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.

Business, building and support services saw the largest gain in employment.

Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.

Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.

Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.

Friday’s report also shed some light on the financial health of households.

According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.

That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.

People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.

That compares with just under a quarter of those living in an owned home by a household member.

Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.

That compares with about three in 10 more established immigrants and one in four of people born in Canada.

This report by The Canadian Press was first published Nov. 8, 2024.

The Canadian Press. All rights reserved.

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Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

The Canadian Press. All rights reserved.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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