EU firms in China forced to focus on risks over business, lobby group says - Al Jazeera English | Canada News Media
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EU firms in China forced to focus on risks over business, lobby group says – Al Jazeera English

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European companies in China are overly focused on risk management amid a less predictable and more politicised business environment in the world’s second largest economy, a business lobby group has warned.

The European Union Chamber of Commerce in China said on Wednesday that about three-quarters of respondents to a survey of its 1,700 members had reviewed their supply chains and exposure in China over the past two years amid a “general sentiment of uncertainty”.

Some 21 percent of respondents said they planned to expand their production in China, while another 12 percent planned to reduce it, the chamber said.

Only 1 percent said they planned to move production out of China entirely, according to the survey.

The findings come “at a time when the global business environment is becoming increasingly politicised, and companies are having to make some very tough decisions about how, or in some cases if, they can continue to engage with the Chinese market,” the lobby group said in a report accompanying the survey.

China’s market has become “less predictable, reliable and efficient”, while companies’ focus has become “skewed disproportionately towards risk management and building resilience”, the report said.

Foreign companies in China have faced a series of challenges in recent years, including slowing economic growth, ultra-strict COVID restrictions, US-China geopolitical tensions, and national security crackdowns.

While Beijing has sought to assure businesses that the country is open for business after the pandemic, authorities have carried out high-profile raids on foreign consulting firms, strengthened anti-espionage and state secrets laws, and restricted cross-border data sharing.

Tensions with Europe have also spiked since the EU Commission in September opened a probe into whether Chinese state-subsidised electric vehicle imports are undercutting European competitors.

In the EU Chamber of Commerce survey, some 55 percent of respondents said that the business climate in China was “more political over the past year”, leading firms to increase their focus on “de-risking” their operations there.

“At the corporate level, the volume, complexity and severity of the risks companies face have grown exponentially in recent years, as politics has seeped into the business environment,” the report said.

Despite these concerns, Jens Eskelund, president of the chamber, urged European companies to reevaluate overly cautious behaviour to avoid stifling future growth and innovation.

“While it is natural that all global actors will seek to ensure the security of their respective economies, it should be done in a way that is minimally disruptive to business,” Eskelund said.

“Actions taken in the name of risk management and strengthening economic security should be proportionate, targeted and precise and should never become a cover for protectionism.”

Foreign direct investment into China sank to a 30-year low in 2023, with new investment falling to $33bn, 82 percent less than the previous year, according to government data.

China’s State Council this week announced a new action plan to promote foreign investment, focusing on key industries such as advanced chips and biopharmaceuticals.

The State Council also promised to address practices that discriminated against foreign companies, a longstanding complaint in the foreign business community.

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Economy

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.

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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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