From energy to drinking water, China has lots to fix in its economy - CNN | Canada News Media
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From energy to drinking water, China has lots to fix in its economy – CNN

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Hong Kong (CNN Business)China has unveiled 19 new measures to shore up its economy and “secure drinking water” supply as the country continues to struggle with its worst heatwave in 60 years and rigid Covld lockdowns.

The new measures announced by China’s cabinet on Wednesday amount to more than 1 trillion yuan ($146 billion) in funding to improve infrastructure, ease power shortages, and tackle drought, including money to secure rice production.
“The current economic recovery has a weak foundation,” the statement said, adding that the new funding was aimed at stabilizing the economy. Premier Li Keqiang hosted the cabinet meeting.
Beijing has tried to boost investment and consumption in the world’s second largest economy more than once this year. In May, the government announced 33 measures to revive growth.
Despite these interventions, the Chinese economy has deteriorated in recent months because of Covid lockdowns and a deepening property downturn. Analysts are also concerned about the impact China’s record-breaking heatwave and drought will have on growth. Already, several international businesses, including Tesla (TSLA) and Toyota (TM), have faced disruption at factories due to power outages.
Several major investment banks, including Goldman Sachs and Nomura, downgraded China’s economic growth forecasts for 2022 to 3% or under, as the heatwave hit industrial heartlands. This is way below 5.5% growth target that the Chinese government had set earlier this year.
China’s biggest focus remains infrastructure growth.
With the central bank’s support, state development banks can lend out $44 billion to finance infrastructure projects, the statement said. That’s on top of $161 billion already committed in June.
Local governments will also be permitted to issue $73 billion in debt to fund the building of roads, railways, airports, affordable housing and energy projects. That’s in addition to 3.5 trillion yuan ($511 billion) of bonds they were given permission to issue for the same purposes earlier this year.
Li also urged all government departments to “do a better job” in battling the drought and mitigating its impacts. He called for more wells to be drilled, and more drought-resistant water sources to be developed, in addition to seeding clouds, which China resorted to earlier this month to bring more rainfall to the Yangtze River.
“Priority should be given to ensuring people’s drinking water, and to transport and deliver the water when necessary,” Li added.
The central government will also take 10 billion yuan ($1.5 billion) out of its reserve fund for drought relief, focusing on securing rice production during the key mid-season harvest for rice in the southern region.
“[We should] do everything possible to ensure agricultural irrigation water and help farmers fight the drought and protect their autumn crops,” Li said.
The government will support research into measures to promote a “bumper harvest” for late-season rice in the fall, he added.
Analysts weren’t optimistic about the impact of the new economic stimulus on the economy.
“These measures could help offset the sharp contraction in government revenue and support infrastructure investment growth to some degree in coming months,” said Goldman Sachs analysts in a note late Wednesday.
But they still expect overall growth to remain sluggish during the rest of this year, “barring major policy easing measures,” as a “very weak” property sector and headwinds from Covid lockdowns will continue to drag on the economy.
Trouble in the property sector — which accounts for as much as 30% of China’s GDP and was already suffering from a prolonged cash crunch — is exerting significant pressure.
The crisis has snowballed since sprawling developer Evergrande defaulted on its debt last year. Property prices have been falling, as have sales of new homes. Angry homebuyers across the country have threatened to stop paying their mortgages on unfinished homes, jolting markets and prompting businesses and authorities to take action to defuse the crisis.
Nomura analysts said the new stimulus measures wouldn’t be a “game changer.”
“The zero Covid policy continues consuming a large amount of local governments’ fiscal resources,” they said, adding that he property sector is “still in deep trouble.”

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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.

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September merchandise trade deficit narrows to $1.3 billion: Statistics Canada

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OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.

The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.

Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.

Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.

Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.

In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.

This report by The Canadian Press was first published Nov. 5, 2024.

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