While China’s troubles might give Raimondo greater leverage to pursue better market access for American companies, she is also likely to face calls from Beijing to help stabilize its faltering economy by easing some of the pressure Washington has recently applied.
“In terms of Raimondo’s trip, Beijing’s principle objective will be securing a reprieve, however temporary, from the onslaught of US export controls and other restrictions being levied on China’s economy,” said Craig Singleton, senior fellow at the Foundation for Defense of Democracies, a non-partisan think tank based in Washington.
Raimondo will travel to Beijing and Shanghai from Sunday through Wednesday, and discuss the US-China commercial relationship, challenges faced by US businesses and areas for potential cooperation, according to the Commerce Department.
China’s growth forecasts for this year are being marked down as exports and foreign investment slump, a real estate crisis deepens and worries about its financial health spread. For Beijing, Raimondo plays a key role in a number of areas that have been the source of mounting friction between the world’s top two economies.
Gina Raimondo, US commerce secretary, speaks during the SelectUSA Investment Summit in National Harbor, Maryland, US, on Tuesday, May 2, 2023.
Ting Shen/Bloomberg/Getty Images
Her department helps set America’s global trade policy — a sticking point in US-China relations since the Trump administration increased tariffs on a range of Chinese goods.
The secretary is responsible for supporting American businesses abroad, and also administers a series of US export controls that are aimed at cutting China off from advanced technologies that could be for military use.
Whether the Biden administration is willing to ease up on Beijing remains to be seen, but an announcement that coincided with news of Raimondo’s visit suggests Washington is trying at least to create the conditions for a useful conversation.
A general top view of the skyline from Lujiazui and the Huangpu River in Shanghai, China is being captured on August 7, 2023.
Ying Tang/NurPhoto/Getty Images
China’s economy is in trouble. Here’s what’s gone wrong
The Commerce Department announced on Monday that it was removing 27 Chinese companies from US export controls. China’s Ministry of Commerce welcomed the decision, saying it was conducive to trade and reflected the interests of both sides.
“[This] may have helped grease the wheels for Raimondo’s trip,” Eurasia Group analysts said in a note this week. “It also suggests that the Biden administration is making modest but measurable progress with Beijing in reestablishing limited government-to-government communication and cooperation.”
Still a vital relationship
For the United States, a stable Chinese economy is also in its interest.
China remains the biggest source of imports into the US, and last year trade in goods between the two countries hit an all-time high of $690.6 billion. US imports from China totaled $536.8 billion, accounting for about 17% of its total imports. Exports to China were $154 billion, 7.5% of total US exports to the world.
American companies have huge manufacturing networks in China and rely on Chinese consumers.
Tesla, which opened a factory in Shanghai in 2018, now makes half of its electric cars in China. Apple still makes many of its iPhones there. Others consumer brands like Starbucks and Nike have a large customer base in China. Intel, Microsoft and General Motors derive a sizable portion of their revenues from the country.
China is also the No. 2 foreign creditor to the United States. It held $835.4 billion of US Treasuries at the end of June, according to most recent data from the US Treasury Department. That’s second to Japan’s official stash of $1.11 trillion.
Pain points
The key friction points in the vital relationship currently center on the US export controls and “de-risking” measures it has taken against China in the past year.
In October, the US government banned Chinese companies from buying advanced US chips and chip-making equipment without a license. The move strikes at the heart of Beijing’s tech ambitions. Washington has persuaded Europe and Japan to take similar measures.
That was followed earlier this month by President Biden signing an executive order that limits US investment in certain tech sectors of the Chinese economy, including AI and quantum computing.
China accused the US of “politicizing and weaponizing” tech and trade issues.
Then there are the long-standing trade curbs on the two countries imposed by each other.
A trade war erupted between the two countries in 2018, when President Donald Trump imposed additional tariffs on hundreds of billions of dollars worth of Chinese goods. China retaliated with tariffs on more than $100 billion worth of US imports.
Most of the tariffs still remain under the Biden administration. They are under review, but it’s still unclear whether the review will result in any tariffs being removed.
Ball in US court?
Raimondo might also express concern about Beijing’s recent crackdown on Western consulting firms, which has unnerved US businesses.
On Tuesday, China fined the Mintz Group, a New York-based corporate due diligence firm, about $1.5 million for allegedly conducting unapproved statistical work in the country. The fine came to light months after authorities closed the firm’s Beijing office and detained five of its local employees.
It’s just part of China’s broader crackdown on consulting firms in the name of national security.
In late April, Beijing tightened its counterespionage law and expanded the list of activities that could be considered spying. Around the same time, police questioned staff at the Shanghai offices of consulting giant Bain & Company.
A few weeks later, state media released details of multiple raids on the offices of Capvision, an international expert network firm with headquarters in Shanghai and New York, by state security forces.
“[Chinese President] Xi Jinping’s moves … indicate a willingness to face the risks associated with reduced integration with the Western-led global economy,” said Singleton, adding that he doesn’t expect US-China relations to “meaningfully improve” anytime soon.
But the Chinese leader’s current challenge is “striking a balance” between his willingness to risk relations with the US, and the West, and the Chinese Communist Party’s general aversion to instability in any form, Singleton said.
To avoid social instability, the Chinese leadership is likely to embrace piecemeal or sector-specific measures to partially alleviate economic pressures.
“Those efforts may include adopting a more conciliatory approach towards Washington on a narrow set of issues in which China stands to benefit,” he said.
And with that, the ball might be in Washington’s court.
— Kylie Atwood and Jeremy Diamond contributed to reporting.
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 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.
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.
