Chinese leaders under pressure over economy

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As China’s leaders gather for their five-yearly policy plenary session, warning signs are emerging about the country’s stagnating economic growth and its impact on the country’s people, increasing pressure on policymakers to intervene.

New GDP data released this morning showed that growth slowed to a weaker-than-expected 4.7% in the second quarter as the world’s second-largest economy struggles with weak consumer demand and a prolonged slump in the property market.

Separate data released on Friday showed exports were growing at the highest rate in more than a year even as the U.S. and European trading partners responded to an influx of cheap Chinese goods by tightening trade restrictions.The latest move came last week when Washington imposed additional tariffs on Chinese steel exports passing through Mexico, an attempt by the Biden administration to solidify support for the former industrial heartland ahead of the November presidential election.

However, the gains from exports were offset by weak domestic demand, a trend underscored by inflation data last week.

Meanwhile, as we report in a new Big Lead, social tensions are becoming apparent. Authorities are increasingly concerned about rising unemployment, mental illness and crime linked to the economic slowdown. Protests are erupting over unpaid wages in the real estate and construction sectors, job cuts in the service sector affected by e-commerce, and wage cuts in the gig economy.

Some hope the five-day plenary session, which has been used in the past to signal economic direction shifts, such as Deng Xiaoping’s push for “reform and opening up” after Mao Zedong, may produce major policy interventions.

Policy makers, at least so far, have downplayed the possibility of any “strong medicine” but some are hoping the central bank will intervene of a different kind as it grows concerned about a bubble forming in the country’s bond market.

“The mood in China is gloomy,” writes economist Eswar Prasad. The government appears to have clear goals, he says, including reallocating resources toward services and more productive manufacturing, moving away from real estate as the main driver of growth and boosting household consumption.

He added that the government now needs to “articulate a concrete plan to achieve these goals, provide an upfront payment with concrete reform measures and smooth the process with targeted stimulus packages.”

What you need to know about the UK and European economies

The British government on Wednesday AI Bill The bill, which was put on the agenda for the first parliamentary term in a King’s Speech, focuses on the creation of large-scale language models, the technology that underpins products such as OpenAI’s ChatGPT, and seeks to strengthen legal safeguards.

UK house builders He warned that it would be at least a year before housing supply began to increase, highlighting the scale of the challenge facing the Government’s mission to “get Britain building more houses”.

British investment boss They have called on the government to reform the UK savings market to steer money into domestic shares, which have been hit by record investor outflows. They want a “radical” simplification of the personal savings account market and tax cuts on UK shares.

Net migration is the largest in a year Population growth Births in England and Wales fell to their lowest level in 20 years last year, the lowest in 75 years, highlighting the demographic pressures facing the new government. In the year to mid-2023, births are expected to rise by around 610,000 to 60.9 million.

European Central Bank Policymakers are worried that increased government spending in countries such as France could halt inflation’s fall and are determined not to over-promise further rate cuts. The ECB’s next decision is on Thursday, but no rate cuts are expected until after September. France’s national auditor expressed concern today about the country’s debt mountain.

As Russia State orders to arm, fuel, feed and clothe the military for a long war in Ukraine are pumping huge amounts of money into the economy, which is expected to grow 3% this year. The country’s Rust Belt regions are directly benefiting from the switch to military supplies.

What you need to know about the world economy

The latest FT-Michigan Ross Poll: Donald TrumpWhen it comes to the economy, Trump has an edge over Joe Biden: 45% of voters (and 40% of independents) say they would be “a lot” or “somewhat” better off under Trump, while only 35% say they would be “a lot” or “somewhat” worse off.

Have we reached our limits? Financial policy? Soumaya Keynes speaks with Hyun Song Shin, head of research at the Bank for International Settlements, on the Economics Show podcast.

Need to know: Business

Bitcoin Cryptocurrencies surged after the assassination attempt on Donald Trump as investors speculated about his possible victory in November’s presidential election, where he is seen as a pro-crypto candidate. Shares of major U.S. firearms manufacturers also soared.

Wall Street’s second-quarter earnings season continues. Goldman Sachs Assets under management more than doubled to $3 billion as trading recovered, Black Rock It hit a record high of $10.6 trillion.

Fashion Group Burberry The company has replaced its CEO and warned that full-year profits will fall short of expectations as it struggles to recover in the face of a broader luxury-goods downturn.

Europe Cannabis companies It plans to go public in the United States to take advantage of federal proposals to reclassify marijuana as a less dangerous drug, as well as decriminalization in Germany.

South Korean tech giant Samsung Electronics is in crisis, with unprecedented worker unrest threatening to undermine its AI ambitions and steal disillusioned engineers from domestic rival SK Hynix.

The world of work

Minority Lawyer A new study has found that lawyers at major US law firms are being used as “front runners” for initial client meetings and then excluded from subsequent work.

British ministers are pushing ahead with reforms Employment agency It is trying to address the problem of huge numbers of workers dropping out of the labour market and should focus on careers advice rather than oversight of the welfare system.

I despair when I think it will be over in half a day.Team BondingHave you ever been to The Session? How about being locked in a dark space with only a strip of light for 378 days with three coworkers? This was an “extreme corrugating” experiment conducted by astronauts to simulate life on Mars.

Good News

I feel guilty for watching too much football Have you watched any sports in the past month? Don’t worry: studies have shown that people who watch sports, whether in person or on TV, feel happier than those who don’t — as long as they share the experience with others.