CM October 2023

China recovery sill plagued by COVID
A recent note from Deloitte, and comment
from the BBC, offers an interesting
perspective on China's post-COVID
recovery which has been plagued by
weak domestic demand as evidenced by
slowing consumer spending and a slump
in private investment.
Its zero-COVID rules placed the
population under draconian restrictions
but without the substantial financial
payment to affected households that
were made in the US and Europe.
With spending channelled towards
infrastructure spending and businesses,
Chinese households that had experienced
the fruits of decades of growth have been
exposed to job insecurity and a loss of
income, many for the first time.
New Middle East trade commissioner
THE Department for Business and Trade
has appointed a new trade commissioner,
Oliver Christian, to cover the Middle East
and Pakistan, albeit while a permanent
candidate can be found.
With a brief to ‘lead the UK’s overseas
effort to promote UK trade, investment,
trade policy and export finance’ and
‘generate business opportunities for the
UK while contributing to the growth of
VIETNAM SHOULD
BE AN EXPORT TARGET
‘VIETNAM’S economic moment has
arrived,’ says the Financial Times. The
economy was Asia’s fastest-growing
last year and is reportedly one of only a
handful globally to have managed two
consecutive years of growth since COVID.
From reports, Vietnam is benefitting
from multinationals who are looking to
diversify away from China. Such firms
include Dell, Google, and Apple who are
now manufacturing in Vietnam.
There are some concerns for the
country. Local shares fell by almost onethird
in 2022 caused by ‘overleveraged
real estate’ and ‘political shifts.’ Also, an
anti-corruption crackdown led to the
resignation of the country’s president
in January (the role is mostly that of a
figurehead).
And late in 2022 authorities clamped
down on land speculation and the
building of luxury properties; dozens
of property firms have missed bond
payments.
Regardless of the political
machinations, there’s still good business
to be done in Vietnam.
In the absence of Western-style support
for households, consumers have battened
down the hatches and are avoiding major
new commitments. The Chinese housing
market has weakened, there is higher
youth unemployment, now at over 21
percent, and unsurprisingly, consumers
have become more cautious and are
prioritising saving and paying off debts
over spending.
Caution is also being applied to the
corporate sector; Chinese factories
that expanded to meet surging western
demand in 2021 and 2022 are facing
flagging exports and domestic consumers
have not filled the gap, leaving some firms
with excess inventories which they have
tried to shift by cutting prices.
sustainable, resilient, and productive
economies across the region’ the
commissioner could be a man worth
getting to know.
While it’s not obvious how to make
contact with the commissioner, one route
is via the Department for Business and
Trade’s own website at https://tinyurl.com/
y82zv2zy. Another is via its Twitter, sorry X,
account on the same page.
UK TRADE
IN NUMBERS
THE Department for Business and Trade
has released updated trade data. Looking
at the top 30 export markets for UK
firms for both goods and services, some
destinations were to be expected while
others were more of a surprise.
For the four quarters to December 2022,
in pole position was the US including
Puerto Rico with trade valued at £168bn
(20.6 percent of exports). Germany
was next at £55.88bn (6.9 percent). The
Netherlands was third at £55.88bn (6.8
percent) and Ireland and France were
next with £54.65bn (6.7 percent) and
£43.27bn (5.3 percent) respectively.
All the other usual suspects in the
top 30 featured including China, Spain,
Canada, Japan, and Australia.
But bottom of the list, and still
noteworthy since the destinations are
still in the top thirty, are Qatar at £4.94bn
(0.6 percent), Cayman Islands £4.81bn (0.6
percent), Jersey £4.58bn (0.6 percent),
Gibraltar £4.56bn (0.6 percent), and
Nigeria £4.33bn (0.5 percent).
In total, exports to the top 30
destinations were worth £710.3bn.
EU TACKLES
‘SUBSTANDARD’ FOODS
NILS Klawitter in Spiegel International
recently commented on what some might
call ‘fish finger-gate’.
Slovakian prime minister Robert Fico
has been speaking up for 103m people
living in Central and Eastern Europe over
substandard fish fingers. It appears that
for years, EU citizens living there have
been ‘forced to make do with second-rate
versions of brand-name products’ such
as more heavily breaded fish fingers or
yoghurts with less fruit.
This story is all about the EU’s
‘commitment to unity’ and the bloc is now
looking at the subject following comment
from several leading Eastern European
politicians.
Klawitter refers to ‘questionable’ industry
studies that state that some companies
alter recipes to suit regional tastes and
that sometimes, they’re selling ‘inferior’
products to boost profits.
The suggestion is that if firms that cannot
‘adequately explain’ product differentiation
they could face legal proceedings. Klawitter
says that some firms are staving off a
potential PR disaster by taking action.
Leibniz, for instance, now uses butter
instead of palm oil in the biscuits it sells.
SEVERE DROUGHTS PRESENT
OPPORTUNITIES AND THREATS
MoneyWeek recently commented on the
severe droughts that seem to be becoming
more common. It wrote that there are now
fears that in a few years’ time Spain’s water
supply will no longer cover demand from
the agriculture and tourism sectors. This
points to rising demand for desalination
plants in the next few years which will
bode well for those active in this market.
The publication referred to a US firm,
Energy Recovery, and its pressureexchanger
technology which makes the
desalination process up to 60 percent more
energy-efficient. The technology is also
helpful for refrigeration systems, which
look set to become another growth area for
the firm.
Companies that have technology that
can help the Spanish – and others – with
their water needs, have an open door.
For the latest exchange rates visit
www.currenciesdirect.com or call 020 7874 9400
HIGH LOW TREND
GBP/EUR 1.17583 1.15371 Up
GBP/USD 1.27954 1.24525 Down
GBP/CHF 1.12428 1.10927 Flat
GBP/AUD 1.99619 1.94302 Down
GBP/CAD 1.73130 1.69810 Down
GBP/JPY 186.617 182.741 Flat
Currency Exchange Rates for the previous month:
11th August to 11th September.
Brave | Curious | Resilient / www.cicm.com / October 2023 / PAGE 33