Headlines from China

There’s so much important China news today but our job is to get you up to speed fast, so we’ve put together a rundown of what’s happening in the region and why it matters for the global economy. 

Up first, five US lawmakers decided to visit Taiwan just 12 days after the same trip by US House Speaker Nancy Pelosi prompted China to launch days of military drills around the self-governing island, which Beijing considers its territory (and experts worry could invade at any time). 

  • Ironically enough, the group is discussing how to reduce tensions in the Taiwan Strait—a strip of sea between China and Taiwan connecting many vital ports. 
  • They’re also talking about investments in semiconductors, since a Chinese blockade of Taiwan could trigger a chip shortage that would devastate the world economy.

Meanwhile, new data showed China is experiencing a severe economic slowdown. The world’s second-largest economy unexpectedly cut its lending rate to bolster growth as it grapples with the effects of continued COVID lockdowns and a worsening property crisis.

  • An official report released yesterday reflected worse than expected consumer demand and factory activity and a rise in youth unemployment to a record 19.9%.
  • But the cut in interest rates is unlikely to turn things around while those twin drags (lockdowns, property crisis) remain, per Bloomberg

Why it matters: China’s slowing economy and rising tensions between the West add yet another threat to the world economy as supply chains and consumer demand (including the $29 billion in exports Canada sends to China) get thrown out of whack.