The Chinese economy is expected to maintain its recovery over the rest of 2021 thanks to the country’s strong exports, according to research by the Asian Development Bank (ADB).
ADB reiterated its April projections for the nation’s economic growth, predicting that China’s GDP will rise 8.1% this year and 5.5% in 2022.
According to Dominik Peschel, head of the economics unit at ADB, net exports will contribute more to China’s economic growth in 2021 than the bank had previously expected. He said consumption will continue to be the major driver for China’s economic growth both in 2021 and 2022.
The bank has also lowered its inflation forecast for 2021 to 1.3%, noting that the country’s consumer price inflation will stay well below its 2020 level.
The head of Ukraine’s state-controlled energy corporation Naftogaz is calling on Washington and Berlin to take decisive action against Russia, accusing the country of using its natural gas as a geopolitical weapon.
The announcement comes amid a growing energy crisis in Europe ahead of the winter season, and shortly after the US and the International Energy Agency urged Russia to pump more gas to the region to ease the deepening supply crunch.
Benchmark European gas prices have soared by more than 250% since the beginning of the year, while benchmark power contracts in France and Germany have doubled.
“This is a very clear sign that they are using gas as a geopolitical weapon at the moment,” Naftogaz CEO Yuriy Vitrenko told CNBC, accusing Russian energy major Gazprom of deliberately withholding gas supplies from Europe.
The former energy minister also accused Gazprom of blocking access to the Ukrainian gas transmission system for other Russian companies, as well as cutting exports from Central Asia that could go to Ukraine via Russian territory.
Vitrenko expressed hope that the US will reinstate sanctions against Nord Stream 2 AG, Gazprom’s Swiss-registered subsidiary, which is working on the Nord Stream 2 pipeline.
Meanwhile, Germany’s Energy Ministry said that Russia is fully compliant with its gas supply obligations to Europe, stressing that there’s no need for the state to intervene in the situation with gas prices.
“According to our information, Russia is fulfilling the existing supply agreements… We do not know about the deliberate disregard of the existing contracts,” the ministry’s spokeswoman Suzanne Ungrad said earlier this week.
Gazprom previously announced it was ready to supply Europe with natural gas via the recently completed Nord Stream 2 pipeline. However, deliveries cannot begin before the project is certified by the EU regulators. The procedures could reportedly last into next year.
The People’s Bank of China revived its tough stance on digital currencies on Friday, ruling all crypto-related trading activities illegal and banning overseas crypto exchanges from providing services to mainland investors.
The regulator announced plans to bar financial institutions, payment companies and internet firms from facilitating cryptocurrency trading, as well as to strengthen monitoring of risks from such activities.
“Overseas virtual currency exchanges that use the internet to offer services to domestic residents is also considered illegal financial activity,” the PBOC said in a Q&A posted to its website.
“Financial institutions and non-bank payment institutions cannot offer services to activities and operations related to virtual currencies,” the central bank said.
The move sent bitcoin and other virtual currencies plummeting. The world’s number one digital asset by market capitalization dropped over 5% to below $42,000. Other cryptocurrencies followed the declining trend with ether dropping 10% to below $2,800, while dogecoin crashed over 8% to below $0.20, according to the Coinmarketcap website.
The latest ruling comes as part of a broader state-run campaign by Chinese regulators against cryptocurrencies. Earlier this year, Beijing banned mining in major bitcoin hubs, such as Sichuan, Xinjiang and Inner Mongolia, which led to a sharp drop in bitcoin’s processing power, as multiple miners took their equipment offline.
A new report by consulting firm AlixPartners has suggested the ongoing semiconductor chip shortage is expected to cost the global automotive industry an estimated $210 billion in revenue in 2021.
That’s almost double the company’s previous forecast, in May, of $110 billion. It had initially projected some $60.6 billion in lost revenues at the beginning of the year, when automakers started cutting production at plants.
“Of course, everyone had hoped that the chip crisis would have abated more by now, but unfortunate events such as the Covid-19 lockdowns in Malaysia and continued problems elsewhere have exacerbated things,” said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners.
AlixPartners forecasts that 7.7 million units of production will be lost in 2021 – up from 3.9 million in its May forecast.
The updated figures come as car manufacturers continue to struggle with the semiconductor chip shortage, which is causing a halt to production in plants across North America, Europe, and Asia.
The growing demand for consumer electronics has worsened the scarcity of the microchips used in vehicles, stalling production at factories worldwide and pushing auto prices ever higher. Semiconductor chips are vital components in new cars and widely used in infotainment systems, as well as in basic parts such as power steering and brakes. An average vehicle may have hundreds of semiconductor chips.
AlixPartners previously expected to see production improving in the third quarter of 2021, but now doesn’t expect to see that until at least the second quarter of 2022.
Dan Hearsch, a managing director in AlixPartners’ automotive and industrial practice, said, “There’s no cushion. There’s nothing to absorb the impacts anymore, so every little thing – a week of downtime – is now creating a month of downtime someplace else.”
Meanwhile, automakers across the globe, including Ford Motor and General Motors, have been warning of massive earnings cuts this year due to the chip shortage. General Motors President Mark Reuss said this week that the chip supply was coming from places where Covid-19 vaccination is low, “so there’s some volatility there … we really need to get the vaccination and protocols into those plants, which we’re working very hard on.”
