The Panama Canal is one of the world's most vital shipping choke points. Spanning the isthmus of Panama, the canal connects the Pacific Ocean to the Atlantic and avoids having to travel thousands of extra miles out of the way around Cape Horn. Now, unusually dry weather in Panama is depleting the canal of its water, and forcing ships to lighten their loads or seek different routes. Costas Paris reports in The Wall Street Journal: The Panama Canal is going through its driest spell in more than a century, and an extended lack of rainfall could saddle global supply chains with delays and … [Read more...]
Semiconductor Equipment Sales to China Tank after Export Restrictions
The value of semiconductor equipment sold to China in the first quarter dropped by 23% compared to the year before after the Biden administration imposed restrictions on the export of certain technologies to the country. Dylan BUtts and Ann Cao report in the South China Morning Post: Semiconductor equipment sales to China fell in the first three months of the year – a sharp contrast to increased shipments to North America and global markets in the same period – as the world’s second-largest economy grapples with intensified trade restrictions imposed by Washington and its allies. During … [Read more...]
What’s the Alternative to China for Manufacturers?
For decades now China has been the obvious choice for manufacturers looking for cheap labor. Now, reports John Keilman in The Wall Street Journal, manufacturers are looking elsewhere. He writes: Fears of military conflict and increasing security worries have some U.S. manufacturers re-evaluating their reliance on China. Executives are plotting alternate supply chains or devising products that can be made elsewhere should China’s hundreds of thousands of factories become inaccessible. That prospect became more conceivable, they said, after the 2022 invasion of Ukraine prompted companies to … [Read more...]
Container Production Cuts a Sign of Declining Trade?
Production of shipping containers will fall to a 14-year low in 2023, following a 71% decline in the first quarter. Are falling production numbers a sign of longer-term declining demand, or a simple realignment after extraordinary circumstances brought on by COVID logistical snags? Sam Chambers reports in Splash 247: Stagnating trade and a ballooning surplus of shipping containers, following easing of pandemic era supply chain constraints, has led to a collapse in newbuild container output, which is forecast by UK consultants Drewry to slump to its lowest level in 14 years. Drewry … [Read more...]
Industry Races to Diversify Away from China
A trend in manufacturing companies diversifying their operations away from China has been accelerating, and now Apple suppliers are joining the exodus. Nguyen Xuan Quynh and John Boudreau report for Bloomberg, writing: Apple Inc.’s Chinese suppliers are likely to move capacity out of the country far faster than many observers anticipate to pre-empt fallout from escalating Beijing-Washington tensions, according to one of the US company’s most important partners. AirPods maker GoerTek Inc. is one of the many manufacturers exploring locations beyond its native China, which today cranks out … [Read more...]
Xi Jinping’s New Market Reality in China
For decades the Western world has been growing closer to China. Now, suggests Diana Choyleva in the Financial Times, with the consolidation of power over China by Xi Jinping and his loyalists, that trend is set to reverse. She writes: Ideology and national security trump all other considerations for Xi, including growth. He will double down on “common prosperity”, achieving economic self-sufficiency and pressing to bring Taiwan definitively under mainland control. For foreign investors in China, this means new investments will be “steered” (more or less politely) to the priorities set by the … [Read more...]
Congestion FINALLY Declining at Ports in Southern California
In The Wall Street Journal, Paul Berger reports that the congestion at California's southern container ports that made headlines earlier in 2022 has finally begun to subside. He writes: The backup of container ships off Southern California’s coast that was at the heart of U.S. supply chain congestion during the Covid-19 pandemic has effectively disappeared. The queue of ships waiting to unload at the ports of Los Angeles and Long Beach fell from a peak of 109 ships in January to four vessels this week, according to the Marine Exchange of Southern California. Shipping specialists say fewer … [Read more...]
Investors Must Survive Volatile New Geopolitical Economic Landscape
Investors are facing many reversals of trends that have been prevalent in markets for decades. Globalization that had a calming effect on markets is turning into reshoring and nearshoring. Fiscal policies that are supposed to suppress inflation are probably going to encourage more of it. Stephen Miran writes at Barron's: Despite the market fireworks, the most important speech at last month’s Jackson Hole conference wasn’t given by Federal Reserve Chairman Jerome Powell. It was delivered by Agustin Carstens, head of the Bank for International Settlements and former governor of the Bank of … [Read more...]
What Happens if the Chinese Blockade Taiwan?
Despite its small size, Taiwan was America's ninth largest trading partner in 2020, with total U.S./Taiwan trade reaching $105.9 billion that year. The little country's heavy reliance on trade has made it the world's fifth-largest holder of foreign exchange reserves at $483 billion, and the thirteenth largest holder of gold reserves with 423.6 metric tons. So what happens if such an important part of the world's trade is blockaded by aggressive neighbors? The Wall Street Journal's Chun Han Wong and Yang Jie try to answer that question, writing: Beijing considers Taiwan, a democratically … [Read more...]
China Builds an Anti-Quad Coalition
China is not happy with the United States and its ever-closer ties with Australia, Japan, and India. The four countries are deepening the ties between them formalized in a group known as the Quad. The Quad's mission, as seen by China, is to deter Chinese progress in the region. Kathrin Hille reports for the Financial Times: Beijing could not have made its displeasure with Joe Biden any clearer. As the US president met leaders of the Quad security grouping in Tokyo, Chinese and Russian nuclear bombers flew over the Sea of Japan. But China is also employing less crude tactics to counter the … [Read more...]
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