Biden Surpasses Trump’s Record For Blacklisting Chinese Entities

Economic

Political

Summary:

US president has curbed 319 firms, people since taking office.Trade tensions are rising between world’s biggest economies.

President Joe Biden has added more Chinese companies and individuals to an export blacklist than any US administration, as growing frictions between the world’s biggest economies continue to complicate global trade.

The Commerce Department added six Chinese companies to its entity list on Thursday, bringing the tally of new targets during the Biden administration to 319. That compares to the 306 entities added during Donald Trump’s time in the White House, when he oversaw a trade war with Beijing that hurt both countries’ economies.

The milestone exemplifies how the US government is increasingly using economic tools to achieve foreign policy goals, as Biden tries to kneecap China’s access to cutting-edge chips and technology, citing national security concerns. President Xi Jinping’s growing assertiveness toward Taiwan, which he claims as part of China’s territory, has increased concerns in Washington that Beijing will use American technology to advance its military prowess. Biden Surpasses Trump’s Record For Blacklisting Chinese Entities_1

Biden Surpasses Trump’s Record For Blacklisting Chinese Entities_1

“Being tough on China, including through the restriction of its access to technology, is a theme that has bipartisan agreement,” said Alfredo Montufar-Helu, head of the Conference Board’s China Center. With a US election in November, both sides “have incentives during these months of campaigning to show themselves as being as strong on China,” he said.

Biden has left in place Trump’s tariffs while adding to those measures, with a specific focus on curbs that block Beijing’s access to innovations capable of a wide swathe of applications, including those in the critical artificial intelligence sector.

In February, the US added eight companies to the entity list, quietly taking Biden past Trump’s record, with six more added this week. The entity list has increasingly become one of Washington’s main weapons for sanctioning and punishing people, companies or other organizations in China and elsewhere on national security grounds.

Beijing has branded that policy an attempt to thwart its development. Imposing export controls on Chinese companies “is typical economic coercion and unilateral bullying behavior,” He Yadong, spokesman of the Chinese Ministry of Commerce, said at a briefing in Beijing on Thursday when asked about the latest US actions.

“The US should immediately correct its wrongdoings and stop the unreasonable suppression of Chinese companies,” He said. “China will take all necessary actions to defend the lawful rights and interests of Chinese companies.”

In a seemingly tit-for-tat move, China sanctioned two US companies on Thursday, announcing that all the assets of the defense contractors in China would be frozen and their executives denied visas. That marked the latest in a series of largely symbolic sanctions against American companies involved in sales of weapons to Taiwan, with such measures to have little effect as the firms likely have no assets in China.

Once added to the US list, entities are rarely removed, although in an unusual concession, the Biden administration withdrew a Chinese government laboratory as part of a deal to combat the fentanyl crisis, around the time of last November’s summit between Biden and Xi.

Four of the firms added to the entity list this week were included for buying US-origin goods to support China’s military modernization efforts, the Department of Commerce said in statement. Another was targeted for supporting Russian military procurement, while the sixth firm had tried to help Iran buy components for unmanned aerial vehicles, according to the statement.

There is a “presumption of denial” for applications to export to the four companies, according to the statement, meaning they will likely be unable to purchase US-origin items in the future. The companies are involved in providing AI chips to the Chinese military, according to a Reuters report of comments from Kevin Kurland, an export enforcement official.

“The US will do whatever is necessary to maintain its technological competitive advantage, especially on technologies that are considered dual use,” said Montufar-Helu, expressing skepticism over the “small yard, high fence” description officials have used to defend that policy.

“Over the past months it seems that the yard has expanded a little bit,” he said.

Source：Bloomberg

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Ukadike Micheal

Economic

Commodity

China faced a sharp contraction in exports and an unexpected decline in imports in March, both falling significantly below forecasts. This dour data signifies a setback for the world's second-largest economy, highlighting the challenges policymakers encounter as they endeavor to bolster a fragile economic recovery.

The dismal export and import figures represent a reversal of fortunes for China, following a generally better-than-expected start to the year. The country's struggle to achieve a sustainable post-COVID rebound is evident, exacerbated by persistent issues such as a protracted property crisis, mounting local government debts, and subdued private-sector spending.

In March, China's exports plummeted by 7.5% year-on-year, the largest decline since August last year, significantly below the 2.3% decline forecasted by economists. Meanwhile, imports unexpectedly shrank by 1.9%, undershooting expectations for a 1.4% rise. These disappointing figures underscore the deep-seated challenges facing the Chinese economy and the urgent need for effective policy responses.

Analysts speculate that Chinese exporters are resorting to price cuts to maintain sales amidst sluggish domestic demand, as evidenced by a decline in export values despite record-high export volumes. Moreover, a higher base of comparison last year may have contributed to the export drop, as production surged in March 2023 following a wave of COVID-19 infections.

The weak export and import data reflects sluggish domestic demand and underscores the uneven nature of China's economic recovery. Despite policymakers' efforts to stimulate household consumption, private investment, and market confidence, the economy's growth remains uneven, with significant headwinds posed by the prolonged property sector crisis.

As China grapples with challenges in traditional growth engines like property and trade, policymakers are striving to pivot towards new drivers such as hi-tech and clean energy. However, analysts caution that this transition will take time and may not yield immediate results.

In response to the economic slowdown, China has unveiled a series of stimulus measures, including issuing special ultra-long term treasury bonds and promoting large-scale equipment upgrades and consumer goods sales. These initiatives aim to revive demand and support key sectors of the economy, but their effectiveness remains uncertain amidst lingering uncertainties.

Overall, the disappointing export and import data for March underscore the fragility of China's economic recovery and the complex challenges policymakers face in navigating through uncertain times. Effective policy responses, coupled with structural reforms to address underlying issues, will be essential in ensuring sustainable and balanced growth in the world's second-largest economy.

Source: Reuters

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Thomas

Central Bank

Economic

Shipments from China slumped 7.5% year-on-year last month, marking the biggest slump since August last year and compared with a 2.3% decline forecast in a Reuters poll of economists. They rose 7.1% in the January-February period.

The nation's exporters endured a tough period for much of last year due to soft overseas demand and tight global monetary policy. With the Federal Reserve and other developed nations showing no urgency to cut interest rates, Chinese manufacturers may be faced with a further period of challenges as they try to shore up goods sales overseas.

The China Beige Book survey said the recent improvements in business conditions, including better corporate revenue, profits and capital spending, were "more of a return to mediocre from genuinely poor."

Analysts warn Western concerns over China's overcapacity in some industries may bring more trade barriers for the world's manufacturing hub.

Imports for March also declined 1.9% from the 3.5% growth in the first two months, missing an expected 1.4% rise.

The imports figure underlined the sluggish domestic demand conditions, which were also highlighted by Thursday's data showing consumer inflation had cooled more than expected last month.

China's economy got off to a relatively solid start this year after policymakers rolled out support measures to revive household consumption, private investment and market confidence since the second half of 2023.

Yet, growth in the Asian giant remains uneven and analysts don't expect a full-blown revival anytime soon mainly due to a protracted property sector crisis.

Rating agency Fitch cut its outlook on China's sovereign credit rating to negative on Wednesday, citing risks to public finances as the economy faces increasing uncertainty in its shift to new growth models.

The economy likely grew 4.6% in the first quarter from a year earlier - the slowest in a year despite signs of stabilisation, another Reuters poll showed on Thursday, maintaining pressure on policymakers to unveil more stimulus measures.

Some analysts say the central bank faces a challenge as more credit is flowing to production than into consumption, exposing structural flaws in the economy and reducing the effectiveness of its monetary policy tools.

On the fiscal front, China plans to issue 1 trillion yuan ($138.18 billion) in special ultra-long term treasury bonds to support key areas. It also raised the 2024 special bond issuance quota for local governments to 3.9 trillion yuan from 3.8 trillion yuan in 2023.

Moreover, in an attempt to revive demand, the cabinet last month approved a plan aimed at promoting large-scale equipment upgrades and sales of consumer goods. The head of the country's economic planner estimated the plan could generate market demand of over 5 trillion yuan annually.

Source: Reuters

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Ukadike Micheal

Economic

Forex

The UK economy's growth in February marks a significant milestone in its recovery journey, indicating a positive trajectory after a shallow technical recession. With GDP rising by 0.1% from January, in line with economists' expectations, and January's figure revised upwards to show a 0.3% increase, there are clear signs of economic resilience.

Paul Dales' assessment that the recession lasted only two quarters, resulting in a modest GDP decline of around 0.4%, suggests a relatively mild downturn compared to historical recessions. This highlights the economy's capacity to rebound swiftly, driven by factors such as robust consumer spending and resilient business activity.

Despite the encouraging growth, concerns about inflationary pressures persist. The modest expansion in February is seen as staying within the margins necessary to prevent excessive price increases, a factor that could influence the Bank of England's future monetary policy decisions. The anticipation of rate cuts in the coming months underscores the delicate balance between supporting economic recovery and managing inflationary risks.

The impact of economic developments on political dynamics is also noteworthy. Prime Minister Rishi Sunak's decision to delay calling an election amidst polling deficits for the Conservative Party reflects the importance of economic stability in shaping political strategies. The pound's depreciation following market volatility further underscores the interconnectedness of economic and political factors in driving market sentiment.

The recalibration of market expectations for UK interest rate cuts reflects the complex interplay of domestic economic indicators and global economic trends. The shift from anticipating three rate cuts to expecting two, with the first cut fully priced in for September, suggests a nuanced assessment of the UK's economic outlook and its implications for monetary policy.

Looking ahead, economists' forecasts of a solid rebound in first-quarter GDP indicate cautious optimism about the UK's economic recovery. The recent uptick in the housing market and private sector activity, coupled with improving living standards due to wage increases and lower energy prices, provide further grounds for optimism.

However, challenges remain, including the persistent threat of inflation and the lingering effects of past interest rate increases. These factors underscore the need for vigilance and proactive policymaking to navigate the complexities of the economic landscape.

The UK economy's growth in February is a positive development, uncertainties persist, and strategic decision-making will be crucial for both policymakers and investors. By closely monitoring economic indicators and responding flexibly to changing conditions, stakeholders can effectively support the UK's ongoing recovery efforts.

Source: Bloomberg

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Alex

Economic

Cryptocurrency

The Financial Sector Conduct Authority (FSCA) of South Africa has introduced cryptocurrency license issuance, declaring important progress in the regulation of digital assets in the country.

This move aligns with the process of integrating cryptocurrency into regular financial activities to increase consumer protection and fight financial crimes such as money laundering and terrorism financing. Consequently, Luno, a crypto exchange, and Zignaly, a decentralized social investing marketplace, are among the first recipients of the said licenses.

Luno Bags First License

The FSCA gave Luno, a crypto asset service provider in South Africa, the first license to operate as a financial services provider. Introduced in 2013, Luno continues to be a very strong player in the cryptocurrency market, respecting regulation, safety, and security.

The license is granted under the Financial Advisory and Intermediary Services Act 2002, which regulates the provision of certain financial advisory and intermediary services in South Africa. This license will allow Luno to offer more and introduce new features and products for financial institutions.

Zignaly’s Licensing Move

Concurrently, Zignaly is partaking in the first licensing phase with Luno. The company was awarded a Category 2 – Discretionary Financial Services Provider (FSP) license. By this approval, Zignaly is empowered to manage investments on behalf of investors as well as act as a fund’s custodian for its customers.

The license is equivalent to that of a license held by traditional financial giants, which implies how seriously South African regulators are taking the crypto industry.

Zignaly’s approval permits the company to comply with forthcoming rules that may concern decentralized finance (DeFi). This forward-looking gesture comes after Zignaly’s substantial $50 million financing deal closed with a Luxembourg fund in 2022.

Regulation and Compliance in the Crypto Space

The licensing of crypto firms started in June 2023, when legislation was passed, and cryptocurrencies became part of regulated financial activities. The FSCA’s approach is to protect consumers and preserve the financial system’s integrity. In the short run, about 60 crypto platforms will get licensed.

In addition, the regulator has stressed the significance of compliance with hefty fines slapped on companies that operate without the necessary approvals. This firm’s stand reflects the regulator’s commitment to a regulated and safe crypto environment.

Consequently, the licensing of these entities will be a milestone for the South African financial market. It reflects the country’s acceptance of digital products and an effort to build a safe and regulated environment for cryptocurrency exchanges. This action is anticipated to attract more participants to the crypto industry, promote innovation, and possibly achieve more financial inclusion.

For users, controlling crypto assets provides greater protection and a safe environment for dealing and investing in digital currencies. It also opens the door for traditional financial institutions to interact with crypto assets, which may result in more harmonious and varied financial services.

Source：coingape

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ING

Commodity

Economic

South American corn crop revisions largely absent

There were few changes to the USDA’s US corn balance, with 2023/24 ending stocks lowered marginally from 2.17bn bushels to 2.12bn bushels. This revision was driven by a 50m bushel revision higher in domestic consumption and specifically for ethanol, feed, and residual use. This leaves US corn stocks slightly above market expectations of around 2.1bn bushels.

As for the global corn market, the USDA lowered ending stock estimates by 1.4mt to 318.3mt due to slightly lower supplies from South Africa (-1.5mt), Argentina (-1mt), Mexico (-0.7mt), and Moldova. The market was expecting a revision lower in Brazilian corn output due to drier weather conditions but this did not happen. As a result, even though stocks were lowered they still came in above market expectations of a little under 317mt. Global corn consumption saw some marginal revisions lower.

Overall, the corn numbers were bearish with the market expecting a downgrade in Brazilian production. The USDA is still pegging Brazilian output at 124mt, well above the 111mt that CONAB, Brazil’s agricultural agency, is forecasting.

Corn supply/demand balance

WASDE Update: A Largely Bearish Affair_1

Brazilian soybean output surprisingly left unchanged

The USDA increased its 2023/24 US ending stock estimates for soybean, from 315m bushels to 340m bushels due to a fall in consumption and exports. The market was expecting a stocks number closer to 319m bushels. Despite this more bearish than expected number, soybean did not sell off as aggressively as corn and wheat, as one may have expected.

The global balance sheet would have disappointed as well. The market was expecting the USDA to also revise lower Brazilian soybean output, but this was left unchanged at 155mt. This means that global ending stocks were left largely unchanged at 114.2mt, and above market expectations.

Similar to corn, there is also growing divergence between Brazilian soybean production estimates. While the USDA has stuck to its estimate for 155mt in 2023/24, CONAB has lowered its output estimate to 146.5mt.

Soybean supply/demand balance

WASDE Update: A Largely Bearish Affair_2

Global wheat balance largely unchanged

The USDA increased its 2023/24 US wheat ending stocks estimate from 673m bushels to 698m bushels following a drop in domestic use. This also meant that stocks came in above market expectations of around 691m bushels.

The global balance saw ending stock estimates marginally cut from 258.8mt to 258.3mt for 2023/24, below market expectations. Clearly the reaction we saw in wheat prices was driven more by changes in the US balance rather than the global balance.

Wheat supply/demand balance

WASDE Update: A Largely Bearish Affair_3

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Ukadike Micheal

Economic

Cryptocurrency

Bitcoin and other cryptocurrencies experienced a relatively stable trading session on Friday, maintaining levels that have persisted throughout much of the week. This stability comes at a crucial juncture as the market awaits Bitcoin's upcoming halving event, which is expected to have profound implications for the entire crypto ecosystem.

Bitcoin, the flagship cryptocurrency, hovered around the $70,800 mark over the past 24 hours, remaining tantalizingly close to its mid-March all-time high of nearly $74,000. Despite a brief dip earlier in the week triggered by concerns over inflation and potential delays in Federal Reserve interest rate cuts, Bitcoin has demonstrated resilience, suggesting underlying strength in the market.

Yuya Hasegawa, an analyst at crypto exchange Bitbank, emphasized Bitcoin's robustness in the face of market uncertainties, hinting at the possibility of a bullish breakout towards the $74,000 threshold in the near term. This sentiment reflects growing optimism among investors regarding Bitcoin's long-term prospects, fueled in part by the impending halving event.

Scheduled to occur around April 20, the halving represents a significant milestone in Bitcoin's protocol, where the rate of new coin issuance is cut in half approximately every four years. This mechanism is designed to curb inflation and maintain the scarcity of Bitcoin over time, akin to digital gold. As the supply of new coins diminishes, the event often triggers a supply shock, leading to upward price pressure as demand outstrips available tokens.

Jess Houlgrave, CEO of blockchain tech group WalletConnect, highlighted the historical precedent of previous halving events, noting the subsequent supply shocks that propelled Bitcoin and the broader crypto market to new heights. With demand for Bitcoin reaching unprecedented levels, fueled by institutional interest and the anticipation of regulated investment vehicles such as spot Bitcoin exchange-traded funds (ETFs), the stage is set for a potential breakout in the coming weeks and months.

While Bitcoin garners much of the attention, other cryptocurrencies are also experiencing notable movements. Ether, the second-largest crypto by market value, saw a modest decline of 2% but remained comfortably above the $3,500 mark. Altcoins such as Solana and Ripple registered minor losses, while meme coins like Dogecoin and Shiba Inu witnessed similar dips of 2%.

As the crypto market navigates through this pivotal period, investors are closely monitoring developments surrounding Bitcoin's halving and its broader implications. The convergence of tightening supply dynamics and growing institutional adoption underscores the maturation of the crypto market and its potential to reshape the global financial landscape.

While short-term fluctuations may occur, the overarching trend points towards a bullish outlook for Bitcoin and the wider crypto market. As market participants position themselves for potential growth opportunities, strategic analysis and risk management will be imperative in navigating the complexities of this evolving landscape.