Dear Members and Friends
I hope you all had a restful summer break
and are back to work invigorated for a busy autumn. The situation in Europe is
such that every country and company is preparing for an uncertain energy
situation for autumn and winter. This will further complicate supply chains,
inventory, and distribution management as manufacturing and transportation
costs will fluctuate and most likely be more expensive. Inflationary pressures
will therefore not ease until at least spring 2023.
The challenges and subsequent slowdown in
China's real estate sector affected many commodities used in real estate, such
as copper and steel prices, which came back from their record highs. This means
an easing of some of the inflation indicators we are seeing in Europe. How long
this will last is unknown, as the Chinese economy is in uncharted waters with
growth rates down to lows not seen in 40 years, a slowdown in consumer spending,
and a youth unemployment rate of almost 20 percent.
In recent days we have learned that the 20th National Congress of the Chinese
Communist Party will be held in Beijing in the week of 17 October 2022. This is
welcome news as the Chinese government needs to focus on the economic challenges;
preparing for the event has and will divert resources from day-to-day
government tasks.
Why is this event of such importance? The Party
Congress is significant because the new leadership of the Chinese government
for the next five years will be announced. These new heads will shape the
policies and decisions that will influence the future business environment in
China.
At the same time, we have noticed that
pandemic measures have been tightened in various places in mainland China. This
is because the "dynamic zero covid restrictions" are still in place.
Travel restrictions will most likely remain in place until the end of the Party
Congress or until the pandemic hotspots are free of infection.
The SCCC is preparing for the 20th
Party Congress, and we are planning an event for late October where we will
describe our impressions of the Party Congress and discuss the business
implications of the decisions taken and policies announced. Stay tuned and
register early as we expect a lot of interest.
The next newsletter will be published in
October. In the meantime, we wish you a Moon Festival with many of your family
members present.
Kind regards
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