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Huawei has declared that it is ‘business as usual’ despite the US restrictions

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Huawei declared it was “business as usual” after years of Washington imposing punitive restrictions that created a model for broader export controls over technology shared with Chinese firms.

The Shenzhen-based technology group said it expects three consecutive quarters of growth and a flat total revenue for 2022. Total sales were expected to reach 636.9 billion renminbi ($91.8 billion) this year, up 0.02 percent annually.

In 2022, we have successfully pulled ourselves out of crisis mode. “US restrictions are now our new normal,” Eric Xu, Huawei’s swivel chair, said in an annual New Year’s message to employees.

Xu added that 2023 will be the “first year” to return to “business as usual,” though Washington’s export controls on cutting-edge technology remain in place.

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Huawei I’ve been trying to explore new markets and companies since I got restricted. Tight controls have forced companies that supply US technology to the Chinese group to seek additional licensing from regulators, limiting Huawei’s ability to produce high-end smartphones.

After being added to Washington’s trade blacklist in 2019, Huawei quickly lost global and domestic market share of consumer electronics. This year, we’ve run out of advanced chips designed in-house, according to research firm Counterpoint.

The United States in October introduced a new technology export restrictions which more broadly restricts China’s access to its technology, as part of a broader geopolitical confrontation between the world’s great powers.

To get around these measures, Huawei has released updated smartphone models using stock chips and licensed components. It has expanded the consumer business to include wearable devices such as smartwatches, which require less advanced semiconductors than smartphones. The wearables hub makes it easier for Huawei to source parts locally.

Huawei is seeking alternatives to US technology, partnering with local companies and collaborating with local governments as Beijing works to become technologically self-sufficient.

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Without giving details of overcoming the advanced chip shortage, Xu said that the free fall in the consumer hardware business has waned, and the company will focus its resources on product development in the next year.

He added that income from expanding cloud services and fixed-line business also offset lower hardware sales.

Another lucrative source for Huawei is charging royalties, especially in 5G-related services, to some of the world’s biggest brands, including Apple and Samsung.

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Alan Fan, the company’s global head of intellectual property, said that the company has also signed more than 20 patent licenses this year, covering smartphones and networks.

Xu acknowledged that business will remain challenging in 2023, saying that the “macro environment may be full of uncertainty” and that the company is “facing external volatility.”

“We need to be proactive about optimizing the business environment and managing risks more effectively. This is the only way we can achieve our business goals for 2023 and lay a solid foundation for Huawei’s continued survival and development.”

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The Bank of Japan needs the courage to change course

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The writer is a contributing editor to the Financial Times and chief global economist at Kroll

The Bank of Japan shocked the markets in December by widening the range in which 10-year government bonds can trade from 25 to 50 basis points. Investors responded by pushing 2- to 10-year yields to their highest levels since 2015, betting that expansion was the first step in ending yield curve control, and pledging to buy as many bonds as necessary to reduce borrowing costs.

But Bank of Japan Governor Haruhiko Kuroda He was pained to say It was just an attempt to help the market function rather than a signal of a policy change in the future. Why?

Yield curve control was introduced in 2016 to boost economic activity and stimulate inflation. Japan now has an inflation rate consistently above its 2 per cent target. Core inflation (excluding fresh food but including energy) rose to 3.7 percent in November – the highest rate in 40 years. It is time for the Bank of Japan to muster up the courage to change course.

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Based on the experience of other central banks that will be painful, with investor losses and market rupture. The longer you wait, the worse it may be. With the liquidity of some Japanese government bonds already thin, at a time when global liquidity is declining, market turbulence may be larger and faster than usual. The BoJ should move forward anyway.

The markets, so far, seem to agree. JGB bond futures show that investors expect the 10-year trading range to widen by another 50 points this year. Index swaps, a market that the Bank of Japan does not directly influence, show that they have also priced in 24 basis points of interest rate hikes. The Bank of Japan now owns more than half of the outstanding Japanese government bond issues. That’s already poor circulation in 10 years. If investors continue to challenge the BoJ, they will eventually have to buy all bonds or give up

Meanwhile, the implied volatility of JGBs 10-year notes over the next 12 months is about three times what it was a year ago. The yield curve is twisted, with the 10-year yield falling below the 9- and 11-year yields. This affects the profits of commercial banks, creating an incentive to lend, and possibly dampening growth.

Prime Minister Fumio Kishida’s government has suggested that it will call for a policy review of the Bank of Japan when Kuroda retires in April. This is another reason for the central bank to act now. Markets will absorb policy change more smoothly under a seasoned and credible ruler than an inexperienced successor. Just ask the members of the then New Mexican government that expanded the circulation of the peso in 1994, sparking the tequila crisis.

One counterargument is that inflation in Japan is not sustainable. As elsewhere, the current rally has been driven by global energy and food prices and a weak currency – so-called cost-push inflation. BoJ officials stress that deflation will not be defeated until wages rise faster, but this year fountain shunto Union wage negotiations It is expected to bring larger wage increases to offset higher inflation. This would generate the kind of inflationary demand and pull that the BoJ wants to see.

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The Bank of Japan must also tighten policy before many advanced economies enter recession later this year. Risk markets tend to trigger a shift to quality in the yen. Changing the policy stance with the weakening of the global economy would boost the appreciation of the yen, affect the competitiveness of Japanese exports and contribute to depressing inflation.

History suggests that ending yield curve control will not go smoothly. The Federal Reserve limited the proceeds to fund the American war effort from 1942 to 1951. That YCC calmed down the companies In assumptions about interest rates and their volatility that collapsed when the caps expired, causing losses for investors holding long-term bonds and severe turmoil in the mortgage markets. The RBA practiced YCC from March 2020 to November 2021. In a Anatomy of its policythe Reserve Bank of Australia conceded to keeping it in place after market participants stopped believing it meant “the exit in late 2021 was disorderly and did some reputational damage to the bank”.

To reduce the chaos, the BoJ should be clear about its reaction function and move slowly but deliberately by expanding the YCC first or targeting a shorter duration. Ultimately, it should announce that it is abandoning YCC altogether and will instead aim to minimize rapid changes in debt prices, such as those seen in the UK government bond market in September.

Market repercussions are inevitable. But the Bank of Japan has to stay on course, barring any kind of systemic collapse. It’s time to join every other major central bank in moving to end extraordinary monetary policy.

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Vacation home sales in China rose 27.1% year-on-year

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© Reuters. FILE PHOTO: A woman walks near a construction site for apartment buildings in Beijing, China, July 15, 2022. REUTERS/Thomas Peter

BEIJING (Reuters) – New home sales in China rose more than 20 percent year-on-year over the three-day New Year holiday beginning Dec. 31, due to promotions, support policies taking effect and a gradual release of pent-up pent-up conditions. Demand after COVID-19 cases spike.

Among the 22 cities chosen by the China Index Academy, the average daily floor area of ​​homes sold was up 27.1% from last year’s holiday season.

In some cities, homebuyers’ visits to home showrooms have increased, the academy said. “Demand pent-up due to the impact of the epidemic was released in December during the New Year holidays after infections passed their peak in some cities.”

The company also said that major cities such as Beijing and Shanghai had similar New Year’s holiday sales last year, but sentiment remained at a low level in most smaller cities.

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Compared to last year’s holiday season, home sales increased by 80% in Beijing, 74% in Shanghai and 131.5% in Guangzhou.

China’s real estate market crisis worsened in 2022, as official data showed housing prices, sales and investment all fell in recent months, adding pressure to the ailing economy.

Policymakers have ramped up their support for the industry in a bid to ease a long-running liquidity squeeze that has hit developers and delayed completion of many housing projects, further undermining buyers’ confidence. The moves included lifting a ban on raising funds through stock offerings for listed real estate companies.

The real estate research firm said new home prices in 100 Chinese cities it monitors fell 0.02% year-on-year in 2022, the first decline since 2015.

Transactions on homes fell about 40 percent year-on-year last year, the lowest level since 2015.

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“For 2013, home sales are likely to grow slightly under the optimistic outlook, while under the pessimistic outlook, the market adjustment trend may continue as new housing construction begins and investment continues to experience downward pressure,” the firm said.

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France is experiencing an inflationary storm but price pressures are still mounting

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France has so far avoided the bread price hikes that have swept Europe—an indication not only of the role of French bread in the country’s culture, but also of Paris’ relative success in curbing inflation.

“Our prices have risen at the slowest rate in Europe,” said Dominique Antract, who heads the main French federation of 33,000 confectioners and bakers.

From his shop in the clunky 16th arrondissement of Paris, Entaract hailed baguettes as “almost . But the country’s bakers and bread eaters have also been helped by government measures that have shielded the economy from large fluctuations in energy costs.

While Europeans saw, on average, the price of a loaf rise by about a fifth, data from Eurostat, the European Commission’s statistics office, showed that annual bread prices in France rose by 8.2 percent.

Economists stress that energy subsidies to businesses and households underlie France’s relative success in keeping a check on the exponential price hikes that have hit shoppers across the region.

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A baker removes a baguette from an oven in Paris
A baker removes a baguette from an oven in Paris. French bakeries have so far largely resisted the bread price increases sweeping Europe © Yoan Valat / EPA / Shutterstock

Other European countries acted to rein in prices only after Russia’s invasion of Ukraine caused energy costs to rise, as well as wheat prices.

But Ludovic Soubran, chief economist at insurance company Allianz, said France’s energy subsidy – which President Emmanuel Macron led before his re-election last April – meant Paris “got in too early”. “It pretty much worked out — it was a good call.”

Unlike other major European economies – including Germany, Spain and the Netherlands – consumer price inflation in France is unlikely to enter double-digit territory, as it peaked at 7.1 per cent in November – well below the regional average of 11.1 percent.

“The peculiarity of France is that it intervened much earlier than anywhere else,” said Anne-Sophie Seif, chief economist at consultancy BDO France.

The low level of inflation has led to a less severe living crisis than that faced by other places.

France, unlike most EU countries, is now expected to avoid a recession in 2023, according to French statistics agency Insee – which nonetheless expects French output to contract in the fourth quarter and expects growth to slow sharply this year.

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Analysts said the measures appeared to have been inspired by political calculations.

The line graph of the annual growth rate of the CPI (%) shows that France avoids the worst price hikes faced by its European neighbors

In the run-up to last year’s elections, Macron was anxious to avoid a repeat of the “Yellow jacketsThe protests that followed His attempt to impose a fuel tax in 2018.

He made the decision to freeze consumer gas bills in November 2021, and to provide energy subsidies worth 100 euros to less than 6 million households in December of that year. Since early 2022, increases in energy bills have been capped at 4 percent for consumers and small businesses. The measures, which included pump cuts and electricity tax cuts, cost the government just over 34 billion euros last year.

“There was no reason at the time to bring the Energy Price Shield to consumers other than to stop people from taking to the streets right before the election,” Soprane said.

Economists say other factors have helped rein in inflation in 2022. French wage increases have been, on average, smaller than anywhere else in the EU, said Eric Dorr, director of economic studies at the IÉSEG School of Management. He added that France also has a highly competitive supermarket sector, with major retailers using their power to extract low prices from suppliers, although some are now also warning of higher prices.

Paris plans to spend nearly 46 billion euros on more household energy protection in 2023, including limiting increases in gas and energy bills to 15 percent. The government has also allocated €10 billion in aid to companies to reduce their energy bills.

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But some companies remain concerned and warn that the help may not be enough.

Cofigeo, a food group known for its canned William Saurin brand cassoulet Stud’s has already said it will pause production at four of its eight French factories in January because a renewal of the electricity contract means its bill will jump tenfold. Some energy-intensive companies such as steel and glass makers have also cut production.

Generosity with subsidies, economists say, could also store other problems given the country’s debt level. After providing 240 billion euros in state aid to help French companies in 2020 and 2021 during the coronavirus pandemic, public debt is well above the eurozone average of 94.2 percent, more than 110 percent of output.

Standard & Poor’s, which recently revised France’s outlook to negative from stable, said the country may have less room to maneuver if further economic shocks materialize.

Higher interest rates [in 2023] “It will challenge the strategy taken by the French state,” said Sylvain Breuer, chief economist for Europe at Standard & Poor’s Europe.

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While inflation is falling elsewhere in the eurozone, figures released on Thursday are expected to show an uptick in price growth in France. French inflation is expected to peak in the first quarter of 2023, according to the French central bank.

Many companies, which do not benefit from energy price caps but are protected by fixed terms for their energy deals, are facing contract renewals.

At the Interact bakery, energy costs are set to quadruple in 2023, though government subsidies should cover about half of the increase. If bakers raised the price of bread by 10 or 20 cents a loaf, he said, most would be able to get by. “Some are freaking out, saying they’re going to have to shut down . . . but I’m telling the bread makers they need to start passing some raises.” “It will not be an exceptional year.”


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