Is China’s economic slowdown here to stay?
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What is the main topic discussed in this episode?
Good morning from the Financial Times. Today is Thursday, July 16th, and this is your FT News Briefing. Energy companies are raking in cash because of the data center boom, and China's growth is at its lowest in decades. Plus, the State Department looks a lot different under U.S. President Donald Trump.
The department is now sort of a shell of itself, where career foreign service officers describe kind of this culture of fear and silence.
I'm Mark Filippino, and here's the news you need to start your day.
Energy companies that are going public are pulling in a lot of money, more than at any other point since the start of the century.
Why are energy IPOs surging and how are data centers driving investment?
Flotations by energy companies raised a little more than $12.5 billion in the first half of this year. That's according to the data firm Dealogic, and it's the highest level for a half year since the dot-com boom. Access to energy has emerged as a key bottleneck in bringing data centers online, and that's what's causing this surge in fundraising.
How much capital did energy flotations raise in the first half of the year?
As we told you a little while back, investors who have been betting on chip makers now appear to be switching to companies that might be able to power these data centers. Some of the winners include manufacturers of electrical distribution equipment. Other companies are using gas, geothermal, and even nuclear power.
China's quarterly growth rate has fallen to one of its lowest levels in decades. That's the result of weak consumer demand and falling investment. And it was below the already diminished target that Beijing had set for the year. The FT's Thomas Hale joins me to discuss this. Hiya, Tom. Hi there.
Which energy technologies are investors backing to power data centers?
So, Tom, what's the most notable thing for you about this growth data that came out on Wednesday?
So the GDP data itself is obviously the headline figure, but China also releases monthly indicators. These include data on retail sales, data on what's called fixed asset investment, which is a gauge of investment. And these indicators for several months and in the data we saw this week really do raise real questions over the health of the Chinese economy. Retail sales are up 1%. Year on year in June, they declined in May for the first time since 2022. And the fixed asset investment data has been declining for several months now. It's now down 5.7% so far this year compared to the same period a year earlier.
What do China’s latest GDP and monthly indicators reveal about consumer demand?
So that is signaling a real issue with investment in China.
I want to focus in on the investment figures. Why are they in particular so low?
Well, the fixed asset investment data in China rose at the start of this year and is now falling again. So it's looking like there is fiscal pressure somewhere on investment in China. China's property sector has been struggling since 2021 when Evergrande, the world's most indebted developer, defaulted on its international debts. But what's different this year and late last year is that the overall investment number as part of this fixed asset investment is declining. Also, there have been signs since the middle of last year of potential pressure from the central government on curbing excessive investments investment and curbing this enthusiasm that has characterized China for three decades to pursue these ambitious investment projects to drive growth.
Why is fixed asset investment falling in China and what role does the property sector play?
So that's a potential tension in the incentives facing local governments in China that could be related to this decline in the fixed asset investment data that we're seeing. Was there any good news for China's economy? So China also reported trade data this week. That data showed exports soaring again. Exports were up 27% in June. Imports rose by even more. But we're still seeing very strong export growth. And the more that issue becomes apparent, the more that there's a sense that trade is playing a very important role in driving activity domestically.
Given this data and the upsides you just mentioned, is China entering a kind of new normal with lower growth expectations than it's seen in the past?
I think this is really a very significant moment. There's a sense now of a potential grind here. You know, that question of where is growth going to come from in future?
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:02–0:50
2
Why are energy IPOs surging and how are data centers driving investment?
0:50–1:09
3
How much capital did energy flotations raise in the first half of the year?
1:09–1:48
4
Which energy technologies are investors backing to power data centers?
1:48–2:31
5
What do China’s latest GDP and monthly indicators reveal about consumer demand?
2:31–3:26
6
Why is fixed asset investment falling in China and what role does the property sector play?
3:26–4:45
7
Could stronger export growth offset China’s domestic slowdown?
4:45–6:11
8
Why are oil traders warning the market could run dry after Hormuz re‑closures?
6:11–10:45