The tough regulatory crackdown in China isn’t only a worry for investors with exposure to China and tech. Markets everywhere were spooked by the level of ideological control sought by the Chinese authorities over private companies.
And it won’t have helped China’s relationship with the UK – something that has been described as having deteriorated in recent times from “Golden Age to Ice Age” following clashes over Hong Kong, Huawei and human rights. The growing concerns over China are adding to the resolve here to limit the communist state’s reach in key energy infrastructure projects, and may affect trade deals too, despite the fact that both of these areas form key planks of government economic policy over the next decade.
Sometimes you just have to choose the less easy route to avoid storing up problems later, even while trying to find your way out of a pandemic-induced economic crisis. In any case, despite the enormity of the economic challenge which includes the additional twists of Brexit, decarbonisation, supply chain problems and inflation risk, there is plenty of positive news on the economic recovery front. As earnings seasons kicks off – find all our latest analysis on our Companies News page – many companies are reporting a much brightened outlook while the EY Item Club is forecasting that the economy will grow by 7.6 per cent this year and the International Monetary Fund agrees, with its own prediction of 7 per cent. Begbies Traynor reports that the number of businesses in distress has fallen for the first time since Q2 2019, by 10 per cent, but it also warns that Covid has dramatically accentuated the UK’s zombie business population with many firms having taken on unsustainable debts during the pandemic.