Business

China is the Biggest Protectionist Threat to World Trade Not the US

There may be another reason that the global trading system is under threat — China simply isn’t satisfied with its role, and wants to shift to a less interdependent, self-contained economy.

China’s foreign minister has literally called the kettle black after saying US protectionism could trigger a world recession. Vowing to stand firm in a trade row with the United States.

“The lessons of the Great Depression should not be forgotten,” Wang Yi told the United Nations General Assembly in New York.

“Tariffs and provocation of trade disputes, which upset global industrial and supply chains, serve to undermine the multilateral trading regime and global economic and trade order,” he said.

“They may even plunge the world into recession,” the foreign minister added.

However even before Trump, China was pursuing a go-it-alone economic strategy that had little use for trade.

Global trade was slowing even before President Donald Trump was elected, Bloomberg reports.

There may be another reason that the global trading system is under threat — China simply isn’t satisfied with its role, and wants to shift to a less interdependent, self-contained economy.

China Enters the World Trade Organization

In the 2000s, China became the center of the world trading system, dominating both Asian and intercontinental trade.

But this wasn’t necessarily optimal for China, because much of this trade wasn’t adding much value. China started out doing a lot of low-value assembly for other countries; a piece of electronics would be researched and designed in the U.S; its expensive high-tech components manufactured in Taiwan or South Korea. And the final product slapped together for export by human hands in China.

Then sold and marketed back in the U.S. or other developed nation.

Though the products say “made in China,” most of the value in these chains weren’t captured by Chinese companies and workers.

This is known in economics as the smile curve. — the people who occupy the middle of the production process get paid less than the people at either end.

China naturally wanted to do more of the high-value stuff for itself. Thus, even as it expanded its trade with other countries, China strove to increase the domestic content of its exports, with some success.

Now China has other reasons to want to bring supply chains within its borders. U.S. export restrictions on the sale of critical technological components; equipment, and software to flagship Chinese technology companies such as; Huawei Technologies Co. have demonstrated just how vulnerable China’s reliance on global supply chains has left it.

China Ramping Up Military Tensions

The country’s military tensions are also ramping up, with potential flash points in in the South China Sea; the East China Sea, and with Taiwan.

In the event of a clash, China’s government doesn’t want its military-industrial complex to be hamstrung by reliance on global suppliers.

For these reasons, China’s government has been making a systematic push to build up its own high-technology industries and rely less on imported components.

The Made in China 2025 initiative is using a variety of industrial policy tools; Government investment, intellectual property acquisition; subsidies and directives to state-owned companies to bolster domestic champions in robotics; pharmaceuticals, aerospace, advanced materials and information technology.

The stated goal is for China to achieve 70% self-sufficiency in these industries by 2025.

From the perspective of developed nations, this is a troubling development for several reasons. It will create new competition for U.S., Japanese, European and South Korean companies. And further disrupt global supply chains.

Also, a more autarkic, less globally engaged China might feel emboldened to start a military conflict; with the U.S., Japan or other countries.

Economist Brad Setser of the Council on Foreign Relations believes that China is already de-globalizing at a rapid rate. He notes that the growth of China’s imports of manufactured goods is falling faster than overall economic growth as the country slows down.

A world of self-contained national supply chains is probably going to be both less efficient and more dangerous than a world of distributed international production.

At the very least, the trend threatens to raise prices for consumers. But the ramifications could be much more serious than that. The roll-up of supply chains into nationalist systems of production could take us back to a world where great powers feel less constrained in resorting to military means to settle conflicts. That’s a future that should worry everyone.

Source: Bloomberg

Business

PepsiCo Reduces Revenue Projections As North American Snacks And Key International Markets Underperform.

(VOR News) – In the third quarter of this year, Pepsi’s net income was $2.93 billion, which is equivalent to $2.13 per share. This was attributed to the company.

This is in stark contrast to net income of $3.09 billion, which is equivalent to $2.24 per share, during the same period in the previous year. The company’s earnings per share were $2.31 when expenses were excluded.

Net sales decreased by 0.6%, totaling $23.32 billion. Organic sales increased by 1.3% during the quarter when the effects of acquisitions, divestitures, and currency changes are excluded.

Pepsi’s beverage sales fell this quarter.

The most recent report indicates that the beverage and food sectors of the organization experienced a 2% decline in volume. Consumers of all income levels are demonstrating a change in their purchasing habits, as indicated by CEOs’ statements from the previous quarter.

Pepsi’s entire volume was adversely affected by the lackluster demand they encountered in North America. An increasing number of Americans are becoming more frugal, reducing the number of snacks they ingest, and reducing the number of times they purchase at convenience stores.

Furthermore, Laguarta observed that the increase in sales was partially attributed to the election that occurred in Mexico during the month of June.

The most significant decrease in volume was experienced by Quaker Foods North America, which was 13%. In December, the company announced its initial recall in response to a potential salmonella infection.

Due to the probability of an illness, the recall was extended in January. Pepsi officially closed a plant that was implicated in the recalls in June, despite the fact that manufacturing had already been halted.

Jamie Caulfield, the Chief Financial Officer of Pepsi and Laguarta, has indicated that the recalls are beginning to have a lessening effect.

Frito-Lay experienced a 1.5% decline in volume in North America. The company has been striving to improve the value it offers to consumers and the accessibility of its snack line, which includes SunChips, Cheetos, and Stacy’s pita chips, in the retail establishments where it is sold.

Despite the fact that the category as a whole has slowed down in comparison to the results of previous years, the level of activity within the division is progressively increasing.

Pepsi executives issued a statement in which they stated that “Salty and savory snacks have underperformed year-to-date after outperforming packaged food categories in previous years.”

Pepsi will spend more on Doritos and Tostitos in the fall and winter before football season.

The company is currently promoting incentive packets for Tostitos and Ruffles, which contain twenty percent more chips than the standard package.

Pepsi is expanding its product line in order to more effectively target individuals who are health-conscious. The business announced its intention to acquire Siete Foods for a total of $1.2 billion approximately one week ago. The restaurant serves Mexican-American cuisine, which is typically modified to meet the dietary needs of a diverse clientele.

The beverage segment of Pepsi in North America experienced a three percent decrease in volume. Despite the fact that the demand for energy drinks, such as Pepsi’s Rockstar, has decreased as a result of consumers visiting convenience stores, the sales of well-known brands such as Gatorade and Pepsi have seen an increase throughout the quarter.

Laguarta expressed his opinion to the analysts during the company’s conference call, asserting, “I am of the opinion that it is a component of the economic cycle that we are currently experiencing, and that it will reverse itself in the future, once consumers feel better.”

Additionally, it has been noted that the food and beverage markets of South Asia, the Middle East, Latin America, and Africa have experienced a decline in sales volume. The company cut its forecast for organic revenue for the entire year on Tuesday due to the business’s second consecutive quarter of lower-than-anticipated sales.

The company’s performance during the quarter was adversely affected by the Quaker Foods North America recalls, the decrease in demand in the United States, and the interruptions that occurred in specific international markets, as per the statements made by Chief Executive Officer Ramon Laguarta.

Pepsi has revised its forecast for organic sales in 2024, shifting from a 4% growth rate to a low single-digit growth rate. The company reiterated its expectation that the core constant currency profitability per share will increase by a minimum of 8% in comparison to the previous year.

The company’s shares declined by less than one percent during premarket trading. The following discrepancies between the company’s report and the projections of Wall Street were identified by LSEG in a survey of analysts:

SOURCE: CNBC

Business

Old National Bank And Infosys Broaden Their Strategic Partnership.

(VOR News) – Old National Bank, a commercial bank with its headquarters in the Midwest, and Infosys, a firm that specializes in information technology, have recently entered into a strategic expansion of their link, which has been in place for the past four years.

This expansion is more likely to take place sooner rather than later, with the likelihood being higher.

For the purpose of making it possible for Old National Bank to make use of the services, solutions, and platforms that are offered by Infosys, the objective of this expansion is to make it possible for the bank to transform its operations and processes through the application of automation and GenAI, as well as to change significant business areas.

This lets the bank leverage Infosys’ services, solutions, and platforms.

Old National Bank Chairman and CEO Jim Ryan said, “At Old National, we are committed to creating exceptional experiences for both our customers and our fellow employees.”

This statement is applicable to Old National Bank. Infosys is carefully managing the business process innovations that it is putting us through, putting a strong emphasis on efficiency and value growth throughout the process to ensure that it is carried out efficiently.

This is a routine occurrence throughout the entire operation. Because of Infosys’ dedication to our development and success, we are incredibly appreciative of the assistance they have provided.

Old National has been receiving assistance from Infosys in the process of updating its digital environment since the year 2020, according to the aforementioned company.

Ever since that time, the company has been providing assistance. The provision of this assistance has been accomplished through the utilization of a model that is not only powerful but also capable of functioning on its own power.

Infosys currently ranks Old National thirty-first out of the top thirty US banks.

This ranking is based on the fact that Old National is the nation’s largest banking corporation.

It is estimated that the total value of the company’s assets is approximately fifty-three billion dollars, while the assets that are currently being managed by the organization are valued at thirty billion dollars.

Dennis Gada, the Executive Vice President and Global Head of Banking and Financial Services, stated that “Old National Bank and Infosys possess a robust cultural and strategic alignment in the development, management, and enhancement of enterprise-scale solutions to transform the bank’s operations and facilitate growth.”

This remark referenced the exceptional cultural and strategic synergy between the two organizations. Dennis Gada is the one who asserted this claim. This was articulated explicitly concerning the exceptional cultural congruence and strategy alignment of the two organizations.

We are pleased to announce that the implementation of Infosys Topaz will substantially expedite the transformation of Old National Bank’s business processes and customer service protocols. We are exceedingly enthusiastic about this matter. We are quite thrilled about this specific component of the scenario.

Medium-sized banks operating regionally will continue to benefit from our substantial expertise in the sector, technology, and operations. This specific market segment of Infosys will persist in benefiting from our extensive experience. This phenomenon will enable this market sector to sustain substantial growth and efficiency benefits.

SOURCE: THBL

Business

American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

The largest regulated water and wastewater utility company in the United States stated Monday that it had been the target of a cyberattack, forcing the company to halt invoicing to consumers.

American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

American Water, based in New Jersey and serving over 14 million people in 14 states and 18 military facilities, said it learned of the unauthorized activity on Thursday and quickly took precautions, including shutting down certain systems. The business does not believe the attack had an impact on its facilities or operations and said employees were working “around the clock” to determine the origin and scale of the attack.

water

The corporation stated that it has alerted legal enforcement and is cooperating with them. It also stated that consumers will not be charged late fees while its systems are unavailable.

According to their website, American Water operates over 500 water and wastewater systems in around 1,700 communities across California, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Maryland, Missouri, New Jersey, Pennsylvania, Tennessee, Virginia, and West Virginia.

SOURCE | AP