Xi’s problems pile up

Chinese President Xi Jinping’s hopes for stability ahead of a historic Communist Party congress are quickly dwindling.His country’s economic [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( Chinese President Xi Jinping’s hopes for stability ahead of a historic Communist Party congress are quickly dwindling. His country’s economic slowdown deepened in July as strict Covid Zero measures and a slumping real-estate market threaten the chances of a recovery to a “reasonable” range. Key reading: - [China Announces Patrols to Protest US Senator’s Taiwan Visit]( - [China Shocks With Rate Cut as Data Show ‘Alarming’ Slowdown]( - [China Youth Jobless Rate Hits Record 20% in July on Covid Woes]( - [China’s Growth Seen Weakening in Months Ahead, Economists Say]( Xi, who’s expected to secure an unprecedented third term at the congress meeting later this year, now has just a few months to rein in spiraling economic crises as well as flaring tensions with the US since his government responded to House Speaker Nancy Pelosi’s visit to Taiwan with its most provocative military drills in decades. Economic data for July suggest confidence is collapsing among China’s businesses and households — retail sales, industrial output and investment all slowed last month, and youth unemployment climbed to a record 19.9%. That means even a surprise interest-rate cut by the central bank is unlikely to help much because there’s little appetite to borrow. It’s a precarious moment for the authorities. They’re already dealing with protests across more than 100 cities in China from homebuyers who are facing delays in receiving apartments they purchased. Add to that fresh outbreaks of Covid-19 in restive areas like Xinjiang and Tibet and the challenges are stark. And Beijing’s commitment to sustaining its new normal around Taiwan, encroaching into a buffer zone that’s helped keep the peace around the democratically governed island, is already being tested. Another US congressional delegation is in Taiwan today, prompting China’s military to say it held fresh patrols to “fight back” against the visit. It’s another unwanted headache for Xi in a year that’s proving anything but calm. — [Rebecca Choong Wilkins]( Xi in Hong Kong on July 1. Photographer: Justin Chin/Bloomberg Click [here]( to sign up for The Readout with Allegra Stratton, your guide to the stories that matter for the UK. And share this newsletter with others. They can sign up [here](. Global Headlines Trump search | US Senate Intelligence Committee leaders requested the government [provide them with]( classified documents the FBI seized at former President Donald Trump’s home last week. Agents took away files that included some with the US government’s highest secrecy rating during the raid, touching off political recriminations before November’s midterm congressional elections. Strengthening ties | Russian President Vladimir Putin offered to [expand]( “comprehensive” relations with North Korea in a congratulatory message for its Liberation Day holiday, the official Korean Central News Agency reported. Pyongyang recognizes the independence of the self-proclaimed Donetsk and Luhansk peoples republics in Russian-occupied eastern Ukraine, leading some analysts to speculate it could be a source of armaments for Putin’s war. - Russia [allowed]( trading from today in debt securities for investors from “friendly” countries that haven’t joined sanctions imposed by the US and its allies. The risk of a euro-area [recession]( has reached the highest level since November 2020 as energy shortages threaten to drive already record inflation higher still, a Bloomberg survey showed. The rising cost of living is hurting companies and households, with Russia’s energy threats exacerbating the problem. Covid curbs | To combat new Covid-19 outbreaks in outlying areas like Xinjiang and Tibet, Beijing is drawing on a security apparatus previously used to quell dissent against the Chinese government. Surveillance methods used against Tibetan Buddhists and mainly Muslim Uyghurs are helping [enforce]( Covid Zero rules, ensuring there are no public displays of anger like those seen during the months-long lockdown in Shanghai. - Mayhem erupted at an Ikea in Shanghai as health authorities tried to lock down the store on Saturday and [quarantine]( those on site after learning someone who had been in contact with a Covid-19 patient had visited. Best of Bloomberg Opinion - China’s Demographics Spell Decline Not Domination: Niall Ferguson]( - [Modi’s India Risks Making the Case for Partition: Nisid Hajari]( - [All I Want for Christmas Is a Reality Check: Maria Tadeo]( Tight contest | Kenya’s electoral commission is close to announcing the final results of last week’s presidential election. Deputy President William Ruto clung to a [narrow lead]( of 51.2% to 48.1% over former Prime Minister Raila Odinga, according to data on the Nairobi-based Nation Media Group’s website. Elections billboards for Odinga and Ruto. Photographer: Michele Spatari/Bloomberg Explainers you can use - [A Desert Nation Turns to Hydroponics to Make Feed for Livestock]( - [Much of US Will Be an ‘Extreme Heat Belt’ by the 2050s]( - [UK Inflation Shock Is Within Whisker of Double Digits]( Winter planning | Germany’s gas storage facilities have reached a fill level of 75% two weeks ahead of schedule, the country’s top regulator said, as Europe’s biggest economy tries to shore up supplies cut by Russia. Gernmany’s [rules stipulate]( that storage facilities must be at least 75% full on Sept. 1, rising to 85% on Oct. 1 and 95% on Nov. 1. Bloomberg TV and Radio air Balance of Power with [David Westin]( weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online [here]( or check out prior episodes and guest clips [here](. News to Note - Mexico moved hundreds of [troops]( into Tijuana to beef up street patrols after armed gangs hijacked and burned at least a dozen vehicles in the border city. - Australian Prime Minister Anthony Albanese ordered a review into claims his predecessor [secretly]( took charge of multiple ministries during the pandemic, describing it as a “shadow government.” - South Korean President Yoon Suk Yeol said he wants to “swiftly and properly improve” [relations]( with Japan by overcoming problems stemming from historical disputes, as the two countries face “common threats.” - Indonesian President Joko Widodo [delivers]( his annual budget speech tomorrow that will outline how his government intends to bring fiscal consolidation back on track in the face of swelling state spending. - South African Finance Minister Enoch Godongwana [denied]( an allegation of sexual harassment, after being informed that a case was opened against him. Thanks for the 54 responses to our Friday quiz question and congratulations to Thomas Hawley, who was the first to name Brazil as the nation whose leader is stepping up aggressive rhetoric before general elections to rally his radical base, including urging his supporters to arm themselves. And finally ... Elon Musk, the world’s richest man, wrote a [column]( for the official magazine of the powerful agency that oversees Chinese data security and censors online content. He addressed his audience as his “Chinese friends,” laid out his vision for using technology to ensure humanity’s future and said his greatest hope is to build a city on Mars. The tycoon has drawn criticism for his close ties to China, the world’s biggest electric vehicle market and home to a factory that’s central to Tesla’s growth plans. Musk at the Satellite 2020 Conference in Washington in 2020. Photographer: Andrew Harrer/Bloomberg Like getting this newsletter? 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