Global Pulse

分类： business

  • Flood of discounted auction homes deepens China’s property slump

    Flood of discounted auction homes deepens China’s property slump

    China’s struggling residential property market extended its downward trajectory through 2026, driven by a flood of steeply discounted court-ordered auction homes seized from defaulting mortgage borrowers. This influx has amplified buyer caution, erasing tentative hopes for a recovery in the world’s second-largest economy.

    New data from leading Chinese real estate research firm China Index Academy reveals that across 355 cities, the number of properties listed for court auction hit 539,000 in the first seven months of 2026, marking a 23.7% year-on-year increase. With courts and asset management firms racing to offload seized assets, average auction prices have dropped 9% compared to the same period last year.

    Industry data shows only roughly one-third of all listed auction properties successfully find buyers, with auctioned homes selling at an average 30% discount to comparable existing homes on the private secondary market. This price gap grows far wider in lower-tier cities: many unsold auction properties in second- and third-tier markets carry discounts of 50% to 60% off secondary market levels, with the majority drawing no bidders at all.

    These deep discounts have reshaped buyer psychology, reinforcing widespread expectations that home prices will continue to fall before hitting a market bottom. Instead of rushing to purchase discounted properties, prospective buyers are now extremely selective, prioritizing assets that offer strong resale value. Demand has become heavily concentrated in well-located units in top-tier cities with reliable transportation access and proximity to high-performing schools, while remote, older, and rural properties sit largely unwanted.

    Shaanxi-based economic commentator Jiang Xiaorong notes that while the total volume of completed court-auction home transactions rose 42.7% year-on-year in the first seven months of 2026, this growth is not a sign of renewed buyer confidence. “This looks more like sellers using deep price cuts to clear a growing backlog of defaulted assets, not buyers suddenly turning bullish on housing again,” Jiang explained.

    For ordinary private homeowners looking to upgrade their properties, the crisis is not just about falling paper values—it is a catastrophic collapse in market liquidity. Jiang shared the example of one upgrading household that needed a 3 million yuan (roughly US$420,000) down payment for their new home. Their existing property, originally valued at 2.5 million yuan, has remained unsold for three months even after two consecutive price cuts that brought its asking price down to 2.2 million yuan, leaving the family unable to meet their purchase deadline.

    Many desperate sellers turn to high-interest consumer loans or dip into long-term savings earmarked for elderly family care or children’s education to raise emergency funds, while others continue slashing prices to force a quick sale. For these households, liquidity matters far more than theoretical property value: court auction data underscores that an asset is only worth what a buyer will pay in cash immediately.

    As of April 2026, 8 million Chinese borrowers are officially listed as loan defaulters after missing mortgage payments, with 60% of these defaulters under the age of 35, according to a commentator writing under the pen name Property Observer. He shared the case of one buyer who purchased an apartment for 3.48 million yuan with a 2.8 million yuan mortgage. Just a few years later, the property’s market value dropped to 1.2 million yuan, but the buyer remains obligated to continue paying down the full original mortgage. If they stop payments, the home will be auctioned off, and they will still be left responsible for the remaining massive debt.

    The commentator added that roughly 45% of borrowers who default on mortgages did so after losing their jobs, as once-stable sectors including hospitality, real estate, and private education have implemented widespread layoffs in recent years. For most households, giving up a home to auction is not a voluntary choice—it is a last resort.

    Official data from the National Bureau of Statistics (NBS) confirms the uneven, two-speed downturn playing out across China’s secondary housing market. In July 2026, secondary home prices in first-tier cities fell 3.7% year-on-year, with Guangzhou recording the steepest drop among the four major top-tier cities at 4.7%, followed by Beijing at 4.5%, Shenzhen at 3.6%, and Shanghai with the smallest decline at 2%.

    Second-tier cities saw a sharper 5.1% year-on-year drop in secondary home prices, while third-tier cities recorded the most severe declines at 5.8% year-on-year. Chinese market analysts say this gap highlights that liquidity, not just price, is the defining feature of today’s market. Top-tier cities are cooling far more slowly because buyers still recognize limited supply and consistent underlying demand, while smaller cities face years of persistent oversupply that leaves sellers with almost no negotiating power.

    “The secondary market has a shortage of high-quality listings, so newer homes in good school districts or prime locations can still hold their value relatively well,” explained Yan Yuejin, deputy director of the Shanghai-based E-house Real Estate Research Institute. “But overall, sellers in most cities are still cutting prices just to keep transactions moving, and further price adjustments will be needed to draw hesitant buyers back into the market.”

    Auction clearance rates— the share of listed properties that actually sell—mirror this stark divide across city tiers. Nationwide, 89,000 of 245,000 listed residential auction properties sold in the first seven months of 2026, for an overall clearance rate of 36.2%. Clearance rates are far higher in top-tier and economically strong second-tier cities: Ningbo leads the country with an 80.8% clearance rate, followed by Shanghai at 78.5%, Shenzhen at 71.3%, Hangzhou at 70.4%, and Guangzhou at 55.6%.

    Smaller cities fare dramatically worse. In Luoyang, a mid-sized city in central China, only 12.87% of auctioned homes found buyers, meaning fewer than 13 out of every 100 listed properties actually transact.

    Across the country, auctioned homes sold for an average of 73% of their appraised value in 2026, equal to a 27% discount. If a property fails to sell in its first auction round, starting bids for the second round can be cut by as much as 20%.

    Commentator Yang Po describes the situation as particularly devastating in Shijiazhuang, a second-tier city adjacent to Beijing where thousands of homeowners have lost their jobs, their homes, and decades of accumulated savings amid the multi-year property downturn. She shared the story of a local man surnamed Zhang, who purchased a small three-bedroom apartment in 2019 for 1.1 million yuan, putting down 350,000 yuan in savings and taking out a 750,000 yuan mortgage with monthly payments of 4,200 yuan. Zhang lost his full-time job in winter 2024, and even after switching to work as a food delivery driver, he could not cover his monthly expenses. His home was seized and listed for court auction with a starting price of 660,000 yuan, equal to 70% of its appraised value. No bidders stepped forward. In the second auction round, the home sold for just 560,000 yuan, leaving Zhang still owing 190,000 yuan to the bank.

    Yang notes that the low auction sale price dragged down property valuations for the entire surrounding neighborhood, amplifying anxiety for other private homeowners in the area.

    The ongoing downturn has also forced private property developers to scale back activity sharply, with new project development slowing dramatically. NBS data shows that nationwide real estate development investment dropped 19.2% year-on-year to 4.3 trillion yuan in the first seven months of 2026, further weighing on broader economic growth.

  • Bird flu ‘obviously’ will hit Ingham’s, chief executive says

    Bird flu ‘obviously’ will hit Ingham’s, chief executive says

    As the highly pathogenic H5N1 avian influenza strain continues to spread across wild bird populations in every Australian state, the chief executive of Australia’s largest poultry producer Ingham’s has warned that an outbreak on one of the company’s commercial farms is no longer a matter of if, but when.

    Speaking alongside the release of Ingham’s full-year 2024-25 financial results on Friday, CEO Edward Alexander acknowledged that growing confirmed H5N1 detections in wild birds across the country makes introduction to domestic poultry inevitable. “Assume bird flu does hit, it’ll hit, obviously, one of our farms,” Alexander stated in his remarks, noting that within a two-kilometre radius of an infected site, containment operations would become challenging.

    To mitigate the risk of large-scale spread, Alexander explained that Ingham’s operational model was intentionally designed with biosecurity as a core priority. The company spreads its farm locations, feed mills, processing facilities and distribution networks across the country, with geographic separation that acts as a natural barrier to transmission. In the event of an outbreak, rapid depopulation of infected flocks would be deployed to constrain the virus to a single site, and the company’s diversified footprint means that a single outbreak does not have to trigger nationwide supply disruption.

    “That means an outbreak in one location does not automatically translate into disruption across our broad network,” Alexander said. “We have the ability to isolate affected areas, protect other parts of the network, and redirect production and supply.”

    Ingham’s has also drawn critical lessons from the ongoing global H5N1 crisis that has killed millions of birds and marine mammals across the globe since the strain re-emerged in Europe in 2021. Data from the outbreak shows that more than 700 commercial poultry flocks across 23 European countries were infected in 2024, with 300 additional detections recorded in 16 nations so far this year. Alexander revealed that Ingham’s senior leadership has traveled to Europe to study firsthand responses to the outbreak, allowing the company to develop detailed, tested response protocols ahead of any domestic outbreak.

    “This is a real and a significant risk for the poultry industry, as has been well documented in recent media. We take this risk extremely seriously and we are prepared for it,” Alexander said. “We know what we would do. We know how we would respond, and we know where the critical decisions ultimately need to be made.”

    Beyond geographic separation and response planning, the company has invested heavily in prevention measures, ongoing wild bird and domestic surveillance, scenario planning and staff training to respond quickly to any detection. Right now, there are no recorded cases of H5N1 in Australian commercial poultry flocks, though state governments have already issued public warnings to beachgoers to avoid contact with sick or dead wild birds.

    Alexander also addressed market concerns, noting that contrary to the European experience, where looser biosecurity standards for egg production led to plummeting consumer demand for eggs, there has been no measurable drop in consumer demand for chicken in Australia amid growing public awareness of the H5N1 risk. While an outbreak has not been formally factored into the company’s new financial year projections, Alexander said that unpredictable nature of the virus makes precise forecasting impossible.

    “We can’t fully eliminate the risk, but we can control how well prepared we are for it,” he emphasized. “What I can say with confidence is that Ingham’s enters this period of time with the most resilient national network, well-developed biosecurity controls and a team that is prepared to act quickly and decisively if required.”

    Alongside its preparedness updates, Ingham’s released full-year financial results that showed a steep 61% drop in net profit to AUD 34.6 million. The decline was driven by lower core earnings and an unexpected AUD 12.7 million addition to the company’s tax bill, related to disputed tax offsets claimed between 2019 and 2021. The company confirmed it will challenge the additional tax assessment and “intends to defend its position” per disclosures in its annual report.

    Headquartered in Australia, Ingham’s operates its largest production networks in South Australia and Queensland, with smaller facilities in Western Australia and Victoria.

  • ARN Media slumps to $28m loss amid Kyle and Jackie O legal costs

    ARN Media slumps to $28m loss amid Kyle and Jackie O legal costs

    Australian Radio Network (ARN), the operator of popular national radio networks including KIIS and Gold Network, has reported a sharp downturn in its first-half financial results, driven by massive costs tied to the abrupt cancellation of its top-rated flagship program, *The Kyle and Jackie O Show*. The regional and metropolitan radio broadcaster revealed in its latest half-year earnings update that total revenue dropped 14% year-over-year to AU$126.8 million, while net losses surged to AU$28.3 million. Company executives confirmed that the overwhelming majority of this loss stems from impairment charges and mounting legal fees that followed the show’s cancellation in March 2024.

    The chain of events that led to the show’s axing began in February 2024, when an on-air public dispute between co-hosts Kyle Sandilands and Jackie ‘O’ Henderson triggered an internal crisis for the network. At the time of cancellation, *The Kyle and Jackie O Show* was ARN’s highest-rated morning program, boasting a large loyal audience across major Australian markets including Sydney and Melbourne. But according to ARN chief executive Michael Stephenson, the program failed to translate its high listener numbers into sponsor interest, while persistent brand safety concerns created lingering risks for advertising partners.

    “While first half revenue was impacted by residual brand safety issues in KIIS Breakfast and the Federal Election in the prior year, ARN’s underlying audience position remains strong and our immediate priority is to regain metro radio revenue share,” Stephenson said in the earnings release. He also confirmed that new breakfast shows for both the Sydney and Melbourne KIIS markets will launch in early 2025, as the network works to rebuild its morning slot revenue.

    Following the cancellation, both Sandilands and Henderson launched legal claims against ARN Media over their exit from the network. Sandilands reached a settlement with the company for AU$13.5 million, while legal proceedings involving Henderson remain ongoing. In a surprising post-exit arrangement, ARN has retained a financial stake in Sandilands’ future media projects: the network will take a 19.9% cut of net revenue from all of his new ventures for up to three years.
    ARN Media chairman Hamish McLennan framed the company’s poor half-year results as a necessary growing pain, noting that the decision to cancel the show was a long-term strategic move to reset the business. “While the first half result is not where we want ARN to be, the board is clear that the decisions being made now are the right decisions to change the trajectory of the company,” McLennan said in the official results statement. “ARN exits the first half as a leaner, financially stronger and more focused organisation.” Industry analysts are now watching closely to see whether the network’s new breakfast programming can reverse the revenue slump and win back lost advertising market share in key metropolitan markets.

  • Why the US economy is ringing alarm bells

    Why the US economy is ringing alarm bells

    This summer, Americans have been distracted by a slate of major cultural and sporting events: the 250th anniversary of the United States, Taylor Swift’s high-profile wedding, and the men’s football World Cup. But beneath the fanfare, mounting economic pressures have been bubbling to the surface, culminating this week in a sobering milestone that has drawn alarm from policymakers and economists at home and abroad: America’s gross national debt has officially surpassed the $40 trillion mark.

    Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, notes that the nation’s journey from zero to its first $1 trillion in debt stretched nearly 200 years, with that 1981 milestone prompting a public warning from then-President Ronald Reagan. In a televised address to the nation, Reagan framed the $1 trillion threshold as a critical wake-up call for fiscal responsibility. Today, 45 years later, the U.S. spends more than $1 trillion annually just on interest payments for its accumulated debt, a stark shift that underscores how rapidly federal borrowing has grown.

    The $40 trillion threshold was widely anticipated by analysts, who trace the rapid expansion of the national debt back to consecutive spending surges under both the Donald Trump and Joe Biden administrations. Decades of ballooning costs for social safety net programs and other federal expenditures have outpaced government revenue, which has been eroded by successive rounds of major tax cuts. Large-scale emergency borrowing to respond to systemic crises, including the 2008 global financial crash and the 2020 COVID-19 pandemic, added trillions more to the national balance sheet. More recently, steep interest rate hikes implemented to tame post-pandemic inflation have drastically increased the cost of servicing existing debt, turning a gradual rise into an accelerating crisis.

    When Trump first took office in 2016, the national debt stood just below $20 trillion, meaning the total has doubled in less than a decade. Data from the Congress Joint Economic Committee puts the current rate of growth at roughly $90,000 per second, or $7.8 billion per day.

    Eric Swanson, an economics professor at the University of California, Irvine and former senior Federal Reserve economist, explains that today’s debt landscape is far more precarious than it was 10 years ago, largely due to the current interest rate environment. U.S. long-term interest rates are now at multi-decade highs, a shift driven in part by persistent inflation concerns and in part by investor anxiety over the unprecedented scale of federal government borrowing.

    Competition for investor capital has also tightened: major technology firms are borrowing massive sums to fund artificial intelligence development, directly competing with the U.S. government for bond buyers. This has forced the Treasury to offer higher yields to attract investment, further increasing borrowing costs.

    Wharton School economist and former global investment chief Mohamed A. El-Erian points out that higher interest rates make deficit funding exponentially more expensive. Year-over-year, federal interest payments on the national debt have risen 15%, and now account for nearly 20% of total federal tax revenue — a larger share than the entire U.S. defense budget.

    The nation is also rapidly approaching the statutory $41.1 trillion debt ceiling, and the nonpartisan Congressional Budget Office projects total national debt will climb to roughly $64 trillion by 2036 if current spending and revenue patterns hold.

    Despite the alarming numbers, economists emphasize the situation is not yet at a critical breaking point. As the world’s largest economy and with the U.S. dollar retaining its status as the global reserve currency, the U.S. has far more fiscal breathing room than other nations facing high debt levels, El-Erian says. Right now, he describes the moment as a flashing yellow warning light, not a flashing red crisis signal.

    Swanson adds that other advanced economies currently carry higher debt-to-GDP ratios than the U.S. America’s current debt equals 126% of its annual gross domestic product, a share lower than G7 peers Japan and Italy. Even so, Swanson warns that investor appetite for U.S. government bonds is diminishing, creating a vicious cycle: the government must offer ever-higher yields to attract buyers, which in turn increases overall debt and servicing costs.

    The ripple effects of America’s debt crisis do not stop at the U.S. border. Higher U.S. borrowing costs inevitably push up borrowing costs for governments, businesses and households across the globe. “What happens in the US never stays in the US,” El-Erian notes.

    For American households, the impact will hit directly in the form of higher interest rates for mortgages, auto loans and credit card balances, with low-income households bearing the brunt of the burden. There is also a secondary inflationary effect: businesses pass their own higher borrowing costs on to consumers via elevated prices for goods and services. Ultimately, MacGuineas says, “the impact of the debt finds its way to the pocketbooks of people one way or another.”

    Recent U.S. economic data shows growth has slowed in recent months but remains solid, a positive sign for fiscal stability. El-Erian explains that stronger economic growth generates higher tax revenue, which can cover government spending and interest payments, gradually easing the long-term debt burden if growth holds. If growth stalls, however, the U.S. will be forced to consider more difficult policy adjustments, including tax system reform, spending cuts, or in a worst-case scenario, debt restructuring.

    So far, the federal government has relied on targeted financial engineering to calm bond markets: on Wednesday, the Treasury Department launched a debt buyback program intended to boost bond demand and push down long-term borrowing costs. The effect was short-lived, however, with long-term yields climbing back to recent highs just one day later.

    With upcoming congressional midterm elections, the White House is under intense pressure to demonstrate progress on economic issues, with affordability ranking as the top concern for U.S. voters. Yet major structural reforms remain politically unappealing, and El-Erian says he is skeptical that policymakers will take meaningful action to address the deficit in the near term. “I don’t see anything happening that is going to significantly lower the deficit over the next two to three years,” he says. “If you look at the political talk, it’s about tax cuts.”

  • US closure bill costs GYG, business posts $26m annual loss

    US closure bill costs GYG, business posts $26m annual loss

    Australian-born Mexican-inspired fast food chain Guzman Y Gomez (GYG) has formally pulled the plug on its high-risk ambition to break into the highly competitive U.S. restaurant market, revealing the failed venture has left the business with a $26.7 million full-year statutory net loss after accounting for exit costs. The Sydney-founded chain released its full-year 2024-2025 financial results on Friday, which showed the U.S. exit dragged the company into the red, with $67.3 million in total costs tied to winding down its eight Chicago locations.

  • Australian spending defies cost-of-living crisis, stoking RBA rate hike fears

    Australian spending defies cost-of-living crisis, stoking RBA rate hike fears

    Against a backdrop of cooling national property prices and broad cost-of-living pressures that have squeezed household budgets across Australia, new consumer spending data has revealed an unexpected resilience in discretionary spending that is putting the Reserve Bank of Australia’s (RBA) rate cut outlook to the test.

    Data compiled by Commonwealth Bank of Australia (CBA), drawn from transaction records of more than 7 million of its retail customers, shows overall household spending climbed 0.6% in July, marking the second consecutive monthly gain. Ten of the 12 tracked spending categories recorded growth, with non-essential discretionary spending driving most of the uptick. Recreation spending led all categories with a 1.1% monthly increase, followed closely by hospitality spending which rose 1.0% over the same period.

    CBA economists attribute this surprise growth in discretionary outlays to a sustained shift among Australian households toward prioritizing experience-based spending, a trend that held strong even in the face of broader budget pressures. July’s packed calendar of major global and domestic events, including the men’s FIFA World Cup and the wide release of the blockbuster film *The Odyssey*, gave an extra boost to spending on leisure and hospitality. Household goods spending also saw solid gains, supported by targeted promotional campaigns across major Australian e-commerce marketplaces.

    “Despite ongoing pressure on household balance sheets, families continue to carve out space in their budgets for discretionary experiences,” explained Ashwin Clarke, CBA’s senior economist. “This strength in non-essential spending signals that households are still willing to open their wallets rather than hunker down and build up savings. That definitely raises the risk that consumer spending will not cool as quickly as the RBA has projected.”

    Even with the current uptick in consumption, year-to-date spending growth remains weaker than the pace recorded in 2025. Clarke noted that while near-term spending has held up better than expected, long-term headwinds including slowing wage growth, declining property values, and still-elevated inflation are expected to drag on consumption growth in the coming quarters. “We still expect household spending to slow, it just may take longer than initially projected,” he said. “The underlying fundamentals for household consumption are fairly weak. But if spending fails to decelerate over the next six months in line with the RBA’s forecasts, it will leave the central bank uncomfortable and could prompt it to consider another interest rate hike to dampen demand.”

    Clarke added that the current strength in discretionary spending has been partially enabled by temporary easing in costs for essential goods and services: “We’ve also seen a growing number of listed consumer firms note in recent earnings outlooks that more shoppers are becoming value-conscious, hunting for discounts and trading down to cheaper alternatives. On top of that, weaker spending on essentials, particularly utilities, plus temporary lower fuel prices in recent months, have freed up small amounts of room in household budgets for leisure spending.”

    The surprise spending surge comes as Australia’s property market continues to cool faster than most analysts predicted. National home prices fell 0.7% in July, the steepest monthly decline recorded nationwide since December 2022. ANZ economists Madeline Dunk and Adam Boyton project that capital city property values will drop 4.3% across the 2026 calendar year, followed by a further 3.4% decline in 2027. Sydney, Australia’s largest property market, is forecast to see prices drop as much as 14.5% from their recent peak.

    Clarke said falling property values are one of the key factors that will likely drag consumer spending lower moving forward. “Income growth has been slowing for the last several quarters, and we expect that trend to continue, especially with persistent inflation and the lagged economic impacts of global conflicts,” he said. “History shows that when housing prices decline, households tend to pull back on spending. Falling equity in their biggest asset makes consumers feel less wealthy, and lower transaction volumes in the property market also cut related spending on moving, renovations and new household goods. Combined, these factors will almost certainly slow consumption.”

    The latest CBA spending data aligns with recent commentary from RBA deputy governor Andrew Hauser, who warned this week that inflation remains well above the central bank’s 2-3% target band, and demand across the economy needs to cool further to bring price growth under control. The RBA has raised interest rates three times already in 2026 to dampen excess demand.

    “Monetary policy needs to bring inflation down, which is why we have raised rates three times this year, but it can only achieve that by reducing pressure on capacity and demand across the economy,” Hauser told the Queensland Futures Institute Annual Regions Summit in Brisbane. “That means slightly slower growth in consumption, slightly slower growth in employment. We’ve seen a little bit of that progress so far, but we are going to need to see more to get inflation back to target. This is not a slump, not a depression, but it will be slower growth than we have seen in the past.”

    Hauser reiterated the RBA’s dual mandate to keep inflation between 2 and 3% while maintaining full employment, adding that domestic demand remains a key contributor to ongoing price pressures. “Inflation is too high,” he said. “Everywhere you look people say prices are too high, cost pressures are too strong. While some of that is driven by global factors, some of it does come from domestic demand here in Australia.”

  • How China eased pressure on oil markets by halting purchases and relying on reserves

    How China eased pressure on oil markets by halting purchases and relying on reserves

    Six months after major supply disruptions shut down much of the Strait of Hormuz — the world’s most critical chokepoint for global oil trade — energy markets have avoided the catastrophic price spikes that marked comparable Middle Eastern crises in decades past. Analysts largely credit one unexpected factor for this muted volatility: China’s deliberate strategy of drawing down its massive strategic petroleum reserves (SPR) instead of bidding up crude prices on a disrupted global market.

    Before the current crisis, the Strait of Hormuz carried roughly 20 million barrels of crude per day, equal to one-fifth of total global daily oil consumption. Six months into the ongoing disruption, an estimated 10 to 14 percent of the world’s total oil supply remains locked in, a far larger share of global output taken offline than during past major Middle East energy shocks. For comparison, the 1973 Arab oil embargo, which quadrupled global oil prices, only disrupted 7 percent of global supply. Both the 1979 Iranian Revolution and the 1990 Iraqi invasion of Kuwait doubled crude prices despite cutting off just 6 to 7 percent of global supply each.

    Against this historical context, the current market outcome has been remarkably stable: international benchmark Brent crude has only risen around 50 percent since the start of the year, stabilizing at a steady $85 to $90 per barrel, after an initial jump when the strait closed. Two key factors explain this relative calm: coordinated emergency releases from the International Energy Agency totaling 400 million barrels, and a sharp pullback in crude purchasing from China, the world’s largest crude oil importer.

    China’s ability to cut back on imports stems from its 20-year program of building up strategic reserves, which has accelerated since 2022. Today, Beijing holds more than 1.2 billion barrels of stored crude, enough to cover more than 100 days of net imports and sustain domestic supply for at least a full year even with a complete halt to seaborne imports. To preserve its stockpile while meeting domestic needs, Beijing sharply slowed refinery output to prioritize essential domestic demand, and restricted exports of refined products including diesel, gasoline, and jet fuel, allowing it to draw on reserves instead of purchasing expensive crude on the open market.

    As Jack Prandelli, a veteran commodity trader, explained to Middle East Eye, Beijing’s strategy has effectively served as a price buffer: “China is preserving a high cushion, using its reserve as a buffer instead of chasing barrels in a disrupted Gulf market.”

    In recent weeks, however, Beijing has begun to adjust its approach: it has partially lifted restrictions on refined product exports and made small, temporary purchases of Gulf crude. This shift has sparked market speculation about when China will resume full-scale restocking of its SPR, a move that analysts warn could trigger substantial upward pressure on global oil prices.

    In July, China recorded a surprise small surplus of 210,000 barrels per day, a figure that caught many analysts off guard given the steep drop in crude imports since March. But Prandelli noted the surplus stems from refiners cutting output faster than export restrictions were loosened, not a meaningful rebound in crude imports. “It looks more like a pause in an extended destocking cycle than a decisive pivot to aggressive restocking,” he said.

    Duncan Wrigley, chief China economist at Pantheon Macroeconomics, added that the minor uptick in oil imports seen in August can be traced to improved refinery margins following a brief drop in global crude prices, which dipped to $78 per barrel in the first week of August after averaging more than $90 the prior month. Prandelli cautioned that this minor import growth is unlikely to hold, predicting that “import volumes are already expected to stall or even reverse in August” as refiners continue leaning on reserves amid ongoing Hormuz disruptions and no diplomatic breakthrough between the U.S. and Iran.

    For the second consecutive month in August, China further relaxed caps on refined fuel exports, approving a quota of up to 2.7 million metric tons for international shipments, according to a Reuters report citing industry sources. This move surprised many analysts, given the ongoing instability for vessels transiting the strait. Wrigley argued the easing “indicated perhaps misplaced optimism that global oil supplies would start to normalise.” A stabilization of conditions through the Hormuz would allow Chinese refiners to return to full normal output levels, he noted.

    Early August had raised hopes for a diplomatic breakthrough: mediation from Qatar and Pakistan signaled that the U.S. and Iran might reach a long-term agreement to reopen the strait, where traffic had already fallen to record lows. Those hopes faded quickly, however, when former U.S. President Donald Trump reaffirmed plans to maintain harsh economic pressure on Iran and reiterated military threats just weeks before the existing bilateral memorandum of understanding expired on August 17 without renewal. The following weekend saw only five vessels transit the waterway, an all-time record low.

    Even with the ongoing disruption, Wrigley noted that China’s loosening of export restrictions signals Beijing is not concerned about running low on either commercial or strategic oil inventories. The current reserve stockpile is enough to cover more than 100 days of net imports, according to Prandelli, and analysts do not expect Chinese refiners to actually export the full 2.7 million tons approved in the latest quota, which falls just short of the pre-crisis 2025 monthly average of 3.04 million tons. While the quota easing is widely seen as a small step toward restoring pre-crisis oil flows, Prandelli noted that since refiners are still drawing on reserves, the move will not automatically translate to an immediate increase in crude imports or refinery runs.

    Across the board, analysts agree that China will not resume filling its strategic reserve with Gulf crude until the Strait of Hormuz stabilizes. Chinese refiners act as opportunistic buyers, Wrigley explained, and will only ramp up purchases after a marked fall in crude prices. Rory Green, a China economist at TS Lombard, projected that once China does restart restocking, the dynamic that has kept global prices muted will shift sharply: “China is likely to move from an oil price deflator to an inflator, limiting the scope for declines in global benchmarks.”

    Prandelli laid out two clear conditions for China to resume large-scale Gulf crude purchases: first, confirmation that the acute crisis has shifted to long-term stability, and second, a meaningful price discount for Gulf crude compared to alternative supplies from Russia and the Atlantic Basin. That discount will most likely only emerge once the strait reopens, or if Saudi Arabia and the United Arab Emirates scale up alternative bypass pipelines to move crude past Hormuz. If China resumes imports before those infrastructure expansions are complete while the strait remains closed, Prandelli warned, that could push global prices higher even before the chokepoint fully reopens.

    To date, China’s strategic reserve strategy has had a deflationary effect on global oil prices: the sharp, rapid pause in crude imports cut global demand enough to absorb most of the initial shock from the Hormuz closure. Beyond its reserves, China’s broader long-term energy strategy has left it far more resilient to this energy shock than many other major economies. It relies on a mix of large-scale domestic energy production, rapid mass electrification, and intentional supplier diversification to reduce exposure to Gulf disruptions.

    Domestically, China produces 60 percent of its natural gas from domestic shale and coal-to-gas projects, and the rapid growth of electric vehicle adoption — EVs now make up more than half of all passenger cars on Chinese roads — has cut overall oil import demand. On the supply side, China has systematically diversified its crude suppliers beyond the Middle East, adding major volumes from Central Asia, Russia, Latin America, and Africa, alongside continued discounted purchases from Iran.

    This diversification has left China much better positioned than neighboring economies including Japan, South Korea, and Taiwan, all heavily reliant on Middle Eastern crude, as well as developing economies like the Philippines, Pakistan, and Thailand, which have already been forced to implement emergency energy conservation measures. “China can cover a substantial portion of its needs through sanctioned barrels sitting in floating and bonded storage, especially Iranian cargoes already positioned in Asia and Chinese ports,” Prandelli explained, a flexibility few other economies can match.

    Before the current crisis, China purchased up to 90 percent of Iran’s total oil exports, and despite the overall drop in volumes, it continues to source discounted crude from Tehran, evading Western sanctions largely via small tankers that disable their location transponders during transit. Today, Russia is China’s largest single crude supplier, delivering more than 2 million barrels per day, equal to more than one-fifth of China’s total imports. Most of this crude is moved via Russia’s “shadow fleet” of aging, unregulated tankers used to evade Western sanctions, a fleet that carries growing risks of major environmental disasters like the recent leak from the tanker Caroline Bezengi off the coast of Oman. Russia has also begun using the Arctic Northern Sea Route to cut transit time to China by more than half, compared to the increasingly geopolitically vulnerable Suez Canal route.

    Even with growing Russian imports, analysts warn that Russian crude is not a permanent long-term replacement for Gulf supplies. “While Russian oil is a workable substitute in the near term, it’s not a perfect one-for-one replacement for Middle Eastern flows in terms of logistics, grades, and political diversification,” Prandelli noted.

    In recent months, some analysts have argued that China is beginning to take on some of the market influence long held by the Organization of the Petroleum Exporting Countries (OPEC), a shift accelerated by the United Arab Emirates’ departure from the group last April. While China’s reserve strategy has undeniably helped stabilize global prices since the Hormuz closure, the analysts consulted by Middle East Eye are skeptical that this amounts to a lasting challenge to OPEC’s market power.

    When asked whether Beijing is now rivaling OPEC, Wrigley said: “I don’t think China is doing so at all. The drop in China’s oil imports is an intended by-product of policy, rather than a strategic move to set oil prices.”

    Prandelli echoed that view, noting that for now, China is setting the cyclical pace of the global oil market, but OPEC still controls the market’s structural trajectory. “If and when Hormuz resolves, that balance shifts back toward a more traditional Opec+ centric structure,” he said.

  • The US and others turn to Brazil for rare earths, raising environmental concerns

    The US and others turn to Brazil for rare earths, raising environmental concerns

    The global race to secure rare earth elements — the critical raw materials underpinning everything from consumer smartphones to electric vehicle motors and wind turbines, all core to the global transition away from fossil fuels — has positioned Brazil as a major alternative to China’s decades-long dominance in the sector, according to a joint investigation by The Associated Press and Reporter Brasil. With the second-largest proven rare earth reserves globally, only trailing China, Brazil’s emergence as a new supply hub is reshaping global resource markets, drawing a flood of foreign investment, and sparking urgent debates over environmental protection, Indigenous rights, and diplomatic positioning between Washington, Brasília, and Beijing.

    Rare earth elements are 17 chemically similar metals that are irreplaceable for permanent magnets, batteries, defense technologies, and consumer electronics. The International Energy Agency projected in 2022 that global demand for these critical minerals will grow at least threefold by 2040, driven by the rapid expansion of renewable energy and clean transportation. That growing demand, paired with China’s 2025 decision to restrict rare earth exports in retaliation for U.S. tariffs, has sent Western governments and corporations scrambling to diversify their supply chains, opening a massive new opportunity for Brazil.

    Data from Brazil’s National Mining Agency, analyzed through June 2026, shows a staggering surge in rare earth exploration permit applications: more than 86% of all 2,727 active requests have been filed in just the past three years, including 268 applications in the first half of 2026 alone. Foreign capital accounts for a huge share of this boom: 42% of all applications come from foreign-owned mining subsidiaries or firms with significant foreign investment stakes, and 11 of the 20 companies with the highest number of applications are backed by investors from Australia, the United States, and Canada.

    Australian firms lead the pack with 695 applications, with U.S. companies close behind at 347, followed by Canadian investors. One of the most high-profile moves came earlier this year, when USA Rare Earth — a firm with a partial U.S. government stake and up to $1.6 billion in federal support — closed a $2.8 billion acquisition of Serra Verde Mining, Brazil’s only currently operating commercial rare earth producer. Based in Goias state, Serra Verde is the only rare earth producer outside of Asia with the capacity to supply all four critical magnetic rare earth elements (neodymium, praseodymium, dysprosium, and terbium) that power everything from automotive manufacturing to aerospace and defense technology. “The Western rare earth sector stands at a critical inflection point, as governments and strategic industries urgently seek reliable sources of critical rare earths — particularly scarce heavy rare earths,” Serra Verde Group CEO Thras Moraitis said of the acquisition.

    For Brazil, the rare earth boom carries significant economic potential: it could attract billions in foreign direct investment, create thousands of new jobs, and cement the country’s status as a key player in the global clean energy economy. But it also brings major risks and unresolved tensions.

    According to the Energy Transition Observatory, a geospatial analysis platform run by Reporter Brasil, at least 25% of all exploration applications target areas that overlap with or lie within 6 miles of 283 protected areas and Indigenous territories, many located on the edge of the Amazon rainforest. Rare earth mining carries well-documented environmental hazards: depending on the deposit, operations can release toxic chemicals, generate radioactive waste, cause deforestation, and contaminate local water supplies, poisoning aquatic ecosystems and drinking water for nearby communities.

    Indigenous groups and traditional local communities have already raised alarms about the incoming projects. In Goias state, a small Afro-Brazilian community of 30 families sees its territory overlapping with exploration claims held by Canadian firm Aclara Resources, which has received $5 million in development financing from the U.S. International Development Finance Corporation. While the company has stated it will not conduct mining directly within the community’s territory, residents still fear planned operations that could launch as early as 2028 will damage local springs and wildlife. “Mining always leaves a footprint,” said Gilvan Magalhães, president of the community’s residents association.

    Political leaders across Brazil’s ideological spectrum have pushed to speed up the permitting process for strategic rare earth projects to capitalize on global demand: President Luiz Inacio Lula da Silva’s Ministry of Mines and Energy has discussed streamlining environmental licensing for critical mining projects, while Sen. Flávio Bolsonaro, a leading challenger to Lula in October’s presidential election, has also proposed faster approval timelines. Even as leaders back faster development, policymakers are moving to safeguard Brazil’s national interests: a pending bill in the Brazilian Senate would establish a federal critical minerals policy, require foreign firms to transfer processing technology to Brazil, and monitor foreign influence in the sector. “We will not allow anyone from outside to come here and exploit our mineral resources, because we want their processing and transformation to happen here,” Lula said recently, confirming the Senate will advance the legislation.

    Diplomatically, Brazil has sought to maintain neutrality in the geopolitical competition between the U.S. and China. While Chinese firms have not yet filed any exploration applications as of June 2026, Chinese state-owned and private companies have already signaled interest: last year, state-owned China Nonferrous Metal Mining Group acquired Brazil’s largest tin producer, Mineracao Taboca, which holds Amazonian mining claims and plans to conduct rare earth exploration, while Shenghe Resources Holding signed a memorandum of understanding with two Brazilian firms to pursue joint rare earth projects. China still holds an estimated 44 million metric tons of rare earth reserves, double Brazil’s 21 million metric tons, and retains near-total control of global rare earth processing and refining capacity.

    Robert Muggah, co-founder of Brazilian think tank the Igarape Institute, noted that Brazil’s rare earth sector carries unique geopolitical weight far beyond its reserve size. “Brazil’s rare earths are significant not just because of the sheer size of the deposits, but because they sit at the intersection of resource nationalism, energy transition demand, Western supply-chain diversification and competition with China’s rare earth dominance,” Muggah explained.

    Industry experts caution that the path from exploration permit to commercial production takes 5 to 10 years in Brazil, requiring extensive technical studies, regulatory approval, and in the case of projects near Indigenous territories, formal community consultation. The sector also carries high inherent financial risk: Julio Nery, mining affairs director at the Brazilian Mining Institute, noted that for every 1,000 potential rare earth prospects, only 100 justify full exploration, and just two will become viable commercial operations. Still, the flood of investment into Brazil’s rare earth sector signals a lasting shift in the global rare earth supply chain that will reshape geopolitics, clean energy development, and environmental policy in Latin America for decades to come.

  • ASX snaps six-day losing streak as miners, tech stocks surge, strong company earnings defy Trump’s ‘economic D-Day’

    ASX snaps six-day losing streak as miners, tech stocks surge, strong company earnings defy Trump’s ‘economic D-Day’

    After six consecutive days of declines, Australia’s primary stock market reversed course on Thursday to close in positive territory, even as escalating geopolitical friction between the United States and Iran sent oil prices climbing and raised global market uncertainty. U.S. President Donald Trump amplified tensions this week, warning Iran of what he called an “economic D-Day” and the “most crushing economic operation” ever enacted against the Middle Eastern nation, a escalation that rippled through global commodity and equity markets.

    The benchmark S&P/ASX 200 closed Thursday up 30 points, or roughly 0.33%, at 9083.80, while the broader All Ordinaries index gained 43.3 points, or 0.47%, to hit 9298.50. Market analysts attributed the turnaround to a wave of stronger-than-expected corporate earnings results that offset investor jitters over geopolitical risk, alongside mixed domestic labor data that tempered expectations for imminent interest rate hikes. The Australian dollar held steady, ending the trading session flat at 71.22 U.S. cents.

    Of the 11 major market sectors, five finished the day in positive territory while six closed with losses. Materials stocks led the rally, driven by surging commodity prices and safe-haven demand triggered by the U.S.-Iran standoff. Miners posted particularly strong gains, as growing geopolitical uncertainty and shifting U.S. Treasury policy stoked inflation expectations, boosting the appeal of gold as a long-term store of value.

    Major diversified miners BHP and Rio Tinto climbed 3.2% to $65.75 and 1.81% to $173.04 respectively, but gold mining operators outperformed the broader materials sector. Northern Star Resources rose 6.21% to $23.94, Evolution Mining surged 10.16% to $15.07, and global gold giant Newmont gained 6.94% to $177.10. Even with a marginal 0.53% pullback, spot gold held near multi-week highs at $4493.89 on Thursday.

    Billy Leung, investment strategist at Global X, linked the materials sector rally to growing investor unease over U.S. economic outlook following the U.S. Treasury Department’s announcement of expanded long-term bond purchases. “People are getting more angsty about the long-term outlook of the U.S.,” Leung explained. “Because of the U.S. Treasury action, it stoked inflation expectations, and that’s why gold was actually up. There was also an element that there is declining credibility with the U.S. which gives gold a stronger standing as a reliable store of value.”

    Beyond materials, the technology sector notched a solid 2.5% gain, while the healthcare extended its recent upward streak to close higher. A handful of prominent tech firms posted double-digit gains: military technology provider Codan jumped 12.42% to $48.88, logistics tech firm WiseTech Global gained 9.12% to $34.19, and cloud accounting platform Xero rose 2.35% to $85.29.

    The banking sector was the day’s biggest laggard, with all four of Australia’s major lenders closing down 1% or more. Commonwealth Bank of Australia led the losses, dropping 2.66% to $156.44, followed by Westpac at 1.8% down to $33.82, ANZ at 1.62% lower to $37.01, and National Australia Bank, the least affected of the group, down 1.26% to $38.43.

    Domestic unemployment data also influenced market momentum on Thursday. Leung noted that a small uptick in jobless claims tempered investor fears of imminent interest rate increases from the Reserve Bank of Australia, opening space for risk-taking in high-growth sectors. He added that seasonal factors tied to school holidays likely distorted the latest employment reading, making a near-term policy shift less likely, a development that supported equities.

    Corporate earnings season dominated individual stock movement, with several major companies posting outsized gains after releasing solid full-year results. Buy-now-pay-later fintech Zip saw its shares surge 18.22% to $3.05 after reporting annual revenue of $1.336 billion and a statutory net after-tax profit of $116.4 million, beating analyst expectations. Super Retail Group, the parent company of outdoor retailer BCF and sporting goods chain Rebel, rallied 15.05% to $14.45 after reporting group sales growth of 3.2% to $4.2 billion, even as normalized net after-tax profit slipped 2.8% to $226 million.

    Not all earnings reports landed positively, however. International education services provider IDP Education plummeted 20.74% to $1.72 after its statutory net after-tax profit slumped 74% year-over-year to $13.3 million. Engineering and infrastructure firm Downer EDI also fell 10.34% to $6.68, despite reporting adjusted net profit that met prior guidance, as investors reacted to management’s softer near-term outlook for the remainder of the trading year.

  • Asian shares gain, with South Korea’s Kospi up 6%, after the US Treasury expands its debt buybacks

    Asian shares gain, with South Korea’s Kospi up 6%, after the US Treasury expands its debt buybacks

    Global equity markets staged a broad upward rebound on Thursday, with Asian benchmarks leading gains after a policy shift from the U.S. Treasury Department calmed investor jitters over soaring bond yields that had dragged down stock values in recent sessions.

    The most dramatic surge came in South Korea, where the benchmark Kospi index jumped 6.1% to close at 6,858.91. The strong gain reversed a 5.8% drop the previous session, which was triggered by a fresh wave of sell-offs in artificial intelligence-linked stocks. Two of the country’s largest technology names led the rally: Samsung Electronics climbed 9.7%, while memory chip manufacturer SK Hynix soared 14.1% following the company’s announcement of a major share buyback initiative designed to support shareholder value.

    Across the rest of the region, major stock indices also posted solid gains. Japan’s Nikkei 225 rose 1.3% to 66,178.26, erasing the declines the index recorded earlier in the week. The country’s latest trade data released Thursday showed that Japan logged its third consecutive monthly trade deficit in July, with both imports and exports hitting all-time record highs. SoftBank Group, the Japanese multinational investment holding company that counts OpenAI among its high-profile investments, added 3.8% to its share price on the day.

    In other Asian markets, Hong Kong’s Hang Seng Index gained 1.1% to end at 25,786.32, while mainland China’s Shanghai Composite Index edged up 0.3% to 3,905.23. Australia’s S&P/ASX 200 climbed 0.3% to 9,066.40, India’s Sensex advanced 0.7%, and Taiwan’s Taiex held nearly steady after previous volatility.

    The market rebound was sparked by an announcement from the U.S. Treasury Department, which revealed it will at least double the volume of planned longer-term government debt purchases. The intervention is designed to stabilize the bond market, as increased buying pushes bond prices higher — which, due to the inverse relationship between bond prices and yields, pulls borrowing yields down. Yields have climbed steadily in recent months, driven by investor concerns over persistent inflation fueled by the ongoing months-long war in Iran, as well as rapidly growing U.S. government debt levels. Spiking yields had pulled down stock valuations across global markets in recent weeks, creating intense pressure on policymakers to act.

    Following the Treasury’s announcement, U.S. government bond yields fell as expected. The 10-year Treasury yield dropped to 4.64% from 4.71% recorded earlier this week, though it remains far above levels seen before the outbreak of the war in Iran. The 30-year Treasury yield also fell, sliding from 5.28% to 5.18% by Thursday. The policy shift also pulled down bond yields across Asia: Japan’s 10-year government bond yield fell to 2.83% from over 2.89% on Wednesday, pulling back from the 30-year high it had touched in recent trading.

    On Wall Street, U.S. stock futures edged higher early Thursday, extending a recovery that began a day earlier. On Wednesday, the benchmark S&P 500 notched its first gain in four trading sessions, rising 0.2%, while the Dow Jones Industrial Average and the technology-focused Nasdaq Composite also each added 0.2% to close out the day.

    In commodity markets, oil prices ticked slightly higher on Thursday as diplomatic efforts between the U.S. and Iran to end the ongoing war made no major breakthrough. International benchmark Brent crude added 0.3% to trade at $91.90 per barrel, up from roughly $72 per barrel before the war began. U.S. benchmark West Texas Intermediate crude rose 0.2% to $84.57 per barrel. In currency markets, the U.S. dollar edged up slightly against the Japanese yen, rising to 158.60 yen from 158.16, while the euro dipped marginally to $1.1676 from $1.1677.