Scapegoat economics

Daily update

China’s officially reported third quarter GDP growth was 4.5% y/y. That means that this year’s officially reported growth is likely to hit the officially set growth target. However, despite a stronger September China retail sales number, the domestic economy remains lackluster. Exports remain the growth driver. China has been fortunate that US companies have been adept at avoiding some tariffs, though ongoing economic nationalism (a form of scapegoat economics) threatens this pattern of growth.
There is an EU-US dispute over communications technology, with the EU looking to limit access to the spectrum to European companies, and the US Starlink accused of limiting access in Ukraine for political purposes. This is part of a wider economic nationalism and lack of trust suggests EU defense spending is likely to be increasingly domestically focused.
France experienced a different form of scapegoat economics with violent protests over the weekend. Protests are not unknown in France, but sensational images are peculiarly suited to the social media age, implying there may be more international focus than for similar protests in previous decades. Investors may speculate on the implications for next year’s presidential elections, but it is probably too soon to say.
The calendar is quiet. European Central Bank Chief Economist Lane is scheduled to speak.