There’s some debate about whether Apple’s problems in the country are company-specific, or if they point to broader issues. Still, concerns about China extend beyond Cupertino, and will probably be a hot topic during corporate earnings this winter.
After decades of expansion, China’s economic engine is losing momentum. Growth in 2018 is expected to be the weakest since 1990. And the outlook for the world’s second largest economy in the coming year is even worse, as the trade war with the United States and government attempts to curb runaway debt take a toll.
That’s bad news for GM and Volkswagen, which now bring in more revenue from China than from the United States or Europe.
Then there’s Starbucks, which has ambitious plans to expand in China, the company’s second-biggest market after the United States. The sluggish economy could hurt the coffee chain just as it needs the oomph to face down local players, and CEO Kevin Johnson will almost certainly be asked to explain the company’s strategy.
But in some cases, flagging demand in China may be a convenient scapegoat for struggling companies, according to Ed Yardeni, president of investment advisory firm Yardeni Research. For example, some analysts believe Apple overestimated how many Chinese consumers would want to pay for iPhones when less expensive alternatives dominate the market.
“Apple seemed to try to blame their disappointing results on weakness in China and [President Donald] Trump starting a trade war,” Yardeni said. “But it might have something to do with the smartphone market being saturated.”
On Tuesday, the National Federation of Independent Business will report on Small Business Optimism. And the Bureau of Labor Statistics will report on inflation Friday.
3. Fed minutes: The Federal Reserve will release minutes from its December meeting on Wednesday.
4. CES begins: The Consumer Electronics Show begins this week in Las Vegas. The annual event attracts nearly 200,000 people, stretching out across the city’s convention center with booths, press events, demos and gadgets.
Attendees can peek at the future of TVs, mobile phones, the continued war between Amazon’s Alexa and Google’s voice assistant and tons of robots. Emerging 5G technology and artificial intelligence are expected to be the most talked-about trends on display.
5. Coming this week:
Monday — US officials in China for trade talks
Tuesday — The floor opens at the Consumer Electronics Show
Thursday — Federal Reserve Chairman Jerome Powell speaks at the Economic Club in Washington, DC; Sears returns to bankruptcy court to potentially get a decision that could determine its future
Friday — CPI reports