Confidence in China's ability to recover is eroding

<p>Kia ora,</p><p>Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news financial markets have decided there are no [economic] adults in the room in China's ruling group and are moving to decrease their exposure to the Middle Kingdom.</p><p>First, almost 20% of the members of the American Chamber of Commerce in Shanghai <a href="https://www.amcham-shanghai.org/en/article/amcham-shanghai-releases-2022-china-business-report" target="_blank"><strong>said</strong></a> they were decreasing their exposure to China. And this survey was carried out before the CCP Congress changes were known.</p><p>On Friday, Hong Kong equity investors took it on the chin with an ugly -3.7% drop to cap a loss of -6.5% for the week. Shanghai was tough too, falling -2.3% on Friday and -3.9% for the week.</p><p>And over the weekend <a href="https://www.bloomberg.com/news/articles/2022-10-30/workers-leave-world-s-biggest-iphone-plant-to-escape-covid-curbs?srnd=premium-asia" target="_blank"><strong>reports</strong></a> emerged that the giant Foxconn facility that makes iPhones in Henan Province, one that employs and houses 200,000 workers, has a serious pandemic outbreak forcing a lockdown on the facility and causing great distress. Workers are escaping, some redirected into isolation facilities, but not all. Apple is likely to accelerate its decoupling.</p><p>Further, some key commodity prices sank rather sharply over the weekend. That included <a href="https://tradingeconomics.com/commodity/iron-ore" target="_blank"><strong>iron ore</strong></a>, <a href="https://tradingeconomics.com/commodity/zinc" target="_blank"><strong>zinc</strong></a>, and <a href="https://tradingeconomics.com/commodity/steel" target="_blank"><strong>steel</strong></a>. <a href="https://tradingeconomics.com/commodity/copper" target="_blank"><strong>Copper</strong></a> remains in the doldrums. The i