Economy
Syria to be relinked to SWIFT system ‘in matter of weeks’
Syria will be fully reconnected to the SWIFT international payment system “in a matter of weeks” after more than a decade of sanctions, the country’s central bank governor said on Monday.
In an interview with the Financial Times (FT) in Damascus, central bank chief Abdulkader Husrieh detailed a road map for restructuring the country’s financial system and monetary policy in order to rebuild the decimated economy.
We “aim to enhance the brand of the country as a financial hub, given the expected foreign direct investment in rebuilding and infrastructure – this is crucial,” Husrieh told the FT.
“While significant progress has been made, there’s still much work ahead,” he added.
Syria has been cut off from global markets since 2011 and the start of a long civil war that left the country isolated, its infrastructure crumbling, and most of the population living below the poverty line.
Yet, since the fall of the Bashar Assad regime late last year, new authorities have received a major reprieve last month when U.S. President Donald Trump unexpectedly announced the lifting of sanctions. The European Union soon followed, while last week it also said it would provide a 175 million euros ($200 million) package to support Syria’s social and economic recovery.
European Commissioner for the Mediterranean Dubravka Suica said Syria is at a “pivotal moment” with a real chance to shift from conflict to peace and stability. “We remain firmly committed to supporting Syrians in this crucial phase,” she said.
Rejoining the SWIFT system would mean another significant step for Damascus on a path of normalization and rebuilding.
SWIFT’s return will help encourage foreign trade, cut import costs and facilitate exports, the central bank governor said. It would also bring much-needed foreign currency into the country, strengthen anti-money laundering efforts and ease the dependence on informal financial networks for cross-border trade.
“The plan is for all foreign trade to now be routed through the formal banking sector,” Husrieh said.
Before Assad’s ousting, the Syrian pound had lost about 90% of its value against the dollar. It has since strengthened, but is still volatile, with differences remaining between the official and black market rates. Husrieh said he aimed to unify the rates and was “transitioning towards a managed float” of the pound.
China and the U.S. kicked off a new round of trade talks in London on Monday, Beijing’s state media report said, as the world’s two biggest economies seek to shore up a shaky truce after bruising tit-for-tat tariffs.
“On June 9, local time, Vice Premier He Lifeng … began holding the first meeting of the China-U.S. trade consultation mechanism with the American side in London,” state news agency Xinhua reported.
Top U.S. and Chinese officials were due to meet for talks to defuse the high-stakes trade dispute that has widened in recent weeks beyond tit-for-tat tariffs to export controls over goods critical to global supply chains.
Officials from the two superpowers were expected to meet at the ornate Lancaster House to try to get back on track with a preliminary agreement struck last month in Geneva that had briefly lowered the temperature between Washington and Beijing.
The talks, which were due to start around 11:30 a.m. GMT on Monday, come at a crucial time for both economies, with investors looking for some relief from U.S. President Donald Trump’s cascade of tariff orders since his return to the White House in January.
“The next round of trade talks between the U.S. and China will be held in the U.K. on Monday,” a U.K. government spokesperson said on Sunday. “We are a nation that champions free trade and have always been clear that a trade war is in nobody’s interests, so we welcome these talks.”
Gathering there will be a U.S. delegation led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer and a Chinese contingent helmed by Vice Premier He Lifeng, a Reuters report said.
In Geneva, the two sides agreed to reduce steep import taxes on each other’s goods that had had the effect of erecting a trade embargo between the world’s No. 1 and 2 economies, but U.S. officials in recent weeks accused China of slow-walking on its commitments, particularly around rare earths shipments.
The inclusion of Lutnick, whose agency oversees export controls for the U.S., is one indication of how central rare earths has become. He did not attend the Geneva talks, at which the countries struck a 90-day deal to roll back some triple-digit tariffs they had placed on each other.
Positive conclusion
The second round of meetings comes four days after Trump and Chinese leader Xi Jinping spoke by phone, their first direct interaction since Trump’s Jan. 20 inauguration.
During the more than one-hour-long call, Xi told Trump to back down from trade measures that roiled the global economy and warned him against threatening steps on Taiwan, according to a summary by the Chinese government.
But Trump said on social media that the talks focused primarily on trade led to “a very positive conclusion,” setting the stage for Monday’s meeting in London.
The next day, Trump said Xi had agreed to resume shipments of rare earth minerals and magnets to the U.S. China’s decision in April to suspend exports of a wide range of critical minerals and magnets upended the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world.
“We want China and the U.S. to continue moving forward with the agreement that was struck in Geneva,” White House spokesperson Karoline Leavitt told the Fox News program “Sunday Morning Futures” on Sunday. “The administration has been monitoring China’s compliance with the deal, and we hope this will move forward to more comprehensive trade talks.”
The preliminary deal in Geneva sparked a global relief rally in stock markets and U.S. indexes that had been in or near bear market levels have recouped the lion’s share of their losses.
The S&P 500 Index, which at its lowest point in early April was down nearly 18% after Trump unveiled his sweeping “Liberation Day” tariffs on goods from across the globe, is now only about 2% below its record high from mid-February. The final third of that rally followed the U.S.-China truce struck in Geneva.
Still, that temporary deal did not address broader concerns that strain the bilateral relationship, from the alleged illicit fentanyl trade to the status of self-governed Taiwan and U.S. complaints about China’s state-dominated, export-driven economic model.
While the U.K. government will provide a venue for Monday’s discussions, it will not be a party for them; they will have separate talks later in the week with the Chinese delegation.
On Monday, the dollar slipped against all major currencies as investors waited for news, while oil prices were little changed.
Starbucks China will reduce the prices of some of its iced drinks by an average of 5 yuan ($0.70) across the country, the company said on Monday, as competition heats up and consumers become more cautious about spending.
In a post on its Weixin social media account, the U.S. coffee chain said it would offer more “accessible” prices on dozens of its drinks, including non-coffee drinks and the Frappuccino, from Tuesday.
While China is Starbucks’ second-largest market after the U.S., the coffee market is highly competitive and consumers have become more cautious about spending because of the slowing economy and concerns about job security.
The new approach means some of Starbucks’ drinks will be priced as low as 23 yuan, the post said.
Domestic rivals such as Luckin Coffee and Cotti have priced their drinks as low as 9.9 or even 8.8 yuan, while deep-pocketed internet companies JD.com and Alibaba Group have entered the food delivery market, adding to the competition. With offers and vouchers, Chinese coffee consumers can buy themselves a drink for as little as 2.9 yuan.
A person close to Starbucks said the company was not reducing prices in response to intense price competition, but was looking to attract more customers in the afternoon.
The individual requested anonymity as they were not in a role that allowed them to comment to the media.
“Starbucks likely has a longer-term strategy, which is to focus on the demand for non-coffee items in the afternoon among consumers,” the source said.
Starbucks had said previously that it would not engage in a price war. However, it has also introduced smaller-sized drinks and issued coupons, which have lowered prices for customers.
The U.S. giant has also been looking to revive its business in China by selling stakes.
Pulled apart between rising geopolitical tensions and constrained public finances, Britain’s finance chief Rachel Reeves is set to unveil feared trade-offs in a government spending review on Wednesday.
Prime Minister Keir Starmer is boosting the defense budget, and reports point to the National Health Service (NHS) being bolstered – forcing other key ministries to tighten their belts.
“Sharp trade-offs are unavoidable,” said the Institute for Fiscal Studies (IFS), a respected think tank, of the spending plans through to 2029-2030.
Reeves, the chancellor of the exchequer, is to detail day-to-day spending plans in her review to Parliament on Wednesday.
An inaugural budget in October featured tax rises and big spending announcements on infrastructure, meaning belt-tightening has to come from elsewhere.
Already in March, Labour announced contested cuts to disability welfare payments, hoping to save more than 5 billion pounds ($6.8 billion) by the start of the next decade.
Thousands of protestors gathered in central London on Saturday, many holding placards that read “tax the rich, stop the cuts – welfare not warfare.”
The government on Sunday announced 86 billion pounds of investment in science and technology and defense by 2030.
Reeves hopes the spending will boost sluggish growth, which risks added pressure from the tariffs trade war unleashed by U.S. President Donald Trump.
Reeves is set to announce a funding boost of up to 30 billion pounds for the NHS, according to The Times newspaper.
Britain’s media has in recent days reported on tough, last-minute discussions between the Treasury and the interior ministry, particularly regarding the police budget, as well as with the energy department amid fears for the U.K.’s carbon-reduction commitments.
Defense priority
Reeves has amended her fiscal rules to allow the government more headroom for investment in the run-up to the spending review.
At the same time, she wishes to balance the books so that tax revenues match day-to-day spending, meaning the government borrows only to invest.
The chancellor has allowed the Treasury to borrow more, particularly for infrastructure projects across the vital housing and energy sectors.
This has handed her a windfall of 113 billion pounds over five years.
“When it comes to capital spending, government investment is set to be sustained at historically high levels in the coming years,” the IFS noted.
“If spent well, this should help contribute to growth and to better public services in years to come.”
Citing Russia’s invasion of Ukraine, London has announced it will increase its defense budget to 2.5% of U.K.’s gross domestic product (GDP) by 2027 – and up to 3.0% by 2034, helped by cutting international aid.
“While going for growth and fixing the NHS will still be central to the Spending Review, bolstering the nation’s defense is now considered an urgent pressing need,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
While seeking to cut costs, it has been reported that the Labour government may later this year announce plans to lift a cap on child benefits and reverse a decision to scrap a winter heating benefit for millions of pensioners, after a backlash over the policies from some of its party members.
Possible “U-turns on benefit and welfare spending, increased pressure to ramp up defense spending and higher borrowing costs have left the chancellor, Rachel Reeves, in a sticky position,” concluded Ruth Gregory, deputy chief U.K. economist at Capital Economics.
“If she wishes to avoid a political backlash and/or an adverse reaction in the financial markets, she probably has little choice but to raise taxes in the Autumn Budget.”
The government has already hiked a business tax that entered into force in April.
China’s export growth slowed down to a three-month low in May, official data showed on Monday, while shipments to the U.S. also plunged due to tariffs.
Coupled with factory-gate deflation, which deepened to its worst level in two years, it pointed the pressure remained high on the world’s second-largest economy on both the domestic and external fronts.
U.S. President Donald Trump’s global trade war and the swings in Sino-U.S. trade ties have in the past two months sent Chinese exporters, along with their business partners across the Pacific, on a roller-coaster ride and hobbled world growth.
Underscoring the U.S. tariff impact on shipments, customs data showed that China’s exports to the U.S. plunged 34.5% year-over-year in May in value terms, the sharpest drop since February 2020, when the outbreak of the COVID-19 pandemic upended global trade.
Total exports from the Asian economic giant expanded 4.8% year-over-year in value terms last month, slowing from the 8.1% jump in April and missing the 5.0% growth expected in a Reuters poll, customs data showed on Monday, despite a lowering of U.S. tariffs on Chinese goods which had taken effect in early April.
“It’s likely that the May data continued to be weighed down by the peak tariff period,” said Lynn Song, chief economist for Greater China at ING.
Song said there was still front-loading of shipments due to the tariff risks, while acceleration of sales to regions other than the United States helped to underpin China’s exports.
Imports dropped 3.4% year-over-year, deepening from the 0.2% decline in April and worse than the 0.9% downturn expected in the Reuters poll.
Exports had surged 12.4% year-over-year and 8.1% in March and April, respectively, as factories rushed shipments to the U.S. and other overseas manufacturers to avoid Trump’s hefty levies on China and the rest of the world.
While exporters in China found some respite in May as Beijing and Washington agreed to suspend most of their levies for 90 days, tensions between the world’s two largest economies remain high and negotiations are underway over issues ranging from China’s rare earths controls to Taiwan.
Trade representatives from China and the U.S. are meeting in London on Monday to resume talks after a phone call between their top leaders on Thursday.
China’s imports from the U.S. also lost further ground, dropping 18.1% from a 13.8% slide in April.
Zichun Huang, economist at Capital Economics, expects the slowdown in exports growth to “partially reverse this month, as it reflects the drop in U.S. orders before the trade truce,” but cautions that shipments will be knocked again by year-end due to elevated tariff levels.
China’s exports of rare earths jumped sharply in May despite export restrictions on certain types of rare earth products causing plant closures across the global auto supply chain.
The latest figures do not distinguish between the 17 rare earth elements and related products, some of which are not subject to restrictions. A clearer picture of the impact of the curbs on exports will only be available when more detailed data is released on June 20.
China’s May trade surplus came in at $103.22 billion, up from the $96.18 billion the previous month.
Other data, also released on Monday, showed China’s imports of crude oil, coal, and iron ore dropped last month, underlining the fragility of domestic demand at a time of rising external headwinds.
Beijing in May rolled out a series of monetary stimulus measures, including cuts to benchmark lending rates and a 500 billion yuan low-cost loan program, aimed at cushioning the trade war’s blow to the economy.
China’s markets showed muted reaction to the data. The blue chip CSI300 Index climbed 0.29% and the benchmark Shanghai Composite Index was up 0.43%.
Deflationary pressures
Producer and consumer price data, released by the National Bureau of Statistics on the same day, showed that deflationary pressures worsened last month.
The producer price index fell 3.3% in May from a year earlier, after a 2.7% decline in April and marked the deepest contraction in 22 months.
Cooling factory activity also highlights the impact of U.S. tariffs on the world’s largest manufacturing hub, dampening faster services growth as suspense lingers over the outcome of U.S.-China trade talks.
Sluggish domestic demand and weak prices have weighed on China’s economy, which has struggled to mount a robust post-pandemic recovery amid a prolonged property slump and has relied on exports to underpin growth.
Retail sales growth slowed last month as spending continued to lag due to job insecurity and stagnant new home prices.
Businesses have also had to adapt to the falling prices. U.S. coffee chain Starbucks said on Monday it would lower prices of some iced drinks by an average of 5 yuan in China.
While the core inflation measure, excluding volatile food and fuel prices, registered a slightly faster 0.6% year-over-year rise, from a 0.5% increase in April, Capital Economics’ Huang said the improvement looks “fragile.”
She still expects “persistent overcapacity will keep China in deflation both this year and next.”
U.S.-China trade talks set to take place in London on June 9 are expected to take up a series of fresh disputes that have buffeted relations in recent weeks, threatening a fragile truce over tariffs.
Both sides agreed in Geneva last month to a 90-day suspension of most of the 100%-plus tariffs they had imposed on each other in an escalating trade war that had sparked fears of recession.
Since then, the U.S. and China have exchanged angry words over advanced semiconductors that power artificial intelligence, “rare earths” that are vital to carmakers and other industries, and visas for Chinese students at American universities.
U.S. President Donald Trump spoke at length with Chinese leader Xi Jinping by phone last Thursday in an attempt to put relations back on track. Trump announced on social media the next day that trade talks would be held on Monday in London.
The latest frictions began just a day after the May 12 announcement of the Geneva agreement to “pause” tariffs for 90 days.
Export controls
The U.S. Commerce Department issued guidance saying the use of Ascend AI chips from Huawei, a leading Chinese tech company, could violate U.S. export controls. That’s because the chips were likely developed with American technology despite restrictions on its export to China, the guidance said.
The Chinese government wasn’t pleased. One of its biggest beefs in recent years has been over U.S. moves to limit the access of Chinese companies to technology, and in particular to equipment and processes needed to produce the most advanced semiconductors.
“The Chinese side urges the U.S. side to immediately correct its erroneous practices,” a Commerce Ministry spokesperson said.
U.S. Commerce Secretary Howard Lutnick wasn’t in Geneva but will join the talks in London. Analysts say that suggests at least a willingness on the U.S. side to hear out China’s concerns on export controls.
One area where China holds the upper hand is in the mining and processing of rare earths. They are crucial for not only autos but also a range of other products, from robots to military equipment.
The Chinese government started requiring producers to obtain a license to export seven rare earth elements in April. Resulting shortages sent automakers worldwide into a tizzy. As stockpiles ran down, some worried they would have to halt production.
Trump, without mentioning rare earths specifically, took to social media to attack China.
“The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US,” Trump posted on May 30.
The Chinese government indicated Saturday that it is addressing the concerns, which have come from European companies as well. A Commerce Ministry statement said it had granted some approvals and “will continue to strengthen the approval of applications that comply with regulations.”
The scramble to resolve the rare earth issue shows that China has a strong card to play if it wants to strike back against tariffs or other measures.
Student visas don’t normally figure in trade talks, but a U.S. announcement that it would begin revoking the visas of some Chinese students has emerged as another thorn in the relationship.
China’s Commerce Ministry raised the issue when asked last week about the accusation that it had violated the consensus reached in Geneva.
It replied that the U.S. had undermined the agreement by issuing export control guidelines for AI chips, stopping the sale of chip design software to China and saying it would revoke Chinese student visas.
“The United States has unilaterally provoked new economic and trade frictions,” the ministry said in a statement posted on its website.
U.S. Secretary of State Marco Rubio said in a May 28 statement that the United States would “aggressively revoke visas for Chinese students, including those with connections to the Chinese Communist Party or studying in critical fields.”
More than 270,000 Chinese students studied in the U.S. in the 2023-24 academic year.
The eurozone economy growth rate outpaced market expectations, hitting 0.6% in the first three months of 2025, official data showed Friday.
The EU’s data agency said the 20-country single currency area recorded growth of 0.6% over the January-March period from the previous quarter, up from the 0.3% figure published last month.
That figure was itself a downward revision from a first estimate of 0.4% issued in April.
The increase in exports positively affected the gross domestic product (GDP) growth, with a rise of 1.9% in the eurozone.
Investments also increased by 1.8% in both the euro area and the EU (after +0.7% and +0.6%, respectively).
Among the member states, Ireland saw the highest quarterly increase with 9.7%, followed by Malta with 2.1% and the Greek Cypriot with 1.3%.
Luxembourg’s economy shrank the most in the first quarter, with 1%, followed by Slovenia with 0.8% and Denmark and Portugal, both down 0.5%.
On a yearly basis, the euro area posted a GDP growth rate of 1.5%, with 1.6% for the EU, according to Eurostat.
Meanwhile, employment in the euro area rose by 0.2% on a quarterly basis in the first quarter of 2025, while it posted no change in the EU.
On an annual basis, the eurozone’s employment climbed 0.7%, while the EU’s was up 0.4% in the first quarter.
The eurozone/euro area, or EA20, represents member states that use the single currency-the euro-while the EU27 includes all member countries of the bloc.
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