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- China’s struggling: what does it mean? 🇨🇳
- Tech giants are worried 📱
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China’s struggling: what does it mean? 🇨🇳
Only eight months ago, we were all expecting a triumphant return, but China's economy has shown up to the party wearing a bathrobe and slippers.
So what's up with the world's second-largest economy, and why should we care?
Let’s break it down.
The Great Thirst for Stuff
China's like that one friend who can't get enough of everything at a buffet.
It gulps down almost a fifth of the world's oil, half of its refined copper, nickel, and zinc, and more than three-fifths of its iron ore.
Feeling the pinch? Countries like Zambia and Australia sure are! When China stops eating, they stop earning.
Some Western companies are now realizing that putting all their eggs in the China basket might have been a bit of an oopsie.
Faltering demand from China is one reason why Germany’s economy has either contracted or stagnated over the past three quarters.
Even big companies are hugely reliant on China. Tesla has a fifth of its sales in China. Qualcomm? A whopping two-thirds!
But Wait, There's More! (Or Less?)
Less demand for commodities means lower prices and import costs. Think of it like a global clearance sale.
Now, the Federal Reserve and other central banks can breathe easier. They might not have to play the bad guy, raising interest rates higher.
A longer slowdown could lead China to turn inward, reducing its overseas investments and loans. Having become the world’s biggest bilateral creditor in 2017, it has already cut back as projects turn sour.
⚖️ How does this impact Law Firms?
International Trade and Export Law:
- Trade Compliance and Advisory: Lawyers specialising in international trade will likely need to provide advice and guidance to companies engaged in exporting goods to China. As China’s economy slows down, this may result in adjustments to tariffs, regulations, and trade agreements. Legal advice will be critical in ensuring compliance with these changing landscapes.
- Dispute Resolution: With China's weakening demand for commodities, exporters may face contractual disputes, such as breaches or non-payment issues. International trade lawyers would be called upon to negotiate settlements, initiate arbitration or litigation, and protect the interests of clients who may be affected by these disruptions.
Investment and Securities Law:
- Investment Analysis and Risk Assessment: Given the concerns about China's property market and potential impact on global financial markets, investment lawyers would undertake thorough analyses and risk assessments. Clients invested in Chinese properties or securities might seek advice on potential exposure and strategy adjustment.
- Regulatory Compliance: Any fluctuations in financial markets due to China's economic conditions may prompt changes in securities regulations. Investment lawyers will be responsible for ensuring that funds, investment banks, and other financial entities comply with these changes, aiding in the adaptation of business models, if needed.
Banking and Finance Law:
- Restructuring and Insolvency Advice: Banking lawyers might see an uptick in work related to restructuring or insolvency as a direct consequence of China's slowdown affecting global businesses, particularly those heavily reliant on the Chinese market. Legal intervention in debt restructuring, negotiations with creditors, or even managing insolvency processes may be required.
- Regulatory Adjustments: The knock-on effects of China's economic trends on the global banking industry could lead to shifts in banking regulations. Lawyers in this field would be tasked with advising banks and other financial institutions on how to navigate these changes, ensuring that their practices align with new regulatory requirements and standards.
Tech giants are worried 📱
You know those ads that somehow know you've been looking for a new pair of socks?
The EU’s rolling up its sleeves to regulate them, and the tech giants are scrambling.
Here’s all you need to know.
The EU is waving its wand to ban targeting ads based on your religion, gender, or love for cats.
How? With the Digital Services Act (DSA) which comes into force tomorrow.
The DSA is the EU's way of telling online platforms that the playground rules are changing. Think of it as a strict referee in a tech football game, ensuring that everyone plays fair.
What do tech companies need to do to comply?
Big online companies like Instagram, Google, and TikTok face a huge to-do list.
They're required to stop targeting ads based on personal details (sorry, overly enthusiastic sock advertisers), be transparent about tackling misinformation, and offer more protections for minors.
They must also submit risk assessments to show how they're complying with these rules. Imagine cramming for a final exam; that's what they're going through.
This isn't just a slap on the wrist for our tech friends. It's a seismic shift that may completely change how they operate.
Battle of the Behemoths
Amazon and Zalando have launched legal challenges, arguing that they should not be considered “very large online platforms”. (Note: this is the term used under the DSA to classify organisations that need to comply with the toughest requirements).
Amazon has said the law should focus on companies that distribute information and for which advertising was their primary revenue, while Zalando has said that too few customers visit its websites to be caught by the rules.
So, August 25 is the day when these tech giants must turn in their homework, outlining how they’ll play nice with the new rules.
The EU isn't your cool substitute teacher; they mean business.
Show up late? Get fined! Even smaller platforms like Pinterest are on the hook, so nobody’s getting a hall pass here.
⚖️ How does this impact Law Firms?
Technology and Data Protection:
- Compliance with Digital Regulations: Lawyers in this field will be involved in assisting online platforms to comply with the DSA. This will include drafting and reviewing policies to meet the new requirements regarding personalised advertising, misinformation control, and minors' protections.
- Risk Assessments and Reporting: These lawyers will also help companies in the risk assessment process as they submit their plans to meet the EU rules. This will require a deep analysis of existing practices and the creation of frameworks to mitigate any potential legal risks.
Commercial and Advertising Law:
- Advertising Restructuring: With the banning of targeted ads based on user characteristics, commercial lawyers will be tasked with reviewing and revising advertising strategies and agreements. They must ensure that advertising methods comply with the new EU regulations and do not violate the restrictions on personal targeting.
- Children's Advertising Compliance: Given the new rules restricting targeted ads for under 18s, lawyers in this field will be needed to draft and review policies that explicitly deal with advertising to minors, making sure that these methods are transparent and aligned with the new legal framework.
Litigation and Dispute Resolution:
- Challenging the Classification of “Very Large Online Platforms”: As seen with Amazon and Zalando, there will be legal challenges against the classification under the DSA. Litigation lawyers will be needed to build and present legal arguments, challenging the rules as applied to specific companies.
- Defending Against Fines and Penalties: Should companies fall foul of these new regulations or miss the mandatory assessment report deadlines, litigation lawyers will be involved in defending these companies against fines and penalties, arguing against the regulatory decisions and working towards an amicable settlement if possible.