Katherine Dunn in London here, filling in for Alan. This morning, all eyes are on China, and the question everyone’s trying to answer is: just how bad was its second quarter?
The headline number certainly isn’t good: in the April to June period, China’s economy slowed to its weakest pace since 1992—the first year the country’s released its quarterly growth data figures. That represents 6.2% growth in GDP from the same period last year, a drop from 6.4% in the first quarter, and far below China’s typical blockbuster rate of expansion.
That figure looks like a sign that the U.S.-China trade war is really starting to bite, and comes amid a massive, two trillion yuan ($291 billion) stimulus program of tax cuts and benefits intended to limit any drag on growth, given Beijing’s goal of doubling the economy between 2010 and 2020.
But there are nuances in the numbers, and analysts are diverging on whether there are bright spots underneath the top-line drop.
A few possible silver linings: there were signs of investment across fixed assets at private firms, manufacturing, and infrastructure. Retail sales were better than expected, too. Meanwhile, numbers for June alone were actually considered strong, with growth in the manufacturing and retail sectors.
The question comes down to whether, in the second half of the year, Beijing’s stimulus is already taking the sting out of the trade war—or whether June was merely a blip.
China will be a big talking point at Fortune’s Brainstorm Tech conference, which kicks off in Aspen this afternoon. You can watch the livestream here, starting with an interview with Walmart CEO Doug McMillon just after 2 p.m. local time.
More news below.
Peter Thiel vs. Google
In a speech Sunday, billionaire Peter Thiel targeted Google for its search engine efforts in China and its decision to let lapse a contract with the U.S. Defense Department that gave the military access to its A.I. capabilities. He went as far as to call Google’s actions “seemingly treasonous,” asking whether Alphabet subsidiary DeepMind or Google’s ranks had been “infiltrated” by foreign intelligence agencies. Bloomberg
Grappling with a blacklisting from the Commerce Department, Huawei Technologies Co. is reportedly planning widespread layoffs in its research and development division in its U.S. offices. That unit employs 850 people in research labs across the country, and employees had reportedly already been struggling with restrictions on communicating with the office in China after the blacklisting. Wall Street Journal
It’s Amazon Prime Day
Monday marks the start of Amazon’s deal bonanza—a yearly affair that has now been extended to two days. Last year the company sold 100 million items, and made $4.18 billion in a single day. But besides the deals, it’s a day to watch Amazon’s marketing strategy, through a potent mix of celebrity endorsements, new product drops, and “exclusive products.” And this year, eBay and Target are also taking note. Fortune
IMF Backs Looser Monetary Policy
The acting IMF chief, David Lipton, is backing looser monetary policy for the world’s largest central banks, saying in an interview with the Financial Times that it makes sense for policy to remain “accommodative.” That was interpreted as a veiled vote of support for signals recently by the head of both the European Central Bank and the Federal Reserve that an uncertain economic outlook could merit cutting rates or resuming bond purchases. Financial Times
AROUND THE WATER COOLER
Warner Bets on Musicals
On Spotify, pop and hip hop have been king. But as streaming becomes more entrenched, and the user base widens and becomes older, labels are betting that jazz, classical, and even musicals soundtracks will be streamed more often—the logic behind Warner Music’s purchase of First Night Records, which owns the rights to the music behind Mary Poppins and Les Misérables. Financial Times
The World’s Largest Diamond Mine Will Close
Rio Tinto Group’s Argyle mine in Western Australia will close by the end of this year after nearly four decades of operation. The biggest impact will be on the world’s supply of pink stones—the mine is the source of 90% of the world’s pink diamonds. But three-quarters of its output are lower-quality diamonds, and a global glut of diamonds has cut profits and made the mine uneconomical. Bloomberg
The Power of Facial Recognition
Databases of faces are growing, drawn from sources as wide as dating websites, cameras in restaurants and at colleges, all driven by the push to create facial-recognition systems. The largest databases are likely those built by Facebook and Google, but they’re far from the only ones: databases are being built around the world both at research institutes and by private companies, and being used to train artificial intelligence. New York Times
Alan Turing on a Bank Note
Famed British code-breaker Alan Turing will be the new face of the British 50 pound bill, the Bank of England said on Monday, after being nominated by the public. Turing was the code breaker who helped the British break encrypted German messages during World War II, and is credited as an early father of computing—while also being arrested and convicted of “gross indecency” in 1952 for his relationship with another man, for which he received a pardon only long after his death. BBC