Today’s top stories
UK ministers met health, rail and education union chiefs in a fresh bid to halt a new round of public sector strikes, but failed to secure a breakthrough.
Eurozone unemployment hit a new low of 10.9mn in November while industrial production in Germany, its biggest economy, increased more than expected, adding to evidence that the bloc may be facing only a mild recession.
Police regained control after thousands of supporters of rightwing former president Jair Bolsonaro stormed Brazil’s Congress, supreme court and presidential palace, raising questions about the loyalty of the country’s security forces. Here’s our explainer on who the rioters are.
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Good evening.
Today is a red letter day for the world’s airlines, hotels and luxury businesses: the Chinese are back.
For the past three years, the world’s largest tourism population has been effectively cut off from the rest of the world by Beijing’s strict “zero Covid” policies of mass-testing, lockdowns and quarantine for arrivals, but Chinese citizens are now free to travel again without fear of being isolated on their return.
Hong Kong is one of the first places to benefit. Thousands streamed in both directions between the city and the mainland yesterday as internal borders were reopened.
As well as allowing families to reunite, the move is welcome relief to Hong Kong’s luxury goods stores, the lifeblood of its retail sector, which lost its position as the world’s most expensive shopping district to New York last year. The wider €353bn global luxury market could benefit by 6 to 8 per cent in sales this year from the return of the Chinese, according to consultancy Bain, with Japan in particular set for an early boost.
Although limited commercial flights and backlogs of visa applications may mean the rest of the world has to wait a little longer to feel the benefits of China’s reopening, the rewards are significant: in 2019 before the pandemic hit, 155mn Chinese travelled abroad and spent $255bn, according to Citi. The China Outbound Tourism Research Institute estimates 18mn will travel internationally in the first half of the year, followed by 40mn in the second.
Asian airlines, already boosted by the reopening of Japan in October, are an obvious beneficiary. The Asia Pacific region has experienced the biggest uptick in passenger traffic over the past year, despite being generally slower than the rest of the world to end restrictions.
Also set to benefit from the lifting of travel curbs are the casinos of Macau which have missed China’s high rollers who used to make up half of the gaming revenues in the city, the only place where casino gambling is legal in China.
As Asia business editor Leo Lewis notes, the return of the “collective globetrotting titan” is not only economically significant but could also help reset negative views about the country that have taken root during the pandemic.
“It is perhaps no coincidence that the China-west decoupling narrative feels much more plausible now than it did in 2019 when Chinese business leaders, mid-level executives and shopaholic middle classes were criss-crossing the planet in their tens of millions,” Lewis writes.
It could also help shift the narrative that Beijing has suppressed the voices of global business, he argues. “The resumption of Chinese overseas travel is no panacea to the onset of decoupling and deglobalisation,” he concludes, “but it may serve to reinvigorate the voices of those who wish it to slow”.
Need to know: UK and Europe economy
The UK government is exaggerating the benefits of recent financial reforms and being “disingenuous” in arguing they were a Brexit dividend, according to the Conservative chair of a key parliamentary committee.
Ireland’s investment-for-residency scheme is proving a big hit with wealthy Chinese. Since it began in 2012, Chinese investors, including those from Hong Kong, have accounted for more than 90 per cent of successful applicants and €1.18bn has been invested in total.
Need to know: Global economy
If investors want to avoid last year’s mistake of believing the surge in global inflation would be short and shallow, they need to realise that slowdowns in China, the EU and the US are happening for different reasons, says investment expert Mohamed El-Erian.
A survey of foreign policy experts pointed to a decade of political tumult, forecasting that Russia would become a failed state, China would invade Taiwan and at least one additional country would obtain nuclear weapons.
Europe was the world’s biggest importer of liquefied natural gas in 2022 as it tried to replace pipeline supplies from Russia, leapfrogging Japan and China. With Europe’s need to refill storage facilities, the global LNG market is set to remain tight, potentially pushing up prices for gas users worldwide.
Indian central bank governor Shaktikanta Das told the FT he was concerned at the debt levels among his regional trade partners but was optimistic about his country’s own growth prospects.
Need to know: business
As Wall Street banks get ready to announce fourth-quarter earnings, the FT revealed Goldman Sachs could begin cutting up to 3,200 jobs within days as it tries to rein in costs. The cuts are the deepest Goldman has made in its recent history and more drastic than plans from its peers. The Lex column (for premium subscribers) says the outlook for profits for European companies is overly optimistic.
Despite a “substantial” hit from the ending of sales to Russia, Rolls-Royce last year sold more cars than ever, driven by demand from the US, its largest market. Meanwhile in China, the world’s biggest electric vehicle market, Tesla owners protested against the company’s price cuts, upset that their cars have lost a significant amount of their value.
The recent fall in tech stocks has been good news for at least one group: short sellers. Until recently they had been squeezed by low interest rates and the rapid bounceback of stocks from the pandemic.
South Korea’s leading vaccine producer said “national pride” meant China was likely to continue with its less effective homegrown Covid jabs, even as the country was hit by its biggest outbreak of the pandemic. A glimmer of hope comes from a handful of Chinese manufacturers trialling messenger RNA shots.
Lloyd’s of London insurer Beazley launched the first ever cyber catastrophe bond, enabling investors to get involved in the fast-growing business of protecting organisations from ransomware strikes.
The World of Work
As the balance of authority in the workplace tilts towards employees, how can managers still assert their authority? Good management is a balancing act between firm leadership and support, writes business psychotherapist Naomi Shragai.
Rival European cities are outpacing London when it comes to recovering activity in offices and hotels after the pandemic, according to a survey that measures the use of lifts in buildings.
Columnist Emma Jacobs says companies should follow the decision by ecommerce platform Shopify to purge pointless and time-consuming meetings.
Some good news
US animal health company Dalan says it has received approval from regulators for the world’s first vaccine to protect honeybees from brood disease.
Source: Economy - ft.com
