Aurelia Butler

The Daily Mail said on Monday that the entire cabinet would back a move to delay the rise in national insurance that is due to come in from April, the same month that energy bills are set to jump. Asked for his position by BBC TV, Zahawi said he would not back a delay because the money was needed to support Britain’s social care system. “It is the right thing to do,” he said. More

For more than 30 years, Chinese foreign ministers have begun the year with a trip to the African continent. This year’s visit brought with it a surprise — the announcement of China’s first “special” political envoy to the Horn of Africa and a possible shift in Beijing’s longstanding policy of non-interference. In January, foreign minister Wang Yi announced that he would appoint a special envoy to foster “lasting stability, peace and prosperity” in the Horn of Africa, where “hotspot issues have intensified and sometimes erupted into conflicts”. The announcement, which came during Wang’s tour of Eritrea, Kenya, and Comoros, can be seen partly as an attempt to annoy the US and other western powers, whose diplomatic efforts to end Ethiopia’s civil war and protect the democratic transition in Sudan have largely floundered. The bigger reason behind the appointment, analysts say, is to better protect China’s investments and lending in the Horn of Africa as violence escalates. China remains the biggest bilateral lender to many in sub-Saharan Africa, where it accounts for about a fifth of all loans. Annual lending peaked at $29.5bn in 2016, according to figures from the China Africa Research Initiative at Johns Hopkins University, though it fell back in 2019 to $7.6bn.Ethiopia has been a big recipient of Chinese loans and investments. This includes funding for a railway from Addis Ababa to Djibouti and the expansion of Addis Ababa’s airport, Africa’s top airline hub. Apart from turmoil in Khartoum and Tigray, there has also been a spike in jihadi attacks in Somalia and continuous fighting in parts of South Sudan. Islamist militants al-Shabaab have even encroached into Lamu — where China has completed the construction of port berths.“There’s a reason to focus on conflict, peace and security, which has not been a policy priority before,” said Hannah Ryder, a Kenyan non-resident senior associate with the Africa programme at CSIS, a think-tank. “For certain Chinese companies, for example, in Ethiopia, continuing to invest can be more challenging if there’s conflict, therefore, how can China help in creating conditions for having less conflict.” Since Xi Jinping became president in 2012, China has watered down a non-interference policy that it had formally adhered to for more than 60 years. Beijing has under Xi established its first overseas naval base in Djibouti, passed a law allowing stationing of soldiers abroad. Chinese peacekeepers were killed in South Sudan, where China has significant oil interests. Yet, Xi said during the triennial Forum on China-Africa Cooperation in Senegal in November, that Beijing will cut the amount of money it supplies to Africa over the next three years by a third to $40bn.At the same time as China announced its new envoy, David Satterfield, the new US envoy arrived in Sudan last week, alongside assistant secretary of state for African affairs Molly Phee, for crisis talks amid the backdrop of a bloody crackdown, and travelled to Ethiopia. He replaced Jeffrey Feltman, who unsuccessfully tried to tame both conflicts.

It is still unclear what influence Beijing will in practice wield, if the new envoy will push peace talks. During a visit to Addis Ababa last month, in what was seen as a veiled criticism of the US, Wang said that “we do not meddle in the internal affairs of Ethiopia, and we also oppose any external forces’ interference in the internal affairs of Ethiopia, and in particular disagree with the practice of some external forces to pressure Ethiopia”. Some Horn of Africa countries have in general welcomed this approach, especially after Washington imposed sanctions on Ethiopia and Eritrea last year. When Wang went to Addis he “reaffirmed his government’s support for the government and people of Ethiopia,” wrote Gabriel Negatu, an Ethiopian non-resident senior fellow with the Africa Center at the Atlantic Council. “This is the contrasting friendship and influence that the United States is missing out on.” Whatever action the new Chinese envoy takes, Ryder said: “China’s saying we’re a different kind of development partner, or even a peace and security partner — that’s for sure.” More

The writer is president of Queens’ College, Cambridge, and an adviser to Allianz and GramercySuggesting that the US Federal Reserve needs to stop lagging behind inflationary developments on the ground is the polite way of describing what the world’s most powerful central bank must do when its policy committee meets this week.More bluntly, the Fed needs immediately to stop its asset-purchase programme, guide markets towards expecting three and possibly more interest rises this year and bring forward to March the announcement of plans to reduce its balance sheet. It also needs to explain how it has managed to get its inflation call so wrong and why it is so late in reacting properly.Without that, it will struggle to regain the policy narrative and restore its credibility.Since the policy-setting Federal Open Market Committee last met on December 14-15, the US headline consumer price index breached 7 per cent. The core measure of rising prices has gone above 5 per cent with broadening drivers. Unemployment has fallen below 4 per cent while labour force participation has remained unchanged, stuck below pre-pandemic levels.Moreover, the Fed’s estimate for its preferred measure of inflation — the core personal consumption expenditure index — for 2021 is 4.4 per cent, more than double what it projected a year ago, and the 2022 forecast has been raised to 2.7 per cent. Further upward revisions in 2022 are surely on the cards.All these data points speak directly to the Fed’s mandate. They suggest that monetary policy should no longer be accommodating. Yet it is still uber stimulative, and on track to remain so for a while.Rather than tapping on the brakes, the Fed still has its foot on the accelerator: real interest rates after taking into account inflation are extremely negative. While it is on course to stop its quantitative easing stimulus programme at the end of this quarter, it continues to inject funds into a marketplace sloshing with liquidity.No wonder financial conditions have remained historically loose despite a dramatic shift in analysts’ policy calls since Fed chair Jay Powell belatedly “retired” the “transitory” characterisation of inflation at the end of November.Forward-looking inflationary pressures continue to be fuelled not just by producer price increases still to make it through the system but also by persistent labour shortages, more supply-side disruptions and a further 10 per cent leg up in oil prices in January.Having grossly mischaracterised inflation for most of 2021 and missed one policy window after another, the persistently late Fed policy reaction risks what Powell himself warned is a “severe threat” to livelihoods. Accordingly, at its meeting this week, it should send a clear message that it is serious in addressing inflationary pressures.This should be done via an immediate ending of QE, forward guidance on three interest rate rises and signalling that the balance of risks has tilted to tighter policies. The Fed should schedule for March the announcement of its “quantitative tightening” plan.To make all this credible, officials must also come clean on why they so badly misread inflation for so long (as noted before, I believe this will go down in history as one of the central bank’s worst inflation calls), and explain how they are now better at incorporating a broader set of bottom-up indicators into its macro modelling and forecasts.This is what I believe the Fed should do. I worry that it won’t, however.Marked by the experience three years ago when market volatility forced it into a U-turn (that is, reverting to more accommodative monetary policy even though the economy did not warrant it), the Fed may well favour a more gradual approach.Indeed, there is a window for such an approach to deliver an orderly adjustment in policy that avoids some combination of prolonged hot inflation, a slowdown in economic growth and unsettling financial volatility. But that window is very small and highly risky.Judged in terms of risk scenarios, the threat to society is one of a persistently slow Fed being forced later this year into an even bigger bunching of contractionary monetary measures. The result would be otherwise avoidable harm to livelihoods, greater financial instability, a higher risk of domestic stagflation and a greater threat to global economic and financial wellbeing.The Fed has an opportunity this week to catch up to realities on the ground and regain some of its lost credibility. To do so, it will need to be bold. Continuing on its current path risks another, significantly more disruptive policy error later this year. More

Taiwan’s top two chipmakers plan to hire more than 10,000 engineers this year to bolster their aggressive expansion plans and maintain their technological edge as global economies push to cultivate their own domestic industries.Taiwan Semiconductor Manufacturing Co is looking to hire about 8,000 engineers in 2022, a similar level to last year, sources familiar with the matter said. The world’s largest contract chipmaker is in the midst of its largest expansion, with facilities being built and scaled up in Taiwan, the US, Japan and China.TSMC announced on Thursday it planned to spend up to $44bn this year in expanding production capacity to alleviate an unprecedented global chip shortage and capture growing demand for chips used in artificial intelligence and 5G-powered applications. TSMC told Nikkei Asia it had not yet finalised its recruitment plans for this year, but said its recruitment goal last year was about 8,000 hires. It already has more than 60,000 employees globally.Meanwhile, MediaTek, the world’s top mobile chip developer by shipments, said it would take on more than 2,000 people this year. The company, which recently surpassed US mobile chipmaker Qualcomm in the premium 5G market, hired more than 2,000 engineers last year, bringing its total workforce to about 19,300 employees.MediaTek is hiring mostly in Taiwan, though it will aim to add a substantial number of employees in India, where the chip developer has a 1,000-strong research and development team and has already found “great semiconductor talent”, the company said. MediaTek said it spent about NT$100bn ($3.6bn) on R&D in 2021 and the budget this year would grow between 10 and 20 per cent. In 2020, its R&D budget stood at NT$77.3bn.Taiwan boasts the world’s second-largest semiconductor economy by revenue after the US, and over several decades it has built up a complete and mature chip cluster on its western coast. The largest European chip equipment maker, ASML, plans to hire some 1,000 people in Taiwan this year, after it hired 1,400 last year, heading for a team of 3,800 employees on the island. Leading chip material makers Merck and Entegris are building new production facilities in Taiwan and also plan to hire more people locally this year.The moves by TSMC and MediaTek come as the yearlong global chip crunch has highlighted the strategic importance of the democratically ruled island and its crown-jewel chip industry. The chip shortages have hit a wide range of industries, from smartphones, PCs and servers to automobiles and military equipment.The top carmaking economies of the US, Germany and Japan have all asked the Taiwanese government to encourage local chipmakers to prioritise automotive chips. To boost supply-chain security, governments have also introduced massive subsidy plans to bring semiconductor production onshore.To protect Taiwan’s position in the chip supply chain, and address concerns of a talent crunch, the island recently opened four new semiconductor graduate schools at its top four universities. The government plans to invest NT$300m in the next decade to ensure a steady stream of R&D talent supporting growth in the local chip industry.A version of this article was first published by Nikkei Asia on January 14 2022. ©2022 Nikkei Inc. All rights reservedRelated storiesJapan chip subsidy requires 10-year pledge from TSMC, othersTaiwan should destroy chip infrastructure if China invades: paperComeback kid: How Taiwan’s MediaTek rose to mobile chip dominanceChips and batteries: Japan to amp up supply chains with subsidies More

“We are of the view that we are at a major inflection point in terms of policy and we are likely to see some significant easing,” said Jean Charles Sambor, head of emerging market fixed income at BNP Paribas Asset Management (BNPPAM) in London.”We are involved in the sector and we are positive in the sector. We have built this position over the last couple of months.”Sambor could only discuss the overall sector, not company-specific investments.Chinese real estate sector assets came under a lot of pressure last year after stricter financing rules for property development set in 2020 met with a mountain of debt, effectively engineering a contraction. The outsized importance of China’s real estate in the global economy sent shivers down many portfolio manager backs.The CSI China Mainland Real Estate Index fell as much as 28% last year before closing down 15%, with stocks in China Evergrande, one of the biggest developers in the midst of a restructuring, down 89% in 2021. Graphic: China real estate sector stocks – https://graphics.reuters.com/CHINA-PROPERTY/STOCKS/lgpdwjyzbvo/chart.png Evergrande carries about $300 billion in liabilities including some $20 billion in international bonds. The foreign bonds, which traded above 90 cents in some cases last year, are now at default levels at under 20 cents on the dollar. “The property market had been under pressure because (the government) wanted to deleverage and to some extent they achieved that,” Sambor said. “Now China wants to make sure that the rest of the sector is not at risk.”Some international investors expect state-owned enterprises (SOEs) to help smooth debt restructurings, but others worry that it could open the door for Beijing to use the limited returns to pay its local debts first.Sambor said a sector restructuring cannot be led by the state because private sector involvement in the property market is very large.”SOEs are a significant part of the market but are not dominating it so it is difficult for them to engineer an SOE-lead restructuring. You need to have strong participation from the private sector,” he said.Sambor said BNPPAM’s view on the real estate sector is part of a wider bet on fixed income returns within emerging markets.”We think it’s going to be the year of the great normalization in Asia high yield, with a focus on China,” Sambor said. “Asian high yield, and China more specifically, will be a key driver of EM fixed income performance in 2022.” More

The US said Moscow’s efforts to destabilise Ukraine were “part of the Russian playbook” after the UK warned of an alleged plot to install a puppet government in Kyiv. Antony Blinken, US secretary of state, said that Washington had been “concerned” for weeks about Russian tactics, including efforts by President Vladimir Putin to replace Kyiv’s government. He was speaking after the UK said in an extraordinary statement that it had evidence Russia was planning to install a pro-Moscow leader in Ukraine — and named Yevhen Murayev as a potential leader favoured by the Kremlin.Russia has massed more than 100,000 troops near Ukraine’s border and vowed “the most unpredictable and grave consequences for European security” if the US does not concede to its demands to roll back Nato’s expansion.Related news: Nato’s pledge to admit Ukraine was an “ugly compromise” but was not to blame for the threat of conflict with Russia, the military’s alliance’s former secretary-general has told the Financial Times.Thanks for reading FirstFT Asia. Here’s the rest of today’s news — Yasemin Five more stories in the news1. Activist hedge fund Trian builds stake in Unilever The arrival of Nelson Peltz’s group comes as the UK consumer giant is under pressure from investors after its failed £50bn attempted takeover of GSK Consumer Health.2. Australian Open ejects protesters for supporting Peng Shuai The tennis tournament ejected two spectators for wearing T-shirts in support of the player Peng Shuai, who accused a senior Chinese government official of sexual assault last year.3. Private equity sidesteps IPO parade The industry’s biggest privately held firms raised at least $9bn through debt sales last year to invest in their own buyout funds, finance growth or pay dividends to partners, according to industry executives and records obtained by the Financial Times.4. World Bank under pressure to release Afghan funds Leading charities working in Afghanistan are demanding more than $1.2bn in frozen funds in order to pay teachers and other government workers and prevent the collapse of essential services.5. Warren Buffett closes in on Cathie Wood Cathie Wood’s flagship Ark fund is on the cusp of being overtaken by Warren Buffett’s Berkshire Hathaway in the post-pandemic performance table, reflecting a dramatic shift in fortunes between the two prominent investors. Coronavirus digestNew Zealand’s Prime Minister Jacinda Ardern will reintroduce tough Covid-19 restrictions — forcing her to cancel her own wedding plans — as Asia-Pacific battles to stop the spread of the Omicron variant.The Beijing Winter Olympics is posing a challenge to China’s zero-Covid policy.The Omicron variant is causing far less damage to the eurozone economy than previous waves of Covid-19, according to FT analysis.The day aheadIBM earnings The computer, technology and IT consulting corporation will report its Q4 results. PMIs IHS Markit flash composite purchasing managers’ index data releases for Japan, Eurozone, France, Germany, UK and the US. Italian presidential election Parliament members and regional representatives to begin voting for Sergio Mattarella’s replacement. Prime Minister Mario Draghi is considered a serious contender.What else we’re reading and watchingRussia and China’s plans for a new world order A decade ago, the neighbours were as much rivals as partners. But after a period when both countries have sparred persistently with the US, Xi Jinping has become Vladimir Putin’s most important ally. Today, Moscow and Beijing have embraced the rhetoric of counter-revolution.Don’t write off Hong Kong as a financial centre just yet Hong Kong is astir after the city passed a death sentence on hamsters. But for hard economic reasons, the future of the Chinese territory is more secure than any global rival except for New York, says FT Asia Editor Robin Harding.Netflix faces a dystopian future The streaming giant appeared to have the wind at its back heading into the end of 2021, with the success of Squid Game and Don’t Look Up. But star-studded releases were not enough to give it a significant boost in subscribers in the fourth quarter. What happens if popular new shows are not enough to lure lots of new subscribers to Netflix any more?

Analysts say the shelf life of hit programmes like Squid Game is short in an era of binge viewing © Netflix/AP

Get ready for the four-day working week First it was working from home, writes our business columnist Pilita Clark. Now it is the four-day working week that is shaking business life in ways that would have seemed unthinkable before Covid-19. Younger managers are a lot more interested in the idea than the older leaders they are on track to replace.Millions of Turks flock to cryptocurrencies TV news channels present bitcoin and ethereum prices alongside the dollar and euro exchange rates. Half-time television adverts at football matches tout the virtues of crypto exchanges. Amid soaring inflation and a plunge in the Turkish lira, millions are investing in crypto. The surge in interest has alarmed the country’s authorities who now want to regulate the sector. Life & ArtsThe FT’s San Francisco correspondent Patrick McGee takes a deep dive into the controversial rise of connected fitness. Fans of Peloton and its peers describe the gamified experience as a way of getting into fitness, or even building a community, without feeling awkward or vulnerable at the gym.

Patrick McGee: “It’s the closest thing yet to cracking the code that will get more people physically active” © Cayce Clifford More