Aurelia Butler

(noun): political agenda designed to reduce inequality through wealth redistribution and improved welfare policiesOne of the trials of China-watching is trying to select the slogans that will stick. A jumble of outworn political mantras clogs up the annals of Chinese communist history. How many of us, for instance, recall what was meant by the “Three Represents”, the “Two Whatevers” or the “Scientific Outlook on Development”.But “common prosperity” commands unambiguous respect. First mentioned by Xi Jinping, China’s leader, in late 2020, it has really come into its own this year.“Common prosperity”, according to Xi, will be one of China’s most important objectives over the next 15 years. It signals an intention to reduce economic inequality by narrowing the country’s stubbornly large gap between rich and poor.The president made clear one reason for the slogan’s prominence: he does not want China to suffer the same fate as the US. “The rich and the poor in some countries are polarised with the collapse of the middle class. This has led to social disintegration, political polarisation and rampant populism,” he said in August.Already, several policy initiatives have been launched under the “common prosperity” banner. Xi has called for the introduction of a property tax, with the aim of making the wealthy pay more for holding valuable property assets. Similarly, he says, wealthy people should “give back more to society”. Old-age pensions and welfare benefits for the poor should be raised. But — in another clear warning against following the west — Xi warned against falling into “the welfarist trap of encouraging the lazy”.In a nutshell, “common prosperity” tacitly recognises that while China has officially been building “socialism” over the past four decades, it has created one of the most unequal societies on earth. The time has come, Beijing says, to fix [email protected] More

The eurozone’s economic recovery risks being undermined if persistently high inflation erodes consumers’ disposable income and forces the European Central Bank to withdraw its stimulus more quickly than planned, according to a Financial Times poll of economists.More than 40 per cent of the 38 economists surveyed by the FT identified inflation as a significant risk to the growth prospects of the 19 countries that share the single currency — making it the most-cited risk factor for 2022 along with the pandemic.“Inflation will eat into wages, reducing demand,” said Jesper Rangvid, finance professor at Copenhagen Business School, adding that the “ECB might also have to respond to inflation risks by raising rates, taming the [economic] upswing”.The ECB responded to mounting concern about rapidly rising prices earlier this month by announcing its €1.85tn pandemic-response scheme would stop net bond purchases in March as part of a “step-by-step” reduction of its quantitative easing policy.Inflation has risen sharply this year as the eurozone economy rebounded from the shock of the pandemic, activity restrictions were lifted and supply struggled to keep pace with demand, driving up energy costs and creating shortages of many materials. The bloc’s consumer price growth reached a record high of 4.9 per cent in November.Like most central banks, the ECB has been surprised by the persistence of upward pressure on prices. This month it sharply raised its forecast for eurozone inflation to 2.6 per cent for 2021 and 3.2 per cent for 2022 — both above its 2 per cent target.“Our economic outlook stands and falls with the inflation outlook,” said Katharina Utermöhl, senior economist for Europe at Allianz. “Should we see runaway inflation that looks set to remain above target also beyond 2022, then the ECB will have to rein in its policy stance much more abruptly than currently envisioned which could weigh on the real economy as well as fuel financial stability concerns.”The economists — who were polled by the FT before the ECB updated its forecasts this month — on average predicted that eurozone inflation would be 2.7 per cent in 2022 and 1.9 per cent in 2023. Their forecast was below that of the ECB for next year but it was above the central bank’s prediction that inflation would dip to 1.8 per cent in 2023.“The energy price surge represents a major risk,” said Fabio Balboni, senior eurozone economist at HSBC. “[By] eating into households’ purchasing power, we have estimated it could take off 0.5 percentage points from the level of GDP over the next few quarters” which would “put the ECB in a difficult place”.Producer prices rose 21.9 per cent in the year to October, the fastest pace since the euro was created more than two decades ago. This was mainly driven by a 62.5 per cent rise in energy prices, but even excluding that industrial goods prices still rose 8.9 per cent.“Runaway inflation is a more significant risk [than the pandemic],” said Nicholas Bennenbroek, international economist at Wells Fargo. “Previous waves of the Covid-19 virus have typically had short-term negative effects on growth, but have not been long lasting, a pattern we expect to continue.” However almost half of economists surveyed thought there was still a significant economic risk from coronavirus variants.The economists on average forecast the eurozone economy would grow 4 per cent next year, slightly below the 4.2 per cent forecast by the ECB. André Sapir, a professor at the Université libre de Bruxelles, said the biggest challenge for the bloc was “finding the right balance for macro policy, both fiscal and monetary, to allow for a continued recovery without uncontrolled fiscal positions and runaway inflation”. More

TOKYO (Reuters) -Japan’s factory output surged in November as production in the auto sector benefited from a recovery in global parts supplies, lifting prospects for a strong fourth-quarter economic rebound.Despite the output jump, the Japanese manufacturing outlook remained clouded by the risk of slowing overseas activity due to a resurgence of the coronavirus pandemic and a persistent shortage in global chip supplies.Factory production gained 7.2% in November from the previous month, posting its largest jump since 2013 when comparable data first became available, thanks to rising output of motor vehicles and plastic products.That meant production rose for the second straight month after increasing 1.8% in October and posted a faster rise than the 4.8% gain forecast in a Reuters poll of economists.”Output recovered to where it was previously because car production rebounded,” said Takeshi Minami, chief economist at Norinchukin Research Institute.”But seen from a global perspective, supply bottlenecks and especially the chip shortage are likely to be prolonged so that will slow down the recovery pace of output.”The data showed output of cars and other motor vehicles surged 43.1% from the previous month in November, also the most since comparable figures became available eight years ago, while that of plastic products rose 9.5%.Despite the stronger output, Japanese automakers are still unable to completely shake off the drag from persistent global parts and chip supply issues.Japan’s top automaker Toyota Motor (NYSE:TM) Corp said last week it would suspend production at five domestic factories in January due to supply issues and the health crisis.Manufacturers expected output to gain 1.6% in December and 5.0% in January. But forecasts by firms in the survey tend to be overly optimistic, a Ministry of Economy, Trade and Industry (METI) official cautioned adding that it remained to be seen whether production will come in positive this month.The government upgraded its assessment of industrial output, saying it was showing signs of picking up.Separate data showed the jobless rate rose to 2.8% from the previous month’s 2.7%, while an index gauging job availability was at 1.15, unchanged from October. More

The seasonally adjusted unemployment rate compared with 2.7% in October and a median forecast of 2.7% in a Reuters poll of economists.The jobs-to-applicants ratio was 1.15 in November, labour ministry data showed, unchanged from the previous month and lower than a Reuters poll forecast of 1.16.(Note: The jobs-to-applicants ratio and new job offers can be seen in Japanese on the labour ministry’s website) More

(Reuters) -U.S. President Joe Biden signed into law the National Defense Authorization Act, or NDAA, for fiscal year 2022, which authorizes $770 billion in defense spending, the White House said on Monday.Earlier this month, the Senate and the House of Representatives voted overwhelmingly for the defense bill https://www.reuters.com/world/us/majority-us-senate-backs-770-billion-defense-bill-2021-12-15 with strong support from both Democrats and Republicans for the annual legislation setting policy for the Department of Defense.”The Act provides vital benefits and enhances access to justice for military personnel and their families, and includes critical authorities to support our country’s national defense,” Biden said in a statement after signing the bill into law. The NDAA is closely watched by a broad swath of industry and other interests because it is one of the only major pieces of legislation that becomes law every year and because it addresses a wide range of issues. The NDAA has become law every year for six decades.Authorizing about 5% more military spending than last year, the fiscal 2022 NDAA is a compromise after intense negotiations between House and Senate Democrats and Republicans after being stalled by disputes over China and Russia policy.It includes a 2.7% pay increase for the troops, and more aircraft and Navy ship purchases, in addition to strategies for dealing with geopolitical threats, especially Russia and China.The NDAA includes $300 million for the Ukraine Security Assistance Initiative, which provides support to Ukraine’s armed forces, $4 billion for the European Defense Initiative and $150 million for Baltic security cooperation.On China, the bill includes $7.1 billion for the Pacific Deterrence Initiative and a statement of congressional support for the defense of Taiwan, as well as a ban on the Department of Defense procuring products produced with forced labor from China’s Xinjiang region.It creates a 16-member commission to study the war in Afghanistan. Biden ended the conflict – by far the country’s longest war – in August.GUANTANAMO BLUESEven as the White House heralded passage of the NDAA, it criticized provisions in the bill barring the use of funds to transfer Guantánamo Bay detainees to the custody of certain foreign countries or into the United States unless certain conditions are met. “It is the longstanding position of [the White House] that these provisions unduly impair the ability of the executive branch to determine when and where to prosecute Guantánamo Bay detainees and where to send them upon release,” Biden said in a statement.Set up to house foreign suspects following the Sept. 11, 2001, attacks on New York and Washington, the prison came to symbolize the excesses of the U.S. “war on terror” because of harsh interrogation methods that critics say amounted to torture.Biden has said he hopes to close the prison before his tenure is up but the federal government is still barred by law from transferring any inmates to prisons on the U.S. mainland. Even with Democrats controlling Congress now, Biden has majorities so slim that he would struggle to secure legislative changes because some Democrats might also oppose them. More