Philippa Kaur

GARY MARX and David Jackson, two veteran investigative reporters at the Chicago Tribune, spent most of last year seeking potential buyers who might save their newspaper from Alden Global Capital, a New York hedge fund. “We need a civic-minded local owner or group of owners,” they wrote in January 2020 in an opinion article in the New York Times. The alternative was a ghost version of the paper, they warned. “Illinois’s most vulnerable people would lose a powerful guardian, its corrupt politicians would be freer to exploit and plunder, and this prairie metropolis would lose the common forum that binds together and lifts its citizens.”Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

PEOPLE’S RELATIONSHIP with work is complex. For all the complaining about the tedium and bureaucracy, the power-crazed bosses and recalcitrant colleagues, individuals need the security of a job. A century of research has shown that unemployment is bad for mental health, leading to depression, anxiety and reduced self-esteem. On average, it has an even greater effect than divorce.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

IT IS HARD to imagine such shockingly different financial documents. Two years ago a startup in New York that boosters claimed was worth $47bn issued a flowery prospectus in advance of its initial public offering (IPO). The firm’s mission, it declared, was to “elevate the world’s consciousness”. Such was the backlash against its puffery that it was forced to scrap its flotation. On March 26th a New York firm unveiled a 50-page investor presentation that was rather less effusive, filled with talk of cost savings, efficiency and productivity gains for clients. This humbler company secured a backdoor listing, through a special-purpose acquisition company (SPAC), that would value it at around $9bn.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

DATA MAY be the new oil, but it is semiconductors—the brains of the data economy—that these days vie with hydrocarbons as the business world’s biggest economic flashpoint. Like crude, the $500bn computer-chip industry is essential to industrial economies. It is regularly buffeted, as are oilmen, by excesses of supply and demand. And it is at the vortex of intense geopolitical rivalries. Its main wellspring, though, is not in the Persian Gulf, but on an island about 175km (110 miles) across the water from China. What is more, the Communist Party in Beijing claims the island in question, Taiwan, as part of its territory. That puts the semiconductor industry at the heart of the Sino-American power struggle—a uniquely uncomfortable place to be. It is in this context that the recent $20bn commitment by Intel, America’s biggest chipmaker, to revitalise semiconductor production in America should be seen. With some fanfare, its new boss, Pat Gelsinger, is placing a flag on his home turf, hoping to help reclaim the dynamism that the country which invented semiconductors has lost to chip factories in Taiwan and South Korea. It comes amid a surge of “chip nationalism”, in which governments from East to West are offering lavish subsidies for such “fabs”. It coincides with a severe chip shortage that—though it mostly affects microprocessors used in cars, which Intel does not sell—has brought home the danger of supply disruptions. And it follows America’s kneecapping of Huawei, a Chinese maker of networking gear, by restricting its access to American technology, including semiconductors.No one could accuse Intel of squandering a geopolitical tailwind. But Mr Gelsinger’s plan to build two new fabs in Arizona is also a gamble. It extends Intel’s traditional business of making its own chips to making those blueprinted by other American companies, including Amazon, which designs the processors used in its cloud-computing data centres, and Qualcomm, which specialises in semiconductors for mobile telephony. The decision to become part contract manufacturer rather than designing chips and outsourcing production, which rivals such as AMD have done successfully, requires a huge outlay that investors may find hard to stomach. Intel already spends about $28bn a year on capital investments, research and development.Intel’s move also marks the start of a new era of public funding for chipmaking in America that could dangerously distort the market. The industry is lobbying for $50bn of federal support over the next decade, which it says is necessary to spur construction of 19 new fabs, requiring $280bn of private investment. Mr Gelsinger’s bet puts Intel in the vanguard of America’s mission to strengthen its position as a semiconductor superpower. But if it does not play its cards carefully, it could be the first Silicon Valley firm to suffer the curse of being a national champion.It is already one of the first in line for public largesse. American politicians loudly grumble about how dependent the country has become on two firms in China’s backyard, Taiwan Semiconductor Manufacturing Company (TSMC), and Samsung, a South Korean conglomerate. Although American firms lead the world in developing and designing chips, they manufacture just 12% of them at home, down from 37% in 1990. They blame the Asian countries’ subsidies, which help defray the huge cost of fabs, which these days can exceed $10bn apiece. That may be so, but TSMC and Samsung have also outdone Intel in recent years in their ability to produce state-of-the-art chips. When he was president, Donald Trump pressed the two Asian companies to expand production on American soil. Both say they will. Intel, though, is a more obvious recruit for the home team. Heeding the call, Mr Gelsinger has vowed to get the firm back into the game, displaying a chutzpah not seen since his mentor, Andy Grove, stepped down as chief executive in 1998. The government is squarely behind him. Intel is likely to be an early recipient of part of the $37bn Mr Trump’s successor, Joe Biden, has earmarked to support America’s chipmakers. It also plans to expand in Europe, where countries hope to lure as much as €50bn ($59bn) in semiconductor investments, partly with state support.In economic terms all this is a mixed blessing. Free money is always nice. If America’s government insists that American companies buy more American-made chips, Intel stands to benefit. But government backing can encourage over-expansion; building factories takes years, while demand for chips changes quickly, fuelling regular boom-and-bust cycles. Support can also unexpectedly be snatched away. Investors, already nervous about the sliding profitability of Intel’s core business, may fret about the impact of over-investment on margins. And there is no guarantee customers will flock to the company as a contract manufacturer. It has dabbled in this business before with little success, chiefly because it had put its own chipmaking interests over its customers’. Mr Gelsinger now talks of “co-opetition” rather than competition, and promises to keep contract manufacturing at arm’s length from Intel’s own chipmaking. Clients may still prefer TSMC, unburdened by any such conflict. The silicon curtainThe trickiest task for Intel will be to balance a state-backed expansion in America and Europe with cordial relations with China, its biggest market, accounting for 26% of last year’s sales. For now China probably needs Intel as much as Intel needs China. But if Mr Biden pursues his predecessor’s policy of restricting chip exports to Chinese firms, the risk is not just lower sales, but retaliation. As geopolitical tensions mount, so does the pressure to renationalise supply chains, or turn them into competing webs of Chinese and American allies. Intel should discourage this at all costs. It would be disastrous for one of the world’s most globally integrated industries. It would be no picnic for Intel, either. ■This article appeared in the Business section of the print edition under the headline “Poker chips” More

BOYCOTTS OF FOREIGN brands are so common in China that managers have a ready-made playbook when caught in a storm of nationalist outrage. Start with an apology. Then stay mostly quiet, perhaps expressing respect for Chinese culture. Wait for the anger to subside. Over the past week the list of companies consulting the manual has grown. Chinese consumers, egged on by the ruling Communist Party, vowed to shun some of the world’s biggest clothing companies, from Adidas to Zara.In the eyes of the boycotters, the firms erred by declaring concern over allegations that China’s cotton industry includes the forced labour of Uyghurs, a mostly Muslim ethnic minority in the north-western region of Xinjiang. Their bosses hope that the controversy will fizzle out. But they and other Western executives in China cannot shake an unsettling fear that this time is different. Their lucrative Chinese operations are at rising risk of tumbling into the political chasm that has opened between the West and China.H&M, a Swedish fast-fashion retailer, faces the most immediate trouble. As of March 30th, a week after it was attacked online, its garments were still unavailable on China’s most popular e-commerce apps. Its stores have disappeared from smartphone maps. Landlords in several shopping malls have terminated its leases. Its Chinese business, worth $1bn in revenues, representing 5% of its global sales in 2020, is in jeopardy.For other companies the Xinjiang rage has not been as devastating. Even as celebrities in China cancelled endorsement deals with Nike, some 350,000 Chinese signed up for an online sale of a limited-edition pair of its swooshy shoes on March 26th. Little by little the social-media mob has dwindled amid signs that government censors were reining it in, perhaps to lower the heat. The share prices of foreign firms entangled in the boycotts have clawed back most of their initial losses.Foreign executives, however, remain on edge. The issue at the heart of their current problems—China’s human-rights violations in Xinjiang, and the West’s newfound willingness to punish them—is one for which the tried and tested playbook is ill-suited. It may also be more expansive, seeping into other corners of their business dealings in the world’s second-biggest economy.The boycotts were apparently triggered by the co-ordinated announcements on March 22nd by America, Britain, Canada and the European Union of sanctions against Chinese officials for abuses in Xinjiang. China responded with sanctions of its own. The Communist Youth League, a party affiliate, then dug up a months’-old statement by H&M expressing concern about reports of Uyghur forced labour. Hua Chunying, a foreign-ministry spokeswoman, made the message clear. “The Chinese people will not allow some foreign companies to eat Chinese food and smash Chinese bowls,” she said.The commercial conflagration over cotton illustrates the difficulty of even limited economic decoupling between China and the West. China’s cotton industry is worth about $12bn a year, less than 0.1% of GDP. About 90% of China’s cotton comes from Xinjiang, and the government says 70% of that is harvested mechanically. In theory it should be possible to remove hand-picked fibres from supply chains. In practice that would require audits of how the cotton is produced. China will not allow free travel around Xinjiang, let alone unmonitored conversations with Uyghur workers. American clothing-industry groups last year described the situation as “of a scale, scope and complexity that is unprecedented during the modern era of global supply chains”.In January Donald Trump cut through the complexity with a full ban on cotton imports from Xinjiang. His successor as president, Joe Biden, who is less China-baiting but more concerned about human rights, has not reversed it. The trouble is that yarn from Xinjiang ends up in factories around China, making it hard to stop the taint from spreading to all Chinese cotton products, which make up a large slice of global supply, since China accounts for about 40% of all global textile exports. “There is no way we can declare the full supply chain is clean,” says a consultant in Shanghai.Mei Xinyu, a researcher with the Ministry of Commerce, has written that cotton is the “entry point” for America’s strategy of using the Xinjiang allegations to suppress China, which denies any forced labour is taking place. China’s only choice, he says, is to fight back forcefully. The Communist Party is confident of its abilities to do so, thanks to what it calls the “powerful gravitational field” of its market. American-listed firms which regularly report their revenues from China or Asia, and can thus be assumed to have larger exposure to the country, have outperformed those that do not in recent years (see chart).Yet even gravity has its limits. An apology, the first step in mending fences, is untenable this time. Many people inside foreign companies “recognise the moral gravity of what’s happening in Xinjiang”, says Scott Nova of the Worker Rights Consortium, a labour monitoring organisation. Those that do not must still comply with the American ban on cotton imports if shipping to America. This earns them little sympathy in China. Foreign firms have found it virtually impossible to get audiences with Chinese officials to explain their legal obligations in America, says a government-relations expert.Those obligations may soon multiply. The Uyghur Forced Labour Prevention Act, currently wending its way through Congress with bipartisan support, assumes that all Xinjiang products are made with forced labour. Companies will have to prove otherwise if they want to export to America. “It’s like having to prove a negative,” sighs one representative of American industry. The consequences could be dramatic. Nearly half of the polysilicon in solar panels globally comes from Xinjiang. China’s largest wind-turbine maker, Goldwind, is based there. Xinjiang’s oil and gas power factories around China.Europe has so far refrained from banning products from Xinjiang. China’s decision to focus its ire on H&M rather than on an American firm may be a warning to EU officials to keep it that way. But the aggression poses a risk. In December the EU and China signed an investment deal which would give European industrial and financial firms greater access to the Chinese market. The European Parliament may now refuse to ratify it. “After seven years of negotiations, we hoped for seven years of wellness. Now it looks like it might be seven years of drought,” says Joerg Wuttke, who is president of the EU Chamber of Commerce in China.China still wants some foreign firms to feel welcome. On March 26th Li Keqiang, the prime minister, visited a plant part-owned by BASF, a German chemicals giant. Such comity will almost certainly become rarer as the authorities promote home-grown business, from chipmaking to battery minerals. China’s newest five-year plan, unveiled in March, is focused above all else on the pursuit of self-sufficiency in the face of “hostile external environment”, as party leaders describe it. Western bosses had hoped that the fissures between China and the West would start to close under Mr Biden’s administration. Instead they are getting deeper and wider. More

FOR MORE than a year some big foreign apparel and technology companies have been walking a fine line on the human-rights abuses committed by China against Uyghurs, a mostly Muslim ethnic minoritiy in the north-western region of Xinjiang. These firms have been working to clear their supply chains of the forced labour of Uyghurs, hundreds of thousands of whom pick cotton under apparently coercive conditions. What they have not done is boast about these efforts, fearful of angering the Communist Party and 1.4bn Chinese consumers. “Usually in our work it’s easier to get companies to say they’re doing the right thing than to actually do it,” says Scott Nova of the Worker Rights Consortium (WRC), a labour-monitoring organisation, and the Coalition to End Forced Labour in the Uyghur Region. “On this issue, with limited exceptions, the opposite is true.”An online furore stoked by Chinese authorities this week suggests that Beijing may be tiring of this double game. China’s government, increasingly keen to punish critics of their Xinjiang policies, is forcing foreign companies to make a choice they have been studiously trying to avoid: support China or get out of the Chinese market.Chinese authorities have stirred nationalist protests against foreign companies in the past, then tamped them down having made their point. This time the campaign looks like part of a broader, more enduring counterattack against critics of the government’s policies in Xinjiang, where it incarcerated more than 1m Uyghurs in a gulag for their religious and cultural beliefs. It extends beyond the corporate world. In recent days China has imposed sanctions against members of the British, Canadian and European parliaments, European scholars and think-tanks in Britain and Germany. Britain, Canada and the EU had previously joined America in sanctions on senior officials in Xinjiang, implicated in what the American government has called “crimes against humanity” and “genocide”. “China is not the first to shoot, neither will we be passive and submissive to threats from the outside,” said Yang Xiaoguang, chargé d’affaires at the Chinese embassy in London, at a news conference. “The Chinese people will not be bullied.”Instead, it is Chinese authorities who are doing the bullying. On March 24th the Communist Youth League, a party affiliate, whipped up a nationalist online boycott of H&M, digging up a months-old statement on the Swedish garment-maker’s corporate website expressing concerns about reports of forced labour in Xinjiang. Government officials and state media joined in. An online mob besieged H&M and other brands, including Nike, Uniqlo and Adidas, demanding they retract past statements about Xinjiang if they expect to make money in China.By March 26th Chinese apps, from e-commerce to maps, had booted H&M off their platforms. By the next day at least some of its stores in China had been closed. A Chinese business worth $1bn in revenues—about 5% of H&M’s global sales in 2020—is in jeopardy. Multiple Chinese celebrities publicly renounced brands they had endorsed but which have stuck by earlier statements about Xinjiang (or not indicated any change). These include H&M, as well as Adidas, Nike, Puma and Uniqlo. Zhou Dongyu, an actress, dropped her deal with Burberry because she said the British maker of posh trench-coats, a member of the Better Cotton Initiative (BCI), a due-diligence consortium, had not “clearly and publicly stated its stance on cotton from Xinjiang”, according to her agency. Tencent, a tech giant, pulled Burberry-designed outfits from one of its online games.The antagonism toward foreign companies comes amid talk in both China and the West of “economic decoupling” between the two blocs, which have been intricately knitted together over decades of globalisation. These debates have focused in part on critical technology such as computer chips and artificial intelligence. But China’s new five-year plan articulates a more ambitious concept of self-sufficiency, the better to shield China from an uncertain or hostile external environment. The Communist Party views itself as increasingly able to exert economic pressure on others, using the “powerful gravitational field” of the world’s second-largest economy.The gravitational pull is strong indeed. Several apparel firms, including Muji, Fila China and the Chinese operation of Hugo Boss, gave testimonials on Chinese social media that they support Xinjiang cotton (all three of those companies have also issued statements from corporate headquarters acknowledging concerns about allegations of forced labour in Xinjiang). China’s success at containing the covid-19 pandemic allowed Hugo Boss to increase its sales there by 24% in the fourth quarter, year on year, helping offset declines of 32% in Europe and 28% in North America. The company expects to add a flagship store in Shanghai this year.Other firms have apparently taken down earlier statements about Xinjiang. They include PVH, which owns Calvin Klein, and Inditex, which owns Zara, among other brands. Inditex had 570 stores in mainland China as of January 2020, more than in any other country besides its Spanish home market, and its manufacturers in China employed more than 500,000 workers, second only to Bangladesh. PVH and Inditex belong—like H&M, Nike and Burberry—to the BCI, which announced in October that it would stop operating in Xinjiang. (That announcement disappeared from the organisation’s website on March 25th; a representative of the BCI said its policy had not changed, that its website has been the target of repeated distributed denial-of-service attacks in recent days, and that it would repost “relevant information” when it could.) PVH and Inditex did not immediately respond to a request for comment.Western brands that have held their ground on Xinjiang may worry that being seen as kowtowing to the Communist Party could provoke a backlash among shoppers in the West, who increasingly expect companies to behave responsibly on everything from the treatment of workers to climate change. And there are many people inside these companies “who recognise the moral gravity of what’s happening in Xinjiang”, says Mr Nova of the WRC. The firms may also be calculating that the nationalist fervour in China will cool. And they are hedging their bets. None of the companies named has publicly endorsed a call to action pushed by the Coalition to End Forced Labour in the Uyghur Region.Investors seem to think it’s a wash, at least for the time being. The share prices of H&M, Nike and Fast Retailing, which owns Uniqlo, all fell on news of the boycotts but have since recovered much of those losses. Those of firms that took a more accommodating stance, such as Fila and Hugo Boss, have reacted in a similar way. The big winners are Chinese firms that make using Xinjiang cotton a point of pride, such as Anta, a big sportswear-maker listed in Hong Kong (in part thanks to interest from patriotic retail investors).That could all change as both China’s official anger at criticisms of its Xinjiang policies and pressure from Western human-rights campaigners and consumers continue to intensify. Human-rights campaigners are already calling for a corporate boycott of next year’s winter Olympics in Beijing. “Companies feel caught,” says Mr Nova. They know that responding to Chinese pressure by renouncing their own human-rights commitments looks indefensible in their home markets. At the same time, they are understandably worried about the consequences in China. The choice between the lucrative Chinese market and the values firms profess in the rest of the world is becoming unavoidable, says Bennett Freeman, a former State Department official in the Clinton administration who now advises multinationals (and also volunteers at the Coalition to End Forced Labour in the Uyghur Region).For Western companies in China both paths, the principled and the pliant, carry risks. But so does the Communist Party’s nationalist indignation. If it does end up causing foreign firms to leave the Chinese market and reduce their dependence on Chinese supply chains, that could itself irritate many Chinese shoppers and hurt millions of Chinese workers. It would also give Western businesses more freedom to do something the party would itself love to avoid: criticise China in the open. More

BIG OIL EQUALS big payouts. The covid-induced collapse in the price of crude, which wiped billions from supermajors’ profits, tested this regularity—but not to breaking point. ExxonMobil booked an annual net loss of $22bn but still paid $15bn to shareholders. On March 21st Saudi Aramco said it, too, would maintain its $75bn dividend, on which its kingdom’s budget depends. Never mind the 44% fall in earnings.■Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

THE FLOTILLA of tugs and a giant digger look tiny against the backdrop of Ever Given, reflecting the scale of their task. One of the world’s largest container ships was wedged athwart the Suez Canal on March 23rd, blown off course by high winds. The problem for global shipping seems as immense.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More