Philippa Kaur

THE RANKS of foreign businesspeople in Shanghai are much depleted these days. Those who remain closely monitor the comings and goings of multinational executives. So all eyes were on the Bund Summit, a globally minded economic and financial forum held in the city from September 22nd to 24th. In previous years the forum brought in A-list chief executives from around the world. The latest edition, the first since China lifted its draconian covid-19 restrictions and declared itself open for business, was expected to draw high-powered crowds once again.Not so. Nearly ten months in, President Xi Jinping’s grand reopening from his zero-covid fiasco has been a big disappointment. Foreign investors believed that 2022, when quarantines threw China into a deep freeze, would be the bottom for sour sentiment. Instead the Chinese economy is creaking and cross-border investment flows have weakened. Foreign businesses have been raided by the authorities. On September 25th the Financial Times reported that Charles Wang Zhonghe, the China chairman of investment banking at Nomura International, a Japanese bank, had been banned from leaving China. Many foreign investors are skipping trips and putting off investment plans.Those that are showing up in Beijing and Shanghai this year say the damage wrought by zero-covid is palpable. Some of this, like the deteriorating English-language skills of hotel workers, is superficial. Other problems cut to the bone. Local staff have been deprived of foreign travel for years, and so from mingling with a previously steady stream of colleagues, engineers and scientists. China’s legions of well-trained white-collared workers appear less prepared to engage with the rest of the world than they did a few years ago, the visitors lament.Communication between the government and foreign investors is even more stilted. Local officials are less willing to have open discussions with visiting investors. Most queries from foreigners receive boilerplate responses. That is particularly unhelpful at a time when dizzyingly complex new compliance rules for things like data transfers pose big legal risks for companies.Perhaps as a consequence, few foreigners bother coming. Inbound travel is still shockingly depressed. The number of passengers entering the country on international flights in the first half of the year was down by more than three-quarters compared with the same period in 2019. As late as July the figure was still only just over 50%. Western tourists have been almost entirely missing from China this year, depriving the country of useful interpersonal connections. Group travel from America was down by about 99% in the second quarter of the year, compared with 2019.image: The EconomistBusiness travel, which ground to an almost complete halt in 2022 as China issued few visas and required up to three weeks of quarantine, is far below Chinese expectations and increasing only at a snail’s pace. Harrington Zhang and colleagues at Nomura warn in a recent report (published before their colleague’s predicament came to light) that the “lack of business contacts and civilian exchanges between China and the outside world may have more profound implications for China’s economic growth potential in the years ahead”. Already foreign direct investment collapsed to $4.9bn in the second quarter, down by 94% from the same period in 2021. Just $4.4bn in foreign venture capital flowed into China in the first half of the year, down from about $55bn for all of 2021, according to PitchBook, a data provider (see chart).Those who stuck it out during the punitive zero-covid years are re-evaluting their commitment to China. According to a survey of American companies in the country by the American Chamber of Commerce, released on September 19th, just 68% were profitable last year. Only 52% think this year will be better. Roughly as many were optimistic about the next five years, a record low. Some 40% of companies say they are moving investments elsewhere or planning to do so.The chamber noted that “2023 was supposed to be the year investor confidence and optimism bounced back”. But, it added grimly, that rebound has simply “not materialised”. Instead, business sentiment has “continued to deteriorate”. Merely flinging the door to the world open has not worked. Meanwhile, the window to meaningfully re-engage with the West is closing. ■ More

Dust-sheets cover the sets inside one soundproofed Hollywood studio, as placard-wielding writers and actors make as much noise as they can outside. The covers have been on since May, when America’s writers downed pens; in July the country’s actors joined them on strike. But on September 24th the writers said they had reached a tentative deal with the studios. The stage is now set for the actors to do the same, after which the dust-sheets can be whisked back off.Neither the Writers Guild of America (WGA) nor the studios have released the detailed terms of the three-year deal. On the face of it, the writers have won some concessions: bonuses for writers on shows that do well on streaming, a format whose success metrics have until now been opaque; minimum staffing levels for writers’ rooms; and terms governing the use of artificial intelligence (AI), which writers fear could soon churn out blockbuster scripts. The WGA says it is an “exceptional” deal. The studios are more circumspect. Until the agreement is approved by the WGA’s members, both sides have reason to say the deal is a good one for writers.The union’s governing councils are expected to nod through the deal as early as September 26th. Next it must be ratified by the WGA’s 11,500 rank-and-file, which will probably take several weeks. After 146 days without work, they are likely to vote “yes”. “If I lose my rent-controlled apartment, I’ll have to leave Los Angeles,” said one Hollywood worker marching in the heat outside Disney last week. The WGA may authorise its members to start working again while the ratification process is still going on, meaning that production of things like talk shows could resume imminently.Elsewhere, the cameras are not quite ready to roll. With actors still on strike, there will be no filming of scripted content (and even the talk shows will feel a bit thin, as striking stars are banned from appearing as guests). Their union, the Screen Actors Guild, is demanding a revenue-sharing deal with the streamers, as well as an 11% rise in basic wages, which the studios have rejected. Several more weeks of negotiation look likely. Factoring in a similar ratification process, things are unlikely to get back to normal much before Thanksgiving, in late November.That will mean a production crunch at a time when Hollywood is normally winding down. After nearly five months on hold, film and television schedules in 2024 are looking rather bare, so studios will rush to cram in as much production as they can. Time is running out to save next year’s summer blockbusters. ■ More

STANTON, TENNESSEE, looks like a place from a bygone age. The town hall quaintly resembles a 1960s grocery store. Next door is a cannery, where townsfolk use communal stoves to make soups and peach preserve for winter. For much of its history, Stanton’s main source of income has been cotton farming, which was so depressed, many smallholders upped sticks and left.Yet amid the cotton fields something remarkable is taking shape. Ford, one of America’s three big carmakers, is setting up the biggest industrial complex in its history, including an electric-vehicle (EV) plant, a battery factory and a base for its suppliers, with an investment of $5.6bn. A year after it broke ground thousands of acres have been covered with concrete and steel. Construction workers in high-vis jackets stomp into Suga’s Diner, the only food joint in the 400-person town, for lunches of fried chicken and catfish. When Ford announced the project in 2021, the diner had a sign lamenting a shortage of chicken. Now a help-wanted sign points to a shortage of staff. “We are rushed off our feet,” says Lesa “Suga” Tard, the owner.It is a similar story in De Soto, Kansas. Its industrial activity was abruptly cut short decades ago when an army munitions factory was mothballed. In April construction began on a $4bn Panasonic battery factory, the largest investment in the state’s history. Driving to the 9,000-acre site in his pickup truck, Rick Walker, the mayor, points out diggers turning a country road into a four-lane highway, counts the cranes—nine of them—helping erect the factory’s second storey, and talks optimistically about a giant solar farm due to be built nearby.image: The EconomistA drive over several days down parts of America’s “auto alley”, which stretches from the Great Lakes to the Gulf of Mexico, provides a glimpse of industrial history in the making. The country is in the grip of an investment boom in everything from semiconductor “fabs” to solar farms (see map). By late 2022, firms had announced a cumulative $210bn of investments in EV and battery factories in America, up from $51bn at the end of 2020, according to Atlas Public Policy, a data gatherer. Such investments have already contributed to a boom in American construction spending, which has doubled since the end of 2021, according to government statistics.Several factors explain what some are calling America’s manufacturing renaissance. President Joe Biden claims much of the investment is the result of financial incentives resulting from the Chips and Science Act and the Inflation Reduction Act (IRA), two of his signature policies. But state and local giveaways also help. So does the desire to outcompete China, as well as reshoring after supply-chain chaos during the pandemic. In the case of carmakers like Ford, which decided to build at Stanton before the IRA was passed, the fear is that unless they seize the initiative on electrification, they will lose their dominance of America’s car industry to Tesla, the EV front-runner.Given how attached Americans outside a few coastal cities remain to their gas guzzlers, the surge in EV and battery factories may seem like white elephants in the making. Yet the companies behind them clearly see a commercial logic. And the factories are already playing a role in national debates. The EV and battery plants are important points of contention in a strike against Detroit’s big three carmakers, Chrysler (part of Stellantis, whose biggest shareholder part-owns The Economist’s parent company), Ford and General Motors (GM). Both Mr Biden and Donald Trump are due to visit Michigan in coming days, to support the strikes. The United Auto Workers (UAW) is worried that the new factories will be hard to unionise. But the cost of labour is likely to be pivotal in determining whether America’s manufacturers can regain their mojo or not.There is little evidence of a full-blown migration of the car industry from the unionised north to the less union-friendly south. James Rubenstein of Miami University, in Oxford, Ohio, who specialises in the geography of the car industry, notes that non-American carmakers have been building factories in the south for decades. And as much new activity is happening in the old carmaking states as in the new ones. GM’s first contiguous EV and battery plant is in Detroit, close to the dilapidated and graffitied factories left over from the city’s heyday. Two hours’ drive away, Ford plans to build a battery plant in Marshall, Michigan, using technology from a Chinese company, CATL. “Everyone’s getting a pretty fair share of the largesse, both north of the Ohio River and south,” says Mr Rubenstein.image: APThe megaprojects may not, then, be reconfiguring America’s large-scale industrial geography. But at the local level, their impact is extraordinary. They are sprouting up in left-behind places that for years waited in frustration for a manufacturing revival to arrive. These places have several things in common.First, they long ago earmarked huge spaces of unproductive land for industrial development. Allan Sterbinsky, mayor of Stanton, says the town set aside 4,000 acres for industrial development decades ago; the state government even set up an office in Japan to promote it. Toyota, a Japanese car giant, made a few exploratory approaches. But it took Ford to ensure that the town’s ambitions could be realised, he says. In Kansas, De Soto started drawing up plans to rezone 9,000 acres for development a decade ago.The second common feature is the availability of labour. Though many of the new factories are in rural backwaters, they have access to big pools of workers within commuting distance. Once up and running, Ford’s operations are expected to employ 6,000 workers, about 15 times more than Stanton’s meagre population. A technical college on site will in time train future workers. For now, it will be fairly easy to find them in Memphis, which is about a 40-minute drive away, and which the car industry has hitherto overlooked. De Soto has 1.5m potential workers within a 30-minute radius, including Kansas City, so Panasonic should have no problem hiring 4,000 people, says Mr Walker.The new factories will nevertheless contribute to further clustering in the American car industry—a third shared trait. This is helpful in order to minimise the cost of transporting heavy batteries. Ford will have SK On, its South Korean battery partner, on site in Stanton. It will also have car-parts suppliers, such as Magna, directly on its doorstep. Unlike the gigafactory in Nevada, where Panasonic has teamed up with Tesla, the Japanese firm’s De Soto plant will supply more than one customer, and make different types of lithium-ion batteries.The projects’ reliance on copious sources of clean energy, meanwhile, makes them symbiotic with the proliferation of wind and solar developments nearby. The skyline along the Kansas prairies is thick with wind turbines, which generate almost half of the state’s electricity. The Tennessee Valley Authority, a multi-state utility, is investing heavily in new solar and other forms of generation capacity to meet sharply rising electricity demand in the south because of projects like Ford’s.Still, there are a few big bones of contention. One is the cost and efficacy of government incentives to promote the investment boom. Ford and SK, which are also building two battery factories in Kentucky, have conditionally been granted a $9.2bn loan from the Department of Energy. They also hope to qualify for a battery-production tax credit under the IRA. Panasonic will reportedly receive $830m in state-funded tax credits, as well as potential IRA support.A new report by Ahmed Medhi and Tom Moerenhout, of the Centre on Global Energy Policy at Columbia University, calculates that the IRA tax credits provide savings of more than 30% for battery manufacturers, helping bridge the gap between the cost of producing batteries in America and China. However, their success in stimulating investments may make their fiscal costs higher than projected. They are also triggering “subsidy wars” with the European Union. Although they might boost factory towns, that comes at a cost to the taxpayer, and perhaps in the long term, blunts the industry’s incentives to innovate. De Soto had to offer tax breaks and the like to lure Panasonic, which for many months kept its identity secret even from town officials so as not to tip off competitors.Another concern is the environmental and social impact of investments. Companies want to develop greenfield sites in places where demand for labour is not too fierce. But that can stir hostility from locals who resist turning fields into factories and worry about pollution and overuse of local resources, even in the service of a “green revolution”. Some also fear that industrial development will destroy the traditional character of their towns, or increase living costs. At a café in De Soto, Kira Horn, a waitress, describes how at night the lights on the cranes, which work around the clock, make the site look “like a city”. Although people like her boss, who is also an estate agent, are already relishing the business and property boom, some of her young friends worry that it will price them out of buying homes.Then there is the union challenge. Neither Kansas nor Tennessee are union-friendly states. In contrast to GM, which has a unionised factory near Nashville, Tennessee, Ford’s workers at Stanton will not automatically be required to join the UAW. This has caused friction. In June the UAW’s president, Shawn Fain, blasted the Biden administration for lending money to the Stanton project without agreeing wage requirements up front.Ford caught a breather on September 22nd when the UAW decided to expand its strike only at factories run by GM and Stellantis, saying it had made progress in negotiations with Ford. But the carmaker will be loth to give much ground on Stanton. Erik Gordon of the University of Michigan’s Ross School of Business says that the revitalisation of American manufacturing will hinge on automation and labour. The Detroit carmakers’ EVs will be uncompetitive if labour costs are too high, he says.If America’s entrepreneurial muscle is to be rebuilt and left-behind places revived, as the champions of local projects hope, these hurdles will need to be overcome. And Mr Biden’s turn towards subsidies could still bring with it economic costs for the country at large. But, although it is early days, the prospects for Stanton look encouraging. The presence of Ford’s supply chain so close to the factory floor is likely to attract more small businesses. The mayor’s projections show that, as a result of Ford’s investment, the town’s population is likely to grow about 20-fold in just over a decade. Mr Sterbinsky is already securing investments in water, sewage and other infrastructure to support that growth. He has toured southern states to learn how to turn sleepy places into creative hotspots that attract enterprising types. Stanton’s genuine southern treasures, such as the cannery and Suga’s Diner, are a good start. ■ More

STANTON, TENNESSEE, looks like a place from a bygone age. The town hall quaintly resembles a 1960s grocery store. Next door is a cannery, where townsfolk use communal stoves to make soups and peach preserve for winter. For much of its history, Stanton’s main source of income has been cotton farming, which was so depressed, many smallholders upped sticks and left.Yet amid the cotton fields something remarkable is taking shape. Ford, one of America’s three big carmakers, is setting up the biggest industrial complex in its history, including an electric-vehicle (EV) plant, a battery factory and a base for its suppliers, with an investment of $5.6bn. A year after it broke ground thousands of acres have been covered with concrete and steel. Construction workers in high-vis jackets stomp into Suga’s Diner, the only food joint in the 400-person town, for lunches of fried chicken and catfish. When Ford announced the project in 2021, the diner had a sign lamenting a shortage of chicken. Now a help-wanted sign points to a shortage of staff. “We are rushed off our feet,” says Lesa “Suga” Tard, the owner.It is a similar story in De Soto, Kansas. Its industrial activity was abruptly cut short decades ago when an army munitions factory was mothballed. In April construction began on a $4bn Panasonic battery factory, the largest investment in the state’s history. Driving to the 9,000-acre site in his pickup truck, Rick Walker, the mayor, points out diggers turning a country road into a four-lane highway, counts the cranes—nine of them—helping erect the factory’s second storey, and talks optimistically about a giant solar farm due to be built nearby.image: The EconomistA drive over several days down parts of America’s “auto alley”, which stretches from the Great Lakes to the Gulf of Mexico, provides a glimpse of industrial history in the making. The country is in the grip of an investment boom in everything from semiconductor “fabs” to solar farms (see map). By late 2022, firms had announced a cumulative $210bn of investments in EV and battery factories in America, up from $51bn at the end of 2020, according to Atlas Public Policy, a data gatherer. Such investments have already contributed to a boom in American construction spending, which has doubled since the end of 2021, according to government statistics.Several factors explain what some are calling America’s manufacturing renaissance. President Joe Biden claims much of the investment is the result of financial incentives resulting from the Chips and Science Act and the Inflation Reduction Act (IRA), two of his signature policies. But state and local giveaways also help. So does the desire to outcompete China, as well as reshoring after supply-chain chaos during the pandemic. In the case of carmakers like Ford, which decided to build at Stanton before the IRA was passed, the fear is that unless they seize the initiative on electrification, they will lose their dominance of America’s car industry to Tesla, the EV front-runner.Given how attached Americans outside a few coastal cities remain to their gas guzzlers, the surge in EV and battery factories may seem like white elephants in the making. Yet the companies behind them clearly see a commercial logic. And the factories are already playing a role in national debates. The EV and battery plants are important points of contention in a strike against Detroit’s big three carmakers, Chrysler (part of Stellantis, whose biggest shareholder part-owns The Economist’s parent company), Ford and General Motors (GM). Both Mr Biden and Donald Trump are due to visit Michigan in coming days, to support the strikes. The United Auto Workers (UAW) is worried that the new factories will be hard to unionise. But the cost of labour is likely to be pivotal in determining whether America’s manufacturers can regain their mojo or not.There is little evidence of a full-blown migration of the car industry from the unionised north to the less union-friendly south. James Rubenstein of Miami University, in Oxford, Ohio, who specialises in the geography of the car industry, notes that non-American carmakers have been building factories in the south for decades. And as much new activity is happening in the old carmaking states as in the new ones. GM’s first contiguous EV and battery plant is in Detroit, close to the dilapidated and graffitied factories left over from the city’s heyday. Two hours’ drive away, Ford plans to build a battery plant in Marshall, Michigan, using technology from a Chinese company, CATL. “Everyone’s getting a pretty fair share of the largesse, both north of the Ohio River and south,” says Mr Rubenstein.image: APThe megaprojects may not, then, be reconfiguring America’s large-scale industrial geography. But at the local level, their impact is extraordinary. They are sprouting up in left-behind places that for years waited in frustration for a manufacturing revival to arrive. These places have several things in common.First, they long ago earmarked huge spaces of unproductive land for industrial development. Allan Sterbinsky, mayor of Stanton, says the town set aside 4,000 acres for industrial development decades ago; the state government even set up an office in Japan to promote it. Toyota, a Japanese car giant, made a few exploratory approaches. But it took Ford to ensure that the town’s ambitions could be realised, he says. In Kansas, De Soto started drawing up plans to rezone 9,000 acres for development a decade ago.The second common feature is the availability of labour. Though many of the new factories are in rural backwaters, they have access to big pools of workers within commuting distance. Once up and running, Ford’s operations are expected to employ 6,000 workers, about 15 times more than Stanton’s meagre population. A technical college on site will in time train future workers. For now, it will be fairly easy to find them in Memphis, which is about a 40-minute drive away, and which the car industry has hitherto overlooked. De Soto has 1.5m potential workers within a 30-minute radius, including Kansas City, so Panasonic should have no problem hiring 4,000 people, says Mr Walker.The new factories will nevertheless contribute to further clustering in the American car industry—a third shared trait. This is helpful in order to minimise the cost of transporting heavy batteries. Ford will have SK On, its South Korean battery partner, on site in Stanton. It will also have car-parts suppliers, such as Magna, directly on its doorstep. Unlike the gigafactory in Nevada, where Panasonic has teamed up with Tesla, the Japanese firm’s De Soto plant will supply more than one customer, and make different types of lithium-ion batteries.The projects’ reliance on copious sources of clean energy, meanwhile, makes them symbiotic with the proliferation of wind and solar developments nearby. The skyline along the Kansas prairies is thick with wind turbines, which generate almost half of the state’s electricity. The Tennessee Valley Authority, a multi-state utility, is investing heavily in new solar and other forms of generation capacity to meet sharply rising electricity demand in the south because of projects like Ford’s.Still, there are a few big bones of contention. One is the cost and efficacy of government incentives to promote the investment boom. Ford and SK, which are also building two battery factories in Kentucky, have conditionally been granted a $9.2bn loan from the Department of Energy. They also hope to qualify for a battery-production tax credit under the IRA. Panasonic will reportedly receive $830m in state-funded tax credits, as well as potential IRA support.A new report by Ahmed Medhi and Tom Moerenhout, of the Centre on Global Energy Policy at Columbia University, calculates that the IRA tax credits provide savings of more than 30% for battery manufacturers, helping bridge the gap between the cost of producing batteries in America and China. However, their success in stimulating investments may make their fiscal costs higher than projected. They are also triggering “subsidy wars” with the European Union. Although they might boost factory towns, that comes at a cost to the taxpayer, and perhaps in the long term, blunts the industry’s incentives to innovate. De Soto had to offer tax breaks and the like to lure Panasonic, which for many months kept its identity secret even from town officials so as not to tip off competitors.Another concern is the environmental and social impact of investments. Companies want to develop greenfield sites in places where demand for labour is not too fierce. But that can stir hostility from locals who resist turning fields into factories and worry about pollution and overuse of local resources, even in the service of a “green revolution”. Some also fear that industrial development will destroy the traditional character of their towns, or increase living costs. At a café in De Soto, Kira Horn, a waitress, describes how at night the lights on the cranes, which work around the clock, make the site look “like a city”. Although people like her boss, who is also an estate agent, are already relishing the business and property boom, some of her young friends worry that it will price them out of buying homes.Then there is the union challenge. Neither Kansas nor Tennessee are union-friendly states. In contrast to GM, which has a unionised factory near Nashville, Tennessee, Ford’s workers at Stanton will not automatically be required to join the UAW. This has caused friction. In June the UAW’s president, Shawn Fain, blasted the Biden administration for lending money to the Stanton project without agreeing wage requirements up front.Ford caught a breather on September 22nd when the UAW decided to expand its strike only at factories run by GM and Stellantis, saying it had made progress in negotiations with Ford. But the carmaker will be loth to give much ground on Stanton. Erik Gordon of the University of Michigan’s Ross School of Business says that the revitalisation of American manufacturing will hinge on automation and labour. The Detroit carmakers’ EVs will be uncompetitive if labour costs are too high, he says.If America’s entrepreneurial muscle is to be rebuilt and left-behind places revived, as the champions of local projects hope, these hurdles will need to be overcome. And Mr Biden’s turn towards subsidies could still bring with it economic costs for the country at large. But, although it is early days, the prospects for Stanton look encouraging. The presence of Ford’s supply chain so close to the factory floor is likely to attract more small businesses. The mayor’s projections show that, as a result of Ford’s investment, the town’s population is likely to grow about 20-fold in just over a decade. Mr Sterbinsky is already securing investments in water, sewage and other infrastructure to support that growth. He has toured southern states to learn how to turn sleepy places into creative hotspots that attract enterprising types. Stanton’s genuine southern treasures, such as the cannery and Suga’s Diner, are a good start. ■ More

“TO WALK AWAY and retire, it’s a pretty dismal prospect,” Rupert Murdoch told an interviewer in 1998, when he was already well into pensionable age. If he ever did stop working, he added, he would “die pretty quickly”.So the announcement on September 21st that the 92-year-old is stepping down as chairman of Fox Corporation and News Corp, the television and newspaper empires he has built up over more than 70 years, should be treated with some scepticism. Mr Murdoch will stay on as “chairman emeritus” and says he will remain “involved every day in the contest of ideas”. This week he advised staff: “When I visit your countries and companies, you can expect to see me in the office late on a Friday.” It was both a promise and a warning.
The handover of Mr Murdoch’s empire has been a gradual process. He has shied away from earnings calls since the sale of 21st Century Fox, the bulk of his film and TV assets, to Disney in 2019. The question of succession was in effect settled the following year, when James Murdoch, the younger son and sometime heir apparent, left the News Corp board, citing “disagreements over certain editorial content published by the company’s news outlets and certain other strategic decisions”. This left the path clear for Mr Murdoch’s elder son, Lachlan, who will take over from his father at the two family firms.image: The EconomistWhy the change in titles now? Mr Murdoch said in his letter to staff this week that he was in robust health. But investors have recently begun to question those assurances. Vanity Fair reported in April that he had quietly suffered a series of health problems including a broken back, seizures and two bouts of pneumonia. His testimony in a recent legal case against Fox brought by Dominion Voting Systems, which accused the company of damaging its reputation, seemed to lack some of the mogul’s old sharpness.These concerns have coincided with a series of missteps. Fox pursued a calamitous legal strategy in the Dominion case, eventually paying up nearly $800m to settle it. (A related case brought by another voting-technology company, Smartmatic, is expected to go to trial in 2025; Smartmatic is seeking $2.7bn.) It has suffered public spats with some of its anchors, including Tucker Carlson, who was jettisoned in April and has since set himself up on the social network formerly known as Twitter. And an attempt by Mr Murdoch to unify his two companies earlier this year was shot down by shareholders.Those investors may be reassured by Mr Murdoch’s more modest new title. In recent years analysts have come to speak of a “Murdoch discount” applied to Fox and News Corp. Mr Murdoch’s new title means that “his interface with the public markets is over,” says Claire Enders, a media analyst. “But it is obvious that he is the ultimate decision-maker as long as he is alive.”That is reflected nowhere so clearly as his choice of successor. Mr Murdoch set up a decades-long audition between three of his children: Elisabeth, Lachlan and James (his eldest child, Prudence, has mostly stayed away from the company; his two youngest children by another marriage, Grace and Chloe, are still in their early 20s). Though it was James who set up the auction of 21st Century Fox, selling to Disney at the top of the market for $71bn, the job has gone to Lachlan, the child who gets on best with his father. Whereas James and Elisabeth have both criticised the political positions of their father’s companies, Lachlan appears to share the elder Murdoch’s politics. Any changes are likely to be minor: perhaps a little more focus on streaming (Tubi, Fox’s advertising-supported streamer, is performing well) and less on British news media (TalkTV, a recent venture there, has not been a big hit so far).When Murdoch père eventually dies, things may change more. Control of the family trust, which ultimately holds sway over both companies, will pass to the four eldest siblings. The newspaper and television industries are both going through a bumpy digital transition, opening up new possibilities. Assets such as Fox News could be changed, or sold off, when the next generation takes control. But it may be a while before that happens. Mr Murdoch’s mother lived to be 103. One person close to the family, asked what will happen when Mr Murdoch passes, reports simply: “He insists he won’t.” ■ More

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Climate Week NYC got off to an early start in California. In the days running up to the launch of the annual jamboree in New York City, America’s most populous and economically powerful state seized the initiative by hurling two thunderbolts at carbon-intensive businesses.The most eye-catching was a lawsuit filed on September 15th by the Democrat-led state government accusing five big oil companies—BP, Chevron, ConocoPhillips, ExxonMobil and Shell—of lying about the dangers of climate change. Two bills passed days earlier by the state legislature may have a bigger impact. They could, for the first time in America, force big business to make climate-related disclosures. Governor Gavin Newsom vowed to sign both, after a few tweaks.The two approaches—legal and legislative—were hailed by climate campaigners as tipping points in American law. The lawsuit against “big oil” aims to make the defendants pay for the alleged environmental damage suffered in California as a result of the use of their products. The firms reasserted their commitment to decarbonisation and said that the courts were not the right place to tackle such a momentous problem. It is the latest and most significant of dozens of court cases filed by states and cities against fossil-fuel producers in recent years. Those lawsuits proceed slowly and, as yet, no firm has lost. But in April the Supreme Court dealt a blow to oil producers by rejecting their efforts to move such cases from state to federal courts.The two laws are likely to have bigger, and more immediate, consequences. They require large firms that do business in California to disclose their greenhouse-gas emissions and climate-related vulnerabilities. They are the first of a kind in America—and will, like the state’s vehicle-emissions standards, probably have implications far beyond California’s borders.One applies to more than 5,000 companies with global annual revenues of over $1bn, and obliges them to disclose direct and indirect emissions, known as scope 1 and scope 2, beginning in 2026. A year later, they must also reveal their scope 3 emissions, which include those generated by their suppliers and end users. For example, carmakers will have to account for the emissions of those who provide them with parts and those who drive their cars. Scope 3 emissions are hard to calculate and can be many times the direct emissions, making some firms loth to calculate them. The second measure applies to 10,000 or so companies with revenues above $500m. Starting in 2026 they must file reports every other year on the financial impact of climate change on their business. Some companies, such as Microsoft, a tech giant, and Patagonia, a clothing brand, threw their support behind the measures. The California Chamber of Commerce, a lobby group, opposed them, arguing that they would push up compliance costs for firms without curbing emissions. Even so, companies will find it hard to resist the lure of California’s giant market. The climate-disclosure requirements come shortly before America’s Securities and Exchange Commission (SEC), a regulator, is expected to launch something similar at a federal level. Michael Gerrard of the Sabin Centre for Climate Change Law at Columbia University points out that the SEC’s rule is narrower in scope than California’s, only affects publicly traded companies above a certain size, and may be more legally vulnerable.Internationally, California is not alone. Many American multinationals will soon have to comply with even further-reaching climate-disclosure requirements by the European Union. America’s Republican states may growl about extraterritoriality. But when it comes to standard-setting, businesses know they must take California and the EU seriously. ■ More

AROUND THE world, dealmaking is in a rut. A combination of higher interest rates, geopolitical tensions and economic uncertainty has put a hold on joint ventures, mergers and acquisitions. One exception is targets with AI in their name. Another, less obvious one, involves a less catchy initialism: ADCs.Makers of these antibody-drug conjugates, to give them their full name, are all the rage among the world’s biggest drugmakers. Pfizer is paying $43bn for Seagen, which in turn has just teamed up with Nurix Therapeutics, a smaller biotechnology firm, to work on this class of drugs. Amgen, AstraZeneca and Merck have also placed billion-dollar bets on ADCs. In the past five years licensing deals worth $60bn have been signed for such therapies. The number of such deals tripled in that period, to 26. So far this year 18 have been signed, outpacing similar deals involving other emerging cancer drugs.ADCs aren’t new. The first was approved in 2000 for types of leukaemia. They act like guided biological missiles: a payload of toxic chemotherapy is carried by antibodies able to seek out cancer cells directly. Because they bypass normal tissue and go straight for their targets, they let patients receive higher doses that would otherwise cause too much collateral damage.Two developments explain the frenzied stockpiling of these anti-cancer weapons of late. One is increased clinical confidence. Enhertu, an ADC developed by AstraZeneca and Daiichi Sankyo, a Japanese biotechnology company, was first approved in America in 2019. But after another set of trials in 2022 showed that it allowed breast-cancer patients to live almost twice as long without relapse as those treated with standard chemotherapy, its approval was extended to different types of breast and lung cancer. Regulators have cleared a dozen other ADCs, which are now routinely used to treat some of the deadliest cancers, including leukaemia, lymphoma and breast cancer.image: The EconomistMore than 140 new ADCs are currently in clinical trials. Bristol Myers Squibb and Sanofi all have therapies in late-stage tests. AstraZeneca and Merck have each formed a joint-venture with biotech firms in China, to take advantage of Chinese regulators’ more relaxed rules for early-stage trials, which helps accelerate the drugs’ development. Susan Galbraith, who oversees oncology research and development at AstraZeneca, says that the timeline for drug testing in China has been significantly reduced in the past decade.Clinical success has, in turn, boosted commercial confidence. Sales of Enhertu exceeded $1.2bn in 2022. Revenue from Trodelvy, a similar drug approved for advanced breast cancer and sold by Gilead Sciences, rose by 79% last year, to $680m. Kadcyla brought in $1.1bn for its Swiss developer, Roche, in the first half of this year. Evaluate, a provider of health-care data, forecasts that ADC sales could reach nearly $30bn by 2028, up from around $7.5bn last year (see chart). Some of these wagers could misfire. It is unclear just how well the drugs will work in combination with others, such as immunotherapies. They are also complex to make. Any deals involving Chinese partners could unravel if Sino-Western tensions increase. For now, though, ADCs are a global arms race worth cheering. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More