Economy

This article is an on-site version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a weekToday’s top storiesRussian officials have refused to tell Alexei Navalny’s family the probable cause of his death or the whereabouts of his body, which the late opposition activist’s team claims is a Kremlin-orchestrated cover-up.Yemen’s Houthis hit a bulk carrier in one of their most damaging attacks yet in the Red Sea area, forcing the crew to abandon ship. The Rubymar was carrying cargo from the United Arab Emirates to Bulgaria. Ursula von der Leyen began her campaign for a second five-year term as European Commission president, focusing on increased defence spending, improved business competitiveness and green policies. For up-to-the-minute news updates, visit our live blogGood evening.Chinese premier Li Qiang urged officials today to work on “boosting confidence” in the first meeting of the country’s cabinet after the lunar new year holidays, as new data highlighted a striking drop-off in foreign direct investment and tensions with the US continued to dog the outlook for China’s trade balance.The FDI data underlined foreign companies’ nervousness in putting money into China amid slowing growth and higher interest rates on offer in other countries.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Policymakers will however be pleased that consumer spending and travel during the holiday period, an important barometer of consumer confidence, seem to have given a kick-start to the Year of the Dragon (said to be the luckiest Zodiac animal). Domestic trips were up 34 per cent on the previous year and 19 per cent on pre-pandemic travel in 2019. Tourists spent Rmb633bn ($89bn) during the period, up 47 per cent from a year earlier and 8 per cent on 2019. With Chinese shoppers making up more than a third of the world’s luxury goods consumption before the pandemic, the holiday period is also an important time for Europe’s high-end groups, as the Lex column (for Premium subscribers) explains. With visits to Europe by large groups of free-spending Chinese tourists yet to resume, the industry is making a special effort to target the country’s domestic market, as seen in elaborate marketing campaigns from the likes of Kering, owner of Gucci.The role of domestic demand in getting a moribund economy back on track is all the more important given the geopolitical tensions affecting China’s foreign trade, including new accusations from the FBI that Beijing has been trying to hack critical US infrastructure.As we report today, Washington has also warned Beijing that the US and its allies will take action if China tries to ease its industrial overcapacity by dumping cheap goods on international markets. The US is most concerned about advanced manufacturing and clean energy sectors such as electric vehicles, solar panels and lithium-ion batteries. Brussels and Washington are increasingly concerned about excessive EV manufacturing capacity in China, where a “bloody sea” of competition is expected to lead to a wave of consolidation that will leave only a handful of companies in the world’s largest car market. The impact of China’s EV push was also seen in today’s announcement of 10,000 job cuts from French car parts supplier Forvia, citing Chinese competition.In the meantime, Chinese EV companies appear confident that their lower costs and technological leadership will continue to help secure western partners, despite the tense political backdrop. Working with Chinese EV companies means foreign companies can develop cars much faster while reducing costs by as much as half. Need to know: UK and Europe economySir Robert Chote, the chair of the UK Statistics Authority, admonished ministers for making potentially misleading claims about the level of personal taxation in Britain.Angela Rayner, deputy leader of the UK Labour party, writing in the FT, promised a new relationship with business that would move the country away from its low-productivity, low-security and low-wage doom loop.FT architecture critic Edwin Heathcote says a government proposal to make it easier to convert shops and department stores to residential use is a terrible idea. Instead, with their industrial-scale loading docks and back-of-house facilities, vacant stores lend themselves to anything from immersive theatre and food halls to workshops, he argues.The Bundesbank warned that the German economy would shrink again in the first quarter, blaming policy uncertainty, transport strikes, cautious consumers and weak industrial demand. As conditions at home and in China, their largest trading partner, worsen, German companies are flocking to invest in the US.France is also struggling: the government said it would cut another €10bn out of this year’s budget as weaker economic growth makes its earlier fiscal plans untenable. The economy is expected to expand only 1 per cent this year, according to revised forecasts.Competition authorities in the UK, EU and Switzerland are stepping up their scrutiny of consumer companies as inflation increases the risk of suspicious behaviour such as collusion on prices, labour practices and consumer rights. Need to know: global economyIsrael’s economy has taken a big hit from the war against Hamas, partly due to businesses struggling as 300,000 reservists were called up to fight in Gaza. Gross domestic product fell 19.4 per cent in the final quarter of 2023 compared with the preceding three months.  A new energy “gold rush” is beginning for a previously neglected carbon-free resource: hydrogen generated naturally within Earth. As much as 5tn tonnes exists in underground reservoirs worldwide and recovering just a small fraction of this would still supply all projected demand — 500mn tonnes a year — for hundreds of years.US natural gas prices hit a near-three-decade low as what is set to be the country’s warmest winter on record slashes demand for heating fuel just as production surges to record levels.  Our new US Election Countdown newsletter launches tomorrow with authoritative, impartial analysis and behind the scenes insights from FT journalists across the campaign trail. Sign up here.Need to know: businessThe FT revealed that Brussels was to impose its first ever fine on tech giant Apple for allegedly breaking EU law over access to its music streaming services. The fine, about €500mn, is the culmination of an antitrust probe into whether Apple has used its own platform to favour its services over those of competitors. Start-ups are worried about the EU’s Big Tech crackdown.On a more positive note, the world’s biggest tech companies have agreed to fight “deceptive” artificial intelligence-generated content such as “deepfakes” from interfering with the elections taking place across the globe this year.IT businesses in Kharkiv, the Ukrainian industrial powerhouse turned tech centre, have shown remarkable resilience despite being the target of rockets launched from Russia across the border just 20 miles away.Russian state-run energy giant Gazprom is struggling to adapt to a collapse in sales in Europe caused by the Ukraine conflict. Russia’s share of EU gas imports dropped from more than 40 per cent in 2021 to 8 per cent last year, while prices have collapsed from their peaks in the early days of the war. A sweeping shake-up of the rules underpinning US financial markets is under way but Wall Street is kicking back. A new Big Read explains.English private schools are on the hunt for more overseas students as they prepare for the prospect of a new tax on fees should Labour win the general election. The World of WorkFT readers have been sharing their pay details with us. Even well-paid professionals say they are feeling the pinch as less generous pay and bonus packages are eaten away by bigger mortgage repayments, higher taxes and rising living expenses.One way to miss out on higher pay is to work from home, writes columnist Pilita Clark, who says lower wage growth and higher productivity might be why bosses like remote working more than we think.Transparency on pay meanwhile seems like a straightforward objective but the process can have unintended consequences, writes Soumaya Keynes. Some good newsArtificial intelligence is enabling researchers to read ancient works from the library at Herculaneum, almost 2,000 years after the papyrus rolls they were on were carbonised during the eruption of Mount Vesuvius.Recommended newslettersWorking it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up hereThe Climate Graphic: Explained — Understanding the most important climate data of the week. Sign up hereThanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here to receive future issues. And please share your feedback with us at [email protected]. Thank you More

Last fall, Tiffanie Simmons, a second-generation autoworker, endured a six-week strike at the Ford Motor factory just west of Detroit where she builds Bronco S.U.V.s. That yielded a pay raise of 25 percent over the next four years, easing the pain of reductions that she and other union workers swallowed more than a decade ago.But as Ms. Simmons, 38, contemplates prospects for the American auto industry in the state that invented it, she worries about a new force: the shift toward electric vehicles. She is dismayed that the transition has been championed by President Biden, whose pro-labor credentials are at the heart of his bid for re-election, and who recently gained the endorsement of her union, the United Automobile Workers.The Biden administration has embraced electric vehicles as a means of generating high-paying jobs while cutting emissions. It has dispensed tax credits to encourage consumers to buy electric cars, while limiting the benefits to models that use American-made parts.But autoworkers fixate on the assumption that electric cars — simpler machines than their gas-powered forebears — will require fewer hands to build. They accuse Mr. Biden of jeopardizing their livelihoods.“I was disappointed,” Ms. Simmons said of the president. “We trust you to make sure that Americans are employed.”Tiffanie Simmons works in Wayne, Mich., at a Ford Motor factory that builds Broncos.Nick Hagen for The New York TimesMs. Simmons’s union has endorsed President Biden, but “I was disappointed” in him, she said.Nick Hagen for The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

The company said it was facing high debt and interest rates, as well as a “challenging free cash flow situation”.”One of our top priorities is reducing debt and increasing flexibility,” Chief Executive Bill Anderson said. “Our amended dividend policy, which considered investor input and was not taken lightly, will help us do so.”Bayer said it will propose a dividend of 0.11 euro for 2023. That compares with 2.40 euros a year earlier, and expectations for a dividend of 1.92 euros, according to a consensus published on its website.Analysts at Jefferies said the move “highlights the extent of the challenges (both operational and financial) facing the business” and that “further major strategic actions are required to restore the balance sheet”.In January, Bayer announced job cuts and in November it had said it was weighing options to break apart the maker of prescription drugs, consumer health products, crop chemicals and seeds, in a bid to revive a battered share price. More

BRUSSELS (Reuters) – China needs to play a constructive role in talks at the World Trade Organization to reform global trade rules on industrial subsidies or risk rivals setting their own policies at China’s expense, the European Union’s trade chief said on Monday.Ministers from the WTO’s 164 members will gather in Abu Dhabi for a biennial conference on Feb 26-29, aiming to agree on reforms of the global trade body itself, on trade in e-commerce and on subsidies for fishing and agriculture.European Trade Commissioner Valdis Dombrovskis said the EU was keen to drive debate on trade and industrial policy, which includes allowing the least developed countries to industrialise while limiting the distortive effect of subsidies elsewhere. “It’s important what kind of position China takes in those discussions,” Dombrovskis told Reuters in an interview.China, he said, was arguably the country that had benefited most from the WTO, meaning it should be interested in preserving it and ready to address new challenges.”If those issues are left unaddressed, then different countries will start addressing them one-by-one according to their own understanding and political dynamics,” he said, adding this could be more damaging to export-oriented China. There was no immediate comment from China on his remarks. The WTO’s 13th ministerial conference (MC13) is not expected to produce an accord on the topic. Nor is it expected to result in a consensus on another topic, that of its Appellate Body, which acts as a global supreme court to resolve trade disputes.It has not functioned since 2019 because of U.S. blocking of the appointment of adjudicators.”If we talk about the specific issue of the Appellate Body, so far we have not seen much of an opening from the U.S,” Dombrovskis said.However, the EU trade chief said MC13 could still prove a success.”Also ahead of the previous ministerial, MC12, expectations were not really high, but eventually it became one of the most successful ministerials in WTO history,” he said. More

BRUSSELS (Reuters) -The European Union will investigate whether ByteDance’s TikTok breached online content rules aimed at protecting children and ensuring transparent advertising, an official said on Monday, putting the social media platform at risk of a hefty fine.EU industry chief Thierry Breton said he took the decision after analysing the short video app’s risk assessment report and its replies to requests for information, confirming a Reuters story.”Today we open an investigation into TikTok over suspected breach of transparency & obligations to protect minors: addictive design & screen time limits, rabbit hole effect, age verification, default privacy settings,” Breton said on X.The European Union’s Digital Services Act (DSA), which applies to all online platforms since Feb. 17, requires in particular very large online platforms and search engines to do more to tackle illegal online content and risks to public security.TikTok’s owner, China-based ByteDance, could face fines of up to 6% of its global turnover if TikTok is found guilty of breaching DSA rules.TikTok said it would continue to work with experts and the industry to keep young people on its platform safe and that it looked forward to explaining this work in detail to the European Commission.”TikTok has pioneered features and settings to protect teens and keep under 13s off the platform, issues the whole industry is grappling with,” a TikTok spokesperson said.The European Commission said the investigation will focus on the design of TikTok’s system, including algorithmic systems which may stimulate behavioural addictions and/or create so-called ‘rabbit hole effects’.It will also probe whether TikTok has put in place appropriate and proportionate measures to ensure a high level of privacy, safety and security for minors. As well as the issue of protecting minors, the Commission is looking at whether TikTok provides a reliable database on advertisements on its platform so that researchers can scrutinise potential online risks. This marks the second DSA investigation after Elon Musk’s social media platform X found itself in the EU’s crosshairs in December last year. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.This article is an on-site version of our Trade Secrets newsletter. Sign up here to get the newsletter sent straight to your inbox every MondayWelcome to Trade Secrets. Sometimes a trade issue that’s been bubbling along steadily seems rapidly to become “A Thing”. In this case, it’s the question of human rights abuses in corporate supply chains, specifically European companies and the alleged forced labour of Uyghurs in China’s Xinjiang province. (Unlike the sweatshop debates of the 1990s about the pros and cons of low-cost workers in global value networks, no one thinks forced labour in car and chemical factories is to be applauded.) Oh, yes, and the World Trade Organization ministerial meeting is next week, so a quick note on that. Charted waters assesses the big fall in lithium prices.Get in touch. Email me at [email protected] up the corporatesI’ve been following the various attempts to monitor and clean up global value networks for a while now and at times it all felt a bit symbolic. Bearing in mind the old Brussels saying that EU trade policy is set by Germany and thus by German manufacturing, and thus by the German car industry, and thus by Volkswagen, was anyone ever really going to interfere in their supply chains? (I’ve said this several times, but remember, it was less than five years ago when the then VW chief executive literally denied knowledge of re-education camps in Xinjiang.)Now it’s getting a bit real. First there’s the staff rebellion at the German consultancy that surveyed VW’s operations in Xinjiang and claimed to find no evidence of human rights violations. Then BASF sold two chemical plants in Xinjiang after complaints of abuses at its Chinese joint venture partner. Then, following allegations published in Handelsblatt that it too ignored abuses at a JV partner, VW has also started a review of its operations in the province.Now thousands of cars made by Porsche, Bentley and Audi (all brands owned by VW) are being impounded in US ports because they are alleged to contain components made using forced labour. US legislation on the subject dates back to 1930, and in 2021 a law was passed to institute a presumption that certain Chinese companies manufacturing in Xinjiang were using forced labour. (An FT colleague has written on German companies’ dilemmas here.)Interestingly, events in Europe are actually front-running the arrival of legislation in the EU. The EU’s own forced-labour law, which has been thrashed around for years, is just now getting to a three-way negotiation between the European parliament, the European Commission and the European Council of member states, though campaigners (predictably enough) say the Council’s position in particular is too weak.A separate corporate due diligence initiative, over which agreement had apparently been reached in December, may now be delayed by Germany and specifically the Free Democrats in the governing coalition digging in their heels. Germany itself has had a due diligence law in place since last year, and though it’s weaker than the EU version, it’s already started generating cases. German businesses are not fans of it.As I said of the German due diligence law when the first complaints started rolling in, it’s not always the criminal and civil liability that matters as much as giving campaigners an opportunity to shine a light and make noise.These laws also have a habit of reproducing themselves internationally. Part of the EU’s motivation for passing a forced labour law was to keep up with the US (the “Washington effect”, we might call it). The (now realised) threat of European companies’ exports getting caught in US customs is a reputational risk if nothing else. The UK, which currently has a sector-specific approach to imports made with forced labour, might well have to follow the EU and pass a broader law, for the same reason.WTO dispute settlement dispute still unsettledThe WTO ministerial meeting in Abu Dhabi starts a week today, February 26. I’ll go into detail in the newsletter that day, but today here is a quick note on one bit that definitely won’t get fixed there — restoring the WTO’s dispute settlement system to full functioning.To recap: the US continues to refuse to appoint judges to the Appellate Body (AB) until reform happens. Fundamentally, it wants a one-stage panel hearing rather than the two-stage appeal process. There’s no consensus here: the draft negotiating text on dispute settlement literally leaves the relevant section blank.Why is the US so obsessed with one stage rather than two? Couldn’t panel decisions irritate it just as much as AB rulings? Well, the political economy here is that the panel stage is dealt with by a different part of the WTO than the AB, which has its own secretariat and is much more independent.Panel members include current serving national ambassadors to the WTO, and the process is regarded as being influenced more by political positioning and the general vibe around the building, and can be more deferential to governments’ wishes. For example, on the apparently abstruse but incredibly vexed question of “zeroing” — the US’s antidumping methodology beloved of its steel industry — AB rulings have been consistently more hostile than those of the panels.But the EU and others are keen on keeping the two-stage process. A group of middle-income countries including Indonesia, India and South Africa recently published a paper explaining their support for the principle, and rejected an idea to classify cases into levels of complexity to streamline hearings. Result: impasse. It’s hard to see how the WTO members get to consensus from here.Charted watersThere’s been a sharp correction in lithium prices as demand for Chinese electric vehicles slows while production of the battery mineral has come on stream. It turns out that the green transition hasn’t abolished the boom-bust cycle for commodities and that the best cure for high prices is high prices.Trade linksSpeaking at the Munich Security Conference over the weekend, the Chinese foreign minister Wang Yi said that other economies “de-risking” from trade with China was a mistake.Some good news for the UK in the week Goldman Sachs said Brexit had seriously damaged the economy: its financial services industry has seen a smaller exodus to the EU than pessimistic forecasts suggested. One cute example: a senior banker claims his employer, Morgan Stanley, created a token job title to give the false impression he was based in Frankfurt rather than London. The world’s biggest solar company has warned rich nations not to cut out Chinese suppliers.The EU has launched an antisubsidy investigation into a Chinese train manufacturer.Trade Secrets is edited by Jonathan MoulesRecommended newsletters for youBritain after Brexit — Keep up to date with the latest developments as the UK economy adjusts to life outside the EU. Sign up hereFree Lunch — Your guide to the global economic policy debate. Sign up here More

KYIV (Reuters) – Ukraine’s leading business associations are calling for changes to be made to draft legislation that would overhaul the process for mobilising troops, saying the reforms could deal a blow to the already embattled economy.Lawmakers are due to discuss the bill to tighten rules on mobilization in a second and final reading this month. Two years since Russia’s full-scale invasion began, the issue is highly sensitive for the army, business community and wider public. “Business asks the parliament not to paralyse the country’s economy with the new mobilisation legislation,” the European Business Association, which unites about 1,000 companies, said in a statement. “A balance is needed between the military front and the economy.”Businesses’ concerns range from export sectors and those supplying the army wanting to avoid loss of staff to such issues as call-ups being made online and civilian vehicles being commandeered in a disorderly way. The array of issues raised illustrates the tightrope the government must walk as it seeks to replenish battlefield manpower while protecting the fragile economy, which contracted by a third in 2022 before making a recovery last year. Ukrainian authorities acted to tighten the rules on drafting civilians into the army late last year as the fighting in the war showed no sign of letting up and it was clear that a much smaller pool of volunteer fighters was available. President Volodymyr Zelenskiy said in December he was considering a proposal to mobilize an additional half a million men into the army.The government drew up legislation, but the initial draft prompted an outcry among analysts and lawmakers who said some of its proposals were unconstitutional.The bill was amended and a new version that has won initial backing in parliament proposes cutting the draft age to 25 from 27, limiting draft deferrals and increasing fines and penalties for draft dodging.COMPREHENSIVE REVISION URGED The Ukrainian Business Council, which brings together more than 100 associations, said in a statement that some criticism had been heeded, but it urged the removal of other proposals that could hurt businesses already operating in “survival” mode. It said it opposed things like allowing the military to seize privately owned vehicles for the war effort without proper oversight and the idea of call-up notices being sent to civilians online. Among other concerns, it said companies that supply the armed forces should also be able to prevent all staff from being enlisted.The defence ministry did not reply to a request for comment.David Arakhamia, head of the ruling faction in parliament, said work was underway to prepare the bill for the second reading, adding that the interests of the military command, businesses and citizens should be balanced.”The task is not easy, there will be a lot of work,” he said on the Telegram messaging app.Business associations have asked for more clarity on how to ensure draft deferrals for critical staff, especially in highly skilled sectors.Mariia Shevchuk, head of an IT Association, told Reuters that only about 1% of the 360,000 workforce in the industry, a key exporting sector, had deferrals from the draft. She said about 75% of the workforce were men.In the new bill, the IT community was concerned about online call-ups that people might simply miss, short deadlines for updating personal information online, and plans to cancel draft deferrals for those studying for second degrees.”We strongly urge the authorities for a dialogue with business so that we can be heard. We could grow, we could pay more taxes, we could provide for the army because there are issues with donor support in general.” More

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