Economy

The writer is chair of Rockefeller International“Resilience” is one of the buzzwords of the year. It’s used widely to describe the US economy, which continues to stave off recession and lift global growth, despite the sharpest interest rate rises in decades. But there is a more surprising tale of fortitude unfolding in the developing world.Among the 25 largest emerging economies, three-quarters of those reporting data have beaten growth forecasts this year — some, including India and Brazil, by a wide margin. Forecasts for global growth in 2023 are rising and most of that uplift is coming from emerging economies.Few analysts saw this revival coming. They expected emerging economies to be especially vulnerable to rising rates and that perception still rules, based on the weaknesses of China, weighed down by its heavy debts, and of a few smaller countries such as Ghana or Bolivia. But this picture excludes big developing nations outside China, from India to Mexico, which account for half the emerging world by economic output and more than half by population.True, rising interest rates did cause emerging world crises in the 1980s and 1990s, but many of the big emerging economies entered the pandemic of 2020 with repaired banking systems and heightened financial discipline. They borrowed less heavily for stimulus spending, and saw deficits rise on average by 15 per cent of gross domestic product from 2020 to 2022, half as much as the US. The old notion that “emerging” is another word for reckless no longer applies.Now, it is the American story that rests on questionable foundations. The US stock market is rallying again thanks in part to the boom in artificial intelligence, which like all manias is likely to prove part hype. Meanwhile, economic growth is kept alive by the billions of dollars in stimulus funds that still sit in US savings accounts, and by financial conditions that remain much looser than the Federal Reserve would like. Despite the scale of interest rate rises so far, the Fed says there is more to come before inflation is under control. By comparison, having moved earlier than the Fed to raise rates, central banks in the emerging world are closer to meeting their inflation targets — and cutting rates again. Normally inflation runs much hotter in emerging economies but, excluding outliers, the median rate is now running at 5 to 6 per cent — no higher than in developed economies. That has not happened in four decades. Some central banks in the developing world have started to cut rates and many others are likely to follow soon.Emerging economies are on track to grow faster than 4 per cent on average over the coming year, or four times faster than developed ones. Though developing economies typically grow faster than developed ones, that gap shrunk last decade and is now widening again. And money follows growth: foreign investment in the big emerging markets is on the rise. Their currencies have been strengthening against the dollar since late last year.While the fiscal deficit is on track to stay unusually high in the US through the 2020s, it is already heading down in most big emerging economies. As a result, the emerging world recovery could be more sustainable.Yet commentators keep warning of looming crises in the emerging world, as if nothing has changed. Back in the 1980s and early 90s, there were never fewer than 25 emerging nations in default, and that often included major ones such as Brazil and Turkey. Today there are just five, all small ones like Belarus and Zambia.Though the major emerging economies are generally in good financial shape, each has its own strengths. So far this year, much of Asia is rising on the back of strong domestic demand. In Latin America, the key driver is exports, particularly commodity exports, with prices holding up. Net exports are contributing 2 points to Latin American growth, and as much as 8 points in Chile — in part thanks to sales of metals used in electric vehicles.They are also “decoupling” from China. Emerging economies used to grow in lockstep with China, their leading trade partner, but that link has weakened in recent years. As Beijing turned inward, developed countries sought to reduce their dependence on trade with China, creating opportunities for other emerging economies.The developing world never fits neatly into one storyline. There are 155 emerging countries and if tightening financial conditions eventually does trigger a US recession, as many still expect, it will ripple outward and stir trouble in some of them. But to borrow that buzzword, their story so far is one of genuine “resilience”. More

California union members are pressuring employers over wages in one of the nation’s most labor-friendly states.In the two months since they went on strike, screenwriters have become a fixture outside studios in Southern California, signs aloft as the traffic roars past. In many parts of America, theirs would be a lonely vigil.Not in Los Angeles.At the behemoth ports of Los Angeles and Long Beach, operations were disrupted for weeks until West Coast dockworkers reached a tentative contract deal in mid-June. Across the city, schools shut down for three days this spring when bus drivers, cafeteria workers and teachers walked out.Now, the union representing some 15,000 hotel workers in Los Angeles is threatening to strike this Fourth of July weekend, just as the summer tourism season ramps up. And more than 160,000 actors are poised to shut down Hollywood productions if they cannot reach a new contract deal later this month.Unions have been embattled nationally, but in California they are having a moment.“We’re calling it the ‘hot labor summer,’” said Lorena Gonzalez, the chief officer of the California Labor Federation, which represents more than 2.1 million union members statewide. “We have sparks and fires everywhere, and we’re not letting it die down in California. We’re fanning the flames.”California has long been a labor stronghold, with Democrats in control of state government and most large cities. Despite a string of labor wins in recent years — including a minimum wage of $15.50 an hour, more than double the federal rate — workers say they are feeling ever more pressure from inflation, housing shortages and technological disruptions.The Unite Here Local 11 union is seeking higher wages and better benefits. Some 15,000 members are threatening to strike at dozens of hotels in Los Angeles.Philip Cheung for The New York TimesThe unemployment rate remains below 5 percent in California, so workers know they have leverage. And numerous contracts are expiring this year, forcing California employers to negotiate with unions as they watch picket lines form daily in Los Angeles. Roughly half of the large work stoppages in 2023 have taken place in the state.On Friday, a major contract for the hotel workers ran out, while the actors’ union said that it would extend its expiring contract through July 12, buying more time to continue negotiations.Hotel workers could walk out as soon as this weekend, however. Operators of hotels might be able to muddle through a short-term walkout, but a longer one could deter tourists from visiting Los Angeles in the busy summer months, and erode the convention business that has rebounded since the beginning of the pandemic, said Kevin Klowden, chief global strategist with the Milken Institute, an economic think tank based in Santa Monica, Calif.Simultaneous strikes of hotel workers, screenwriters and actors would ripple first through Los Angeles businesses that rely on the region’s signature tourism and Hollywood industries. And they could have a broader effect beyond Los Angeles; during the 2007 screenwriters strike, the California economy lost $2.1 billion, according to one estimate.The Hotel Association of Los Angeles said in a statement that it had bargained in good faith and would continue to serve tourists during a walkout. Keith Grossman, a spokesman for the coordinated bargaining group consisting of more than 40 Los Angeles and Orange County hotels, said in a statement that it had offered to increase pay for housekeepers currently making $25 an hour in Beverly Hills and downtown Los Angeles to more than $31 per hour by January 2027.“If there is a strike, it will occur because the union is determined to have one,” Mr. Grossman said. “The hotels want to continue to provide strong wages, affordable quality family health care and a pension.”A recurring theme this year among striking workers has been the unbearable cost of living in Southern California. School employees said in March that they had to take two or three side gigs to afford their bills. Screenwriters have echoed that lament. A University of Southern California survey recently found that 60 percent of local tenants said they were “rent-burdened,” spending more than 30 percent of their income on housing.“How can anyone keep living here?” asked Lucero Ramirez, 37, who has worked as a housekeeper at the Waldorf Astoria Beverly Hills since 2018. On Thursday, Ms. Ramirez gathered inside an office space near downtown Los Angeles with dozens of other hotel workers represented by Unite Here Local 11 to decorate poster boards and staple together fliers ahead of a planned strike. Earlier that day, the Westin Bonaventure Hotel & Suites announced that it had staved off a walkout with a contract deal.The union has asked that the hourly wage, now $20 to $25 for housekeepers, immediately increase by $5, followed by $3 bumps in each subsequent year of a three-year contract. Hotel workers — and their employers — are well aware that this deal will set pay levels ahead of the 2026 World Cup and 2028 Olympics, when tourists will flood the region.Ms. Ramirez, who earns $25 an hour, has lived in a rent-controlled, one-bedroom apartment in Hollywood for the past decade, where she pays $1,100 a month. The hot water often goes out, and the flooring in her unit is cracked and decaying, she said.Lucero Ramirez, a housekeeper who’s been working at the Waldorf Astoria Beverly Hills since 2018.Philip Cheung for The New York Times“The landlord wants me to leave so they can boost the rent,” she said. “They want me out, but I cannot afford to go anywhere else, I would have to leave the city.”Labor power is a function of the electorate in California, where Democrats have nearly a 2-to-1 edge over Republicans, supermajority control of the state Legislature, a lock on state offices — and owe a debt to unions, whose members routinely knock on doors and contribute money to liberal candidates.Next year, voters in California will consider an initiative that would raise the minimum wage to $18 an hour. In Los Angeles, members of the City Council are weighing a plan that would raise the minimum wage for tourism workers to $25 an hour. Maria Elena Durazo, a Democratic state senator and former head of the Los Angeles County Federation of Labor, is carrying legislation that would give all health care workers a $25 minimum hourly wage.Tens of thousands of unionized teachers, bus drivers, cafeteria workers and other employees at the Los Angeles Unified School District, the nation’s second-largest district, won major raises this year after their high-profile walkout in March. Smaller labor actions have proliferated as well, including strippers organizing in May at a North Hollywood club, and Amazon drivers walking out in June at a warehouse in Palmdale, Calif. The Los Angeles Dodgers averted a strike by giving ushers, groundskeepers and other workers significant raises.Across the country, union membership as a percentage of the labor force has dropped to a record low of 10.1 percent of employed wage and salary workers. In California, however, such membership rose last year to 16.1 percent of wage and salary workers, compared with 15.9 percent in 2021.“This is a tug of war between inflation and wages,” said Sung Won Sohn, a finance and economics professor at Loyola Marymount University in Los Angeles. “Inflation has been winning and workers are trying to catch up with inflation that’s been persistent.”Nancy Hoffman Vanyek, the chief executive of the Greater San Fernando Valley Chamber of Commerce, which represents about 400 businesses from one-person operations to Hollywood studios, said that workers should be able to afford to live in Los Angeles. But she said simply forcing employers to pay more was a Band-Aid for a much deeper problem in California.“It’s business that always has to bear the brunt of fixing these issues, when we’re not looking at what’s causing them,” she said. “What’s causing the high cost of living in our state? What’s causing the high cost of housing?”Workers nationally are trying to lock in gains from a job market that has remained tight, as employers brace for a possible recession. Rail workers were on the brink of a strike last year, while employees at manufacturing companies like John Deere and Kellogg went on strike in late 2021.In California, the activism has been further driven by white-collar workers, whose jobs have been threatened by the rise of artificial intelligence and the gig economy.“It’s remarkable, the degree to which they are getting support from other unions,” said Nelson Lichtenstein, who directs the Center for the Study of Work, Labor and Democracy at the University of California, Santa Barbara. “There’s a new sense of commonality between the retail clerk who is being told to come in every other day from 3 to 7 p.m. and the screenwriter who is suddenly being offered seven episodes to write and then, goodbye.”Writers and supporters were on strike outside the Paramount Pictures studio in Los Angeles on Wednesday.Morgan Lieberman for The New York Times More

UK government debt has delivered the worst returns of any major bond market in the first half of this year, as investors bet that the Bank of England will have to increase interest rates to the highest level in a quarter of a century to tame high inflation.An ICE Bank of America index of UK government bonds — known as gilts — has fallen by 3.7 per cent in the first half of 2023. Meanwhile, other big bond markets have delivered positive returns as inflation has eased and other central banks appear closer to the end of their cycle of rate rises.“Gilts have been a huge outlier this year, it’s been a very sobering experience,” said Jim Cielinski, global head of fixed income at Janus Henderson Investors. “You are seeing more of the traditional cost push inflation where wage pressures continue to move higher and higher.”The poor performance of gilts comes after investors had a major rethink about the outlook for UK interest rates, with wages and inflation data relentlessly exceeding market and economist expectations. UK headline inflation was 8.7 per cent for the year to the end of May, compared with 6.1 per cent in the eurozone and 4 per cent in the US.Retail investors and fund managers have been snapping up gilts in recent months to lock in some of the highest yields available since the global financial crisis. Nevertheless, two-year gilt yields hit 5.31 per cent on Friday, the highest level since 2007. But investors looking for short-term gains may be facing painful paper losses.Markets are now pricing in UK interest rates to rise from 5 per cent to a peak of about 6.25 per cent by the end of this year.While traders also expect more rate increases in Europe and the US, the moves are less stark, with markets pricing in a likely two more 0.25 percentage point increases by the ECB this year, and one more by the Fed in July. “UK inflation both headline and core has been much stickier than what the Bank of England or the market expected,” said Mohit Kumar, chief European financial economist at Jefferies, explaining why gilts had underperformed peers.He added that Andrew Bailey, BoE governor, sounded “surprised” by the persistence of inflation when talking on a panel at an ECB conference in Sintra, Portugal, this week, and that he sounded “uncertain” that inflation would come down quickly enough for the BoE to stop raising rates. Investors also note that the long-dated nature of the UK bond market and the large volume of debt being issued while the BoE has started selling gilts as part of its quantitative tightening programme have and will continue to weigh on performance. “The inflation and supply combination means gilts are still not quite there yet in terms of being attractive on a global market,” said Jon Day, fixed income portfolio manager at Newton Investment Management. “For global investors I would still say there are better markets out there than gilts.”Janus’s Cielinski said stagflationary fears are “noticeably higher” in the UK than in other markets, as the central bank feels like it has “no choice” but to keep clamping down on inflation, regardless of the pain that will be inflicted on large swaths of the economy.“You need to be tough but by being too tough and killing the economy and making it weaker than every other global economy — that is not a victory and it will come at such a cost that you will win the battle on inflation and lose the war,” he said. “I do think that is what the gilt market is saying.” More

When the chief executive of Next warned in March that surging inflation and stagnant sales would result in a “challenging” year ahead the City took notice.Shares in the high street bellwether fell almost 8 per cent following the profit warning and comments by Lord Simon Wolfson, who commands respect as the longest-serving boss in the FTSE 100.Yet three months on the picture appears very different: in June Lord Wolfson upgraded the retailer’s annual profit forecast, arguing that a combination of salary increases in April and warmer weather had encouraged shoppers to spend more on their summer wardrobes. The owner of Primark, one of the largest clothing retailers in Europe, followed suit with its own profit upgrade boosted by higher prices and strong demand for clothes. The more upbeat mood from two of the UK’s biggest clothing chains has confounded policymakers who have sought to tame resurgent inflation by lifting interest rates. Despite surging mortgage costs, greater energy costs and higher food prices, British retail sales unexpectedly expanded in May boosted by spending on summer clothing and outdoor goods, according to data published by the Office for National Statistics. Consumer confidence in the UK increased for the fifth month in a row last month despite “fierce economic headwinds”, according to research group GfK. But although the overall picture is one of people still treating themselves and swallowing the higher cost of non-essentials, within this there are winners and losers. Analysts are also asking how resilient household spending actually is amid stubbornly high inflation and as millions of homeowners find themselves squeezed by higher mortgage payments. “Yes, retail sales are holding up, but importantly, they are being driven by inflation, and actually, people are cutting back and they’re buying less,” said Richard Lim, chief executive of Retail Economics. He points to a wedge between the volume of products being sold and how much it costs to buy them — consumers are paying more and getting less in return, he explains. 

British retail sales grew more than expected in May, helped in part by better weather © Bloomberg

Nowhere is this starker than for the casual dining sector. Like-for-like sales at UK restaurants in May were up 2.7 per cent, compared with a year ago, according to data from CGA by NielsenIQ. Pub sales were 8.8 per cent ahead of last year. But high inflation means volume sales for both were below May 2022. Few restaurant bosses are more acutely aware of the challenges in the economy than Dean Challenger, Prezzo’s chief executive. Earlier this year, the Italian casual dining chain cut a third of its sites, let go of around 800 staff and entered a restructuring process just to stay afloat. Challenger said customers are making careful choices about when to splash out. Demand in peak trading periods, like the summer and winter holidays, had remained strong, but at the cost of making the quieter periods even more fallow. “People are being more careful in the quiet times, so they can enjoy the busier times and school holidays,” said Challenger. Two-fifths of consumers surveyed by CGA said they went out to eat and drink at least once a week in April — the figure was unchanged from March, but down two percentage points on October last year. Martin Williams, chief executive of Rare Restaurants which owns the Gaucho steak chain, is a mixture of bullish and cautious. He has been surprised by the level of demand at Gaucho’s latest 200-seater outpost in London’s Covent Garden district, with sales after just a fortnight already ahead of what was projected for six months. “It’s beyond what we imagined,” he said, but added: “It’s undoubtedly a tough time.” He predicts that the second half of the year will be more challenging. “Each interest rate rise chips away at disposable income, and that means less money to spend in restaurants.”Like rivals, Williams continues to have to manage high input costs — all the while wondering if robust consumer demand can continue to hold, as rising mortgage rates eat further into restaurant-goers’ disposable income. He has added more affordable £30 three-course lunch options to the menu as a result. Williams said sales in 2022 were up around 25 per cent on the pre-pandemic benchmark of 2019, but so far this year were flat compared with last year.There is evidence that higher end restaurants are more protected. Profit margins at the upmarket Ottolenghi chain are down just one percentage point year on year despite high inflation — and spending per head is up on last year, while dishes ordered per head is flat. “Probably the majority of our customers are in the cluster where if your mortgage payment goes up, you’re not happy but it doesn’t mean that you have to cut other expenses,” said Emilio Foa, chief executive. Mid-market restaurant chains are “suffering the most”, he added. Mid-market retailers are also “struggling” said Lim at Retail Economics. Several high profile brands such as Hunter and Joules have collapsed into administration over the past year. “They don’t have a strong enough proposition. They are still having to combat all of the costs and that squeezed [profit] margin is really hitting the middle part of the market where there’s much softer consumer demand,” he said. Although Next and Primark are both large chains, they have long been outliers in the troubled retail landscape and “don’t reflect the [wider] performance of the market” he added. Discounter B&M, which sells items spanning garden tools to frozen food, has benefited from hard-pressed consumers looking for bargains. “Clearly we’re seeing trading down to us,” said chief executive Alex Russo. Like-for-like sales for the three months to June 24 were up 9.2 per cent in the UK.

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But retailers selling more expensive big-ticket items, such as furniture and household appliances, have suffered. Bike and car parts seller Halfords saw profits tumble last year as the boom experienced during the Covid-19 pandemic ended. Finance chief Jo Hartley told investors in April that “it has never been harder to predict customer behaviour or cost inflation”. Customers are also leaning more on credit to afford technology, white goods retailer Currys said in May. “We’re still seeing consumers being very careful with their spending,” its chief executive Alex Baldock said. One clear winner among consumer spending is travel. Airlines are in the midst of a bumper summer season, with holidaymakers undeterred by the weak economic backdrop and sky-high ticket prices, which rose more than 30 per cent year-on-year across Europe in May.UK airline executives believe consumers are prioritising spending on holidays above other discretionary expenses, particularly after years of pandemic travel restrictions. British Airways owner IAG raised its annual profit forecast last month, as did low-cost carrier easyJet in April. “Of course, ‘revenge’ travel supported the recovery this year, but without restrictions and health concerns, people seem keen to resume flying more permanently, especially for leisure purposes and family visits,” said Rico Luman, a senior economist at ING.But the trend is for shorter trips: easyJet boss Johan Lundgren noted in a recent earnings update that people have booked briefer getaways this summer, with the average trip lasting seven days, down from nine last year.Still, there are early signs of a slowdown, with ticketing data showing a “progressive dampening” of demand since the beginning of April, according to Olivier Ponti, an executive at aviation data company ForwardKeys.Paul Charles, chief executive of travel consultancy the PC Agency, said despite the “bumper” summer for travel operators, he predicted that demand “will not continue at the same pace after the summer”. “Higher mortgage rates and prices across the economy will lead to some people tightening their belts, so I’d expect a September to December period which sees lower demand,” said Charles. “But at the higher, luxury end of the market the boom will continue.” More

The amount that most UK farmers are paid for milk has plunged below their production costs, exacerbating concerns over the viability of small dairy farms.Arla and Muller, Britain’s two largest dairy processors, cut their “farmgate price” for five consecutive months, with Arla holding the price at 35p a litre in June and July, down 29 per cent from 49p in February. Muller pays 38p a litre compared with 47p five months ago. The fall in the amount paid by dairy processors, intermediaries between farms and retailers, is a result of a global oversupply and drop in demand for dairy, as well as the global downward trend in the market price of agricultural commodities, which consumers have yet to see reflected on supermarket shelves.But farmers and industry bodies warned that the sustained drop was compounding an already difficult business climate and that customers would have to pay more for milk if farmers were to break even. “We’re at the mercy of markets,” said Chris Wood, a dairy farmer near Penrith, Cumbria, who supplies Arla. “Everybody is on about food inflation but we’ve got inflation too. We’ve got to live.”Consumers have yet to see lower commodities prices reflected on supermarket shelves © Neil Hall/EPA/ShutterstockThe government is increasingly concerned about the high rate of food price inflation, which stood at 18.3 per cent in May. The Treasury announced on Wednesday that it would scrutinise the profits of companies in the food industry supply chain. Amid widespread price rises, milk is one of the few staples showing signs of deflation, raising hopes that consumers will soon benefit from plummeting commodity prices.In April, the average cost of one pint of milk fell by 2p to 68p, according to the Office for National Statistics, the first decline since Russia’s full-scale invasion of Ukraine in February last year led prices to soar. The price remained unchanged in May. Andrew Opie, director of food and sustainability at the British Retail Consortium, a trade body, said milk’s short supply chain meant lower energy and commodity costs could be passed on more quickly to shoppers than for products made with multiple ingredients or requiring manufacturing. But marginally cheaper milk in shops is no consolation for farmers, who are contending with the cut in income from dairy processors as well as historically high input prices. Wood said that while his fertiliser prices had halved, he was paying £310 a tonne for cattle feed. That is up from £214 before the Ukraine war, based on a contract signed in October last year when prices were starting to drop from their peak of £1,000. Farmers benefited from the surge in milk prices in March last year when feed and fertiliser costs soared, forcing processors to pay more to ensure a steady supply. At the market’s peak in December, farmers were paid more than 50p a litre, but supply has now recovered.Susie Stannard, dairy analyst at the Agriculture and Horticulture Development Board (AHDB), an advisory body to British farmers, said falling prices were being driven by “a slight increase in global supply and a decrease in global demand, each of less than 1 per cent”. Ash Amirahmadi, Arla’s outgoing managing director, said UK demand for dairy dropped last year because of high food inflation but was showing signs of recovery. “The current price we are paying our farmers is below the costs of production . . . And because a proportion of the milk goes into the globally traded commodity markets — it’s those that have crashed — that’s having a drag-down effect [on prices],” said Amirahmadi. He added that a prolonged dry spell as well as the tight labour market was adding to pressure on the dairy sector.Mechanised milking on a dairy farm in Leicestershire, The number of dairy farmers in Britain has fallen 4.8 per cent in the past year © Tracey Whitefoot/AlamyMuller said its price reductions were a result of “market pressures coupled with supply being ahead of forecast”. But industry figures cautioned that if prices stayed low, farmers would have little incentive to feed their cows to produce more milk, causing volumes to fall. “We’re anticipating that dairy production will slow and go into negative,” said John Allen, managing consultant at dairy adviser Kite, adding that prices were not likely to fall further in the coming months. The number of dairy farmers in Britain has fallen 4.8 per cent in the past year, according to data from AHDB, leaving about 7,500 by April. Most at risk of closure or being subsumed into larger businesses are small and medium-sized farms that struggle to make efficiency savings because they lack the cash to reinvest into their operations. Robert Craig, a partner in three farms across the north of England and vice chair of processor First Milk, said bigger farms were only just breaking even. “We are not being sufficiently rewarded to keep things as they are . . . the only thing you can control is efficiency, which results in more intensive dairy farms and bigger operations,” he said. Stannard said processors would ultimately have to pay more for milk in order to secure a steady supply as volumes drop. Allen, meanwhile, predicted the emergence of a two-tier market in which processors paid more for agricultural products with better environmental credentials as food manufacturers took steps to cut “scope three” emissions, or greenhouse gases produced along a product’s entire supply chain. Some processors already reward farmers with a premium price. Muller pays more to farmers who meet certain conditions on supply chain collaboration, herd health and reductions in environmental impact. Arla will this year launch environmental incentive payments for farmers.But Craig said farmers needed surplus cash to become sustainable in the long term. “When my grandfather started out there were a quarter of a million farms,” he said. “When my dad took over that had halved. When I took over it had halved again. Is that good or bad?” More

The party’s Central Organization Department announced the decision at a meeting on Saturday afternoon, the People’s Bank of China (PBOC) said in a statement on its website. The Journal reported hours earlier that Pan would be named to the party post before being appointed by the government to head the PBOC.The PBOC did not respond to a Reuters fax seeking comment.The appointment of Pan, who turns 60 this month, comes as expectations rise for the authorities to take steps to boost the world’s second-largest economy. A slowdown is deepening and spreading with the waning of a burst of activity following the lifting of strict COVID-19 controls.The central bank said on Friday it would implement prudent monetary policy in a “precise and forceful manner” to support economic growth and employment.Pan has deep experience with Chinese banks and policy. He did post-doctoral research at Cambridge University and was a senior research fellow at Harvard University, and has been the deputy governor of the PBOC since 2012, according to the SAFE and PBOC websites.The current governor, Yi Gang, has been widely expected to retire since being left off the ruling Communist Party’s Central Committee during the party’s once-in-five-years congress in October.Under Chinese President Xi Jinping, the Communist Party has tightened its grip on the financial system, and the central bank has seen its regulatory power eroded in recent reshuffles and restructuring of institutions. More

Rioting erupted across France for a fourth night in the wake of the fatal police shooting of a 17-year-old driver of North African origin as his family prepared to bury him on Saturday in his hometown of Nanterre.The interior ministry said 994 arrests were made overnight compared with 875 on Thursday night and suggested that the ferocity of the protests was waning. Rioters caused considerable damage, with cars and buildings set ablaze, widespread looting in Marseille and around Paris, and dozens of attacks on police stations. “We can consider that events were less intense overnight,” Gérald Darmanin, the interior minister, told BFMTV news channel early on Saturday morning.He said the deployment of armoured vehicles, helicopters and 45,000 police officers, as well as the high number of arrests, had caused a “psychological shock” that deterred people from rioting. The government said the average age of people arrested on Friday was 17.The killing on Tuesday of Nahel, whose last name has not been made public, stoked a wave of anger in the Paris suburb where he lived that has spread to cities and towns across France.It exacerbated tensions between the police and young people in low-income areas that are home to minorities and immigrants, who face racial profiling by police and discrimination in housing and job opportunities, according to official studies. The unrest poses a big challenge for France’s president Emmanuel Macron who has called for calm while also describing the shooting as “inexplicable and inexcusable”.

His government has been criticised by far-right leader Marine Le Pen for being too lenient on the rioters and soft on crime, while Jean-Luc Mélenchon, the far-left politician, said violence committed by police had to end. Prosecutors have filed preliminary charges for voluntary homicide against one of the two officers allegedly involved in the shooting, and placed him in pre-trial detention, a rare move in such cases. Public buses and tramways were shut down overnight to prevent them from being targeted and set on fire while some towns set curfews. French football captain Kylian Mbappe and the national team tried to persuade the protesters to stop the violence. “Many of us are from working-class neighbourhoods, we too share this feeling of pain and sadness,” they wrote on Mbappe’s Twitter account. But they criticised the “self-destruction”, adding “it is your property that you are destroying, your neighbourhoods, your cities”. More

Central bankers and economists gathered this week and, amid concerns about persistent inflation, wondered about all the things they still don’t know.When prices started to take off in multiple countries around the world about two years ago, the word most often associated with inflation was “transitory.” Today, the word is “persistence.”That was uttered repeatedly at the 10th annual conference of the European Central Bank this week in Sintra, Portugal.“It’s been surprising that inflation has been this persistent,” Jerome H. Powell, the chair of the Federal Reserve, said.“We have to be as persistent as inflation is persistent,” Christine Lagarde, the president of the European Central Bank, said.The latest inflation data in Britain “showed clear signs of persistence,” Andrew Bailey, the governor of the Bank of England, said.Policymakers from around the world gathered alongside academics and analysts to discuss monetary policy as they try to force inflation down. Collectively, they sent a single message: Interest rates will be high for awhile.Even though inflation is slowing, domestic price pressures remain strong in the United States and Europe. On Friday, data showed the inflation in the eurozone slowed to 5.5 percent, but core inflation, a measure of domestic price increases, rose. The challenge for policymakers is how to meet their targets of 2 percent inflation, without overdoing it and pushing their economies into recessions.It’s hard to judge when a turning point has been reached and policymakers have done enough, said Clare Lombardelli, the chief economist at the Organization for Economic Cooperation and Development and former chief economic adviser in the British Treasury. “We don’t yet know. We’re still seeing core inflation rising.” The tone of the conference was set on Monday night by Gita Gopinath, the first deputy managing director of the International Monetary Fund. In her speech, she said there was an “uncomfortable truth” that policymakers needed to hear. “Inflation is taking too long to get back to target.”Gita Gopinath, of the International Monetary Fund, said inflation was “taking too long” to come back down.Elizabeth Frantz/ReutersAnd so, she said, interest rates should be at levels that restrict the economy until core inflation is on a downward path. But Ms. Gopinath had another unsettling message to share: The world will probably face more shocks, more frequently.“There is a substantial risk that the more volatile supply shocks of the pandemic era will persist,” she said. Countries cutting global supply chains to shift production home or to existing trade partners would raise production costs. And they would be more vulnerable to future shocks because their concentrated production would give them less flexibility.The conversations in Sintra kept coming back to all the things economists don’t know, and the list was long: Inflation expectations are hard to decipher; energy markets are opaque; the speed that monetary policy affects the economy seems to be slowing; and there’s little guidance on how people and companies will react to large successive economic shocks.There were also plenty of mea culpas about the inaccuracy of past inflation forecasts.“Our understanding of inflation expectations is not a precise one,” Mr. Powell said. “The longer inflation remains high, the more risk there is that inflation will become entrenched in the economy. So the passage of time is not our friend here.”Meanwhile, there are signs that the impact of high interest rates will take longer to be felt in the economy than they used to. In Britain, the vast majority of mortgages have rates that are fixed for short periods and so reset every two or five years. A decade ago, it was more common to have mortgages that fluctuated with interest rates, so homeowners felt the impact of higher interest rates instantly. Because of this change, “history isn’t going to be a great guide,” Mr. Bailey said.Another poor guide has been prices in energy markets. The price of wholesale energy has been the driving force behind headline inflation rates, but rapid price changes have helped make inflation forecasts inaccurate. A panel session on energy markets reinforced economists’ concerns about how inadequately informed they are on something that is heavily influencing inflation, because of a lack of transparency in the industry. A chart on the mega-profits of commodity-trading houses last year left many in the room wide-eyed.A shopping district in central London. “Our understanding of inflation expectations is not a precise one,” said Jerome H. Powell, the chair of the Federal Reserve.Sam Bush for The New York TimesEconomists have been writing new economic models, trying to respond quickly to the fact that central banks have consistently underestimated inflation. But to some extent the damage has already been done, and among some policymakers there is a growing lack of trust in the forecasts. The fact that central bankers in the eurozone have agreed to be “data dependent” — making policy decisions based on the data available at each meeting, and not take predetermined actions — shows that “we don’t trust models enough now to base our decision, at least mostly, on the models,” said Pierre Wunsch, a member of the E.C.B.’s Governing Council and the head of Belgium’s central bank. “And that’s because we have been surprised for a year and a half.”Given all that central bankers do not know, the dominant mood at the conference was the need for a tough stance on inflation, with higher interest rates for longer. But not everyone agreed.Some argued that past rate increases would be enough to bring down inflation, and further increases would inflict unnecessary pain on businesses and households. But central bankers might feel compelled to act more aggressively to ward off attacks on their reputation and credibility, a vocal minority argued.“The odds are that they have already done too much,” said Erik Nielsen, an economist at UniCredit, said of the European Central Bank. This is probably happening because of the diminishing faith in forecasts, he said, which is putting the focus on past inflation data.“That’s like driving a car and somebody painted your front screen so you can’t look forward,” he said. “You can only look through the back window to see what inflation was last month. That probably ends with you in the ditch.” More