Economy

Speaking to journalists after attending an event hosted by Fiesp industry association, Brazil’s biggest industry association, Haddad said the issue was discussed with central bank governor Roberto Campos Neto in a morning meeting.”If you want good technical names, you have few places to look, so it can be from the private sector, it can be from the public sector,” said Haddad.Bruno Serra’s mandate as head of monetary policy expires as soon as next month. His area is considered one of the most critical as it provides essential inputs for monetary policy decisions and is responsible for the foreign exchange and interest rate desks.Under a formal autonomy Congress approved in 2021, Campos Neto will remain in office until December 2024. His current directors’ mandates will expire in different timeframes up to 2025, and it will be up to leftist President Luiz Inacio Lula da Silva to appoint all members of the bank’s nine-member board. Haddad said he had committed with Campos Neto to unloading all paralyzed central bank credit initiatives, without giving further details. He also cited eight proposed bills already in Congress that are “ready to be forwarded,” including one that modernizes guarantees for bank credit and should be voted on shortly in the Senate. The minister, who insisted on the importance of consumer credit as an economic activity booster, predicted the popular Pix instant payment system would become a credit instrument this year. He also said he favored a differentiated treatment to encourage companies and guarantee new players’ entry into the credit market. Still, he mentioned the high level of Brazil’s benchmark Selic interest rate – currently at 13.75% – as an “obstacle.” The central bank meets this week to make its policy decision. “Obviously, we have the Selic issue, which is an obstacle for all of us. You can reduce the lending spreads, improve the guarantee system, but the Selic will always be an obstacle to a consistent reduction in interest rates and the democratization of credit,” he said.Haddad stated that he will work toward a “virtuous balance” of the exchange rate and interest rates in the short term.He defended a national reindustrialization that takes climate change into account, stressing that gas could play a role in accelerating the energy transition process that is being planned, as the government has “a lot of interest” in pre-salt gas. By calibrating state-ruin oil company Petrobras’s pricing policy, ethanol would have a “natural development,” he added. More

Today’s top storiesThe EU is to make it easier for member states to give tax credits to companies for green investment, according to plans seen by the FT, as it seeks to compete with US subsidies. The German economy shrank unexpectedly in the fourth quarter, dragged down by the effect of soaring gas prices on its large manufacturing sector. The news put a dampener on new European Commission survey data showing EU business and consumer confidence surging in January. The UK is bracing for huge public sector disruption on Wednesday, with strikes set to close schools, cancel university classes and cripple rail services while unions hold rallies to protest against anti-strike legislation and refusal to fund higher pay awards.For up-to-the-minute news updates, visit our live blogGood evening.China’s stock markets reopened today after a week-long break for the lunar new year amid investor hopes that the end of “zero-Covid” will unleash a wave of pent-up consumer spending and spur global economic growth.Oil prices rose, reflecting the new optimism. The International Energy Agency, which advises governments on energy policy, said last week that China’s reopening could drive global demand to a record high this year of 101.7mn barrels a day.Traders are also betting on surges in demand for other commodities, with the price of base metals such as tin, zinc and copper jumping more than 20 per cent in the past three months. The impact on world trade in general will be substantial.Asian currencies such as South Korea’s won should also benefit as exports to China pick up, as should Thailand’s baht as Chinese tourists begin to travel again. The Australian dollar is expected to climb 3 per cent on increased demand from China for commodities.Hopes are also high for Chinese stocks. Goldman Sachs has raised its forecasts for earnings growth and boosted its outlook for Chinese listings in Hong Kong. Markets in Malaysia, Thailand and Singapore should also benefit.Some investors are turning optimistic on tech stocks in particular as Beijing eases its long-running sector crackdown. Others however are still wary, noting that state control over private companies has been stepped up, with big names such as Alibaba and Tencent having to cede “golden shares” to state bodies, allowing officials to take board seats and veto certain decisions.Beijing is also switching its focus to make consumption the “main driving force” of the economy, which grew by just 3 per cent last year under the weight of zero-Covid restrictions and the collapse of the property market, which has been responsible for around a quarter of GDP over the past decade.China’s renewed embrace of the private sector and positive noises on foreign investment were also on display at the recent World Economic Forum in Davos. The FT editorial board welcomed the change in tone but argued Beijing still had more to do to rebuild the trust of investors and business.“China should recognise that giving better treatment to the private sector and multinationals cannot be a matter of expediency,” it said. “Such policies must be long-term and sustainable if Beijing wishes to build trust. If officials travel to Davos to express fealty to a creed of open markets only to reverse course once back home, it will inflict lasting damage to China’s reputation.”Need to know: UK and Europe economyOur latest Big Read examines the difficulties of spinning out companies from British universities, with some founders and investors arguing the institutions are benefiting unfairly from the work of the entrepreneurs. Many UK tech start-ups are accelerating plans to expand abroad as the government cuts research and development tax credits.The “Qatargate” graft scandal rocking the EU also gets the Big Read treatment. The affair has highlighted some uncomfortable truths about lobbying by foreign powers.Hungary recorded the highest inflation in the EU in December at 24.5 per cent, which analysts pin on a weak forint, the phaseout of price caps and a retail tax. The country’s economic woes and the resulting public anger have been a blow to rightwing prime minister Viktor Orbán as his Fidesz party prepares for municipal and European elections in 2024.Need to know: Global economyIt’s a big week in central bank land with interest rate decisions from the US Federal Reserve on Wednesday and the European Central Bank and the Bank of England on Thursday. The Fed is expected to raise rates by 0.25 percentage points, and the ECB and BoE by half a point.Rising interest rates, volatile prices and the war in Ukraine have made it much more expensive to ship raw materials such as oil, gas, sugar and gold around the world. McKinsey predicts shipping times will increase 8 per cent, energy prices three-fold, and interest costs seven-fold, between the end of 2020 and 2024, with working capital requirements for commodity trading to increase up to $500bn as a result.Global food supplies could still be at risk despite sharp falls in fertiliser and crop prices from the highs of last year. Some experts warn the grain deal between Moscow and Kyiv could yet unravel while volatile energy prices and bad weather could hit crop production. Our Europe Express newsletter (for premium subscribers) talks to EU foreign policy chief Josep Borrell about the food propaganda war with RussiaThe prime minister of Mongolia told the FT how his landlocked country, sandwiched between Russia and China, had been battered by the effect of sanctions on Moscow. The collateral damage ranges from complications in paying Russian companies on which it is “wholly dependent” for fuel, to the loss of revenues from airlines that once flew over the country.Need to know: businessRetailer JD Sports became the latest high-profile UK company to be targeted by hackers as it warned that the data of 10mn customers could be at risk.Ryanair returned to profit and said the rush of US and Asian tourists would boost demand for travel in Europe. The surge in passenger numbers will come too late for Flybe. The budget carrier has gone into administration for the second time in less than a year after starting to fly again after the pandemic.Profit warnings from UK-listed companies rose 50 per cent last year as rising costs and falling consumer confidence hit British business. UK shareholders meanwhile are set for a fall in dividends this year as the global economy shrinks and a period of large one-off payments comes to an end. US investors are increasingly targeting European football by snapping up stakes in clubs — and angering fans and regulators in the process. Clubs have been turning to investors for capital since the pandemic battered their balance sheets: governing body Fifa estimates top-division teams lost €7bn over the 2019-20 and 2020-21 seasons. Will the end of Covid restrictions encourage the Chinese — one of the world’s biggest film audiences — to return to the cinema? Challenges include declining financing, censorship and changing tastes.The World of WorkManagement editor Anjli Raval says brutal mass lay-offs have serious long-term effects for companies as well as the individuals involved and those left behind. They need to plan for future workforce changes on an ongoing basis and ride out difficult periods, she argues.A tougher minded approach to meetings may become a lasting benefit of the pandemic, which has forced managers to think about how and where people work best, writes Stefan Stern.Thanks to Covid, many of us are working from home, but that doesn’t mean your boss can’t keep tabs on you. Columnist Pilita Clark looks at the world of time-tracking software — aka spyware, bossware or tattleware. Feel like you’re being discriminated against at work on the basis of your age? Law courts correspondent Jane Croft explains the difficulties inherent in bringing your claim to an employment tribunal. Some good newsA rare tree kangaroo has been born at Chester Zoo in the north of England for the first time. The animal is native to the rainforests of Papua New Guinea where they are under threat from hunting and habitat destruction.

Is it safe to come out yet? © Chester zoo/AFP via Getty Images More

Children lost more than a third of a year’s worth of learning during the Covid-19 pandemic, according to a worldwide study that shows gaps in skills and knowledge have persisted long after schools reopened. Bastian Betthäuser, author of the report in science journal Nature Human Behaviour, warned that education authorities’ focus was “shifting away” from helping school-aged children recover lost knowledge and skills during the pandemic, highlighting a need for continued support for catch-up learning. Academic subjects that depended most on teacher-led learning, such as mathematics, suffered the most when classes moved online, researchers said, with damaging consequences for individual career prospects, labour markets and overall inequality. The paper, which focused on 15 high- and middle-income countries and was published on Monday, added that the educational impact was more pronounced for children from disadvantaged backgrounds. “It’s not clear whether, or to what extent, learning deficits have been recovered. There’s a gap between what needs to happen and what is happening,” said Betthäuser. Attention was moving away from helping children catch up on lost learning, as governments moved their focus to other issues such as the cost of living crisis caused by soaring food and energy costs, he added. “My worry is that government programmes that have been set up — with very generous funding in some countries — will phase out soon, or have already [been phased out].”The paper collated 42 studies and reported that 95 per cent of the world’s school-age pupils were affected by school closures during the pandemic. Countries analysed included Brazil, Colombia, Germany, South Africa, Spain, the US and UK, with the report noting that some pupils had been affected by irregular teaching for more than two-and-a-half years.It found learning “slowed substantially” during the pandemic, with schoolchildren losing the equivalent of 35 per cent of a year’s worth of learning. “Learning deficits opened up early in the pandemic and have neither closed nor substantially widened since then,” the report added. Learning deficits were higher in maths, potentially because the subject depended more on teacher-led formal instruction than other subjects such as literacy, the researchers concluded. Governments have spent billions on funding schemes to support children to catch up on lessons missed during the pandemic, such as after-school programmes and additional lessons during holiday periods.However, the World Bank warned last year that less than half of countries were operating learning recovery programmes at the scale needed to help children catch up. Betthäuser said missed learning had affected the development of skills that were crucial to the needs of the labour force. “Learning deficits are likely to have knock-on effects on students’ future trajectories,” he said.The report backs up evidence from researchers that educational inequality has widened since the outbreak of the pandemic. Last month, the Education Policy Institute think-tank found that in England the gap between disadvantaged pupils and their peers increased at the fastest rate on record in 2021, after a year of periodic closures. Children living in persistent poverty were two years behind their wealthier peers, it added. “There is much more the government needs to do to support schools in reducing learning losses — particularly schools in poorer areas,” said David Laws, executive chair of EPI. More

The writer is former head of Citigroup’s emerging markets investments and author of ‘The Gathering Storm’The Pakistani rupee’s 14 per cent precipitous fall since last Thursday has raised fears that Pakistan may be the next emerging market to default. The currency hit this all-time low after authorities abandoned controls on its exchange rate, in an attempt to secure the conditions for an IMF bailout. A mission from the IMF is scheduled to arrive tomorrow. Earlier this month, a nationwide power outage in Pakistan left nearly 220mn people without electricity. Successive days without regular electricity threatened to cause havoc in a country on the brink of default, with inflation at a high of 25 per cent. While some have made the questionable claim that the reasons for the power breakdown may have been technical, Pakistan could soon run out of the fuel that powers its electricity plants. The state raised gasoline prices by about 16 per cent on Sunday. The country has been struggling to pay for oil imports and to meet energy demand, as its foreign exchange reserves have dwindled to just $3.7bn, equivalent to barely three weeks of imports. Former prime minister Shahid Khaqan Abbasi, a senior leader of the ruling coalition, has warned that Pakistan will have to default if it does not resume its adherence to the IMF programme that called for containing current spending and mobilising tax revenues. Pakistan grew its electricity generation capacity through the China-Pakistan Economic Corridor programme that began in 2015 but the expansion came at a cost, both in terms of high returns guaranteed to Chinese independent power producers (IPPs) and expensive foreign currency debt. Pakistan has been unable to make capacity payments to the IPPs under its long-term power purchase agreements. The country’s electricity sector debt has risen to approximately $9bn. China is Pakistan’s largest bilateral creditor with about $30bn in total debt, which represents around 30 per cent of the developing country’s total external official debt. In addition, Pakistan owes $1.1bn to Chinese IPPs for electricity purchases. Last December, the Pakistani government agreed to repay this debt in instalments. But this is likely to have displeased the IMF, which in August 2022 expected the government to renegotiate its power purchase agreements. Pakistan tried to renegotiate but China refused.Pakistan is squeezed between IMF demands and Chinese interests. Rescheduling debts will provide some relief, but who will bite the bullet first? China or the international financial institutions that are owed $41bn? If Pakistan doesn’t reach an agreement with the IMF within the next few weeks, its reserves could fall to a point where it can no longer buy oil. Pakistan’s central bank governor admitted last week that the country needed $3bn to meet its external debt obligations and approximately another $5bn to meet its current account deficit. In total, somewhere between $9bn and $10bn is required to stabilise the rupee. The IMF programme has essentially been in suspension since last November, mainly because of finance minister Ishaq Dar’s reported refusal to meet the organisation’s demands that Pakistan stick to a market-determined exchange rate and take measures to reduce its growing fiscal deficit. But a few days ago, the government finally agreed to accept the demands, and wrote to the IMF, asking it to send a mission.Even if the IMF programme is revived soon, the next tranche of about $1.1bn may not be sufficient in shoring up Pakistan’s foreign exchange reserves. The Saudi Fund for Development recently agreed to fund $1bn worth of oil imports on deferred payment, which is not enough to finance even one month of Pakistan’s oil needs. Only an immediate and large bailout can save Pakistan from default. Otherwise, the country may suffer the same fate as Sri Lanka last year. More

Dealerships are seeing sales and prices drop as consumers tighten their belts, putting financial pressure on companies like Carvana that grew fast in recent years.About a year ago, the used-car business was a rollicking party. The coronavirus pandemic and a global semiconductor shortage forced automakers to stop or slow production of new cars and trucks, pushing consumers to used-car lots. Prices for pre-owned vehicles surged.Now, the used-car business is suffering a brutal hangover. Americans, especially people on tight budgets, are buying fewer cars as interest rates rise and fears of a recession grow. And improved auto production has eased the shortage of new vehicles.As a result, sales and prices of used cars are falling and the auto dealers that specialize in them are hurting.“After a huge run up in 2021, last year was a reality check,” Chris Frey, senior manager of economic and industry insights at Cox Automotive, a market research firm. “The used market now faces a challenging year as demand weakens.”According to Cox, used-car values fell 14 percent in 2022 and are expected to fall more than 4 percent this year. That shift means many dealers may have no choice but to sell some vehicles for less than they paid.The industry’s difficulties have been exemplified by Carvana, which sells cars online and became famous for building “vending machine” towers where cars can be picked up. The company recently reported a quarterly loss of more than $500 million, and has laid off 4,000 employees.In the last 12 months, Carvana piled up debt. Its stock price has fallen by more than 95 percent in the last 12 months, and three states temporarily suspended its operating license after consumer complaints.“We think there’s a decent chance the company will end up having to file for bankruptcy protection,” said Seth Basham, an Wedbush analyst. “They have too much debt for the level of sales and profitability and can’t support that debt load, and likely will need to restructure.”In a statement to The New York Times, Carvana said it was confident it had “sufficient” funds to turn its business around, noting the company had $2 billion in cash and an additional $2 billion in “other liquidity resources” at the end of the third quarter.It has also hired the investment bank Moelis & Company and is working to reduce its inventory of vehicles and cut the cost of reconditioning them.Used-car values fell 14 percent in 2022. Some dealers may have no choice but to sell some vehicles for less than they paid.An Rong Xu for The New York Times“Millions of satisfied customers have responded positively to Carvana’s e-commerce model for buying and selling cars,” the company said. “Although the current environment and market has drawn attention to the near term, we continued to gain market share in the third quarter of 2022, and we remain focused on our plan to drive to profitability.”CarMax, another used-car giant, is also hurting, although it is on much steadier ground. In the three months that ended in November, its vehicle sales fell 21 percent to 180,000, and net income tumbled 86 percent, to $37.6 million.Inflation F.A.Q.Card 1 of 5What is inflation? More

The writer is an FT contributing editor and writes the Chartbook newsletterAs 2023 unfolds, the world of economic analysis and commentary is marked by a disjuncture between discourse and data. On the one hand, you have feverish talk of deglobalisation and decoupling. While on the other, the statistics show an inertial continuity in trade and investment patterns.There are at least three ways to reconcile this tension.Option one: you can cleave to the old religion that economics always wins. In which case you dismiss the talk of deglobalisation as journalistic hype. This debunking posture has the air of empiricism and common sense about it. But to hold this view you have, in fact, to believe many things, chief among them being that the Biden administration does not mean what it says.If you take Washington seriously it is hard to avoid the conclusion that whatever the statistics tell us about the current state of affairs, the US is bent on revising the world economic system. It intends to reprioritise domestic production and to face up to the historic challenge posed by China’s rise. If there is one thing that America’s divided polity can agree on, it is the necessity to confront China.Adopting this view leads you to option two: rather than business as usual, we are on the cusp of a new historical epoch, a new cold war. And this is not the cold war of the detente era. In Washington these days even coexistence with CCP-led China is up for debate.Taken at face value this is a scenario of high-stakes confrontation that overshadows every other priority. In recent weeks there have been efforts to de-escalate — first the G20 meeting between Xi Jinping and Joe Biden, then China’s dovish appearance at Davos. But these moves do not presage a return to business as usual. Rather than reconciliation and reconvergence, the Biden team holds out something far weirder. They do not want to stop China’s economic development, they insist, just to put a ceiling on every area of technology that might challenge American pre-eminence.How that is supposed to work is anyone’s guess. But in its sheer otherworldliness it points to interpretive option number three. We are witnessing not a reversal of globalisation or full-scale decoupling, but a continuation of some aspects of familiar pattern, just on fundamentally different premises. A future world economy might be made up of a patchwork of antagonistic coalitions divided by more or less visible data curtains. States that have the resources will launch national policies such as the US Inflation Reduction Act, which blends green industrialisation and “buy American”, with an anti-China stance and a push for friendly supply chains. That the IRA has caused a ruckus with Europe and South Korea is not a bug. It is a feature.Perhaps a harbinger of the future is the crazy quilt of Covid vaccines: the US driving Operation Warp Speed; the Europeans trying to broker a complex bargain that includes exports to the rest of the world; India as a manufacturing hub; China pursuing an inadequate national solution; and a third of the world’s population excluded altogether.You might shrug and ask whether this mélange of geopolitics, economic nationalism and the occasional pandemic is really new. Is it not just “history” as we have always known it — unpredictable and red in tooth and claw? But, in saying that you give the game away. The promise of globalisation, as it was understood from the 1990s onwards, was precisely that it would usher in a new era. So to admit not only that a slew of unexpected and diverse shocks is disrupting the world economy, but that they are multiplying and becoming more intense is, in fact, to admit a fundamental disappointment of expectations.Whereas the advocates of business as usual declare that it is still “the economy, stupid” and the new cold warriors rally around the banner of “democracy versus autocracy”, the third position faces the reality of confusion, the kind of confusion registered by a term like “polycrisis”.Polycrisis has its critics, and at Davos 2023 it risked becoming something of a cliché. But as a catchword it serves three purposes. It registers the unfamiliar diversity of the shocks that are assailing what had previously seemed a settled trajectory of global development. It insists that this coincidence of shocks is not accidental but cumulative and endogenous. And, by its currency, it marks the moment at which bullish self-confidence about our ability to decipher either the future or recent history has begun to seem at the same time facile and passé. More

European stocks and US futures slipped on Monday with central banks on either side of the Atlantic poised to lift interest rates to their highest levels since the global financial crisis.The region-wide Stoxx Europe 600 traded 0.5 per cent lower after fresh data showed a surprise 0.2 per cent drop in fourth-quarter German gross domestic product, just as Spain’s inflation rate rose by 5.8 per cent in the year to January, up from 5.5 per cent in December. The euro gained 0.3 per cent against the dollar and the yield on 10-year German Bunds rose 0.06 percentage points to 2.3 per cent. Bond yields move inversely to prices.Contracts tracking Wall Street’s blue-chip S&P 500 and those tracking the tech-heavy Nasdaq 100 fell 0.9 per cent and 1.2 per cent respectively ahead of the New York open. The UK’s FTSE 100 was trading flat at the middle of the session. The moves come ahead of policy meetings at the Federal Reserve, European Central Bank and Bank of England this week. Investors expect the Fed to slow the pace of its monetary tightening to 0.25 percentage points, raising rates to the highest level since September 2007, while the BoE and the ECB are widely expected to lift rates by half a percentage point to their highest levels since autumn 2008.Slowing inflation in Europe and the US has nevertheless boosted hopes that rates are close to peaking, with some investors forecasting cuts later this year. Central bank officials, however, are set to resist such calls when fielding questions later this week.Investors are likely to “keep looking through the Fed’s more hawkish policy guidance”, said Lee Hardman, currency analyst at MUFG. “We are not convinced that the Fed will be able to trigger significant hawkish repricing in markets.”Equity markets have rallied so far this year on growing optimism that global growth will be less anaemic than previously feared, helped by falling energy prices in Europe and China’s abrupt reversal of zero-Covid measures in place since early 2020. Yet higher equity prices are thought to raise consumer spending — exactly what central banks, determined to drag down inflation, are attempting to prevent.Financial conditions have been further loosened by a weaker dollar, declining Treasury yields and tighter credit spreads, according to analysts at ING, “and it may feel that any further loosening, fuelled by talk of potential policy easing in the second half of the year, could undermine [the Fed’s] current actions in fighting inflation”.The key question for the BoE, meanwhile, is whether it acknowledges its work is nearly complete. “We suspect it’s more likely to keep its options open,” the analysts said, adding that market expectations of ECB rate cuts in 2024 were “premature”.In Asia, Hong Kong’s Hang Seng index fell 2.7 per cent, dragged lower by a 6 per cent decline for Alibaba. China’s CSI 300 gained roughly 0.5 per cent. More

Welcome to Trade Secrets. Sometimes it feels like I need a weekly “Manchinations” section dedicated to the senator for West Virginia and the intricate manoeuvrings around the electric vehicle tax credits in the US Inflation Reduction Act. Last week, senator Joe introduced a bill to delay the handouts to try to stop the Europeans and Japanese getting their hands on them. Related to this, Treasury secretary Janet Yellen appeared to accept that the EU and Japan would need to sign an actual “Free Trade Agreement” (as opposed to having a “free trade agreement”) with the US to benefit from the critical minerals bit of it. Given the US isn’t signing trade deals with anyone right now, that’s a touch disingenuous, like asking someone to jump through a hoop you refuse to hold up for them. Today’s newsletter touches on another tense US-EU-Japan issue, Washington’s demand for export controls on semiconductors, but first I consider the Zambia test case for sovereign debt restructuring. Charted waters looks at how China’s reopening is fuelling a rise in base metal prices.Going bust in styleLast summer I wrote about the wave of sovereign bankruptcies breaking among middle- and low-income countries, and how the world hadn’t created a system to restructure debt smoothly and constructively. It still hasn’t. In particular, it’s proven as hard as we all feared to incorporate China, now frequently low-income countries’ biggest official creditor (see this chart from JPMorgan), into the system.

The G20 came up with the “Common Framework” for restructuring debt after the Covid-19 pandemic hit, which was supposed to enshrine principles of openness and burden-sharing. Zambia, where China was heavily involved in the copper mining sector and elsewhere, emerged as a test case. It’s not going brilliantly. Last week the US took the unusual step of going public and saying China was a barrier to the negotiations on restructuring Zambia’s debt. See also this thread by former US Treasury debt guru Brad Setser and his piece for Alphaville last October, whence comes this handy chart of who owes what.

Some of the problems with getting China to participate in a debt restructuring are cultural and organisational, others more fundamental. To be fair to China, it’s not exactly practised at this game, being outside the Paris Club of creditor nations and not having decades of practice at restructuring. It also lends via a mish-mash of state-owned or state-influenced agencies with different rates, terms and conditions, which makes negotiating burden-sharing particularly difficult.But there are reportedly some serious differences of principle, notably China’s insistence that debt owed to multilateral development lenders such as the World Bank be included in the restructuring. With the exception of one-off separately funded exercises such as the heavily indebted poor countries (HIPC) debt relief schemes of the 2000s, MDBs (and the IMF) rightly don’t participate in writedowns. They are the closest things the international financial system has to lenders of last resort, and writing down their debt would destroy support for them among shareholder countries, especially the US.There’s a fundamental clash of principles there. China insists on seeing itself as a developing country helping low-income economies with development-focused infrastructure finance, not a rich-world creditor. (For the same reason China also always shrunk from taking a leadership role in the IMF, actually lobbying to keep its voting share on the board below the US and Japan.) By that token it makes perfect sense for China to resist writedowns unless the MDBs are also involved. But it’s not compatible with seeing the world the way the other official creditors do. Something quite substantial is going to have to give.A block of the old chipsA big victory for the US, on the face of it. The Netherlands and Japan, the former after huffing and puffing in line with the EU’s famous commitment to strategic autonomy, have reportedly acceded to American demands further to restrict exports of semiconductors and semiconductor equipment to China. You’ll recall this is something the US has been pressing European and Japanese companies to do for a while. The Dutch are particularly important because of ASML, the world’s leading maker of photolithography machines. It’s no longer enough for the US to keep China a generation or two behind with tech — it wants to establish as much of a lead as possible.So, score one for US high-pressure securocratic diplomacy, Biden with chips succeeding where Trump (and Biden) didn’t quite succeed with Huawei and 5G? Well, let’s be a bit careful on this one, and wait for the exact details of the deal to be released. As I’ve written before, the Netherlands and Japan already co-operate closely with the US on export controls. They’re also healthily suspicious of some of the motives for these measures, which have blocked their sales to China while allowing in US competitors. Japan in particular, whose companies are at a lower-value-added part of the supply chain, will lose a lot of sales to China they will struggle to make up elsewhere.Agreeing to make a tripartite announcement, assuming it comes, will be a symbolic gain for the US, and for the Biden administration’s continual attempts to build coalitions against China. In substance, I suspect the Dutch and the Japanese will be scrutinising the legal commitments of any deal very closely and working out exactly how it will affect their companies. The principle of co-operation is established: the practice of what gets blocked will, however, be a continual process.As well as this newsletter, I write a Trade Secrets column for FT.com every Thursday. Click here to read the latest, and visit ft.com/trade-secrets to see all my columns and previous newsletters too.Charted watersThe reopening of China after its pandemic lockdown has been possibly the best pieces of news for the global economy — as well as the Chinese population — of the year to date. It is also likely to be good news for miners, as the chart below illustrates.A group of “base metals” led by tin, zinc and copper have surged more than 20 per cent since November on bets that China’s reopening will boost demand for raw materials. We do not just have the Chinese Communist party to thank for this, as my colleagues Harry Dempsey and George Steer explain. The bullish sentiment driving up prices is also supported by the US Federal Reserve signalling a slowdown in the pace of interest rate rises and a softening in the US dollar, which importers use to buy commodities. (Jonathan Moules)Trade linksThe list of strategic assets in the US expands by the day, in some lawmakers’ eyes extending towards farmland, which they want to keep out of the hands of Chinese investors. FT colleague Martin Sandbu argues that the EU should welcome a green subsidy race. A nice summary FT Q&A explainer on the Inflation Reduction Act and what all the fuss is about.A fun NPR piece on tracking the prices in one Walmart store for years and what they said about the US economy, trade and globalisation.The Trade Talks podcast explains the recent history of export controls, and how they were shaped by cold war scandals about supplying sensitive technology to the Soviet Union.Trade Secrets is edited by Jonathan Moules More