Is China’s high-growth era over?

Is China’s high-growth era over?

China on Tuesday announced an official growth target of around 5 percent that already appears difficult to achieve. The world’s second-largest economy faces headwinds, from a slowdown in consumption to weak investor confidence and a trade war with the West.

But the growth target only tells part of the story of how Beijing is rethinking economic policy.

Left out of the pronouncements: a stimulus package. Investors are watching the annual meeting of the National People’s Congress, the country’s official parliament, and a parallel meeting of China’s top political body, for clues about the government’s priorities. Spending is expected to remain roughly at last year’s level, suggesting there is no big boost on the horizon.

That’s not good news for Western brands that have taken advantage of increased Chinese consumer spending to huge growth in recent years. Apple has reportedly seen its sales of Chinese iPhones plummet this year.

The growth objective also coincides with that of last year, when the post-lockdown economy grew 5.2 percent. (Some analysts say the actual growth rate is much lower.) Global investors must accept that slow growth is the new normal, says Yu Jie, senior China researcher at Chatham House, a think tank. “Beijing wants to end the previous economic model that focused on infrastructure and property,” she told DealBook.

Beijing’s real goal is to reshape the economy. The government knows it faces a number of challenges, but China’s leader Xi Jinping is trying to move away from debt-driven sectors such as real estate and toward strategically important industries. The terms he uses are “high-quality development” and “new productive forces,” which include electric vehicles, climate technology, life sciences and artificial intelligence. The latest steps to achieve it: Premier Li Qiang, China’s second-highest official, said Tuesday that the government would increase spending on scientific and technological research by 10 percent.

The priority is to increase investment led by the State, rather than “other types of more politically painful reforms,” ​​George Magnus, a research associate at the University of Oxford’s China Center and former chief economist at UBS, told DealBook.

It may also mean more pressure on private companies to toe the party line, even with Bankers are ordered to be more patriotic. and develop a “financial culture with Chinese characteristics.”

Donald Trump is expected to win big in the Super Tuesday contests. Voters in 15 states, including California and Texas, are heading to the polls. A landslide victory for Trump in the Republican primary could force Nikki Haley to drop out of the election. Elsewhere, the outspoken billionaire Mark Cuban endorsed President Biden in the general election, and supporters of the third-party initiative No Labels fear the group is is no longer politically viable.

The White House confronts “corporate scams.” The Biden administration said Tuesday it was forming a “strike force” to coordinate federal efforts to combat “Unfair and illegal prices..” It’s part of Biden’s effort to fix rising prices, a voter concern that is costing him politically – partly about greedy corporations, a topic sure to resurface during his State of the Union address on Thursday.

Nelson Peltz publishes his full case against Disney. The activist investor shared his White paper outlining his recommendations for turning around the media giant; Among them is finding a partner for Disney’s broadcast television assets and scrapping plans to introduce a new ESPN streaming service that would replace ESPN+. Peltz’s 133-page filing comes less than a month before Disney shareholders vote on whether to give him control of two board seats.

European antitrust authorities have finally taken on Apple, fining the iPhone maker $2 billion for trying to thwart competition in music streaming. A bigger test of the EU’s ability to restrain the tech giants is yet to come.

The Digital Markets Law will come into force on Thursday, aimed at ensuring competition between popular digital platforms. But skeptics believe that tech giants like Apple will find ways to avoid getting caught.

The DMA represents an aggressive effort to control digital competition. Monday’s fine covered the specific issue of Apple acting to thwart rivals like Spotify in music streaming. The new law is supposed to prevent the “gatekeepers” of the major platforms (including Amazon, Apple, Google and Meta) from using their market power to block new entrants.

The cost of non-compliance is high: WFD violators could be forced to pay up to 10 percent of your global revenueor up to 20 percent in case of repeated violations.

Apple says it will comply with the law, offering multiple options to app developers that it says could reduce their fees. Several involve paying Apple a per-download fee once your apps reach one million downloads per year.

But critics say Apple has tried to get around the new rules. In the Netherlands and South Korea, countries that adopted laws requiring app store owners to allow alternative payment systems, the iPhone maker agreed to open its app store. But it began charging a 26 percent fee to those using non-Apple payment methods, a move the Korean government said undermined its law.

in a letter to the european commission published last week, three dozen companies argued that Apple was taking a similar approach to the DMA: “Apple has a history of circumventing these rules.” Daniel Ecksaid Spotify’s co-founder and CEO, after the EU fine was announced on Monday. “He will continue acting as before.”

Apple has the resources to fight. The company said it planned to appeal Monday’s ruling and could challenge the allegations made under the DMA. It’s worth noting that the tech giant is still fighting other government punishments, including a €13 billion tax assessment that the European Commission handed down in 2016..

The SEC will vote tomorrow on a new rule that would require companies to disclose the climate risks of their businesses, a key piece of the Biden administration’s green agenda.

When the proposal was introduced two years ago, SEC Chairman Gary Gensler said it would help safeguard “tens of billions of dollars”of investors’ money. But climate experts and former SEC commissioners hope the measure has been watered down amid intense corporate lobbying and a broader conservative pushback against the agency’s power.

The standard was intended to help investors assess climate risks. Money flowing into companies that prioritize environmental, social and governance principles has skyrocketed in recent years, a huge profit driver for Wall Street. But ESG investors have begun to pull back lately amid concerns about greenwashing, red-state boycotts and regulatory uncertainty.

Some fear that the SEC’s weak rules could hamper transparency. Another problem: California and Europe aggressive disclosure mandates have been advanced, leaving large companies potentially forced to navigate a hodgepodge of regulations.

What is expected to disappear? The most controversial aspect It is said that he was fired These are so-called Scope 3 discharges, which would apply to the majority of a company’s emissions. But measuring Scope 3 involves an expensive examination of the entire value chain from suppliers to customers.

Scope 3 is a “centrally important metric for investors” and critical to preventing greenwashing, Allison Herren Lee, former acting chair of the SEC, told DealBook. (In 2021, she pushed for this requirement.)

What’s probably inside? Scope 1 and Scope 2 emissions, which measure a company’s direct carbon footprint, are expected to be part of the new rules, but only if they are considered “material.” This qualification leaves companies some room for maneuver.

“If the SEC ultimately leaves climate disclosure decisions in the hands of corporate executives, that is a political choice with an unfortunate history,” said Satyam Khanna, a former SEC climate adviser.

Even watered-down rules could trigger a legal battle. Business groups have repeatedly challenged the Biden administration’s environmental agenda in court.

The SEC will be sued “as surely as the sun rises in the East,” said Joseph Grundfest, a Stanford Law School professor and former SEC commissioner.

96phoenix, a member of the online community WallStreetBets, about Reddit’s IPO plans. Reddit has banked on the enthusiasm of its users, but some express reservations.

More than a year after Elon Musk closed his $44 billion acquisition of Twitter (now X), the challenges (and lawsuits) are piling up.

Musk, who filed his own successful lawsuit last week against OpenAI, has faced a mountain of legal problems before. But these distractions come at an especially difficult time for the billionaire. Musk is struggling with a Exodus of investors in Teslaits electric vehicle maker, and the banks that lent it billions to buy Twitter two years ago have supposedly met with him to discuss refinancing terms.

Former Twitter executives are the latest to join. One of Musk’s first acts after buying the company was to fire Parag Agrawal, its executive director; Ned Segal, CFO; Vijaya Gadde, head of legal and policy; and Sean Edgett, the general counsel. They sued Musk for $128 million on Monday, accusing him of withholding severance pay and depriving them of unvested stock awards when he took the company private in October 2022.

Musk believes he fired them “for a good cause.” The suit quotes Musk telling biographer Walter Isaacson that he would “hunt” the executives “until the day he dies.”

“This is Musk’s strategy: keep the money he owes other people and force them to sue him,” the executives’ lawyers write. “Even in the event of defeat, Musk can impose delays, inconvenience and expense on others less able to afford it.”

The case once again puts Musk’s multiple legal claims in the spotlight. Here are a couple more:



The best of the rest

We would like to receive your comments! Email your ideas and suggestions to

Avatar photo

John C. Johnson

Related Posts

Read also x