Tag: Business and finance

DIPLOMATS are racking up the air miles, but the prospect of trade war has not receded. Negotiations between American and Chinese representatives in Beijing ended on May 4th without agreement. Indeed, the two sides’ starting positions are so different that a mutually agreeable deal is hard to imagine. Talks will resume next week when Liu He, China’s vice-premier, travels to Washington. Negotiators will need to work quickly. From May 23rd America can impose its first set of tariffs against China, on around $50bn of goods. The Chinese would soon retaliate.

America is edging towards trade conflict not just with an avowed rival but with its closest friends. In March, when President Donald Trump announced plans for tariffs on steel and aluminium, America’s allies were granted temporary exemptions to allow time to negotiate deals. Those exemptions are due to run out on June 1st.

Many countries are already off the hook, having agreed to restrict shipments to America. South Korea…Continue reading

The way we were

THE words “Unite Students” are emblazoned on Aston University’s residence halls and on signs all over campus. They are the name of a firm that builds, buys and manages student accommodation across Britain. Last year Unite Students bought all 3,000 of Aston’s on-campus bedrooms for £227m ($313m) in partnership with the Government of Singapore Investment Corporation, a sovereign-wealth fund. It was thought to be the largest ever one-off purchase of student housing.

Many readers will no doubt recall dingy halls of residence owned by universities, or squalid private digs owned by individual landlords. But student accommodation has got an upgrade. Private halls have sprung up as cash-strapped universities have outsourced to companies such as Unite. Some have grown into publicly traded brands offering thousands of beds across the globe. American Campus Communities owns more than 134,000 beds across America. Dubai’s GSA has student housing in…Continue reading

SCIENCE is supposed to be the ultimate meritocracy. People might sneer at a thinker’s background or training, but there can be no arguing with a powerful new idea which explains the world better than its rivals do. In reality, academia is cluttered with odd cultures and practices which serve as barriers to entry—and, at times, as cover for discrimination. In economics, men receive tenure at a rate 12 percentage points higher than women do, after controlling for family circumstances and publication records. Women who clear that hurdle are about half as likely as men to be named full professor within seven years. Just 4% of doctoral degrees in economics were awarded to African-Americans in 2011 (compared with about 8% across all academic fields). Something is broken within the market for economists, and the profession has moved only belatedly and partially to address it. A lack of inclusivity is not simply a problem in itself but a contributor to other troubles within the field.

Though women in…Continue reading

FOR a country that is hugely proud of its high-flying tech firms, China has a funny way of showing it. None of its internet giants—not Alibaba, nor Tencent, nor Baidu—is listed on the domestic stockmarket. Rules that were supposed to help investors have had the perverse effect of forcing firms to go public abroad, mostly in America. The result is that most people in China cannot buy stocks in the country’s biggest, most innovative companies. But change is finally at hand. In the coming weeks China is expected to start letting these firms list some of their shares at home. If handled well—a big if—it would be a boon for the young stockmarket.

China’s tech darlings initially went abroad because it was their only real option. Chinese regulations forbid dual-class shares, a structure favoured by tech entrepreneurs because it means they can raise capital while retaining control. Companies must also have three years of profits before going public. This is a stumbling block for tech…Continue reading

More like these, please

IN THE spring of 1991, Indian officials desperate to fend off a balance-of-payments crunch secretly airlifted 20 tonnes of gold confiscated from smugglers into the vaults of UBS, a Swiss bank. That crisis prompted liberalising reforms that helped integrate India into the global economy. By 2013 India’s exports as a percentage of GDP had nearly quadrupled, to over 25%, not far from the global average. But an exporting funk since then has pushed the figure to its lowest level in 14 years. Paired with a rise in imports, the trend has revived questions about the competitiveness of Indian firms—if not the government’s ability to finance a growing current-account deficit.

A repeat of the 1991 drama is not in the offing. India’s economy today is growing at a world-beating pace. Its central bank holds enough foreign reserves to pay for nearly a year’s worth of imports. Foreign investors are on hand to finance both government and corporate…Continue reading

ON MAY 8th, as the peso continued to tumble, Mauricio Macri, Argentina’s president, addressed his nation on television. His government had opened negotiations with the IMF for a credit line in order to “avoid a crisis like those we have faced before in our history”. That steadied the peso. But it also brought back painful memories for Argentines, highlighted doubts about Mr Macri’s approach to mending Argentina’s economy and cast a shadow over the reformist president’s future.

Argentines have bitter memories of the last time their government sought the IMF’s help. Many blame the fund for imposing austerity in return for loans and then pulling the plug in 2001, tipping their country into a devastating $82bn sovereign default. It was followed by widespread unemployment, a sharp rise in poverty and the corralito, in which the government froze bank accounts for a year to halt a run. Argentina’s economy had been battered by the lunatic policies of a succession of…Continue reading

AIR FRANCE likes to present itself as a cut above other European airlines. Offering fancy French food and free champagne in economy class on long-haul flights, the company’s strategy is to justify its high ticket prices by offering a premium service. But facing intransigent unions at home and competition from abroad, the airline’s financial fizz is rapidly going flat. 

A drawn-out fight with its unions has toppled the boss of its parent group, Air France-KLM, yet again. On May 4th Jean-Marc Janaillac, its chief executive, resigned after its workers voted against a pay rise of 7% over four years. His predecessor, Alexandre de Juniac, left two years ago after two executives had their shirts violently ripped off by a mob of angry workers over a restructuring plan. The latest resignation is more serious because investors are also losing their rag. Air France-KLM’s shares have halved in value since January; over the same period those of rival carriers such as IAG and Ryanair have risen.

Air France’s trade unions are demanding an…Continue reading

WHEN a hacker gets hacked, hackers hack back. That is exactly what an attendee at a hacking conference in Berlin in 2003 did when the keycard-operated lock of his hotel room got hacked. On returning to his hotel room, he found that his laptop had been stolen, but there was no evidence of forced entry. So how did the thief get into the room? Two of his colleagues spent more than a decade trying to answer that question. Now they have succeeded—and in the process they have exposed a security vulnerability that leaves millions of hotel rooms susceptible to theft.

Tomi Tuominen and Timo Hirvonen of F-Secure, a cyber-security firm, devised a hack that they say allows them to create a master key that mimics the guest keycards produced by VingSecure, a manufacturer of hotel locks. According to F-Secure, the affected software is used in more than 40,000 hotel…Continue reading

IT IS an enormous privilege, and responsibility, to write for The Economist and capture a small sliver of readers’ attention. All told, there have been well over a thousand posts on this blog (the site history runs for 98 pages) as well as 546 print columns (the last will appear at the end of the week). The first post, back in February 2009, was written in the depths of the crisis and “was looking for signs of hope, although without any confidence it can call the bottom exactly.” In fact, the market bottom occurred only a few weeks later. There have been a few wobbles along the way but that bull run is still going. The irony would be that, just as the start of this blog heralded the upswing, the last post might signal the demise of the great bull market.

This blogger has been a bit gloomy during his tenure, too gloomy as it turns out. So as well as three signs of danger, I wanted to close with three signs of optimism. First, the…Continue reading

START with the good news from the trade negotiations between China and America. After weeks of threatening tariffs and counter-tariffs, representatives from the world’s two biggest economies are at last talking. Over two days of meetings in Beijing, which ended on May 4th, Chinese and American officials laid out their grievances and their demands. That, unfortunately, is where the good news ends. The positions that both sides took were so extreme and contradictory that compromise appears a remote prospect. What, until now, has largely been a war of words could easily careen into a full-fledged trade war.

Publicly, the two countries put a positive gloss on the outcome. Xinhua, China’s official news agency, described the talks as candid and constructive. It noted that they had agreed on some issues and recognised their “considerable differences” on others. On the evening the talks closed, President Donald Trump tweeted a sentiment that, by his standards, was sympathetic: “it is…Continue reading