The Economist - 15 June 2024

Год выпуска: June 2024

Автор: The Economist Newspaper and The Economist Group

Жанр: Экономика/Политика

Издательство: «The Economist Newspaper Ltd»

Формат: PDF (журнал на английском языке)

Качество: OCR

Количество страниц: 80

The rise of Chinese science: Welcome or worrying?

• Chinese science is becoming world-class. Is that worrying or welcome? Leader, page 9.
• From plant biology to superconductor physics, China has emerged as a major scientific force. On some measures it has even eclipsed America, page 67.
• America’s attempt to destroy Huawei has been a counterproductive failure: briefing, page 14.

Our presidential electionforecast model

• America’s presidential race is not a coin flip, according to our forecasting model. Five months before the election, Donald Trump has a clear lead: leader, page 10, and analysis, page 17.
• But in debating Donald Trump, Joe Biden faces graver public doubts and a greater challenge than he did in 2020: Lexington, page 24.

Macron’s gamble

• The French president believes that a snap election can help solve his many problems. Is he right? Leader, page 11.
• His defiant attempt to weaken the hard right could backfire, page 42.

The war for Al talent

• It is heating up, page 53.

Is the New York Times bestseller list biased?

• Our analysis suggests that it is: leader page 12, and report, page 71.

The world this week Politics

• Elections to the European Parliament saw the hard right making the most gains overall, though the European People’s Party, representing the centreright, and the Socialists and Democrats, on the centre-left, remain the biggest voting blocs. Green parties lost a quarter oftheir seats. In France Marine Le Pen’s right-wing National Rally took a third of the vote, more than double that of Emmanuel Macron’s party, Renaissance. In a surprise announcement, the French president dissolved the National Assembly and called a snap election. Mr Macron lost his parliamentary majority in 2022, and says the country now “needs a clear majority in serenity and harmony”.
• Germany’s governing coalition also got a shellacking at the election. The opposition Christian Democrats came first and the nationalist Alternative for Germany (AfD) second, beating all three parties in the government. The Social Democrats, the party of Chancellor Olaf Scholz, took just 14%, its worst showing ever in a national poll. The AfD’s biggest increase in support was among people aged 16-24, an election where 16-year-olds were able to vote for the first time.

There’s a new kid in town

• By contrast Hungary’s populist-right Fidesz did worse than expected. A new party, Tisza, led by Peter Magyar, a former Fidesz official, took 30% of the vote. Before the election Mr Magyar held a rally in Budapest with tens of thousands of supporters, where he fulminated against government corruption and illiberalism.
• Belgium held a general election also. Alexander De Croo resigned as prime minister after his Open VLD, a liberal Flemish party, lost half its seats in the lower house of the federal parliament. Bart De Wever, the leader of the New Flemish Alliance, a national-conservative party that wants to shift more power to Belgium’s regions, has emerged as the most likely prime minister.
• A flurry of meetings discussed the future of Ukraine. A donors’ conference in Berlin pledged to help rebuild the country after the war with Russia. The World Bank thinks it will need $500bn over a decade. A summit of NATO countries in central and eastern Europe promised to take a co-ordinated approach to supporting Ukraine, though the heads of state of Hungary and Slovakia stayed away. And 90 countries prepared to gather in Switzerland to discuss a peace proposal. The G7 also met near Bari, in Italy, where Ukraine dominated the talks.
• Britain’s National Health Service put out an urgent appeal for О-type blood donations (О-negative can be used for anybody) following a recent ransomware attack by Russian hackers on a provider of bloodlaboratory services. The attack forced some hospitals in London to revert to paper records and documentation. Three donations a minute are usually needed to meet Britain’s demand for blood.
• Israeli commandos rescued four people being held hostage by Hamas in Gaza. One Israeli counter-terrorism officer was killed in the raid, as were large numbers of Palestinians (the Hamas-run authorities put the number at 274, but Israel disputes that). A day later Benny Gantz and Gadi Eisenkot, two centrist former generals, resigned from Israel’s war cabinet accusing the prime minister, Binyamin Netanyahu, of failing to come up with a strategy for ending the war.
• At least 49 people died in a fire that engulfed a residential building in Kuwait. Many of those killed were foreign workers. Reports said the building had been overcrowded.
• A boat carrying around 260 migrants from Somalia to Yemen capsized, drowning at least 49 people and leaving a further 140 missing. Two similar accidents in April led to at least 62 deaths. The UN says that tens of thousands of people, mainly from Ethiopia, attempt the dangerous crossing from the Horn of Africa to Yemen and then onward to the Gulf states each year.
• The African National Congress, which has governed South Africa for 30 years, invited other parties to help form a government of national unity after it lost its parliamentary majority in the elections on May 29th.
• The chief prosecutor of the International Criminal Court in The Hague appealed for evidence of atrocities in Sudan following an attack that closed the last functioningcivilian hospital in the besieged town of el-Fasher.
• Saulos Chilima, Malawi’s vice-president, was killed along with several other people when the defence-force plane he was travelling in crashed.
• Hunter Biden was found guilty of lying about his drug use when he completed a background check to buy a gun in 2018. Joe Biden’s son says he has not used drugs since 2019. He will be sentenced at a later date. He is due to stand trial in September for allegedly failing to pay tax from 2016 to 2019.

Judicial review

• Three of the foreign judges who sit on the Court of Final Appeal in Hong Kong resigned. Two cited the deteriorating political situation in the city. One, Jonathan Sumption, wrote that the judiciary was operating in an “impossible political environment created by China”. That drew a furious denial from the government.
• The leader of South Korea’s opposition Democratic Party, Lee Jae-myung, faced new charges, this time in relation to a scheme promoting a business project with North Korea. Mr Lee, the runner-up in the presidential election of 2022, has also been indicted over a property-development scheme. He denies all charges against him.
• Human-rights groups condemned the Indonesian courts for sentencing a comedian to seven months in prison for making a joke about the name Muhammad.
• President Javier iMilei’s government in Argentina cleared a hurdle in the Senate to passing a sweeping set of economic reforms. The bill will cheer markets, though plenty of macroeconomic headaches remain. The reforms are opposed by unions and various leftists. Police fired water cannon to disperse violent protests that took place outside Congress.
• A jury in Florida found Chiquita, one of the world’s biggest producers of bananas, liable for eight deaths caused by a right-wing paramilitary group in Colombia’s civil war. Chiquita pleaded guilty in 2007, under a deal with America’s Justice Department, to making security payments to the United Self-Defence Forces of Colombia. It has faced hundreds of othercivil trials, but this is the first time it has been held liable. The company is to appeal against the decision.

The world this week Business

• The Federal Reserve left its benchmark interest rate on hold at a range of between 5.25% and 5.5%. Markets were more interested in the latest moves along its path for rate reductions. The Fed now thinks it will cut just once this year, possibly as late as December, a big change from iMarch, when it predicted three cuts. On June 6th the European Central Bank cut interest rates for the first time in five years, shaving a quarter of a percentage point off the deposit facility, to 3.75%.
• America’s labour market confounded expectations again, adding 272,000 jobs in May, far above analysts’ forecasts and the second-biggest monthly addition of employees to the payrolls this year. The annual inflation rate fell to 3.3%.

Road blocks

• The European Commission said it would impose additional tariffs on imports of Chinese electric vehicles, finding that they benefit from unfair state subsidies. It proposed extra duties of 17% on imports from BYD, 20% on Geely’s and 38% on SAlC’s, on top of the 10% tariff they are already subject to. The rates vary for other carmakers. Western firms that produce in China and export to the EU will also be taxed. America is imposing tariffs of 100%, but imports few Chinese EVs. The Chinese government reacted furiously to the EU’s decision, calling it “ill-informed and lawless”.
• A long-awaited secondary sale of shares by Saudi Aramco was completed. Saudi Arabia’s state oil company sold about $11bn-worth of shares, equivalent to a 0.64% stake, mostly to international investors.
• The International Energy Agency said that despite an expected slowdown in the growth of demand for oil over the coming years, global production was set to ramp up, leading to a “staggering” over-supply of 8m barrels a day by 2030. Most of the extra output will come from America, but countries such as Brazil and Guyana are also expanding production. The huge surplus of oil will cause prices to plunge, the agency said, further undermining OPEC’s ability to control the market.
• Elliott Management, an activist hedge fund, said it wanted a change ofleadership at Southwest Airlines, signalling a period of turbulence at the carrier. Elliott holds an 11% stake in Southwest, which has yet to see its reputation recover from an IT fiasco in late 2022 that caused it to cancel thousands of flights.
• Apple launched its much-anticipated new artificial-intelligence system. Apple Intelligence integrates the technology into its next operating system, iOS 18, allowing users to generate images and customise emojis. Apple emphasised the privacy aspects of its system, though concerns were raised about an arrangement that allows Apple’s services to tap into ChatGPT, OpenAl’s chatbot. The company’s share price reached a new high, which in turn helped the S&P500 and NASDAQ stock indices hit new records.
• Nvidia’s stock split came into effect, which also boosted markets. The Al-chipmaker gave its shareholders ten shares foreach one they held, a price dilution that makes them more attractive to small investors. Alphabet, Amazon and Apple have also split theirstock in recent years, but Microsoft hasn’t since 2003 and Meta never has.
• Elon Musk dropped his lawsuit against OpenAl, which alleged that its partnership with Microsoft broke a deal to make its Al free to the public. Mr Musk has had a stormy relationship with OpenAl since leaving its board in 2018 in a dispute.
• Underlining the mania for all things AI, Mistral, a French startup that is backed by Microsoft and Nvidia, was reportedly valued at €5.8bn ($6.4bn) after its latest round of fundraising, triple the amount it was valued at in December. Mistral was founded just a year ago, and has ambitions to challenge Al products provided by the likes of Google, Meta and OpenAl.

An appetite for Pi

• The share price of Raspberry Pi, a British maker of cheap single-board computers that grew out of a charitable foundation to promote the study of computing, rose by 38% on its first day of trading on the London Stock Exchange.
• Mike Lynch, the former chief executive of Autonomy, a British software firm, was found not guilty by a jury in San Francisco of criminal fraud in relation to Hewlett-Packard’s takeover of the company in 2011. American prosecutors had alleged that Mr Lynch inflated Autonomy’s revenues to seal the deal; Autonomy’s former chief financial officer had been found guilty on similar charges. Mr Lynch’s legal saga has not yet concluded. A British judge is still to decide what damages he must pay in a civil trial that found he was liable for fraud, a ruling that he may appeal against.

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