Business review from the Economist
U.S., China take first step to end trade war
The “phase one” deal suspending trade hostilities between the United States and China was signed in Washington. The agreement commits China to buy more American agricultural goods, among other things, in exchange for the U.S. withholding further tariffs. Most of the penalties that both sides have imposed on each other remain in place. Data this week showed that China’s global exports grew by 0.5% in dollar terms last year, the weakest rate in three years. Its exports to the U.S. fell by 12.5%. In another gesture that eases tensions, the U.S. said China was no longer a currency manipulator, having placed the People’s Republic on its list in August. Since then China has held back from devaluing the yuan in order to gain a trade advantage, according to the Treasury.
ZTE, a Chinese maker of telecommunications equipment, launched a private-share offering to raise $1.7 billion that it will put toward R&D in 5G networks. Like Huawei, a bigger rival, ZTE has faced a ban on working in 5G in America over security issues, but that hasn’t stopped it from expanding in other markets.
Car sales in China fell by 8% last year to 26 million vehicles. That followed a 3% drop in 2018, which was the first decline in decades. Even sales of electric and other new-energy vehicles went into reverse, after the government cut subsidies.
Aston Martin’s share price retained most of the gains it made after reports emerged that Geely, a Chinese carmaker that owns the Lotus and Volvo businesses, was interested in buying a stake. The British producer of sports cars, featured in many a James Bond film, recently issued a surprise profit warning and said it was talking to potential investors.
Global trade tensions were in part to blame for Germany’s economy expanding by just 0.6% last year, the slowest pace since 2013 and below the 1.5% it chalked up in 2018. The export industry remains subdued.
BlackRock announced that it would put climate change and sustainability at the heart of its strategy, doubling the number of green funds it invests in and curtailing its investments in coal companies. As the world’s biggest fund manager overseeing $7 trillion in assets, BlackRock has come under pressure from environmentalists to divest from fossil fuel. Larry Fink, the chief executive, said that climate change is now a “defining factor” in business prospects that will also fundamentally reshape the finance industry.
The British government cobbled together a rescue plan for Flybe, an airline that provides services to Britain’s smaller regional airports. The bailout, which includes deferring the loss-making company’s tax bill, provoked fury from other airlines. Willie Walsh, the outgoing boss of the group that owns British Airways, described it as “a blatant misuse of public funds” and filed a complaint with the E.U.
Buffeted by the grounding of its 737 MAX airliner, Boeing confirmed that last year had been its worst for orders and deliveries in more than a decade. The aerospace company delivered just 380 aircraft in 2019, compared with 806 the previous year.
Global politics from the Economist
Iran takes blame in air crash that killed 176
After three days of covering up the cause of the crash of a Ukrainian airliner near Tehran, the Iranian armed forces admitted that they mistook the plane for an incoming missile and shot it down, killing all 176 people on board. Thousands of Iranians demonstrated against the government’s handling of the accident. President Hassan Rouhani, who said he was also lied to, called for a full investigation.
Britain, France and Germany triggered the dispute mechanism in a deal that is meant to curb Iran’s nuclear program. The move was prompted by Iran’s gradual lifting of limits on its production of enriched uranium, which can be used to make energy or a bomb. Britain’s prime minister, Boris Johnson, called for a new “Trump deal” to replace the old agreement. Rouhani dismissed this.
Talks in Moscow over Libya broke down when Khalifa Haftar left without signing a cease-fire agreement. His forces are at the gates of Tripoli, seat of the internationally recognized government.
In Sudan, former intelligence officers clashed with troops on the streets of Khartoum, briefly shutting the airport. It was the biggest display of force from those still loyal to Omar al-Bashir since his ousting as president last year.
Voters in Taiwan re-elected Tsai Ing-wen as president and her Democratic Progressive Party also retained control of the legislature. The landslide victory was seen as a rebuff to China’s intensifying efforts to isolate and intimidate Taiwan.