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The World
China’s population falls for first time in 6 decades: China’s population fell in 2022 for the first time in decades, a historic shift that is expected to have long-term consequences for the domestic and global economies. The world’s most populous country has long been a crucial source of labour and demand, fueling growth in China and the world. On Tuesday, the National Bureau of Statistics announced that the total population fell by 850,000 in 2022 to 1.41175bn, the first decline in 60 years. “This is a truly historic turning point, an onset of a long-term and irreversible population decline,” said Wang Feng, an expert on Chinese demographic change at the University of California, Irvine. (Financial Times)
Treasury Secretary Janet Yellen will meet with her Chinese counterpart, Vice Premier Liu He, in Switzerland on Wednesday to discuss economic developments between the two nations. The Zurich talks will be a follow-up to the November meeting between President Joe Biden and China’s Xi Jinping on the sidelines of the Group of 20 summit in Bali, Indonesia. The two world leaders agreed to empower key senior officials to maintain communication. Strains between the world’s two leading economies have been growing despite their trade ties. The Biden administration has blocked the sale of advanced computer chips to China and is considering a ban on investment in some Chinese tech companies, possibly undermining a key economic goal that Xi set for his country. Statements by the Democratic president that the U.S. will defend Taiwan against a Chinese invasion have increased tensions. (Associated Press)
What the end of the US shale revolution would mean for the world: Fracking catapulted America to the top of the energy hierarchy, but low yields and a lack of reinvestment threaten that position. There are scenarios where this might not matter: if China’s economy keeps sputtering and Russian oil exports remain robust, despite sanctions, then oil markets should be well supplied. And if an energy transition takes off quickly, the world may cope without fast-growing American oil supply. Indeed, some environmentalists will welcome slower fossil fuel growth from a major supplier. But the evidence that the world’s consumers are losing their thirst for oil is thin, despite some governments’ efforts to decarbonise their economies and lower emissions. (Financial Times)
Siemens has signed a 3 billion euro ($3.25 billion) contract to supply and service freight trains in India, the German engineering company said on Monday, the biggest locomotive deal in its history. Siemens will deliver 1,200 electric locomotives and provide servicing for 35 years under the agreement, also its biggest ever in India. The Siemens-designed, 9,000-horsepower trains with a top speed of 120 km (75 miles)/hr will be assembled in India over the next 11 years, with deliveries starting in 24 months. (Reuters)
Economic officials from the European Union offered a rosier vision for the bloc's economic future, with the latest data showing Europe may avoid a recession that had been predicted several months ago. EU Economic Commissioner Paolo Gentiloni said that although the bloc's economic situation "is still uncertain ... we had some encouraging news." "We managed to reduce our energy dependence, energy prices went down significantly and inflation peaked last year in Europe," Gentiloni said ahead of monthly talks with eurozone finance ministers in Brussels. "So, there is a chance to avoid a deep recession and maybe to enter a more limited, shallow contraction," he added. (Deutsche Welle)
Germany’s much-criticized defense minister announced her resignation following a series of missteps while her department steers the massive project of modernizing the country’s military and oversees expanding weapons deliveries to Ukraine. Christine Lambrecht said in a written statement that she had submitted her resignation to Chancellor Olaf Scholz, adding that “months of media focus on my person” had stood in the way of a factual debate about the military and Germany’s security policy. (Associated Press)
Rising levels of ill health in the UK is costing the economy £150bn a year: Lost income tax, benefit payments and bigger NHS budgets are taking a heavy toll on the public purse. (The Times)
Edelman Trust Barometer Says We Only Trust Business—And Democrats Trust It More Than GOP: The 2023 Edelman Trust Barometer reveals that business is now viewed as the only global institution to be both competent and ethical. Business now holds a staggering 53-point lead over government in competence and is 30 points ahead on ethics. Its treatment of workers during the pandemic and return to work, along with the swift and decisive action of over 1,000 businesses to exit Russia after its invasion of Ukraine helped fuel a 20-point jump on ethics over the past three years. Business (62 percent) remains the most and only trusted institution globally. This year's report finds that economic optimism has collapsed globally (50% to 40%), with half of the countries surveyed showing a year-over-year double-digit decline in the belief that their families will be better off in five years' time. Further, not one developed nation has over 36 percent of its people confident that their family will be better off in five years, and 24 of the 28 countries surveyed dropped to all-time lows in optimism including the U.S. (36%), the UK (23%), Germany (15%) and Japan (9%). (Forbes, Edleman)
Economy
China GDP: economy grew by 2.9 per cent in fourth quarter, 3 per cent in 2022 second-lowest since 1976. China’s economy grew by 2.9 per cent in the fourth quarter of 2022, compared with a year earlier, down from the 3.9 per cent growth seen in the third quarter. This brought the economic growth rate for 2022 to 3 per cent, below the ‘around 5.5 per cent’ target which had long been seen as unattainable due to the coronavirus. (South China Morning Post)
China resumed only 21% of stalled housing projects in 2022. (Nikkei Asia Review)
The world’s wealthiest residents have been getting far richer, far faster than everyone else over the past two years. The top 1% have captured nearly twice as much new wealth as the rest of the world during that period, according to Oxfam’s annual inequality report. Their fortune soared by $26 trillion, while the bottom 99% only saw their net worth rise by $16 trillion. And the wealth accumulation of the super-rich accelerated during the pandemic. Looking over the past decade, they netted just half of all the new wealth created, compared to two-thirds during the last few years. (CNN)
Worker pay increases fell behind inflation in 2022 for the second year in a row, leaving households worse off despite historically strong pay gains. But recent data suggest a shift is under way, with paycheck totals gaining ground as inflation eases. Whether the trend continues in 2023 depends on the path of the economy, which is cooling as the Federal Reserve raises interest rates and faces the risk of a recession. (Wall Street Journal)
Declining international cooperation and commerce could shrink the global economy, particularly harming low-income countries, the International Monetary Fund said in a new study. The report cited several ways that government policies are driving a reversal of global economic integration, such as by restrictions on trade, immigration and cross-border capital flows. The authors labeled this process geoeconomic fragmentation and warned it could lower global gross domestic product by up to 7% over an unspecified “long-term” period. (Wall Street Journal)
Singapore's new five-year visa program targeting elite talent will help the city-state lure foreign investment, a senior executive at the government's investment promotion agency said in a recent interview. This month, Singapore launched the Overseas Networks & Expertise Pass (ONE Pass) as part of a strategy to attract global professionals. It targets highly skilled individuals earning at least 30,000 Singapore dollars ($22,300) per month in various fields, such as finance, technology, academia, sports and the arts. Visa holders are allowed to work for multiple employers, offering more flexibility than other employment passes tied to a specific job. (Nikkei Asia Review)
Technology
Electric-vehicle sales crossed a global milestone last year, achieving around 10% market share for the first time, driven mainly by strong growth in China and Europe, according to fresh data and estimates. While EVs still make up a fraction of car sales in the U.S., their share of the total market is becoming substantial in Europe and China, and they are increasingly influencing the fortunes of the car market there as the technology goes mainstream. The surge in EV sales also contrasted with the broader car market that suffered from economic worries, inflation and production disruptions. (Wall Street Journal)
Microsoft Corp. said it will add OpenAI’s viral artificial intelligence bot ChatGPT to its cloud-based Azure service “soon,” building on an existing relationship between the two companies as Microsoft mulls taking a far larger stake in OpenAI. The software giant announced the broad availability of its Azure OpenAI Service, which has been available to a limited set of customers since it was unveiled in 2021. The service gives Microsoft's cloud customers access to various OpenAI tools like the GPT-3.5 language system that ChatGPT is based on, as well as the Dall-E model for generating images from text prompts, the company said in a blog post. That enables Azure customers to use the OpenAI products in their own applications running in the cloud. (Bloomberg)
Microsoft Corp. has invested in Asian human resources software company Darwinbox, as more corporate customers seek an edge in retaining talented workers. The US tech giant made an equity investment of an undisclosed size as an extension of Darwinbox’s Series D round that valued the company at more than $1 billion in early 2022, according to the startup’s statement Tuesday. As part of the deal, the two companies will work together to integrate the Darwinbox and Microsoft product ecosystems. (Bloomberg)
General Catalyst, Spark in Talks to Back OpenAI Rival (The Information)
Smart Links
Global air travel forecast to bounce back by mid-2023 as China reopens. (Financial Times)
Central-Bank Digital Currencies Are Coming—Whether Countries Are Ready or Not. (Wall Street Journal)
Where Internet Connection Costs More in the US. (CityLab)
Microsoft’s $10bn bet on ChatGPT developer marks new era of AI. (Financial Times)
England is banning the sale of some single-use plastics. (Engadget)
Canada Home Prices See Record Drop as High Rates Hit Buyers. (Bloomberg)