Monday, January 28, 2013

When two Russias emerge; One billion rising -- Like a feminist tsunami; Pakistan's other problem

1 When two Russias emerge (Denis Corboy in Khaleej Times) Two Russias are emerging — one seeking freedom and prosperity, the other focused on patriotism and populism. In the first, people can travel abroad, buy and sell their homes and keep money securely in banks. In the other Russia, President Vladimir Putin stifles dissent, alleges Nato missile defence threats, and seeks to ensnare former Soviet neighbours in an unequal Eurasian union. A new diplomacy that deals effectively with both Russias is essential. The first Russia is modernising. In 2011 it had the world’s sixth-largest economy by purchasing power parity. Gross national income per capita was approximately $20,000, akin to European Union members Poland and Hungary. Wealthier people often own foreign property or send children abroad for study.

In some areas Russia cooperates with the West. It facilitates supplies for Nato forces in Afghanistan, backs selected sanctions on Iran’s nuclear programme and launches rockets to the international space station. The second Russia is retrograde. It is returning to a more statist and authoritarian past, away from ideals of civil liberties and the rule of law. The Soviet Union is not about to reappear, but democracy-building groups are under assault, dissidents are thrown into psychiatric hospitals and justice is politically rigged. Russia ranks 142 out of 179 countries in the Press Freedom Index compiled by Reporters Without Borders.

Internationally, Russia struggles to retain its identity as a great power, even though it is being eclipsed by more dynamic areas of the world such as East Asia. But stubborn support for the Assad regime in Syria has tarnished the prestige of Russia, and intimidation of neighbours leaves it without friends or allies.
Retrograde Russia can be its own worst enemy. Dual track diplomacy, embodying pragmatic but principled approaches, would foster cooperation with Russia on common interests while lifting the spirits of those who seek democracy and respect for human rights.

2 One billion rising – Like a feminist tsunami (Jane Martinson in The Guardian) Since Eve Ensler launched the One Billion Rising campaign to end violence against women she has been repeatedly asked: is it a dance movement or overtly political? Just a few weeks before 14 February, the date that Ensler, activist and author of The Vagina Monologues, designated the "day to rise", she says: "I've never seen anything like it in my lifetime."

One in three women around the world are subject to violence at some point in their life, a statistic that prompted Ensler, who wrote the Monologues in 1996, to set up One Billion Rising. With such violence encompassing domestic abuse, gang rape, female genital mutilation and war, it is perhaps unsurprising that the campaign has taken on a different hue in each of the 190 countries where events to mark 14 February are planned. "It is something that has gone across class, social group and religion. It's like a huge feminist tsunami," she said in Paris.

Local protests range from the first ever flashmob in Mogadishu, Somalia, to the town square in Rothesay on the Isle of Bute and encompass Maori women in New Zealand and an estimated 25m protesters in Bangladesh. Ensler's idea for One Billion Rising came from her work in the Congo, where she set up the City of Joy to help female victims of violence and where she plans to be on 14 February itself, a day chosen partly to take back the idea of love from the soppy commercialism of Valentine's Day.

Ensler says a combination of social media and the world's grassroots feminist movements have driven the way the campaign has taken off globally. In south Asia for three weeks over Christmas, she was struck by how much the horror over the gang rape of the 23-year-old medical student Jyoti Singh in Delhi had given impetus to the campaign. "In India, One Billion Rising is at the centre of the biggest breakthrough in sexual violence ever seen," she says.

3 Pakistan’s other problem (Bruce Stokes on BBC) Pakistan is a country beset with political difficulties, but they could be of secondary importance to its economic woes. While much attention has been devoted to the dramatic Supreme Court move to order the arrest of Prime Minister Raja Pervez Ashraf on charges of corruption and recent large-scale protests led by populist cleric Tahirul Qadri to demand the resignation of the government ahead of elections due in May, the country's financial difficulties have been overlooked.

Likewise recent deadly militant bombings have also distracted attention, as have skirmishes with India on the Line of Control (LoC) that divides the disputed Kashmir region. These headline-grabbing events have not only served to obscure the profound economic challenges facing Pakistani society but in many cases have also nurtured and aggravated them.

The truth is that the Pakistani people are deeply troubled by the plight of their economy and their own economic prospects. With the government likely to ask the International Monetary Fund this year for a new aid package, the nation's economic plight may soon become topic number one in the global discussion about Pakistan's future. Economic growth over the past four years, after adjustment for inflation, averaged 2.9% annually, and is projected to be only 3.2% in 2012-13. That, says the IMF, is not sufficient to achieve significant improvement in living standards and to absorb the rising labour force.

Sunday, January 27, 2013

'Decisive two years' for bank reform; Exxon Mobil is most valuable company; Revolution hits universities

1 ‘Decisive two years’ for bank reform (BBC) The incoming governor of the Bank of England has said the next two years will be "decisive" for bank reform. Mark Carney, current governor of the Bank of Canada, said "shadow banking" and the issue of "too big to fail" would be tackled. The 2008 crisis would be repeated if unregulated financial activities - blamed for amplifying the meltdown - went unchallenged, he said.
He also warned that central banks alone could not eliminate "tail risks". He said that, contrary to some reports, tail risks - essentially worst-case scenarios - in Europe and the US remained. Shadow banks are companies that operate like banks but fall outside current oversight.

"The next two years will be decisive on ending 'too big to fail' [for banks] and addressing shadow banking and over-the-counter derivatives, that absolutely amplified the last crisis - and will do so again if we don't complete our agenda," he told an audience at the World Economic Forum in Davos.

2 Exxon Mobil is most valuable company (BBC) Apple has lost its crown as the world's most valuable publicly traded company after its shares continued to fall. Oil company Exxon Mobil has regained the top slot after Apple shares fell 2.4%, following a 12% drop on Thursday. Apple, which posted disappointing iPhone sales figures on Wednesday, has seen its shares fall 37% since their record high last September. Exxon became number one in 2005, traded places with Apple during 2011, and had been number two since early 2012.

At the close on Wall Street, Apple had a market value of $413bn, against Exxon's of $418bn. The tech giant has been hit by fears over its future growth, despite record profits. Apple is also facing fierce competition from rivals like Samsung, which accounted for one in four of all mobile phones shipped worldwide last year, according to Strategy Analytics.

Apple's share price rose sharply following a revival under Steve Jobs, who died in 2011, which came about first in computers and then the iPod music player, and was then followed by the iPhone and iPad. Apple's shares were worth as little as $3.19 in 1997 when it faced the possibility of bankruptcy, and reached a record $702.1 on 19 September.

3 Revolution hits universities (Thomas L Friedman in The New York Times) Lord knows there are a lot of bad news in the world today to get you down, but there is one big thing happening that leaves me incredibly hopeful about the future, and that is the budding revolution in global online higher education.

Nothing has more potential to enable us to re-imagine higher education than the massive open online course (MOOC) platforms that are being developed by the likes of Stanford and the Massachusetts Institute of Technology (MIT), and companies like Coursera and Udacity. Anant Agarwal, the former director of MIT's artificial intelligence lab, is now president of edX, a nonprofit MOOC that MIT and Harvard are jointly building. Agarwal told me that since May, some 155,000 students from around the world have taken edX's first course: an MIT intro class on circuits. "That is greater than the total number of MIT alumni in its 150-year history," he said.

I can see a day soon where you will create your own college degree by taking the best online courses from the best professors from around the world -- some computing from Stanford, some entrepreneurship from Wharton, some ethics from Brandeis, some literature from Edinburgh -- paying only the nominal fee for the certificates of completion. It will change teaching, learning and the pathway to employment.

Friday, January 25, 2013

Britain half way to triple-dip recession; Pentagon laying off 46,000 staff; Delhi: Sprawling and problematic

1 Britain half way to triple-dip recession (Phillip Inman in The Guardian) Britain is now halfway to an unprecedented triple-dip recession due to a stalled recovery in a manufacturing sector that was supposed to kickstart sustained growth in the aftermath of the credit crunch. Industrial production was growing strongly in 2011 but the government's aim of rebalancing the economy away from financial services and towards the manufacturing belt of the Midlands and north England appears to have foundered.

A fall in manufacturing output in the last three months of 2012 countered a small rise in construction between October and December to leave a 0.3% contraction in GDP, according to the Office for National Statistics (ONS). The economy achieved zero growth for the year as a whole as the services sector, which accounts for three-quarters of national output compared with manufacturing's 10%, also struggled to grow.

The decline was blamed on the recession in the eurozone, which has hit exports; bad weather, which hit shops and farmers; and a temporary drop in oil and gas output in the North Sea. However, Chris Williamson, chief economist at the financial data provider Markit, said the figures revealed a "broad-based weakness throughout the economy" and threatened Britain's AAA credit rating.

2 Pentagon laying off 46,000 staff (BBC) The US defence department says it has begun laying off most of its 46,000 temporary employees, as automatic defence budget cuts loom in March. Deputy Defence Secretary Ashton Carter said the Pentagon was acting "because we're running out of time" to absorb potential changes to their budget. $50bn in cuts are due this year under the so-called fiscal cliff.

Mr Carter also said the Pentagon could force its 800,000 civilian employees to lose one day of work per week without pay from April, in a move that would save $5bn. The Pentagon and other parts of the US government face across-the-board cuts on 1 March, with an estimated $500bn decrease in the defence budget over 10 years. The US defence department unveiled a strategy in early 2012 designed to accommodate at least $450bn in Pentagon cuts over the next decade, as the country winds down the Afghanistan war.

3 Delhi: Sprawling and problematic (Neeta Lal in Khaleej Times) Through its sheer design, Delhi discourages people on its streets, leading to greater possibilities of crime. On the contrary, research has proven that when a city designs its roads and public spaces using people (especially children and women pedestrians) as its pivots, crime automatically plummets.

What is required in Delhi therefore is not more development for vehicles but people. “A developed city,” goes a popular expression, “is not one where poor people own cars, but where rich people take public transport to work”. Amsterdam’s example is particularly illuminating here as even the Queen can be seen pedaling her bike on cycle tracks here! What Delhi needs is an ecosystem where more people feel encouraged to come onto the streets. Addressing Delhi’s structural problems is thus a critical component of making it a safe metropolis.

As India shifts from being a poor, mostly agrarian nation to an urban, wealthier and modern one, more and more women are migrating from towns to cities to pursue their academic or professional ambitions. India’s urban population is expected to ratchet up to 285 million in 2001 to 820 million by 2051. To cater to this exponentially growing demographic, Delhi will need a safe and world-class transport infrastructure. Though the Metro functions well, it makes for an expensive ride for the bourgeoisie. Taxis too, are pricey while auto rickshaws remain unreliable.

Such socio-economic dynamics have pushed an average Delhiite to board public buses, a distinctly unsafe option for women, especially at night. The neglect of non-motorized transport and an overt emphasis on high tech, expensive transport projects have thus contributed significantly to sexual crime in the city.

Given Delhi’s primacy, its infrastructure needs to be urgently reoriented to accommodate a robust public transport system and secure public spaces for its citizens. Challenging ossified mindsets, more and more Indian women are claiming the public space as equal citizens. Without facilitating safe mobility and a secure environment for them, Asia’s third largest economy may never to able to realize its true potential.

Thursday, January 24, 2013

Commerzbank plans 6,000 job cuts; Spain young jobless rate at 55%; China's influence in Africa; Common capital of India and Pakistan; Yes, paved yards are illegal

1 Commerzbank plans 6,000 job cuts (BBC) Germany's second-biggest lender Commerzbank is planning to cut as many as 6,000 jobs, or more than 10% of its workforce. The bank said it wants to cut between 4,000 and 6,000 full-time employees by 2016. Commerzbank currently employs 56,000 staff, of which 49,000 are full-time. The bank said it was planning to invest more than 2bn euros ($2.7bn) as it overhauls its retail banking. 

In June, Commerzbank was downgraded by ratings agency Moody's. In addition to having its rating cut, Commerzbank was placed on negative outlook, meaning Moody's is considering a further cut. The agency said that was because of the bank's exposure to the eurozone periphery, as well as its concentration of loans to single sectors and borrowers.

2 Spain young jobless rate at 55% (BBC) Spain's unemployment rate has hit a modern day record, and joblessness among young people has topped 55%.Official data showed that the jobless rate in the last three months of 2012 rose 1% to 26%, or 5.97 million people. The figure, the highest since the mid-1970s, follows Spain's prolonged recession and deep spending cuts.

The impact has been acute for 16 to 24-year-olds, who saw the rate in the last quarter of 2012 surge to 55.13% from 52.34% in the previous three months. Spain's economy sank into recession after its property crash left millions of low-skilled workers without a job, and general economic decline eroded business and consumer confidence. "We haven't seen the bottom yet and employment will continue falling in the first quarter," said Jose Luis Martinez, strategist at investment bank Citigroup.

Eurostat, the EU's statistics body, estimates that last November there were 5.8 million people (23.7%) aged under 25 unemployed in the 27 countries, of whom 3.73 million (24.4%) were in the eurozone area. For last November, the lowest rates were in Germany (8%), Austria (9%) and the Netherlands (9.7 %), and the highest was in Greece 57.6 % (September 2012 figure) and Spain (56.5%). However, many economists have wondered if the jobless data exaggerates the problem. Jobless numbers include economically inactive people, including young people who are in education.

3 China’s influence in Africa (Jonathan Power in Khaleej Times) Chinese small time traders are to be found in many African countries, often causing resentment as they cut prices and expand businesses at the locals’ expense.  In Zambia there were violent riots at a Chinese-owned copper mine over working conditions and pay. In Nigeria their activities have led to the collapse of the textile industry.

In Tanzania, where imports from China have been about 15% of its total, Tanzanians complain about the growing number of cheap and counterfeit products. But at the same time China’s Export Import Bank signed concessional loans for Tanzania to support the country’s broadband structure and to upgrade Zanzibar’s airport terminal.

China’s purchase of raw materials has become an important export for many countries. China-African trade now accounts for 14% of Africa’s trade and 4% of China’s. It is almost entirely raw materials to feed China’s booming manufacturing- mineral products, in particular iron ore, copper and platinum, base metals, oil, precious stones and wood products. China will be an important part of Africa’s future. Undoubtedly the relationship will broaden and deepen. Other investors in the West, India and the Arab world will have a hard job keeping up with it.

4 Common capital of India and Pakistan (Khuda Bux Abro in Dawn) On one hand, both countries are atomic powers. On the other hand, they have no electricity, water, gas or petrol. We line up for CNG and other fuels; there is no electricity neither here nor there. We say it’s ‘loadshedding’ and they call it ‘katoti’. At night, their footpaths are full of sleeping, homeless people. A similar sight can be seen on our roads at night. We have katchi abadis and they have slums. Piles of rubbish litter our streets and theirs. There are armies of beggar children on both sides of the wall. But we still stand amongst the developed nations with our heads held high, saying that we are atomic powers. They stand in dhotis and we in old, torn shalwars.

The world is getting closer everyday and you are adamant on not saying hello to your neighbour. Our children would like to benefit from each other’s developments. They wish to study and learn from each other’s teachers. The fearful atmosphere spread by our leaders has greatly harmed our previous generations. For goodness sake, let the new generations familiarise themselves with their culture, traditions, art and literature. The entire world is coming closer but we are being kept apart from each other every single day.

Why are we forbidden from knowing about ourselves? Why we are not allowed to look into the mirror? We are supposed to be each other’s reflection. Why are we being forced to look into opposing directions? Who has ever been saved by weapons? Only love can save us! Please cut the crop that you have been cultivating for the last 65 years. And just let us be.

5 Chinese grads say no to factory jobs (Keith Bradsher in The New York Times) A national survey of urban residents, released this winter by a Chinese university, showed that among people in their early 20s, those with a college degree were four times as likely to be unemployed as those with only an elementary school education. It is a problem that Chinese officials are acutely aware of.

China’s swift expansion in education over the last decade, including a quadrupling of the number of college graduates each year, has created millions of engineers and scientists. The best can have their pick of jobs at Chinese companies that are aiming to become even more competitive globally.  But China is also churning out millions of graduates with few marketable skills, coupled with a conviction that they are entitled to office jobs with respectable salaries.

China now has 11 times as many college students as it did at the time of the Tiananmen Square protests in the spring of 1989, and an economy that has been very slow to produce white-collar jobs. The younger generation has shown less interest in political activism, although that could change if the growing numbers of graduates cannot find satisfying work. Prime Minister Wen Jiabao acknowledged last March that only 78% of the previous year’s college graduates had found jobs. But even that figure may overstate employment for the young and educated.

6 Yes, paved yards are illegal (Ellen Huet in San Francisco Chronicle) In San Francisco's Outer Sunset neighborhood, the sidewalks stretch a dozen feet wide, thanks to residents who have paved over their entire front yards - and city agencies that do little to cite them, though the practice has been outlawed since 2002. "It's illegal to pave over your yard, but it's pretty widely ignored, and people do it with impunity," said Jonathan Frank, 56, a retired teacher who has lived on 33rd Avenue for 10 years. "The two main reasons are that they want an extra parking spot, and it's a pain to take care of the garden area."

Under city law, at least 20% of a front yard must consist of permeable surfaces with vegetation, mostly to allow for proper drainage and to keep the neighborhood looking green. Homes can be reviewed for compliance every time an owner does construction on the driveway or property.
The Board of Supervisors passed the ordinance in 2002, but the law didn't have much bite until 2008, when lawmakers gave the city the power to fine homeowners $500 if they ignored a 90-day warning to add greenery. But even that wasn't enough to break up the concrete - many residents thought that if they paid the fines, they could keep their front yards as is.

Wednesday, January 23, 2013

India minister to Europe: Get your act together; IMF sees global recovery 'weakening'; Competitors at Apple's heels; Share of US workers in union at 97-year low; Lloyds job cuts reach 38,000

1 India minister to Europe: Get your act together (Natasha Brereton-Fukui & PR Venkat in The Wall Street Journal) India's finance minister criticized euro-zone members for not being on the same page on tackling the region's debt crisis, saying that they need to "get their act together" to stop inflicting pain on the world. The euro-zone countries should move fast "because the world's economy is dependent to a large degree on the health of the European and US economies," P. Chidambaram told The Wall Street Journal.

Each euro-zone country should follow the US' lead and deal with its issues "seriously," Mr. Chidambaram stressed in an interview on the Singapore leg of a roadshow to raise investment interest in India. Asked whether he sees a risk of the euro-zone crisis flaring up again this year, he said: "I hope not. If there is a deterioration this year like last year, it will cause immense pain to a large number of countries, including developing countries." His interest in Europe comes partly because the region accounts for 18.69% of India's total exports.

The global economic crisis has hit India hard, with economic growth slowing to its worst in nearly a decade and exports of goods and services to Europe and the US slipping sharply and adding to the country's trade deficit. Latest government figures show that exports to Europe in the April-November period of 2012 fell 10.5% to $34.9 billion from $38.8 billion a year earlier.

2 IMF sees global recovery ‘weakening’ (BBC) The International Monetary Fund has warned again of a weakening global economic recovery despite government efforts to stimulate growth. The global economy is likely to grow at a slower rate than previously forecast over the next two years, the organisation said in its latest report. It said it now expected the eurozone to remain in recession in 2013, having previously predicted growth. 

The UK's growth forecasts have also been revised down. The IMF said continued problems in the eurozone were weighing on the global economy. "The euro area continues to pose a large downside risk to the global outlook," the IMF report said.  "In particular, risks of prolonged stagnation in the euro area as a whole will rise if the momentum for reform is not maintained." The eurozone's economy is now forecast to shrink by 0.1% this year. Just three months ago the IMF had forecast 0.2% growth. 

3 Competitors at Apple’s heels (Caleb Garling in San Francisco Chronicle) Competitors like Samsung and Google are fighting - with success - to dislodge Apple as the mobile device king. Since 2003, Apple's profit has jumped more than 10% in all quarters except one. Yet an analysis by Bloomberg estimates that the company's net income for the latest quarter will fall 2% to $12.8 billion ($13.48 per share). Apple has exceeded analysts' estimates for earnings in all but three quarters since 2006.

Research firm IDC noted that in the third quarter of 2012, Samsung accounted for 21.8% of "connected" devices - phones, tablets, PCs - compared with Apple's 15.1%. In 2011, the two companies were tied at about 15%. Lenovo, HP and Sony rounded out the list of rivals in the space. While Apple depends on revenue from the sale of Macbooks, iMacs, iPods and iPads, iPhones are the heart of the company's business. In the final quarter of its fiscal year, the company sold 26.9 million iPhones, accounting for roughly half its revenue. But since the release of the iPhone five years ago, competitors have crowded the mobile market. 

Analysts have begun to worry that Apple has lost that innovative flair and been content to sit on its laurels. "Far more concerning is the company's uninspired business model," said Jeff Macke, an analyst. "Making the same basic product in different sizes and colors isn't new." Apple's global share of the tablet market will slip to 53.8% in 2012, down from 56.3% in 2011, according to December data from IDC, and Android products will grow to 42.7% from 39.8%.

4 Share of US workers in union at 97-year low (Steven Greenhouse in The New York Times) The Bureau of Labor Statistics said the total number of union members fell by 400,000 last year, to 14.3 million, even though the nation’s overall employment rose by 2.4 million. The percentage of workers in unions fell to 11.3%, down from 11.8% in 2011, the bureau found in its annual report on union membership. That brought unionization to its lowest level since 1916, when it was 11.2%, according to a study by two Rutgers economists, Leo Troy and Neil Sheflin.

Labor specialists cited several reasons for the steep one-year decline in union membership. Among the factors were new laws that rolled back the power of unions in Wisconsin, Indiana and other states, the continued expansion by manufacturers like Boeing and Volkswagen in nonunion states and the growth of sectors like retail and restaurants, where unions have little presence.

“These numbers are very discouraging for labor unions,” said Gary N. Chaison, a professor of industrial relations at Clark University in Worcester, Mass. “It’s a time for unions to stop being clever about excuses for why membership is declining, and it’s time to figure out how to devise appeals to the workers out there.”

The figures announced by the bureau point to grave problems for the future of organized labor. The portion of private sector workers in unions fell to just 6.6% last year, from 6.9% in 2011, causing some labor specialists to question whether private sector unions were sinking toward irrelevance. Private sector union membership peaked at around 35% in the 1950s. The report showed particular drops in union membership in two groups where unions have long been strong: local government employees and manufacturing workers.

5 Lloyds job cuts reach 38,000 (Jill Treanor in The Guardian) The job toll at Lloyds Banking Group since the rescue of HBOS has reached 38,000 after another 940 cuts were announced. "This is a bleak start to the year for hard-working Lloyds employees and bad news for the UK economy on a day when the small fall in the numbers unemployed was supposed to be good news," Ged Nichols, general secretary of the Accord union, said.

The bailed out bank said the latest cuts would take place across the group in operations as diverse as insurance, retail, wealth, international and commercial, with the highest concentration in Scotland where 230 roles will be lost. Nichols was also angry that 200 positions were being taken offshore to India, and said the bank should "think of the public interest" before taking such decisions. Barclays is also moving roles to India as part of the restructuring of its investment bank.

Tuesday, January 22, 2013

CEOs 'see no growth' in 2013; UK's AAA rating under threat; China's flagging future; Gangnam Style earns $8m for YouTube

1 Business leaders ‘see no growth’ in 2013 (BBC) More than half of chief executives in a new survey have predicted the global economy will continue on its current path of minimal growth in 2013. In PwC's annual global CEO survey, 52% predicted no change, 28% foresaw further decline and 18% expected an improvement. It is still an improvement from last year when 48% predicted a decline. The research came from interviews conducted with 1,330 chief executives in 68 countries. It was released at the start of the World Economic Forum in the Swiss ski resort of Davos. 

"Chief executives believe that we are in for another year with a global economy that is reluctant to recover," Dennis Nally, chief executive of PwC International, said at the launch. "Risks that were once viewed as improbable are now the norm." The business leaders were more upbeat about the growth of their own companies, with 36% of them very confident about growth prospects in 2013. 
 But that was down from 40% at the same time last year. They were also asked what issues worried them the most and top of the list was uncertainty about growth, which 81% of them cited.

2 UK’s AAA rating under threat (Phillip Inman in The Guardian) Britain's coveted AAA credit status came under renewed pressure after official figures pointed to higher than expected public sector debts last month. The government borrowed an extra £15.4bn in December, higher than forecast by most analysts and, with three months still to go, almost hitting the total forecast for the full financial year. 

Unless there is a large jump in tax receipts in January, credit ratings agencies are expected to take a pessimistic view of the UK's public finances and downgrade its credit status. James Knightley, an analyst at ING, said there was little to please the Treasury after borrowing figures of £15.2bn in December, against £14.8bn in the same period last year, according to the Office for National Statistics. Knightley said the UK's triple-A rating was under pressure and was likely to follow the US and France, which have already been downgraded.

"At first glance the cumulative budget deficit for the financial year to date appears to have shown a decent improvement this year – £78.5bn versus £99.3bn for the same period in full year 2011/12," he said. Knightley emphasised that the government's problems centred on a dearth of tax receipts rather than an explosion in spending.

3 China’s flagging future (Zhang Monan in Khaleej Times) China’s economy is at a crossroads. As 2013 begins, foreign and domestic observers alike are asking which path the country’s economic development should take in the next decade. How can China ensure stable and sustainable growth in the face of significant internal and external challenges, including slowing medium and long-term growth, rising labour costs, and growing inflationary pressure?

On average, China’s industrial enterprises are relatively small, and, although its industrial labour productivity (real manufacturing value added per employee) has improved over the last decade, it remains much lower than that of developed countries – just 4.4% of America’s and Japan’s productivity, and 5.6% of Germany’s. And the “pauperisation” phenomenon — in which companies must adjust their commercial strategies to cope with an impoverished consumer base — is increasingly affecting traditional industries, further undermining China’s capacity for sustainable development.

While manufacturing wages remain significantly lower in China than in the US, the rapidly narrowing gap is already fueling American reshoring. Given that Chinese wages are rising at an annual rate of 15-20%, productivity-adjusted wage rates in low-cost US states are expected to exceed those in some coastal regions of China by only 40% in 2015. Add to that reduced energy costs in the US, owing to the country’s shale-gas revolution, as well as the global supply chain’s complexity, and China’s cost advantages will soon be negligible. Although the enormous potential of China’s consumer market can provide a new impetus for economic growth, the country’s economic transformation cannot succeed unless it upgrades its manufacturing sector.

Only by combining growing Chinese consumption with enhanced Chinese manufacturing will the country be able to develop a new comparative advantage, which is the key to sustainable growth over the next decade.

4 Gangnam Style earns $8m for YouTube (Straits Times) Google said the YouTube page showcasing the Gangnam Style video by South Korean rapper Psy has reaped more than $8 million in ad revenue. Google Chief Business Officer Nikesh Arora revealed the figure while discussing the money-making potential of YouTube during a quarterly earnings call with financial analysts.

Ad revenue from popular YouTube videos is shared with creators of the content. In December, Gangnam Style became the first video to break a billion views on YouTube, marking a historic milestone on the Internet.