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      China Sets Economic Growth Target of About 5%

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      Premier Li Qiang targets growth of about 5 percent this year but signals continued reluctance to use deficit spending for economic stimulus.China’s top leaders on Tuesday set an ambitious target for economic growth but they signaled only modest stimulus measures, not the aggressive support for China’s domestic economy that many analysts believe is necessary to halt a steep slide in the housing market and ease consumer malaise and investor wariness.Premier Li Qiang, the country’s No. 2 official after Xi Jinping, said in his report to the annual session of the legislature that the government would seek economic growth of “around 5 percent.” That is the same target that China’s leadership set for last year, when official statistics ended up showing that the country’s gross domestic product grew 5.2 percent.The country’s program for state spending showed little change. Mr. Li said that the central government’s deficit would be set at 3 percent of economic output, but that the government was ready to issue another $140 billion worth of bonds to pay for unspecified projects of national importance. The more the government borrows, the more it can spend on initiatives that could boost the economy.China had also set the deficit at 3 percent early last year, before raising it in October to 3.8 percent when the government approved $140 billion in additional bonds to pay for disaster relief and prevention measures after severe summer flooding.Conspicuously missing from the premier’s agenda for this year was a move to shore up the country’s social safety net or introduce other policies, like vouchers or coupons, that would directly address Chinese consumers’ very weak confidence and unwillingness to spend money.“There’s a lot of positive noises for the economy, but not a lot of concrete proposals for how to resolve the country’s growth difficulties,” said Neil Thomas, a fellow at the Center for China Analysis of the Asia Society.

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      China consumer confidence index
      Source: China National Bureau of StatisticsBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      The Squeeze on British Businesses Is Not Letting Up Soon

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      Company insolvencies hit a three-decade high, with businesses under pressure from high debts, prices and interest rates. The Bank of England held rates steady on Thursday.Britain’s economy faces a bracing fact: The number of companies that folded last year was the highest in three decades.More than 25,000 companies registered as insolvent in 2023, the most since 1993, according to government data published this week. As pandemic-related support measures for businesses ended, the wreckage from years of high debt and interest rates, soaring prices and a cost-of-living crisis become clearer. Insolvencies have spread from small to larger businesses, analysts said.Businesses still dealing with relatively high costs, demands for higher wages, supply chain uncertainties and wavering consumer confidence are hoping for brighter economic times. Slower inflation, stronger growth and cuts to interest rates are expected to come this year, but not soon.On Thursday, the Bank of England held interest rates at 5.25 percent, the highest since 2008, and where they have remained since August, after rising from just above zero in a series of increases over a year and a half.Policymakers said inflation had declined, including wage growth and services inflation, but some measures of persistence remained “elevated.” Two members of the nine-person rate-setting committee voted for a quarter-point rate increase, while one voted for the first time to cut rates.There has been good news on inflation, “but we have to be more confident that inflation will fall all the way back to the 2 percent target and stay there,” Andrew Bailey, the governor of the bank, said on Thursday. “We are not yet at a point where we can lower interest rates.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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      Real Estate Giant China Evergrande Will Be Liquidated

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      After multiple delays and even a few faint glimmers of hope, a Hong Kong court has sounded the death knell for what was once China’s biggest real estate firm.Months after China Evergrande ran out of cash and defaulted in 2021, investors around the world scooped up the property developer’s discounted I.O.U.’s, betting that the Chinese government would eventually step in to bail it out.On Monday it became clear just how misguided that bet was. After two years in limbo, Evergrande was ordered by a court in Hong Kong to liquidate, a move that will set off a race by lawyers to find and grab anything belonging to Evergrande that can be sold.The order is also likely to send shock waves through financial markets that are already skittish about China’s economy.Evergrande is a real estate developer with more than $300 billion in debt, sitting in the middle of the world’s biggest housing crisis. There isn’t much left in its sprawling empire that is worth much. And even those assets may be off limits because property in China has become intertwined with politics.Evergrande, as well as other developers, overbuilt and over promised, taking money for apartments that had not been built and leaving hundreds of thousands of home buyers waiting on their apartments. Now that dozens of these companies have defaulted, the government is frantically trying to force them to finish the apartments, putting everyone in a difficult position because contractors and builders have not been paid for years.What happens next in the unwinding of Evergrande will test the belief long held by foreign investors that China will treat them fairly. The outcome could help spur or further tamp down the flow of money into Chinese markets when global confidence in China is already shaken.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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      When Will the European Central Bank Start Cutting Rates?

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      Interest rate cuts could start as soon as April, investors say. But the eurozone’s central bank, which held rates steady on Thursday, has said it will probably wait longer.If what goes up must come down, then the urgent question on the minds of many in Europe is when will interest rates begin dropping? For months, rates have been set at the highest in the European Central Bank’s history.Despite the protests of the eurozone’s policymakers, investors have been betting that the central bank will cut rates quite soon — possibly in April. Traders figure rates must come down because inflation has slowed notably — it’s been below 3 percent since October — and the region’s economy is weak. By the end of year, the central bank will have cut rates by more than 1 percentage point, or between five and six quarter-point cuts, trading in financial markets implied.Policymakers, however, are trying to pull market opinion in the other direction and delay the expectations of rate cuts. Many of the central bank’s Governing Council are wary of declaring victory over inflation too soon, lest it settle above the bank’s target of 2 percent.On Thursday, the European Central Bank stuck to this outlook. It held interest rates steady, leaving the deposit rate at 4 percent, where it has been since September. The bank said rates were at levels that, “maintained for a sufficiently long duration, will make a substantial contribution” toward returning inflation to 2 percent in a “timely manner.”Benchmark interest rate in the eurozoneEuropean Central Bank’s deposit facility rate.

      Source: European Central BankBy The New York TimesInflation in the eurozoneYear-over-year change in consumer prices in the eurozone.

      Source: EurostatBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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      Why Americans Are Feeling Better About the Economy

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      In 2022, Republicans seemed to have an easy path to regaining the White House, no actual policy proposals required. All they had to do was contrast Donald Trump’s economic record — which they portrayed as stellar — with the lousy economy under President Biden.That rosy view of the Trump economy involved a lot of selective forgetting — more about that in a minute. But the Biden economy was indeed troubled for much of 2022, with the highest inflation in 40 years. Jobs were plentiful, with unemployment near a 50-year low, but many economists were predicting an imminent recession.Since then, however, two terrible things have happened — terrible, that is, from the point of view of Republican partisans. First, the economy has healed: Inflation has plunged without any major rise in unemployment. Second, Americans finally seem to be noticing the good news.Before I get to that, however, let’s talk for a second about Biden’s predecessor. How can people claim that Trump presided over a great economy when he was the first president since Herbert Hoover to leave the White House with fewer Americans employed than when he arrived?We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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      Brainard Pitches Biden’s Economic Efforts In Hard-Hit Regions

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      Lael Brainard, the National Economic Council director, contends the administration deserves credit for recent gains in areas battered by past job losses.President Biden’s top economic adviser will argue on Monday that the administration is engineering a revival of economically disadvantaged communities across the nation, largely relying on anecdotal evidence and patterns of new federal spending in places like Eastern Pennsylvania and Milwaukee, Wis.Lael Brainard, who heads Mr. Biden’s National Economic Council, will use a speech to the Brookings Institution in Washington to lay out a detailed blueprint of the administration’s efforts to bring jobs, investment and innovation to areas hobbled by the loss of jobs and industries.Those “place-based” policies are often directed at former industrial strongholds that were battered by automation and foreign competition. They are a cornerstone of Mr. Biden’s economic agenda across several major pieces of legislation he has signed and a big part of his re-election pitch. Whether voters perceive them as successful could affect Mr. Biden’s chances in November, particularly in industrial swing states like Pennsylvania and Wisconsin.Mr. Biden “came to office determined to invest in all of America, to leave no community behind. It is working,” Ms. Brainard plans to say, according to a copy of her prepared remarks. “Communities that had been left behind are making a comeback.”Place-based efforts were included in several laws that Mr. Biden signed, including those aimed at infrastructure, climate change and clean-energy production and semiconductors and other advanced manufacturing, all of which Ms. Brainard plans to spotlight on Monday afternoon. The Commerce and Transportation Departments have launched pilot programs to support neighborhoods that have historically been cut off from opportunity.Ms. Brainard will make case studies of two areas in particular: Allentown, Pa., and Milwaukee, both of which Mr. Biden visited recently.After his Allentown visit, Mr. Biden told reporters that he was “really reassured that what we’ve done has had an impact not just here in Eastern Pennsylvania and — but — in the Northeast, but throughout the country. And we’re going to do more.”Ms. Brainard does not plan to offer comprehensive national statistics to support the administration’s revival claims, other than a Treasury Department analysis that finds low-emission energy investments spurred by Mr. Biden’s climate law have disproportionately boosted lower-income areas and communities that have been historically reliant on fossil fuels. Ms. Brainard will say that the Allentown area, for example, has experienced a “boom” in job creation and small business formation under Mr. Biden, after listing investments the administration has steered to the region’s roads, airports and more. But she does not explicitly link that spending and those trends.Administration officials acknowledge that many of Mr. Biden’s programs to help hard-hit communities are still in their infancy, and that it may be difficult to assess their effects yet. But Ms. Brainard, in an interview ahead of the speech, said it was fair for Mr. Biden to claim credit for gains in areas like Allentown and Milwaukee.“In many left-behind communities, unemployment rates have been well above the national average for years,” she said. “And what you’re seeing in those communities now is that unemployment rates have actually moved down below 4 percent, which are, in some cases, a level they haven’t seen in a very long time.”The unemployment rate in the Allentown area was 3.9 percent in November, according to the Labor Department. That’s down from nearly 9.5 percent after the 2008 financial crisis and 4.2 percent on the eve of the pandemic in February 2020, when Donald J. Trump was president. In November, unemployment was 3.1 percent in the Milwaukee area, the same rate as it was in February 2020, and down from 10 percent after the 2008 recession.Mr. Trump has long promised on the campaign trail and in the White House to revitalize hard-hit American communities. He is making similar promises as he attempts to defeat Mr. Biden this fall, a counterpoint that looms over the president’s place-based effort.While Ms. Brainard will not mention Mr. Trump by name, she plans to cast Mr. Biden’s place-based policies as the antidote to what the administration calls the failed promises of “trickle-down economics,” including those practiced by the previous administration. That term has long been associated with Republican tax policies. By cutting rates on high earners and corporations, conservative economists have long contended, policymakers would stoke fast economic growth that would lift incomes for all workers.The Biden administration has attempted to broaden that trickle-down phrase to include the outsourcing of jobs and factories to foreign shores.Mr. Trump’s signature 2017 tax-cut law included deep cuts to corporate and individual tax rates, but it also featured a place-based program: a tax-based incentive called Opportunity Zones that sought to entice investors to put money into designated lower-income areas. The program has continued under Mr. Biden, even as his aides have debated whether to attempt to change it. Asked whether the administration judged that program to be succeeding, Ms. Brainard did not answer directly.“I’ve been very focused on making sure the president’s policies are implemented and are having the effect of lifting up these communities,” Ms. Brainard said. “That’s been my focus.” More

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      At Davos, War Is on the Agenda, but the Focus Is on A.I. and Elections

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      The leaders and executives gathering at the World Economic Forum are obsessed with elections and artificial intelligence, not Ukraine or Gaza.Each day this week has brought a new and fleeting reminder to the executives and politicians at the annual World Economic Forum meeting of the two wars threatening global security and clouding the economy. Ukraine’s president spoke on Tuesday. Israel’s spoke on Thursday.Neither was able to hold the collective attention of a gathering that this year has focused overwhelmingly on artificial intelligence and populist politics.Gaza and Ukraine have made daily appearances on the public agenda in Davos, along with climate change and economic inequality. But in the warm halls and slushy streets around town, conversations almost inevitably turn to the two accelerating trends that are destabilizing business models and democracies.Everyone wants to talk about how A.I. and this year’s elections, especially in the United States, could shake up the world. The Russian invasion of Ukraine, the Oct. 7 attacks on Israel led by Hamas or the ensuing Israeli bombing of Gaza? Drowned out in comparison.“No one is talking about Israel,” said Rachel Goldberg, who came to Davos to urge action to free the more than 100 hostages who were taken on Oct. 7 and continue to be held by Hamas, including her 23-year-old son, Hersh.In an interview on Wednesday, Ms. Goldberg said she was not surprised the war had taken a back seat here. “I think it’s complicated,” she said. “And I think it’s very polarizing.”Davos is many things layered on top of one another. It is a font of wealthy idealism, where the phrase “committed to improving the state of the world” frequently adorns the walls of the main meeting center.The forum is a networking event where chief executives, world leaders, celebrities, philanthropists and journalists speed-date through half-hour coffee meetings. It is a trade show for big ideas, with overlapping panel discussions on topics including gender equity, media misinformation and the transition to green energy.It is also a venue for top government officials to speak on grave issues, including war. That is where much of the Gaza and Ukraine discussion played out this week.President Volodymyr Zelensky of Ukraine and Klaus Schwab, the founder and executive chairman of the World Economic Forum, meeting on Tuesday.Laurent Gillieron/Keystone, via Associated PressPresident Volodymyr Zelensky of Ukraine called for international aid — but not more weapons — in a packed-house address on Tuesday to hundreds of people. He also took questions from reporters afterward.Without more assistance from the United States and others, Mr. Zelensky said, “a huge crisis will happen.” He added: “We have a war now, and we will have a huge crisis — a crisis for the whole of Europe.”Several leaders spoke about Gaza and the broader conflict it has spawned in the Middle East, though typically to smaller crowds. In a room of about 60 attendees on Wednesday, Mohammad Mustafa, the chairman of Palestine Investment Fund and the former deputy prime minister of Palestine, called for additional international aid for the people in Gaza and for an end to the war.“The military action has got to stop very quickly,” Mr. Mustafa said. “There is no need for anyone to build their political careers at the expense of more Palestinian people.”Hossein Amir Abdollahian, the foreign minister of Iran, blamed Israel for raising tensions in the Middle East in the past several months. “If the genocide in Gaza stops, then it will lead to the end of the other crises and attacks in the region,” he said.In his Thursday speech, President Isaac Herzog of Israel called Iran the center of an “empire of evil” destabilizing the Middle East and displayed a photograph of Kfir Bibas, a 1-year-old hostage being held in Gaza. “We have a very cruel, sadistic enemy who has taken a decision to try to torture the Israeli national psyche as well as the hostages themselves,” Mr. Herzog said.But those speeches rarely dominated the conversations on the sidelines of the event, at the nightly private dinners after the day’s agenda concluded or in most of the storefronts that large corporations paid to transform into branded event spaces along the main promenade in town.President Isaac Herzog of Israel with a picture of Kfir Bibas, a child who was taken hostage by Hamas, on Thursday.Denis Balibouse/ReutersOne possible explanation: Attendees and leaders here do not view either war as a significant threat at the moment to the global economy. Neither Gaza nor Ukraine cracked the Top 10 near-term concerns in the Global Risk Report — a survey of 1,500 global leaders — that the forum released on the eve of the gathering. A World Economic Forum chief economists’ report released this week suggested that growth forecasts for the Middle East had “slightly weakened” amid uncertainties about the war between Israel and Hamas. It did not mention Ukraine.In private conversations around Davos this week, corporate leaders acknowledged the wars in Gaza and Ukraine as one of many concerns. But they grew much more animated about other topics that they said they expected to affect their businesses in the near term — potentially enormously, for good or ill.A.I. topped that list. In interviews, executives expounded, usually with significant enthusiasm, on the benefits and drawbacks of the technology. They also talked politics, exhaustively. Over dinner, they and other attendees debated whether former President Donald J. Trump would win back the White House in November — and how his populist, protectionist policy could roil markets and upend their business models.Some executives explicitly ranked Gaza and Ukraine lower than the American elections on their list of geopolitical concerns. Many attendees lamented that there was not more energy behind war discussions, or recognition of the risks the wars pose to the economy and global security. Last year, concerns about Ukraine shared the spotlight at the gathering, along with a surge of A.I. interest.This year, “everyone is focusing on other subjects,” Pascal Cagni, France’s ambassador for international exports, said in an interview. Economically and politically, he added, Ukraine is “a critical issue.”There were a few exceptions. Supporters of Ukraine opened their own storefront space on the main promenade and staged several events each day to draw attention to the conflict. The technology company Palantir and its chief executive, Alex Karp, hosted Ms. Goldberg and other parents of hostages for events and interviews.Waiting for the arrival of Mr. Zelensky at the Ukraine House in Davos on Tuesday.Gian Ehrenzeller/EPA, via ShutterstockSeveral governments sent leaders to Davos in an attempt to quietly advance back-channel diplomacy in Ukraine or Gaza. That was true of the Biden administration, which sent Secretary of State Antony J. Blinken and Jake Sullivan, the White House’s national security adviser, to Davos for a flurry of meetings centered on Gaza.In an interview on Wednesday, Ms. Goldberg said she was grateful for all efforts to bring her son and the other hostages home. She wore “103” taped to her sweater, which represented the number of days since her son had been taken.In Davos, Ms. Goldberg was sharing a house with other parents of hostages. “I walked out this morning and here, you know, you have these, like, gorgeous views and beautiful mountains,” she said. She said she had turned to another mother and said: “It’s so beautiful. It’s perverse.”But, she added a moment later: “I’m very grateful that I’m here. Because I am having access to people that I would never have access to. And the goal is to save Hersh’s life, and everyone who is there, their lives. I can only do that if we have access to people who have power. And that’s people who are here.”Reporting was contributed by More

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      More Than Words: 10 Charts That Defined 2023

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      Some years are defined by a single event or person — a pandemic, a recession, an insurrection — while others are buffeted by a series of disparate forces. Such was 2023. The economy and inflation remained front of mind until the war in Gaza grabbed headlines and the world’s attention — all while Donald Trump’s […] More