Economist 4/1/15

  1. During the lunar new-year holiday in February, Chinese tourists thronged to Japan in record numbers.Chinese visitors bought more high-tech lavatory seats than almost any other Japanese product during the week-long break, according to Hottolink, a Japanese consulting firm.China’s state-controlled media have found little comfort in the discovery that many Japanese loos are actually made-to-order in China.
  2. THE world is in the middle of a skyscraper boom. Last year nearly 100 buildings over 200 metres tall were built—more than ever before. This year China’s business capital will welcome the Shanghai Tower, which will be the world’s second-tallest building. Saudi Arabia is building Kingdom Tower, which will be the world’s tallest (and twice the height of One World Trade Centre in New York, the tallest building in the Americas).In 1999 Andrew Lawrence, then of Dresdner Kleinwort Benson, an investment bank, identified what came to be known as the “skyscraper curse”.* Mr Lawrence noticed a curious correlation between the construction of the world’s tallest buildings and economic crises.The Empire State Building opened its doors in 1931, as the Great Depression was getting going (it was soon dubbed the “Empty State Building”).
  3. Skyscrapers can be hugely profitable, since by building upwards developers can rent out more floor space on a given plot of land. But at some point extra storeys are no longer a good deal, since marginal costs—for more lifts and extra steel to stop the building from swaying in the wind, for example—increase faster than marginal revenues (rents or sales). William Clark and John Kingston, an economist and an architect writing in 1930, found that the profit-maximising height for a skyscraper in midtown New York in the 1920s was no more than 63 storeys. (The ideal height is probably not much different today.)Until recently, however, there had been no formal analysis of the skyscraper curse. A new paper by Mr Barr, Bruce Mizrach and Kusum Mundra (all of Rutgers) investigates Mr Lawrence’s musings in detail. The authors then compare building height to GDP per person. They find that in all countries GDP per person and skyscraper height are “cointegrated”, a fancy way of saying that the two things track each other. In other words, developers tend to be profit-maximisers, responding rationally to rising incomes .
  4. China National Chemical Corporation (CNCC), a state-owned conglomerate, would buy Pirelli, an Italian tyremaker, for €7 billion ($7.7 billion). It will be the biggest Chinese investment in Italy so far, but just the latest in a string of acquisitions driven by China’s growing appetite for Europe’s brands and technology.Chinese firms are following an edict to acquire advanced technology and high-quality brands from abroad that the government laid down in its five-year plan of 2011. Until recently most outbound dealmaking was by state firms buying up raw materials. Now high value-added businesses are the main target, and private capital is flowing.In Britain, which has long been open to foreign ownership, Chinese firms have stakes in Thames Water and Heathrow airport. In France they have invested in Toulouse airport; in PSA Peugeot Citroën, a carmaker; and in Club Med, a resort operator. In Greece a Chinese firm runs part of the port of Piraeus. In Sweden Volvo, another carmaker, is also Chinese-owned.
  5. VANCOUVER is the best place to live in the Americas, according to a quality-of-life ranking published earlier this month by Mercer, a consulting firm. The city regularly tops such indices.But its status as an urban oasis is threatened by worsening congestion. Over the next three decades, another 1m residents are expected to live in the Greater Vancouver region, adding more cars, bicycles and lorries to roads that are already struggling to serve the existing 2.3m residents.A proposal by Vancouver’s mayor and 20 of the 22 other local governments in the region seeks to avert the snarl-up. Upgrades would be made to 2,300 kilometres (1,400 miles) of road lanes, as well as bus routes and cycle paths. Four hundred new buses would join the fleet of 1,830. There would be more trains and more “seabus” ferry crossings between Vancouver and its wealthy northern suburbs. The catch: to get all that, residents must vote in a referendum to accept a hike in sales tax, from 7% to 7.5%. Polls suggest they will vote no.
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