Economist 10/26/15

  1. Mr Xi Jinping’s campaign against graft has ensnared some prominent business figures. Last month it was announced that Song Lin, a former chairman of China Resources Group, a state-owned conglomerate, was being prosecuted.Five days later Jiang Jiemin, the former head of PetroChina, another state-controlled petroleum firm, was sentenced to 16 years in jail. On October 13th Chinese media reported the arrest of Sam Pa, a middleman in resource deals done in Africa by Chinese state-owned firms.But some analysts worry that the recent arrests of business leaders signal a broader anti-corporate campaign.Such fears are overblown. Businessmen targeted so far are mostly senior managers of state-owned enterprises (SOEs), not private firms. In China powerful SOE bosses are also important figures in the Communist Party, so there are likely to be political reasons as well as economic ones for many of the arrests.Indeed, Mr Xi’s government has been rather supportive of Chinese business. Internet giants have been encouraged to expand into the provision of government-related services, such as booking hospital appointments and processing utility bills.
  2. “Spectre”, the 24th Bond film will be released in Britain today, on October 26th, and is expected to draw yet more fans to the once-flagging film franchise.That last Bond outing “Skyfall”, went on to become the most successful of the franchise to date, surpassing 1965’s “Thunderball”, the only other Bond film that has grossed (in today’s money) over $1 billion (£630m) at the box office.Daniel Craig, the sixth and current Bond, has been the most successful yet. His films as 007 have taken an average $835m at the box office. But the production budgets have ballooned as well. The first three Bond movies in the 1960s grossed over 30 times their production costs.
  3. “POTENTIALLY catastrophic”—that was how America’s National Hurricane Centre described Hurricane Patricia as it barrelled menacingly towards Mexico’s Pacific coast on the afternoon of October 23rd.Yet 48 hours after it hit Mexico, no reports had come in of major damage, and Hurricane Patricia was being blamed directly for just two deaths, caused by a falling tree.Why then did this most recent hurricane fail to deliver the cataclysm feared?Several factors appear to have played a role. Firstly, Patricia made landfall at a relatively quiet stretch of coastline between the towns of Puerto Vallarta and Manzanillo, rather than directly—and more dangerously—over either of them. It then moved quickly enough that its rainfall was not concentrated in any one place, thus reducing the chances of flooding. Its really strong winds were to be found within 50km of its “eye”, making it a comparatively tight storm.If nature turned out to be strangely benevolent, the state and federal governments should also take some credit for Patricia’s failure to deliver the blows expected–signs that lessons have been learned after less impressive responses to previous disasters.
  4. On October 9th Vanuatu’s Supreme Court found that in 2014 the country’s then opposition leader, Moana Carcasses Kalosil, had offered legislators a total of 35m vatu ($300,000) to support a no-confidence motion. The government fell in June 2015, and Mr Carcasses became deputy prime minister in an administration led by Sato Kilman.The court convicted Mr Carcasses for corruptly seeking to procure MPs’ loyalty, and the other 13 MPs for receiving bribes.One of the convicted MPs was the parliament’s speaker, Marcellino Pipite. Earlier this month, while the president, Baldwin Lonsdale (pictured), was out of the country, Mr Pipite used his temporary powers as acting head of state to pardon himself and the 13 others. He said this was necessary in order to avoid civil unrest.On his return to Vanuatu, however, President Lonsdale rescinded the pardons, resulting in the arrests of 11 of the convicted MPs, and paving the way for their sentencing.In Vanuatu, MPs sentenced to two or more years’ imprisonment lose their seats; appeals are likely to delay that outcome.The country’s politics are now plunged into uncertainty. By-elections will need to be held to replace the jailed MPs. As Mr Kilman no longer has a governing majority in parliament, he will need to form a new coalition to stay in power.Most citizens live far from the urban centres, and rarely punish politicians at the ballot box for indiscretions in the capital city.
  5. SELDOM do governments try to turn away extra tax. But that is just what Luxembourg and the Netherlands did this week, after the European Commission ruled that subsidiaries of multinationals in the two countries were paying €20m-30m ($23m-34m) too little. The commission argued that the favourable tax treatment the firms were receiving was tantamount to a government subsidy, and thus illegal under European rules on “state aid”. The two countries, worried that the decision will deter other foreign firms from investing, demurred.It claimed a Fiat finance unit in Luxembourg had provided loans to other divisions at artificially low prices, shrinking the unit’s revenue so that it paid a twentieth of the taxes it should have. By the same token, the commission said that a Dutch subsidiary of Starbucks had overpaid a Swiss unit for coffee beans and a British one for “coffee-roasting know-how”.
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s