Weekend reading links

1. McKinsey is facing new challenges following the expansion of its digital practice.

In the 2010s, as many chief executives grew increasingly nervous that their companies would be the next victims of digital disruption, McKinsey invested to broaden its offerings. Between 2013 and 2023 it acquired at least 16 specialist technology consultancies, giving it the ability to assist clients not only with their digital strategies, but everything from developing prototypes of new products to building whizzy data-crunching tools. That points to the final source of the firm’s recent expansion, as it has pushed more widely into implementing its own advice. Having counselled a client to spruce up its technology, sharpen its operations or squeeze its suppliers, McKinsey will often now hold their hands through the process. That has meant muscling in on a segment of the consulting market traditionally dominated by Accenture and the “big four” professional-services giants, which charge considerably lower rates, notes Tom Rodenhauser of Kennedy Intelligence. To compete, McKinsey has had to rethink how it charges clients (fees are now often tied to the results of a project) and whom it hires (focusing less on generalists, more on geeks and grizzled executives).

And there's the threat from the newbies like Palantir.

As bosses look to AI to transform their businesses, they are asking McKinsey and other consultancies for help. But they are also turning to less conventional partners. Palantir, an analytics firm, offers tools to feed enterprise data into AI models, and embeds its so-called forward-deployed engineers with its clients to get them up and running. Its revenue is still small (just under $3bn in 2024) but is growing at a blistering pace (48%, year on year, in the second quarter of 2025). Although it began by serving governments, it now makes over two-fifths of its revenue from businesses. Its market value has septupled over the past year, to more than $400bn. Analysts at UBS, a bank, describe Palantir as “McKinsey meets Databricks”, alluding to a software firm whose tools also help enterprises connect their data with AI models. That sounds a lot like QuantumBlack, McKinsey’s own AI unit and the crown jewel of its digital practice. Other AI companies are taking inspiration from Palantir, too. OpenAI, maker of ChatGPT, has begun offering a consulting-like service to help businesses deploy its models.

2. Impact of Trump tariffs on India's $86.5 bn exports to the US.

3. Taiwanese public opinion on integration with China.

4. Naushad Forbes writes about India's corporate R&D landscape.

We invest 0.3 per cent of gross domestic product (GDP) in in-house R&D to a world average of 1.5 per cent. Our 10 most successful non-financial firms (highly profitable firms in refining, information technology services and consumer goods) invest 2 per cent of profit in R&D; whereas their 10 most successful peers in the United States, China, Japan and Germany invest between 29 and 55 per cent. And Indian firms are completely missing in five of the 10 most technology-intensive industrial sectors worldwide… Our hundredth largest spending firm invested about ₹97 crore in R&D in 2022–23; our two-hundredth largest, about ₹33 crore; and our three-hundredth largest, about ₹16 crore. These are small numbers relative to the world’s leading firms.

5. China seeks to consolidate its semiconductor chip making industry.

Consolidation in the chip equipment space would help boost China’s bid to build a self-sufficient semiconductor supply chain and replace equipment from US groups such as Applied Materials and Lam Research, said Edison Lee, semiconductor analyst at Jefferies. Currently, a Chinese fab buying local equipment has to use multiple vendors, whose technology is not well integrated. “In the equipment industry, it is difficult to be very successful as a single-product company. Fabs prefer to buy multiple machines from the same vendor, which makes it easier to use,” he added. By consolidating, Beijing also hopes to better direct funding to firms deemed strategically significant... Little progress has yet to be made in consolidating China’s sprawling network of foundries — a segment that remains highly fragmented and politically sensitive. The past decade saw a surge in foundry projects backed by local governments, many of which built capacity in parallel, resulting in a glut of supply of mature chips and steep price competition. Chip experts note that China could also benefit from streamlining its advanced fabrication market, to concentrate talent and the most advanced chip equipment machinery in one place instead of being spread across disparate projects.

6. Some details of where Apple will source its US components from

For example, Apple said that all of its cover glass for iPhones and Apple Watches would be made by Corning in Kentucky, and that it would spend $2.5 billion on that effort... Apple also highlighted its partnership with Coherent, a longtime supplier of lasers for Apple’s facial recognition hardware, which is made in Texas... The iPhone maker said it expanded a partnership with Texas Instruments to make chips in Texas and Utah. Texas Instruments has long supplied chips for the iPhone, such as circuits to control USB interfaces or power displays... Other partnerships are with Applied Materials, a tooling company, GlobalFoundries, a chip foundry, and GlobalWafers America, which is supplying Taiwan Semiconductor Manufacturing Co. and Texas Instruments with made-in-USA wafers, the starting point for a batch of chips. GlobalFoundries manufactures chips for Broadcom, which supplies wireless chips for iPhones. Both will work with Apple to develop and manufacture 5G components in the U.S. Meanwhile, Apple will buy millions of advanced chips made by TSMC in Arizona, where it will be the factory’s largest customer... Apple said it would invest in and become a customer at an Arizona Amkor facility, which packages and tests chips, the final stage before installation in a computer. Apple also said it would expand existing data centers for artificial intelligence in North Carolina, Iowa, Nevada and Oregon.

This is a break-up of Apple's spending a year

In Apple’s fiscal 2024, the company spent $210 billion globally on cost of goods sold, $57.5 billion on operating expenses and $9.45 billion in capital expenditures for nearly $275 billion in global spending during the period.

7. Global rice prices plunge to an eight year low on the back of record harvests and India's resumption of exports. 

8. More on India's Russian oil imports

Indian refiners had gained $16bn in extra profit from importing discounted Russian oil, with almost $6bn of that going to Reliance... Before Moscow’s full-scale invasion of Ukraine in February 2022, India imported a minimal amount of Russian seaborne crude. Indian government data shows it has since bought discounted Russian oil worth nearly $140bn, which Ambani’s Reliance and others have processed into petrol and diesel for sale in both domestic and international markets... the country’s refineries operate by the book and that oil from Russia, unlike Iran and Venezuela, has not been subject to direct sanctions. Washington previously made no objection to the trade, as long as purchases were priced below the $60-a-barrel G7 price cap intended to limit Russian revenues while keeping oil flowing into the global market... Energy Aspects estimates that since the start of the war in Ukraine, India has received an average discount of $11 for each barrel of Russian oil compared with the international price of crude, though the discount has fluctuated and is now about $2 before freight costs.

See also this. 

9. Fascinating discussion about towns in France and England.

Yet it is shocking to realise that the medieval feudal lords had more of a stake in ensuring their new towns were sustainable than most property developers today. “The private sector has no financial interest in the sort of heavyweight placemaking you need to build at scale,” argues Hugh Ellis, director of policy at TCPA. “Even mining companies in the 1920s cared more about providing a decent home for their workforce than modern property development does.” Thrift adds: “If you look at the private sector housebuilding model, their necessity is to get the highest possible price for that house on the day they sell it. If it all goes downhill afterwards, it really doesn’t matter, because they’ve gone somewhere else by then.”

By contrast, the postwar new towns had a strong stewardship model of “owning the shops in the town centre and the business premises in the industrial area, having that money coming back in and being able to reinvest it for the good of the town and its maintenance,” says Congreve. But Ellis adds that the model “was deliberately broken in the 1980s by an ideological decision to basically vandalise the programme by forcing a fire sale of most of their assets to the private sector”. One reason why Milton Keynes — often held up a model new town — still has such good green spaces is that when its development corporation was wound up in 1992, a trust was created with an endowment to continue to manage the parkland.

10. Turmoil in the Chinese military as Xi replaces officials accused of corruption.

Three of the seven seats on the Central Military Commission — the Communist Party council that controls the armed forces — appear to be vacant after members were arrested or simply disappeared... Mr. Xi has set a 2027 target for modernizing the People’s Liberation Army, or P.L.A... In the first years after Mr. Xi came to power in 2012, he launched an intense campaign to clean up corruption in the military and impose tighter control, culminating in a big reorganization... The most jarring absence in the military leadership is that of Gen. He Weidong. The second most-senior career officer on the Central Military Commission, General He has disappeared from official public events and mentions, an unexplained absence that suggests he, too, is in trouble and may be under investigation. Another top commander, Adm. Miao Hua, who oversaw political work in the military, was placed under investigation last year for unspecified “serious violations of discipline,” a phrase that often refers to corruption or disloyalty. He was among around two dozen, if not more, senior P.L.A. officers and executives in the armaments industry who have been investigated since 2023, according to a recent tally by the Jamestown Foundation. Both men had risen unusually quickly under Mr. Xi’s patronage...

Since Mao Zedong’s era, the military has served not only as a fighting force but also as a lever of political control for Chinese leaders, as their ultimate protection against potential rivals or popular uprisings... Mr. Xi is the only civilian party leader who sits on the Central Military Commission, which ensures his singular power over the military. That also means that he cannot turn to other civilian officials to help him... The purges are likely to disrupt coordination, weaken confidence in commanders and prompt Beijing to be more wary of considering an amphibious assault on Taiwan

11. Excellent NYT editorial video advocating a change in the air ticket tax to fund the Federal Aviation Authority (FAA) that ends up as a case of taxing the regular air travellers to subsidise private jets. 

12. How the surge in gold exports provoked Trump's 39% tariff on Switzerland.

America’s trade deficit in goods with Switzerland was just over $38 billion last year. In the first six months of this year, the deficit ballooned to nearly $48 billion... In recent months, two-thirds of Switzerland’s exports to the United States were accounted for by various forms of gold. These bars of gold are often sent from London, a trading hub, to Switzerland, a refining hub, where the metal is forged into bars sized for the standards required by U.S. warehouses and then shipped across the Atlantic. Surging demand for gold in the United States as Mr. Trump threatened to upend the global trading order fueled a spike in Swiss gold imports — and greatly expanded the U.S. trade deficit with Switzerland. Excluding gold, Switzerland’s mammoth pharmaceutical industry accounts for half the value of Swiss products shipped to America. In 2024, Swiss drug companies, which include the pharma giants Roche and Novartis, exported around $35 billion worth of medicines, cancer treatments, vaccines and other drugs.

13. Some facts and observations about GCCs.

There are over 1,000 global organisations that collectively operate over 1,700 GCCs across India. They employ over 2 million professionals. They generate over $40 billion in annual value, set to surpass $100 billion in another five years. So, what’s the problem? Well, most GCCs are technically doing work that could have been outsourced to Indian outsourcers like Infosys, TCS, Wipro, HCL, etc. In fact, GCCs are so successful a strategy that they’re growing much faster than Indian outsourcers. And as if taking away potential revenue from Indian outsourcers weren’t enough, GCCs are now also taking away talent. That’s right. They’re hiring experienced and talented professionals using higher salaries, better brands and the promise of better work.

It's time somebody analysed the nature of the work done by in-house GCCs and that done by outsourced service providers like the Indian software firms. Is it significantly a case of the multinational firm (a) vertically integrating its activities and bringing them in-house, or (b) identifying more outsourceable work and relocating them to India, or (c) doing non-outsourceable, higher-skilled work in India? 

14. Fascinating statistic from Ruchir Sharma on wealth-creating companies.

Since 2015, the world has generated a total of 444 companies with average annual returns in dollar terms of more than 15 per cent, and a market cap that today exceeds $10bn. A solid majority of these — 248 — emerged outside the US... Countries such as Japan, Canada, Taiwan, Switzerland and Germany have their fair shares but the big numbers are in China, with more than 30 such compounders and... India has produced 40 steady compounders in that time. Most of the compounders have arisen in manufacturing, tech or finance... More than 50 — and thus more than one in five — of the steady compounders are European. And after a long slumber, signs are emerging of an entrepreneurial awakening: the number of tech start-ups in Europe more than quadrupled in the last decade to 35,000... Since 2015, the global billionaire population grew by 1,200 to over 3,000, and seven out of 10 new ones surfaced outside the US. While the number of names on the Forbes list grew by 70 per cent in America, it grew by 90 per cent or more from India and China to Canada, Israel and even Italy... Another cloak obscuring wealth creation worldwide is the market for private equity, credit and other assets, also widely seen as a US preserve. Nearly half of the $13tn in these private assets, and more than half in categories such as venture capital and infrastructure projects, is held outside the US. Unicorns — private firms valued above $1bn — are not an exclusively American species either; roughly 40 of the top 100 are based in other countries.

15. In a remarkable arrangement, the first such one, Nvidia and AMD have agreed to pay 15% of the revenues from chip sales in China to the US government in return for export licenses for their chips.

The two chipmakers agreed to the financial arrangement as a condition for obtaining export licences for the Chinese market that were granted last week, according to people familiar with the situation, including a US official. The US official said Nvidia agreed to share 15 per cent of the revenues from H20 chip sales in China and AMD will provide the same percentage from MI308 chip revenues... According to export control experts, no US company has ever agreed to pay a portion of their revenues to obtain export licences... Nvidia tailored the H20 for the Chinese market after President Joe Biden imposed tough export controls on more advanced chips used for artificial intelligence.

Trump has basically converted the US into a country where the rule of law has been replaced with the rule by law (made by Trump himself personally)! Talk about institutions!

16. India's exports to the US and their share of the country's exports of those products.

17. Europe rearms.

EU defence commissioner Andrius Kubilius told the FT that since Moscow’s invasion, Europe’s annual capacity to produce ammunition had increased from 300,000 to reach about 2mn by the end of this year Rheinmetall’s expansion will account for a big part of this growth: the company said its annual production capacity for 155mm rounds was set to rise from 70,000 in 2022 to 1.1mn in 2027.

18. In order to overcome deflationary pressures and stimulate household spending, China announces an interest subsidy of 1 percentage point on consumer loans (typical consumer loan interest rates are 3%) for purchases up to Rmn 50,000 ($7000). The subsidy will be borne 90% by the central government and 10% by local governments. This shift away from investment subsidy to consumer subsidy comes on top of a "trade-in" scheme whereby buyers can receive subsidised prices when they upgrade old goods like smartphones, air conditioners, and rice cookers. 

Weekend reading links

1. Toyota fact of the day

Toyota... the world’s largest auto manufacturer by volume. The company’s annual revenues now account for roughly 8 per cent of Japan’s nominal GDP.

2. AI is supercharging weather forecasting, which has become very accurate over the years.

3. Right to repair

A committee under the Department of Consumer Affairs has designed a Repairability Index for the mobile and electronic sector based on six criteria: Disassembly depth, repair information, availability of spare parts within a reasonable timeline, software updates, tools, and fasteners (types and availability). A scorecard of a product would be asked to be displayed at the sales counter, on the e-commerce platform, or on the package itself. On May 2, Belgium became the second country in Europe after France to implement a Repairability Index. The Belgian index is mandatory for pressure washers and laptops (excluding tablets). It also assigns a score from 1 to 10 to products like dishwashers, vacuums, and lawnmowers, allowing buyers to make a conscious choice based on a product’s repairability. The country is also expected to extend the index to bicycles — especially electric ones — as well as electric scooters in the future.

4. What Tesla stands to lose from the Big Beautiful Bill?

The bill would eliminate tax credits of up to $7,500 for people who buy electric cars. It would quickly phase out subsidies for battery factories and lithium refineries, and end financial support for electric vehicle charging stations. The bill imposes an annual fee of $250 on electric vehicle owners that environmental groups say is punitive. Those measures would hurt all carmakers that sell electric vehicles. But the Trump administration and Republicans in Congress are also trying to kill regulations that are especially beneficial to Tesla. Those rules allow Tesla to sell clean air credits to other carmakers that fail to meet environmental standards. During the first three months of the year, Tesla sold regulatory credits worth $595 million, which was more than the company’s net profit of $409 million. In other words, without the credits, Tesla would have lost money...

The Republican measures would result in sales of 7.7 million fewer electric vehicles by 2030 than would be the case if Biden administration policies remained in place. Tesla would sell 3.4 million fewer electric vehicles, or almost two years’ worth of sales, assuming it maintained its current U.S. market share of 44 percent of all new electric cars sold. Republican legislation would also eliminate programs that subsidize the cost of large battery storage projects, which has been a growth business for Tesla.

More here

5. Vietnam's spectacular manufacturing success is not translating into much value addition and risks the middle income trap. 

Annual foreign direct investment (FDI) reached $19bn in 2023. Foreign enterprises accounted for a fifth of GDP that year, up from 6% in 1995. The biggest is Samsung, whose complex in Pho Yen, a factory town near Hanoi, employs some 160,000 workers, who assemble the bulk of Samsung’s smartphones. The FDI boom, in turn, has produced a surge in exports, which have risen eight-fold since 2007, to $385bn a year. Foreign firms account for just 10% of employment and 16% of investment, but 72% of exports. Samsung alone accounts for 14%. Yet Vietnamese workers are simply assembling parts made, by and large, in China or South Korea. Even as export volumes have ballooned, the average unit value has stagnated. Vietnam adds less value to its exports than do nearby Malaysia and Thailand. Because final assembly is labour-intensive, productivity is low. Vietnam’s output per hour worked is 37% below the average for upper-middle-income countries in Asia. Over 90% of jobs in manufacturing require few or no skills...

Multinationals in Vietnam source the lowest share of local inputs of any country in East and South-East Asia. Despite Samsung Electronics’ huge presence in Vietnam, none of its core suppliers is a homegrown Vietnamese firm, noted a recent article in Guancha, a Chinese news outlet, that was widely read among the Vietnamese elite. The small number of Vietnamese firms that do supply global manufacturers mainly provide simpler materials, such as cardboard and plastics.

Meanwhile, Vietnam has reached the “Lewis turning point”, at which developing economies exhaust their rural labour surpluses and wages begin to rise swiftly. Between 2014 and 2021, over 1m agricultural jobs disappeared each year despite a growing labour force; in 2022-23 the pace decelerated to 200,000. Labour costs in manufacturing are already higher than in India or Thailand and are set to climb by a further 48% by 2029, according to the Economist Intelligence Unit, our sister company. Vietnam could soon end up too expensive for labour-intensive manufacturing yet too technologically unsophisticated to do much else—a classic middle-income trap.

This low value addition is something India should guard against. This sounds impressive reform by President To Lam.

Mr Lam has been boldest. He has abolished five ministries and eliminated an entire layer of the bureaucracy, at the level of Vietnam’s 705 districts. He is reducing the number of provinces from 63 to 34. All this is eliminating 100,000 jobs from the civil service. He has decreed that there should be a 30% reduction in red tape. At the same time Mr Lam wants to build administrative capacity. He has called for higher pay for capable civil servants. Some of his changes seek to reverse the legacy of “blazing furnace”, an anti-corruption campaign initiated by his predecessor. Over 330,000 party members were prosecuted or punished and tens of thousands resigned. The effect was to make bureaucrats drastically risk-averse. Mr Lam has instead sought to engender an atmosphere of tolerance of mistakes.

6. China's EV dominance in two graphics. First, its share of major global markets

Second, the competitiveness gap between its battery manufacturers and the rest of the world. 

7. Important graphic about the changing perceptions about dollar safe haven status.

What we’ve been seeing in recent months, with interest rates and the dollar moving in opposite directions, doesn’t look like what we normally see in the United States, or for that matter advanced nations in general. Instead, it’s the kind of thing one sees in emerging markets, where big market moves often reflect crises of confidence: International investors lose faith, pulling their money out, and capital flight causes both a falling currency and rising interest rates.

8. Reshoring manufacturing to the US faces daunting challenges. For most products, manufacturing in the US is more costly than for its largest trading partners.

Manufacturing costs in the United States are significantly higher.

9. If the tariffs on China were intended to gain leverage in negotiating a trade deal for the US, then it appears to have handed back all that leverage with the two rounds of negotiations that have been held to date. It appears that China has succeeded in linking its restrictions on rare earth exports to the US's restrictions on high technology exports. 

The US has accused China of not honouring its pledge in Geneva to ease restrictions on rare earths exports, which are critical to the defence, car and tech industries, and dragging its feet over approving licences for shipments, which has affected manufacturing supply chains in the US and Europe. Beijing has accused the US of “seriously violating” the Geneva agreement after it announced new restrictions on sales of chip design software to Chinese companies. It has also objected to the US issuing new warnings on global use of Huawei chips, and cancelling visas for Chinese students. On Monday, a senior White House official indicated that Trump could ease restrictions on selling chips to China if Beijing agreed to speed up the export of rare earths. That would amount to a significant policy shift from former president Joe Biden’s administration, which implemented what it called a “small yard, high fence” approach designed to restrict Beijing’s ability to obtain US technology that could be used to help its military.

Instead of building on President Biden's successes in restricting high-technology exports, President Trump appears to have allowed the Chinese to place on the negotiating table their easing in return for similar easing of their recently imposed export controls on rare earths. Here is Hal Brands,

China wants few things more than a relaxation of curbs on its access to high-end semiconductors; so do corporate players and analysts who argue that they do more harm than good. Although the details are hazy, the Trump administration reportedly agreed to lift some recent controls as part of a deal to deescalate the trade war. Let's hope the administration doesn't go much further than that. Ditching or dramatically rolling back the measures that preserve American's technological advantage — and that have been imposed, with bipartisan backing, over the past several years — would be strategic self-sabotage of the highest form.

The export controls at issue pertain to the most advanced computer chips and the inputs, both hardware and software, required to make them. During Trump’s first term, the US hit specific Chinese firms, namely Huawei, with targeted bans. Under President Joe Biden, Washington went big: It intensified the tech war by expanding their application to cover China as a whole. Since then, Washington and Beijing have been playing cat-and-mouse, as China has sought to evade tech controls while the US gradually tightens them... The goal, as then-National Security Adviser Jake Sullivan said in 2022, was to maintain “as large a lead as possible” in key sectors like AI and advanced computing, because those sectors will shape the future economic and military balance... if Trump's deal with Xi entails an agreement not to impose new export controls in the future, it will — thanks to the cat-and-mouse dynamic — severely erode America's ability to keep even its existing restrictions effective and up to date.

10. Samsung appears to have done a better strategy of geopolitical risk diversification than Apple.

A research by S&P Global shows that Samsung’s share of global final assembly volume of smartphones in India in 2024 was at 25 per cent compared to only 15 per cent of the Cupertino-based Apple Inc in the same period. For Samsung, its biggest exposure is smartphone assembly in Vietnam, which is more than double of India at 55 per cent, and Brazil is in the third spot at 12 per cent. These account for the top three assembly markets. In the case of Apple Inc, its exposure to different countries is very different — China still dominates with 83 per cent, a market from where Samsung had withdrawn assembly years ago in phases, preferring to shift to Vietnam and India. And apart from China and India, Apple has a small exposure of 2 per cent in Brazil and some other countries... one commonality in both Samsung and Apple is that they don’t assemble their phones in the US.

11. Are private credit and hedge funds the likely sources for the next financial crisis? TT Rammohan writes

The Economist says, “The five top players in private credit manage $1.9trn of credit assets across funds and insurance balance-sheets. Assets of the five biggest multi-manager hedge funds sit at $1.6trn, including huge leverage.” Moody’s Analytics warns that private credit’s linkages with banks and insurers could make it a “locus of contagion” in the next crisis. It warns that private credit could amplify a future financial crisis even if it’s not the source of one... after the GFC, bank ownership or sponsorship of hedge funds in the US has come to be heavily restricted under the Volcker Rule. Data on bank exposure to hedge funds in the US must be made public... Bank failure during the GFC was pervasive due to the combination of three factors: Excessive leverage, inadequate liquidity and mark-to-market losses on the proprietary trading book (and not losses on loan exposures). All three have come to be addressed by regulation. Banks are better capitalised. The Liquidity Coverage Ratio ensures that banks are better covered for liquidity. Stiffer capital requirements have discouraged proprietary trading. These measures may need to be augmented by bringing systemically important entities among hedge funds and private credit under the ambit of regulation if required. The Financial Stability Oversight Council in the US has the authority to do so.

12. Which is the world's largest packaged food company? JBS, a Brazilian company started in 1953, had revenues of $78 bn in 2024 with half its sales in the US.  

13. The Print has a good article on Gujarat’s potato revolution

The growth of the fast-food industry and increasing consumer cravings for fries, hash browns, and ready-to-cook frozen products kicked off this change. Homegrown companies like HyFun, Falcon Agrifriz, Iscon Balaji, and McCain started investing in processing technologies and an expanding network of high-end cold chain facilities crystallised. Scientists did their part as well. The Central Potato Research Institute (CPRI), under the Indian Council of Agricultural Research (ICAR), developed varieties with low sugar and high dry matter—qualities that make for crispier fries that soak up less oil. Now, India is not only meeting its own demand but shipping frozen potato products internationally.

Weekend reading links

1. AI is already starting to bind on hiring decisions of Indian IT firms.

Salaries have been stagnant at the starting levels for years.

2. A reality check on private finance mobilised by multilateral and bilateral lenders in sub-Saharan Africa

By their own reckoning multilateral and bilateral lenders mobilised $88bn of private finance for low- and middle-income countries in 2023, only a belated jump after years of stagnation (see chart). Just $20bn went to sub-Saharan Africa, of which $10bn reached the poorest countries. By comparison, the region received $62bn of aid that year... In 2018 a task-force launched at Davos, the annual gathering of the World Economic Forum, envisaged that every public dollar could whip up two or more from the private sector. Such ratios are rarely achieved. A forthcoming study by odi Global, a think-tank in London, examines a subset of investments called “blended concessional finance”, where some of the capital comes at below-market rates. It finds that by 2021 each dollar was attracting about 59 cents of private co-financing in sub-Saharan Africa, and 70 cents elsewhere.

3. President Trump's Executive Order on pharmaceutical prices should draw attention to the practices followed by Big Pharma. This is a good illustration.

Take the example of Keytruda, a cancer treatment from Merck, which is manufactured in Ireland. According to Jefferies, an investment bank, Merck holds the intellectual property (IP) for Keytruda in the Netherlands. The arrangement allows the firm to book profits at a tax rate of 10.5%, roughly half what it would pay if the ip resided in America.

4. Mexico is taking democracy to the judiciary.

On June 1st Mexicans will vote to elect judges to 850 federal posts, nine Supreme Court seats, 22 powerful tribunal jobs and thousands of roles in lower courts. In 2027 a second vote will see the rest of Mexico’s judiciary filled. A few countries elect a handful of judges, mostly to lower courts. Mexico will become the first country in the world where every judge on every court is chosen by popular vote. Mexico’s Congress passed the constitutional changes required for this upheaval in September last year. It was Andrés Manuel López Obrador’s final act as president, achieving one of his most cherished goals. His successor, Claudia Sheinbaum, has followed in his footsteps. Their party, Morena, argues that the election of judges will make the judiciary more democratic, purge corruption and nepotism, and widen access to justice.

There are several cocnerns.

The only place where judges are currently elected to higher courts is Bolivia. Its Supreme Court judges have been elected since 2011. The selection mechanism has been a disaster, with the court’s authority undermined by an endless political squabble to control it. Two-fifths of Bolivians who voted in the most recent judicial election spoiled their ballots. In Mexico, judicial elections pose a graver danger than mere chaos: control of the justice system by drug gangs. Criminal gangs are happy to kill or threaten public officials to get what they want. The gangs already field their own candidates in local elections. More quotidian corruption of judges by businessmen and officials, also endemic, will probably expand. It is hard not to see the elections as a final step that entrenches Morena as Mexico’s political hegemon...

Institutional knowledge will be lost. Only a minority of sitting federal judges are standing for election. Just three of the current 11 Supreme Court judges are running. A study by Mr Ríos found that it took an average of 24 years to become a magistrate. From June, cases on constitutional law and million-dollar commercial disputes will be heard by people who may have never set foot in a courtroom.

5. The emergence of the UAE, a country with less than a million citizens, as a major investor in Africa.

Persian Gulf investments in Africa, primarily by the Emirates, have exploded in recent years. Since 2019, $110 billion worth of deals — mostly by firms tightly aligned with the ruling powers — have been announced, dwarfing amounts pledged by any other country... Like other oil-producing nations in the Persian Gulf, the Emirates is looking to diversify its economy away from fossil fuels, and it sees Africa as an essential part of the plan... Powerhouse Emirati corporations based in Dubai and Abu Dhabi with political connections are in dozens of countries across Africa... 

AMEA Power is already building or operating clean energy plants in Burkina Faso, Djibouti, Egypt, Ethiopia, Ivory Coast, Kenya, Morocco, South Africa, Togo, Tunisia and Uganda and has plans to expand. Abu Dhabi National Energy Company has projects in Morocco, Senegal and South Africa and is participating in a project to invest $10 billion in renewable energy in sub-Saharan Africa. DP World, the gargantuan government-backed ports and logistics operator, has invested billions of dollars in ports and economic free zones from Algeria to Zambia, including in the Berbera port city in the breakaway republic of Somaliland, where the Emirates also has a military base. Last summer it announced that it would spend another $3 billion on African ports over the next three to five years. Last year, the Emirati International Holding Company invested more than $1 billion for a 51 percent share in the Mopani Copper Mines in Zambia. Spending in Egypt has also soared. Last year, the Emirates agreed to invest $35 billion to develop a new city and tourism destination on Egypt’s Mediterranean coast.

Emirati investment in Africa has ramped up as China’s has tapered off. Once the biggest foreign investor on the continent through its Belt and Road Initiative, China still has a large presence, but Beijing has pulled back in recent years after a series of debt crises in Africa and economic problems at home. In 2022 and 2023, the Emirates announced a total of $97 billion in investments in Africa — three times China’s total, according to fDi Markets, a database of foreign investments. U.S. investment in 2023 was about $10 billion... The U.A.E.’s total foreign assistance in Africa exceeded $1 billion in 2023-24... Meanwhile, Mr. Trump has fast-tracked America’s exit from Africa, ending billions of dollars in funding, dismantling the U.S. Agency for International Development and ending all contributions to the African Development Bank. The State Department’s reorganization plan also calls for the elimination of most operations in the region.

6. Germany's unique labour market problem - highest labour force participation rate and low unemployment rate, coupled with the lowest number of hours worked.

7. Ramesh Chand has an excellent op-ed drawing attention to the success of expansion of soyabean crop cultivation for edible oils in India. The growth story is amazing.

Soybean started spreading in India with the introduction of the Barag variety in the early 1970s. It was brought from Mississippi, United States (US), by scientists of Illinois University. The area under soybean reached a reasonable base of 100,000 hectares in the mid-1970s and kept increasing in leaps and bounds. The area crossed 13 million hectares in 2022-23, and it is still rising. With 99 per cent of the area being rainfed, it did not put any stress on water resources. Soybean output increased from 130,000 tonnes during the mid-1970s to 13.6 million tonnes during 2021-22 to 2023-24, ie more than 100 times increase in less than five decades. Production doubled every four years between 1975-76 and 1999-2000. No crop in India has increased so much in less than 50 years after reaching a comparable base. Such examples are rare even abroad and almost absent in a rainfed situation.

But the story of stagnant productivity raises concerns.

On the flip side, the yield of soybean in the country has remained flat and fluctuated around one tonne per hectare for 45 years. It rose above 1 tonne in some favourable years but again returned to 1 tonne. There is another distinguishing feature of soybean that its output witnessed a 100-fold increase in 48 years without any appreciation in productivity, except an initial edge in yield through the introduction of an exotic germplasm... What role did domestic research & development (R&D) play after the initial introduction and adaptation of exotic soybean seeds in the 1970s, which brought a big one-time jump in yield? Domestic agricultural R&D has at best ensured sustaining productivity by checking any decline in yield over time. However, it is baffling that the National Agricultural Research System could not bring any improvement in yield in 50 years despite reasonable expenditure. But the rest of the world has moved on. In the mid-1970s the yield in the US was two times and the world average was 60 per cent higher than that of India. The recent yield of soybean in the US and Brazil is 3.3 times and the world yield is 2.6 times the soybean yield in India. 

The main reasons for stagnant productivity are: One, an absence of collaboration and germplasm transfer from US universities after the initial introduction; two, India’s policy of a ban on genetically modified (GM) food crops (GM varieties now occupy 75 per cent of the area under soybean in the world); and three, the inability of national agricultural research systems to achieve any breakthrough in soybean productivity. If the soybean yield in India had kept pace with that in the US or Brazil, our production would have doubled and India’s import dependence would have been 40 per cent lower than what it is now.

8. Steven Pinker's thoughtful essay on Harvard. 

According to its critics, Harvard is a “national disgrace,” a “woke madrasa,” a “Maoist indoctrination camp,” a “ship of fools,” a “bastion of rampant anti-Jewish hatred and harassment,” a “cesspool of extremist riots” and an “Islamist outpost” in which the “dominant view on campus” is “destroy the Jews, and you’ve destroyed the root of Western civilization”... 

Most of my colleagues, too, follow the data and report what their findings indicate or show, however politically incorrect. A few examples: Race has some biological reality. Marriage reduces crime. So does hot-spot policing. Racism has been in decline. Phonics is essential to reading instruction. Trigger warnings can do more harm than good. Africans were active in the slave trade. Educational attainment is partly in the genes. Cracking down on drugs has benefits, and legalizing them has harms. Markets can make people fairer and more generous. For all the headlines, day-to-day life at Harvard consists of publishing ideas without fear or favor...

A poll of my colleagues on the academic freedom council turned up many examples in which they felt political narrowness had skewed research in their specialties. In climate policy, it led to a focus on demonizing fossil fuel companies rather than acknowledging the universal desire for abundant energy; in pediatrics, taking all adolescents’ reported gender dysphoria at face value; in public health, advocating maximalist government interventions rather than cost-benefit analyses; in history, emphasizing the harms of colonialism but not of communism or Islamism; in social science, attributing all group disparities to racism but never to culture; and in women’s studies, permitting the study of sexism and stereotypes but not sexual selection, sexology or hormones (not coincidentally, Hooven’s specialty)...

Harvard, too, is not a monastic order but part of a global network. Most of our graduate students and faculty members were trained elsewhere, and go to the same conferences and read the same publications as everyone else in academia. Despite Harvard’s conceit of specialness, just about everything that happens here may be found at other research-intensive universities. Finally, our students are not blank slates which we can inscribe at will. Young people are shaped by peers more than most people realize. Students are shaped by the peer cultures in their high schools, at Harvard and (especially with social media) in the world. In many cases, students’ politics are no more attributable to indoctrination by professors than are their green hair and pierced septums... 

Harvard, as I am among the first to point out, has serious ailments... But Harvard is an intricate system that developed over centuries and constantly has to grapple with competing and unexpected challenges. The appropriate treatment (as with other imperfect institutions) is to diagnose which parts need which remedies, not to cut its carotid and watch it bleed out.

9. Graphic on how Chinese solar panel makers drove down prices.

In 2023, Chinese-headquartered companies produced 84 per cent of the world’s solar modules and 92 per cent of solar cells, according to BloombergNEF… Chinese-made panels are still dirt cheap at about $0.09 per watt, on BloombergNEF data, down from $1/watt at the start of 2012.

10. FT has an article on China's dominance of rare-earth minerals and the export controls it placed in early April on the export of seven rare earth elements and permanent magnets made from them (which are also used in fighter jets like US F-35s). 

The controls, which require exporters to gain licences from commerce ministry officials for shipments of the seven targeted rare earths and of permanent magnets that are made from them, highlighted the geopolitical leverage conferred by China’s dominance over global mineral supply.

More on the latest restrictions

Rather than raw materials in bulk they involve finished articles, particularly magnets, made by only a few Chinese companies and traceable through the supply chain. Unlike previous export controls, they are executed via end-user licensing requirements for materials with dual military and civilian use, which restricts foreign companies selling them on. If China really does maintain and enforce a ban on sales to the US, it could affect the manufacture of F-35 fighter jets as well as electric vehicles. The materials involved are so-called medium and heavy rare earths, which are harder to extract and process. Industry experts say that increasing supply from elsewhere is likely to take years, as is retooling EV or other supply chains to use other technologies. Prices of heavy rare earths such as dysprosium shot higher after the controls were announced.

And the shocking reality that even as Trump wages war, America appears to have done very little to prepare for it by, for example, stockpiling rare earth reserves. 

11. Sweden's paradox of social democracy coexisting with a surge in billionaire wealth. Ruchir Sharma writes.

Sweden saw billionaire wealth rise by 4 points to 31 per cent of GDP — the biggest increase, and to the highest level, of the 20 major economies in my analysis. Sweden has 45 billionaires, about 1.5 times more per capita than the US, which is often said to be enjoying a new gilded age. The richest American ever was John D Rockefeller in around 1910, when his fortune surpassed 1.5 per cent of GDP... A functioning economy will generate a balanced billionaire class, with more “good” wealth from industries like tech or manufacturing than “bad” wealth from sectors such as real estate or commodities. Not that real estate or commodities are inherently bad. But they contribute less to productivity and are less likely to be held in high popular esteem than, say, cars or software. In Sweden, the “good” billionaires are outnumbered two to one by the “bad” ones... At just 12 per cent, the “good” share of billionaire wealth is third lowest among my top 10 developed countries... Nearly 70 per cent of Sweden’s billionaire wealth comes from inheritance, third highest on my list after France and Germany... The country taxes capital much less heavily than salaries, and sometimes taxes capital regressively... Sweden has also held interest rates well below the European average, and low rates tend to inflate asset prices, while making it easy for the rich to borrow money to make more of it.

12. Finally, Simon Kuper points to some ideas to be a great thinker - read books; don't use screens much so that you have time for other things; do your own work, not the world's; be multi-disciplinary; be an empiricist who values ideas; always assume you might be wrong; keep learning from everyone.

Weekend reading links

 1. Profile of Wang Chuangfu, founder of BYD

Born in 1966 in the eastern province of Anhui, Wang is part of a generation of Chinese entrepreneurs who escaped poverty to join the nation’s newly minted billionaire class... Wang’s obsession with batteries led to a pivot to vehicles in the early 2000s. Cracking the five-minute charge this week builds on his pioneering “cell-to-body” technology — sandwiching a battery cell inside a vehicle’s structure... The company’s stock rally has also taken Wang’s personal net worth, according to Bloomberg data, to just shy of $30bn, making him one of China’s richest men. Despite that he remains a workaholic who lives humbly. His house is walking distance from BYD’s main factories and he dispatches lieutenants to public-facing events unless his attendance is absolutely necessary. Underlings have long described Wang as a restrained, highly detail-orientated micromanager. His approval was once sought for a business unit to distribute fruit to team members. But his passion for batteries has revealed a performative flare. To demonstrate to an investor just how safe his battery cells are, he has drunk battery electrolyte fluid. He has reused cells after trucks drove over them and frequently shows visitors batteries being penetrated by nails.

BYD plans to manufacture in India with a JV partner.  

2. Interesting insights from a survey of over 30,000 GenZ professionals and 700 HR leaders. 

Unstop, the community engagement and hiring platform for students and graduates, said that 83% of engineering school (E-school) graduates and 46% of business school (B-school) graduates remain without a job or internship offer in its report ‘Unstop Talent Report 2025’. A significant 51% of GenZ professionals seek multiple income streams through freelancing and side hustle, with the number rising to 59% among B-school students. The report also delves into the glaring gender pay gaps. Two in three female arts & science graduates earn below ₹6 LPA, while their male counterparts largely surpass this mark. However, B-schools and E-schools demonstrate pay parity, ensuring fair compensation irrespective of gender.

3. Borders and proximity is what matters on defence spending in Europe.

There is an inverse relationship between the two, with the well-protected south of Europe skimping, and the exposed north-east spending well above the Nato mark of 2 per cent of GDP. What compounds this problem are the respective populations. Portugal, one of the lowest spenders, has more people than all three Baltic states combined. Spain is bigger than Poland.

4. Striking graphics on the rise of solar and wind generation globally since 2017.

China has built more than 120,000 wind turbines, nearly a third of the world total, and 1.5 million acres of utility-scale solar.

5. Africa's poor progress in electrification should count as one of the biggest failures of international development. 

Nearly half the continent's 1.2 billion people are without electricity.

6. The history of free speech shows that it's a more recent phenomenon.

For millennia, people thought differently about words, actions and liberty. Instead of valuing liberty of expression, their main preoccupation was to limit it. Because they were acutely aware of the power of words and the danger of lies, slanders and other kinds of harmful speech, the public policing of such things was a central feature of every premodern society across the globe. “Free” speech, by contrast, was an exceptional mode, which took different forms — divine prophecy, frank advice to a ruler, religious disputation or the exchange of ideas within the scholarly Republic of Letters. Only around 1700 did our modern notion of it, as a general right to speak out on matters of public concern, begin to emerge... 

In 1695, amid political and religious disagreements, the English parliament failed to renew a law mandating the pre-publication licensing of books. The result was an explosion of novel kinds of print, and a growing international fascination with “liberty of the press” as an engine of enlightenment. The two competing models of free speech that we’ve inherited were created in this new media world. The first approach contrasted press “liberty” (which was beneficial) with “licentiousness” (which was harmful) — responsible vs irresponsible speech, rights vs duties. That balancing attitude remains, globally, the norm... The alternative, absolutist model of free speech was invented in London in 1721 by two partisan journalists, John Trenchard and Thomas Gordon. As I discovered, they were mainly writing to defend their own corrupt practices, and their theory was full of holes. Nonetheless, the slogans of their hit column, “Cato’s Letters”, which proclaimed that free speech was the foundation of all liberty and should never be curtailed, were soon taken up across the world, including by the rebel colonists of North America, who enshrined its clumsy formulations in their First Amendment — “Congress shall make no law . . . abridging the freedom of speech, or of the press”. No ifs, buts or qualifications. 

In no other country have speech laws ever taken that absolutist form. The subsequent history of American attitudes is full of unappreciated ironies. Even before the First Amendment was ratified in 1791, Americans abandoned its approach in favour of the balancing model popularised by the 1789 French Declaration of the Rights of Man. Until the 1910s the First Amendment remained a dead letter; it was only the radical, now forgotten arguments of US socialists and communists that subsequently resurrected it. Early theorists of free speech mainly conceived of it in terms of public opinion, assuming that liberty of expression would eventually lead to consensus about everything...

But from the 1960s, as part of the cold war backlash against collectivist ideologies, interpretation of the First Amendment swung instead towards its current, libertarian outlook. This produced an American jurisprudence obsessed with clear and abstract rules — which was gradually achieved by ignoring libel, falsehood, civic harm, the responsibilities of the media and all the most difficult problems of how communication actually works in the world. Its simple, anti-governmental interpretation has also been increasingly hijacked to invalidate laws regulating businesses, restricting money in politics or otherwise attempting to uphold the common good. Legally, corporations are persons, and the First Amendment trumps everything.

The author makes an important distinction between free speech and its amplification.

It is a mistake, when grappling with freedom of expression, to focus too much on speakers. Especially in our age of 24/7 viral media, the critical issue is not speech per se but the responsibility for its amplification. It’s entirely reasonable to require the private media (whether printed, broadcast or online) through which most “public” speech is actually circulated and consumed to be transparent in their practices, and accountable to the society in which they operate. That means at a safe distance from direct governmental control, but more than just the fig leaf of “self-regulation”.

7. A frontline of the new Cold War, in central Africa.

Zambia and Tanzania are negotiating with a consortium led by the state-owned China Civil Engineering Construction Corporation for a $1bn concession to rehabilitate and run the iconic... Tazara railway that links copper-rich, landlocked Zambia to Tanzania on Africa’s east coast... reviving the strategic export route to Beijing... Tazara showcases an attempt to use more equity investment by Chinese state companies after Beijing’s Belt and Road Initiative was marred by defaults in borrower countries, including Zambia... Started in 1970, the Tazara railway was designed to help copper-rich Zambia access overseas markets after white-controlled neighbouring Rhodesia, today Zimbabwe, shut its borders in opposition to the country gaining independence from Britain... 

Under Mao, Beijing forked out Rmb1bn in interest-free loans to build the Tazara, with thousands of Chinese labourers working alongside locals. At its peak, it ferried more than 1mn tonnes of copper, consumer goods and passengers annually. “The Tazara to this day is still the biggest Chinese aid project implemented in Africa,” said Tim Zajontz, a lecturer at the University of Freiburg. “It continues to be a symbol of the Chinese-African all-weather friendship, as many officials on both sides often refer to  it”...A rival US-backed project is under way to upgrade the colonial-era Lobito Corridor and ferry Zambia’s resources westward through Angola instead. Agreed under former president Joe Biden through the US International Development Finance Corporation, Washington is lending $553mn to the railway in a model that brought in private investors such as Trafigura and Mota-Engil.

8. While the tech stocks and US stock markets appear to be in a bubble, there are historical precedents. The US has been the leader throughout most of the last century, except a brief interregnum when Japan took over.

Big Tech's 37.4% of the market capitalisation in 2025 pales before the 62.8% capitalisation of Railways in 1900. 

9. Starlink and Space X are now the most valuable assets for Musk.

Roughly half of Musk’s $314bn net worth is now tied to SpaceX — which was valued at $350bn in a recent private tender offer — while his 20 per cent stake in Tesla has dwindled to $100bn. Morgan Stanley estimates Starlink will generate $16.3bn in revenue this year, up 74 per cent from an estimated $9.3bn in 2024, with subscribers almost doubling to 7.8mn from 4.65mn, according to a January report. By comparison, SpaceX’s rocket launch business is forecast to make $5.8bn in 2025 revenue, up 20 per cent from $4.9bn last year... Starlink has said its more than 7,000 low-orbit satellites provide service to 118 countries and territories, with Niger the latest to be connected last week... It has won contracts with major airlines including state-backed carriers Qatar Airways and Air France, shipping groups including MSC and Maersk, and cruise operators Cunard and Carnival. About a quarter of the company’s revenues come from government contracts, however. According to US filings, SpaceX has already secured 39 different Starlink contracts across the US government worth around $3.5bn, including multiple military contracts with the Department of Defense.

10. Even as he takes the chainsaw to the US federal government, it emerges that Elon Musk's companies have received $38 bn in government contracts, loans, subsidies, and tax credits in the US over 20 years, with nearly two-thirds coming in the last five years. 

“Not every entrepreneur at this scale has been this dependent on federal money — certainly not Nvidia, not Microsoft, nor Amazon, nor Meta,” said Jeffrey Sonnenfeld, professor at the Yale School of Management, who noted that much of the funding has come during Democratic administrations. “With DOGE, there does seem to be a paradox there. He has been a big beneficiary of national industrial policy, especially Democrat industrial policy, through government funding.” Government funding also provided key early infusions to Musk’s ventures. NASA and the Defense Department nurtured SpaceX in its earliest years with contracts that helped it build infrastructure, while the agency tolerated the company’s failure to meet required milestones on time, according to congressional investigators. The $465 million Energy Department loan, which arrived in 2010, helped fuel Tesla’s meteoric rise: With that money, the company engineered and assembled its luxury electric sedan — the Model S — and bought a factory in Fremont, California, according to the agency. Tesla went public six months later... Since its 2003 Silicon Valley founding, Tesla has benefited from billions in rebates and tax credits from California. The state’s governor, Gavin Newsom (D), has claimed that “there was no Tesla without California’s regulatory bodies, and regulation.”... About a third of Tesla’s $35 billion in profits since 2014 has come from selling federal and state regulatory credits to other automakers... Tesla is the largest seller of these credits to automakers that don’t meet the standards and want to avoid paying a fine.

And that of Space X

11. Big Tech and job creation graphic of the day, Nvidia edition. (HT: Adam Tooze).

Even as its revenues doubled in 2024 from $61 bn to $130 bn, its headcount went up by just 20%!

12. The rise of Chinese e-commerce giants, Shein and Temu, has become a lightning rod for the backlash against cheap imports. President Trump ordered a halt in February to the so-called de minimis shipments, duty-free entry without inspections of parcels worth up to $800. 

The number of duty-free shipments to the United States has risen more than tenfold since 2016, to four million parcels per day last year. Similar shipments to the European Union have climbed even faster, reaching 12 million parcels a day last year. Duty-free shipments to developing countries like Thailand and South Africa have also surged… Last summer, South Africa imposed 45 percent tariffs on even the smallest imports of clothing. Thailand ended its exemption of low-value imported parcels from sales taxes, although it continues to allow tariff-free entry of parcels up to 1,500 Thai baht ($44). And the European Commission, the executive arm of the European Union, proposed this month to end the 27-nation bloc’s duty-free treatment of packages worth up to 150 euros ($156)…

Guangzhou has emerged as the global hub of de minimis shipments… Shein and Temu, competing Chinese e-commerce giants that together hold at least a third of the de minimis industry, coordinate much of their supply chains from large offices in Guangzhou… Yiwu, a city 600 miles northeast of Guangzhou with a vast wholesale market, has become another hub. It coordinates de minimis exports of toys, hats and other small items from towns scattered across the Yangtze River delta.

13. Mihir Sharma hits the nail on its head in his diagnosis of the ongoing trade wars

The fundamental flaw at the heart of how international trade in the era of the World Trade Organization (WTO) functions is the polite assumption that all economies are similarly structured. In other words, that costs, subsidies, and protections are transparent. Unfortunately, the biggest trading power in the world does not meet these criteria. If the People’s Republic of China violates this assumption, then the entire trading system is built on a lie. It is to this baseline problem that US actions, and those of others from the European Union to India, are responding. China’s accession to the WTO was premised on the assumption that its economy was, or eventually would be, comparable to the market economies that designed the system. The fact that it was not then; nor has it tried hard enough since to become one. As a consequence, it has built up imbalances domestically — and, thanks to its sheer size, those imbalances have expanded and mutated till they cover the entire world...

Hidden subsidies to power, land, and capital mean that competing with Chinese manufacturing has become very difficult for more transparently-run economies. By some estimates, China has the lowest average electricity price for industrial users among major economies. It is about 60 per cent of the equivalent in India, and about a quarter that of Germany’s. Meanwhile, it has increased and is still increasing the use of targeted tax subsidies in export-oriented sectors such as electric cars, batteries, and solar panels. There is no recourse within the WTO system for China’s trading partners if they want to correct this issue. It is not entirely surprising that both parties in the US have lost faith in WTO dispute settlement.

14. Africa's India rice dependency

Africa is typically a large market for broken rice — accounting for more than 80 per cent of India’s exports over 2018-20, according to data from the International Food Policy Research Institute. In 2022, Indian rice accounted for more than 60 per cent of rice imports for 17 African countries and more than 80 per cent in nine, including Somalia.

15. Trump bump has raised the flagging prospects of political leaders in many allied countries. 

16. In so far as it brought together the Bannonite nationalists, the MAGA populists, and plutocrats under one umbrella, the Trump coalition was one of opportunism. And its internal contradictions are now starting to show on the back of the DoGE cuts on welfare spending and associated departments. 

Over the next few months, he will have to find a way to balance the interests of both the fiscal hawks and billionaire allies, who want to radically downsize the federal government, and his working-class Maga base, which has become heavily reliant on government support... a growing section of voters has come to rely on government transfers, the result of an ageing society and rising inequality. These include Medicaid for poorer families and Medicare and Social Security for retirees. In 2000, according to the Economic Innovation Group, a think-tank, just 10.4 per cent of counties in the US derived a quarter or more of their total personal income from transfers. But by 2022, that had risen to 53 per cent of counties in the US. Many of those counties are in the sort of rural areas where Trump is hugely popular. 

“As much as Republicans like to rail against big government, [their voters are] often its biggest beneficiaries,” says John Mark Hansen, professor of political science at the University of Chicago. Or as Steve Bannon, one of the architects of Trump’s initial rise to power, put it in a recent podcast: “Medicaid’s going to be a complicated one . . . a lot of Maga’s on Medicaid.”... Income from government transfers was the fastest-growing major component of Americans’ personal income, according to the EIG report last year. It said they made up 18 per cent of all personal income in the US in 2022 — a total of $3.8tn — with the share more than doubling since 1970. Transfers, which include state pensions and state health insurance, as well as veterans’ benefits, food stamps, unemployment insurance and other benefits, were now the third largest source of Americans’ personal income, after income from work and investments, EIG said. The main driver of this trend, EIG said, was the ageing of the US population. Because the largest transfer programmes — Social Security and Medicare — are aimed at people of retirement age, transfer payments expand as the elderly population grows... 

The trend is not confined to a few poor pockets of the country. The report says that “most US counties depend on a level of government transfer income that was once reserved only for the most distressed places”. It said the transfer share runs highest in parts of the country that are “rural, old and poor”. Some of these, Appalachia and the rural South, are firmly Republican... A report by the Center for Children and Families at Georgetown University in January found that there are 15 states where at least one-fifth or more of non-elderly adults in small towns and rural areas are covered by Medicaid. Of these, eight voted for Trump in November.