Weekend reading links

1. Indian universities have come to dominate the global rankings for research paper retractions, following complaints of plagiarism, fake peer reviews, and other misdemeanours. According to the Retraction Watch database, India recorded 887 research paper retractions in 2025, form 21% of all retractions (second to China with 41%) despite contributing just 5% of all publications, and occupying six of the world's top 10 universities for retractions. 

2. Stunning statistic about the Algerian demographic dominance of the Les Blues, the French national soccer team.

Only two of France’s 26 players are of non-immigrant ancestry — 22 of them have African roots. Some, such as Mbappé, are deeply connected to their country of origin.

And this dynamic of reverse migration and migrant domination elsewhere.

Of England’s 26 players, eight have Caribbean forebears, 10 African, and 20 who were eligible to represent at least one other country because of their family heritage or birthplace. Belgium has players who trace their lineage to its former colonies — Congo, Burundi and Mali. The Portugal team has those of Cape Verdean, Angolan, and Guinean lineage. Those surplus to their requirements — players of African descent born and raised in Europe — in turn, populate most of the African teams. Ten of the 11 Senegalese players in the starting lineup against France in the opening game were born in France... Six of the players in the US national team are of Afro-Caribbean heritage... There are those from Nigeria, Ghana, and Jamaica. Three are from Hispanic backgrounds — Christian Roldan (Guatemala), Ricardo Pepi (Mexican-American) and Jesús Ferreira (Colombian-American). As many are from Europe, and three others have dual nationalities... For Australia's Socceroos, four players were born in refugee camps. The players represent 15 ethnic backgrounds and include a Malaysian with Sri Lankan roots. Eighteen other players have direct immigrant or refugee heritage. To contextualise, only one Black player (Sam Morris) and another of Caribbean descent (Andrew Symonds) have represented Australia in cricket.

This is a brilliant article by Sandip G about the magnificent quartet in the French team - Kylian Mbappe, Ousmane Dembele, Michael Olise and Desire Doue. 

3. The US military learns from Iran.

The US has, similarly, begun to build its production of drones. It used the Lucas, a one-way attack drone reverse-engineered by start-up SpektreWorks from an Iranian Shahed-136, for the first time in combat in February. The Pentagon is looking to begin mass-producing them, and has requested to triple its spending on drones and related technologies to over $74bn next year.

4. Shenzhen, with 400,000 taxi drivers licensed to provide services in 26 platforms, will permit robotaxis from July 1. The new rules will allow the Shenzhen government to promote the “orderly development” of robotaxi tests, demonstrations and commercial pilots either in select zones or citywide. 

5. Friedrich Merz's landmark pension reforms

Under proposals agreed by a bipartisan commission, a compulsory initial contribution of 0.5 per cent of employees’ pre-tax income, rising to 2 per cent by 2031, will go into a Swedish-style public pension fund managed centrally and invested in capital markets. Contributions are split 50/50 between employees and employers. The statutory minimum retirement age of 67 is set to rise in line with life expectancy; rights to early retirement for people with 45 years of contributions will be restricted.

Such measures have become vital to reduce the deficits of Germany’s unsustainable pay-as-you-go system. Some 16.5mn baby boomers will retire by 2036 with only 12.5mn new workers joining the workforce, according to some estimates. The government spent about a quarter of the total federal budget on plugging gaps in the system in 2024; economists say that could double to 50 per cent in two decades.

Linking the retirement age to life expectancy is projected to mean only a gradual increase — to 67.5 by 2041 and 70 by 2091. But economists say this is the only sound way to stabilise the system without spiralling payroll taxes or huge federal subsidies. Narrowing early retirement rights will address a drain of experienced workers amid acute skills shortages.

6. Important graphic that highlights the extent of renminbi depreciation since the beginning of 2022 and the surge in surplus.

7. China expands export restrictions on dual-use items against Japanese companies in the latest instance of weaponisation of its manufacturing dominance. 

The companies added to the export control list include subsidiaries of Mitsubishi Electric and Mitsubishi Heavy Industries. The restrictions will also apply to several Japanese government research organisations including the National Institute for Defense Studies. Chinese exporters are banned from selling to the entities on the restricted list, and foreign organisations or individuals are also prohibited from selling dual-use items that were built or originated in China. China last expanded the list to 40 companies in February. In parallel with the expanded export control list, China’s commerce ministry on Monday put 20 Japanese companies and organisations on its watchlist, meaning they will get closer scrutiny in any matters relating to potential dual-use technologies. The list includes subsidiaries of Fujitsu, Mitsui E&S, Hitachi, Komatsu and Terra Drone. Beijing’s targeting of Japanese companies is the latest example of China’s weaponisation of trade in recent years. The EU Chamber of Commerce in China in April has found that Beijing has nearly tripled its use of export controls in the past five years. While some instances have been in response to western measures, the researchers noted that Beijing’s controls have also frequently targeted trade chokepoints.

8. GST balance sheet.

Though average GST collections in absolute terms are almost 90 per cent higher than those in the pre-GST period, other parameters tell the real story. The average growth rate in tax collections and the tax-GDP ratio are lower under the GST regime compared to the pre-GST era. Collections were further marred by GST cuts starting September 22, 2025.

9. India's labour market challenge.

With high-skilled IT services under pressure, a financial sector with limited capacity to create low and medium skilled jobs and manufacturing struggling to gain traction, the one area where jobs are being created is low-end services. Delivery riders for Zepto, which has just filed its papers for an IPO, have gone up from 49,278 in 2024 to 2.21 lakh in 2026 — more than a four-fold increase. Zomato and Blinkit have almost doubled to 10 lakh riders in two years. Swiggy now has 6.1 lakh riders, while Uber, at 14 lakh active drivers, outstrips Indian Railways. The gig economy is emerging as an urban employment sink.

10. The Uniqlo-Toray partnership that underpins Fast Retailing's spectacular growth. 

In April 2000, Uniqlo founder Yanai paid a visit to the offices of Toray, a Tokyo-based chemicals and materials conglomerate he had read about in a magazine. It marked the start of a strategic collaboration that provided Uniqlo with arguably its most important advantage over rivals: access to high-tech, specialised fabrics. After testing 10,000 prototypes, Toray invented a material combining four types of synthetic yarn that absorbs moisture from the body and converts it to heat. Uniqlo branded it Heattech, and since 2003 has sold 1.5bn garments made from or containing it. Toray also helped develop the fabrics behind AIRism, used as a breathable base layer, and the Ultra Light Down ranges of packable jackets insulated with bird plumage... control over fibre shape and fineness, dubbed nanodesign, has helped to make highly water-repellent and durable $50 lightweight parkas, creating a far cheaper alternative to specialist outdoor brands such as Patagonia. The two sides are entering a fifth phase of collaboration that aims to combine synthetic fabrics with natural ones, such as introducing cashmere into Heattech products to make them softer. Okawa believes few other retailers have such deep relationships with their key suppliers.

11. Good FT long read about the Jamie Dimon succession struggle at JPMorgan. The things that stand out are the following: 

One, the appointment of someone to the top position in any organisation, public or private, is bound to be opaque and involve considerable discretion. The only disqualification would be the egregiously ineligible. For any others, there will always be ways to spin it as a fair process. This holds with greater effect as the stakes go up. 

Two, in the succession struggle, dominated as they are by a multiplicity of considerations, among those eligible or qualified, it is rare that the most professionally competent will emerge as the successor. 

Three strong leaders will always delay succession, and even when they choose to retire, will seek to retain enough levers to influence the decisions of their successors. Most often, it is about decisions involving the promotion of the interests of those in the organisation closest to them, their pet projects or initiatives, broader organisational strategic shifts, etc.

Weekend reading links

1. Samsung's spectacular turnaround, from being in the doldrums as late as in 2024.

This month its market value, which has soared by 400% in the past year, hit $1trn for the first time, propelled by furious spending on artificial-intelligence infrastructure. In the first quarter of 2026 its operating profit rose to 57trn won ($38bn), more than eight times as much as a year before. Analysts expect profits to keep rising at a blistering pace, thanks in particular to the seemingly insatiable demand for its advanced memory chips... Semiconductors accounted for 61% of sales and 94% of operating profits in the first quarter. It is one of just three firms capable of making at scale the memory chips needed for ai, alongside SK Hynix, a South Korean rival, and Micron, an American one. The number of memory chips Samsung sold in the first quarter was up by about 20% on the preceding three months, but the average selling price rose by 90%.

2. The Economist argues that the calm in global oil markets despite a supply shock of some 14 mb per day can be traced to the 4 mbpd of increased exports by the US and the 4.5 mbpd of reduction in Chinese imports, coupled with rationing across countries. 

3. As the rise of AI threatens white-collar jobs and increases the returns to capital, The Economist proposes some measures to redistribute the gains. 

If employment falls, income that once went to workers is likely to show up as high profits in AI firms, chipmakers, data centres or elsewhere in the supply chain. Clever tax reforms, such as levies on corporate profits that are above a normal return on capital, on land and on natural resources, could capture these rents. The case for inheritance taxes to prevent the entrenchment of a capital-owning elite looks even stronger than before. At the same time governments could help workers adjust. Public wage-insurance, which smooths out falls in income after job losses, can help workers find better opportunities (and so can eventually pay for itself). Denmark’s active labour-market policies, in which the state helps people find and train for new occupations, have been proved to cut spells in unemployment... 

A last set of radical ideas, such as the partial nationalisation of ai firms. This week a South Korean presidential adviser floated a citizens’ “dividend” from AI businesses, sending the local stockmarket down by 5%, before backtracking. In America politicians murmur about giving citizens shares in AI companies via “Trump accounts”. In economic terms there is little difference between a well-designed tax system and a government stake in the private sector—and countries without AI giants will have to rely on taxes rather than seizing shares in foreign companies. But America may find that some public ownership is the best way to make the social upside from the technology transparent.

4. The changing face of Reliance Industries.

5. America's remarkable productivity growth miracle since the pandemic (it predates the AI boom).

Now with AI coming of age, the productivity spurt is likely to continue. 

6. Egypt may well be the leader in land monetisation to promote economic growth in any substantial form.  (HT: Adam Tooze)

Since 2015, Egypt has increasingly contributed public land as equity, while foreign investors provide capital, development expertise, and project execution. Once a project is completed, revenues are shared according to pre-agreed division... in 2023, Egypt appointed the bank’s International Finance Corporation as its advisor for the asset monetization program, leveraging its experience supporting emerging markets. While land monetization has been tried elsewhere, Egypt’s projects are among the largest... For the Ras el-Hekma development on the country’s North Coast, Egypt contributed approximately 40,600 acres of state-owned land along the Mediterranean. The UAE (via its ADQ sovereign wealth fund) committed roughly $35 billion, the largest foreign direct investment in Egyptian history. Egypt received immediate foreign currency inflowsfor the land, a 35 percent stake in the project, and long-term profit participation... A similar project, also on the North Coast, is Alam el-Aroum/Samla near Marsa Matrouh. The Qatar Investment Authority-linked Qatari Diar is investing almost $30 billion, which includes a $3.5 billion upfront land payment for some 20 million square meters and $26 billion in development investments. A revenue share for Egypt (15 percent after cost recovery) is part of the deal.

Another arrangement is in place for Egypt’s New Administrative Capital (NAC). About thirty miles east of Cairo, the NAC is designed as the government seat and a commercial hub; reports estimate total development costs of up to $58 billion, including infrastructure and governmental, commercial, and residential districts. Foreign direct investment plays a role in specific sub‑components like the Central Business District (CBD) and future free-trade‑zone ventures. Chinese banks led by the Industrial and Commercial Bank of China provided 85 percent of funding for twenty towers in the CBD. The China State Construction Engineering Corporation developed the CBD; Gulf investors (such as the United Arab Emirates’ DP World) developed commercial parcels. The state monetized land incrementally for the NAC, and parcel sales financed development, without increasing Egypt’s debt.

All this appears very impressive. While the article paints a picture of success, it would be interesting to peel layers and scrutinise this. 

7. This is anecdotal, but tells a lot about why India lags in manufacturing.

8. Spain is undertaking an ambitious experiment in immigration.

Since 2022, Spain’s foreign-born population has surged by an annual average of 665,000, the equivalent of adding a city the size of Málaga each year. Last year the country accounted for roughly one-third of the total increase in the EU’s immigrant population, according to the Rockwool Foundation, a Berlin think-tank. Supporters say the influx has given Spain’s ageing society a much-needed burst of economic vigour. Critics call it a poorly planned strategy that is straining the country’s infrastructure and creating new social tensions... In less than a quarter of a century, Spain’s foreign-born population has gone from one in 20 residents to almost one in five, a higher proportion than even the US... Last month the Spanish government’s most contentious immigration move to date took effect — a sweeping amnesty giving at least half a million people the chance to gain residency and work permits and move out of the shadow economy... applicants must prove he was in Spain before January 1 this year and has been there for five consecutive months.

The country is already experiencing an acute housing shortage, has among the highest youth unemployment rates at over 10%, and the anti-immigrant Vox party is running third. The final outcome on the rapid rise in immigration is yet to be known. 

9. Ruchir Sharma points to an area where China trails badly behind the US, the negligible role of the renminbi as an international currency. 

With a 17 per cent share of global GDP, but only 2 per cent of central bank reserves, China is trailing 30 to 40 years behind previous superpowers at a similar stage of their ascents... Britain at its peak accounted for 40 per cent of trade, but 60 per cent of trade payments were in sterling. China by contrast has a leading 15 per cent share of global trade, but only 2 per cent of trade bills are invoiced in renminbi...

China will remain an incomplete superpower until it can match this financial firepower. For decades, it has kept its financial system more tightly sealed than any other major nation. It now ranks in the bottom fifth of nations by international investment position, which captures the level of foreign ownership in the domestic market. Foreigners own less than 5 per cent of the stocks and bonds in China, one-fifth the level in the US. Its home market is something of a local prison. Beijing has generated economic growth with heavy infusions of government money, corralled at home by capital controls. Its money supply has multiplied sixfold since 1980 to 230 per cent of GDP, among the highest in the world. This liquidity sloshes around inside the walled economy, much of it in the domestic debt market, battered lately by a property bust. Beijing is wary of easing controls, lest it unleash capital flight.

10. The US has been the biggest oil export beneficiary of the Iran war.

11. The booming market for whey protein.

Prices for whey protein isolate have soared fivefold to €28,000 a tonne since 2023, outstripping cheese and butter prices by more than four times as producers struggle to keep pace with a booming protein market... Thirty years ago whey was primarily used in animal feed or spread on farmland as a fertiliser. Whey is the liquid separated from curds during the cheesemaking process. Now, dairy groups upgrade the liquid by filtration to produce whey protein isolate, a valuable ingredient for use in sports supplements as well as groceries such as yoghurt, bread and fizzy drinks, as weight-loss drugs and the protein megatrend propel demand. “This is reshaping the economics of dairy,” said Jose Saiz, analyst at Expana, a commodity market information service. “It used to be a product with no value . . . now cheese could become the byproduct of whey production.”

12. The UK's experience of small altnets driving broadband expansion and lowering prices has come with excesses. 

Over the past decade, more than £31bn has been raised to roll out full fibre broadband across the UK, with private equity giants, including Macquarie and KKR, backing upstart challengers — or “altnets” — in the sector. Yet despite the initial investor optimism that the “altnets” could snatch customers away from industry leaders, the firms have been dogged by high build costs, lower-than-expected customer uptake and a sharp response from the country’s largest provider — BT’s Openreach — to deploy its own fibre infrastructure. The destruction of shareholder value has been brutal. At the last count, the “altnets” posted losses of more than £1.5bn in 2024, according to Enders Analysis. After accumulating some £9bn of net debt as of 2025, some companies have already been placed into administration, while others have fallen into the hands of lenders... 

Prior to the “altnet boom”, which accelerated from 2021 onwards, only 24 per cent of Britons had access to full fibre internet, according to Ofcom. Fast forward five years, that number is now more than 78 per cent, with altnets serving almost 20mn homes with full fibre, according to Assembly Research. By next year, Ofcom estimates 95 per cent of UK homes will have full fibre, putting it in line with Europe’s leaders, including Spain and Luxembourg, where regulators encouraged full fibre rollout earlier than the UK. The “altnets” have also forced BT’s telecoms infrastructure provider Openreach and Virgin Media O2 to expand their own fibre networks, giving consumers a choice between providers who are now forced to think faster and harder about how to up their game. This added competition has meant prices have fallen, with the average monthly real-terms list price of UK full fibre broadband falling from £62.38 in September 2021 to £43.46 in September 2025, a drop of 30 per cent... altnets are taking close to 1mn [customer] lines from BT annually.

13. Alan Beattie argues that EU has initiatied several trade measures against China, though their implementation has been weak, primarily due to internal opposition within the bloc. 

One of the recent instruments with a bit more bite is the Foreign Subsidies Regulation (FSR), launched in 2023 and designed to level the playing field against state-backed Chinese companies bidding for contracts or producing and selling in the EU. It’s notable that it gives a lot of investigatory and decision-making powers to the Commission, specifically to the internal market and competition directorates, which are used to having autonomous powers. By starting investigations into their operations, the FSR has managed to get some Chinese companies to pull out of public procurement bids. But when the EU tries to use its internal market powers to investigate supposedly subsidised Chinese businesses trading in the single market, it becomes clear just how strongly Beijing is willing to resist. Last week, in an investigation dating to 2024 into the Chinese cargo scanner company Nuctech, Beijing cited new supply chain security laws to forbid Chinese companies to comply with requests for information, saying Brussels’ extraterritorial reach was illegitimate.

14. Arvind Subramanian and Devesh Kapur on the contrasting tales of India and China in monetisation of lands by urban local bodies. 

China’s land revenues increased from less than 1 per cent of GDP to more than 10 per cent at its peak. In contrast, India’s revenues have stagnated at about 1 per cent of GDP through the entire growth phase. Put differently, the Chinese government’s collections from land revenue for every urban resident that was available for spending were about 15 times more than India’s in 1999; at its peak in 2020, this multiple increased to 225.

15. As AI capex surges, there are growing doubts about whether it will generate the returns required to justify it.

For each of these hyperscalers, I collected the consensus estimates of analysts for the capital expenditures and revenues between 2025 and 2030. In these five years, capital investments are expected to rise by 20 per cent a year, a growth rate never seen before in this industry. Meanwhile, revenues are expected to grow 15 per cent annually. If we make the heroic assumption that there are no costs, then the additional revenue is the profit these companies are expected to make from their additional investments in AI data centres. Yet, even under these extremely optimistic assumptions, I calculate the implied return on investment is highly negative for all of them except Amazon. These numbers show that if the hyperscalers continue on the current trajectory, the AI boom will become a story of one of the largest destructions of shareholder value in history... If the hyperscalers want to generate, say, a 10 per cent return on investment, they would have to find an additional $2tn to $5tn in revenue a year. A tall order for a group of companies that currently generates revenues of just $1.5tn per year.

See this comparison with the technology, media and telecom (TMT) bubbles of the late nineties.

In 2025, US businesses invested almost $1.5tn in IT equipment and software. At the peak of the TMT bubble, it was $466bn or $829bn when adjusted for inflation. Indeed, the US economy is growing solely because of the tech boom. I calculate that over the past four quarters, 93 per cent of US GDP growth was explained by tech investments. Even at the peak of the TMT bubble, it barely reached 60 per cent.

16. Tim Harford points to evidence that retailers jack up prices in response to shocks much faster than they bring prices down, and that retailers make their money not so much during the upcycle than in the downward phase.

Johannes Brinkmann and Nikhil Datta of the University of Warwick recently published an analysis of the impact on petrol and diesel prices of the oil price shock in 2022, following Russia’s onslaught in Ukraine. They found that in the UK, retailer margins compressed: the wholesale price of diesel rose by 39 pence per litre, while retail prices only rose 16 pence. This is the opposite behaviour to that predicted by the greedflation hypothesis. A natural explanation of this price compression is that retailers feel under more intense scrutiny when prices are rising. Brinkmann and Datta show that searches on the petrolprices.com website increased dramatically when prices did — and that areas where such searches were more common were also areas where the price compression was more intense. 

Brinkmann and Datta’s analysis is merely the latest in a long tradition of research describing “rocket and feather” pricing at the pump — capturing the idea that pump prices neither faithfully track the ups and downs of the crude oil market, nor exaggerate them — instead, they shoot up like a rocket but drift down again like a feather. What is more, the quick surge upward reaches prices less lofty than one would expect; it is during the slow descent that retailers make their money. Fifteen years ago, Matthew S Lewis and Howard Marvel noted that customers spent more effort searching when prices were rising, even though there was little benefit to that search, since most retailers were charging similar prices. When pump prices were falling, there was more variability from forecourt to forecourt and a higher return to shopping around, but most customers did not bother, feeling content that prices were moving in the right direction.

17.  Preference shares are a complicated instrument.

The “preference” investors receive — usually a slightly higher dividend — comes at the expense of voting rights. Preference shares therefore arguably resemble the worst of both worlds of debt and equity. Like bonds, they do not offer any influence over the company’s decision-making. Like ordinary shares, they do not come with a contractual claim to annual payouts as dividends are subject to management discretion. Such non-voting shares have been a prominent feature in corporate Germany. Four of the 40 blue-chips in the Dax have used them to establish substantive two-tier share structures for years: Volkswagen, Porsche and BMW, the three auto giants, and glue and detergent maker Henkel. All are dominated by controlling families who hold a tight grip over the firm. 

Two further Dax companies — Merck and Fresenius — are listed as “partnerships limited by shares”, a German legal structure known by its acronym KGaA, that makes some shareholders more equal than others through other means. Deutsche Bank listed its asset management arm DWS as a KGaA in 2018, too, warning at the time that this structure could dent its valuation. Yet the club of German blue-chips with differential voting rights will soon become smaller after BMW shareholders voted to abolish preference shares last week at its annual meeting. The group’s 54.7mn preference shares, representing 10 per cent of BMW’s equity, will soon be swapped into ordinary shares with voting rights... In the US, dual-class share structures have become increasingly popular as fast-growing tech groups want to tap public markets while keeping outsized voting power for insiders. Elon Musk’s SpaceX even wants to grant its CEO 10 times as much voting power as external investors.

Sample this about SpaceX  

Elon Musk's special class of shares currently gives him control of 85 per cent of the voting power at SpaceX.

Weekend reading links

1. On the origins of infrastructure financing in the UK.

In the summer of 1858, Britain’s parliamentarians soaked the curtains in the Palace of Westminster with lime chloride in an attempt to counter the “Great Stink” emanating from the river Thames. It failed. The prime minister demanded the Metropolitan Board of Works construct a sewerage system, legislating to allow the board to raise £3mn. This was to be repaid by a three-penny levy on all London households for 40 years. By 1900, the municipal bond market in England was about 50 per cent of the market for UK government debt. Today it is just 4.7 per cent. Back then, most infrastructure projects were not only financed by the private sector but also backed by hypothecated cash flows from money raised locally. For example, the debt for the 1892 Elan Valley Aqueduct to pipe water into Birmingham was funded by an increase in water rates on businesses and households there. So the residents of, say, Manchester were not funding infrastructure elsewhere.

2. India is marching ahead on adoption of electrotech.  

3. Germany is the poster child for central bank independence.

4. Spurred by surging data centre loads, electricity demand is rising sharply in the US.

Data centre power demand will surge from 34.7 gigawatts in 2024 to 106GW by 2035, according to BloombergNEF, a research group, equivalent to more than 80mn homes. Overall US electricity demand is forecast to jump by a quarter by 2030 and by 78 per cent by 2050, compared with 2023, according to consulting firm ICF... Between January and November, the latest month for which data is available, the cost of electricity for residential customers in the US increased by 11.5 per cent.

5. Most Indian state boards focus on memory and conceptual understanding, as opposed to analysis and application. 

6. At 16%, US after tax corporate profit margins are at historic highs.

7. Nick Bloom, Paul Mizen, Gregory Thwaites et al have an estimate of the costs of Brexit (HT: Adam Tooze)

These estimates suggest that by 2025, Brexit had reduced UK GDP by 6% to 8%, with the impact accumulating gradually over time. We estimate that investment was reduced by between 12% and 18%, employment by 3% to 4% and productivity by 3% to 4%. These large negative impacts reflect a combination of elevated uncertainty, reduced demand, diverted management time, and increased misallocation of resources from a protracted Brexit process.

8. Some data on students and migrants from Asia in the US. Even as enrolment of Chinese students has declined, that of Indian students has taken off since 2014. While Chinese students were mainly for the UG programs, Indian students have been mostly for PG studies. (HT: Adam Tooze)

Indian students dominate the workforce of computer science workers. 

Similarly, Indians dominate physicians and Filipinos dominate nursing. 

9. India has one of the lowest free floats in its equity markets.

10. Japan's public debt at 237% of GDP is way off the charts, and considerably constrains Sanae Takaichi's room to manoeuvre. 

11. Tej Parikh writes that UK's biggest economic challenge is its political instability.

The UK doesn’t have a productivity puzzle. The causes of Britain’s weak underlying growth are well known and discussed ad nauseam. Why policymakers aren’t delivering is the bigger conundrum. Instability undermines business investment, hiring and planning decisions, and absorbs the political bandwidth that could be used to address lacklustre growth... Uncertainty and slow growth weaken the appeal of UK assets too. Pound sterling and British stocks have underperformed relative to peers over the past decade. Long-term UK government borrowing costs have remained elevated compared with other G7 nations, having come under frequent selling pressure thanks to fiscal mishaps... For all the turbulence, Britain remains attractive. London remains the leading European destination for foreign direct investment. The country’s strengths in finance, university research, tech and life sciences are draws. Cheap assets add to the allure.

12. Fascinating account of China's largest hotel chain, H World, with 12,700 hotels, adding 1700 hotels in 2025, aiming for 20,000 hotels by 2030, and took in 8.3 m guests during last year's Lunar New Year holiday. As a reference, Marriot has 10,000 hotels worldwide. 

H World was launched in 2005 by Ji Qi, co-founder of online travel booking site Ctrip, after he took inspiration from the multi-brand French group Accor... Its Hanting Inn brand, a fixture of the streets of major Chinese cities, often charges well below Rmb300 ($43) a night, while mid-range Ji Hotels typically cost slightly more. H World has several other brands, while internationally it also operates German brand Steigenberger. Its franchise model mirrors an approach that other Chinese businesses have used to expand in consumer sectors from bubble tea to fast food. For the “vast majority” of its franchised hotels, H World retains a degree of control, sending in hotel managers on its own payroll under what it calls a “manachise” approach. In the US, “typically the franchisees decide almost everything . . . we think in China this would not work,” said He. “A lot of people would not abide by your rules.”

13. VC funding for India's tech startups has fallen 73% since 2021, which also coincided with the rise of Byjus.

14. Fascinating account of the Jeffrey Epstein world. 

15. Shruti Rajagopalan has a good essay on India's AI ambitions, and more. This on regulation.

The EU went first and went heavy, a binding cross-sector AI Act with tiered risk categories, compliance obligations, and a governance apparatus that could employ a small city. China took the authoritarian-efficiency route. Regulate fast, regulate specifically, and make sure the state retains control over what models can say and do. The US, characteristically, has been light touch at the federal level, leaving governance to a patchwork of executive orders, state laws, and vibes. India, with these guidelines, has landed somewhere interesting, closer to the US in its instinct to avoid a standalone AI law, but far more deliberate in articulating why it is choosing not to regulate horizontally yet. The framework’s core bet is that India’s existing legal infrastructure (the IT Act, the Digital Personal Data Protection Act, sectoral regulators like the RBI and SEBI) can handle most AI risks if enforced properly and updated where needed...

Do not regulate the technology itself, govern its applications through the regulators who already understand those domains. Build incident databases so you learn from failures instead of pretending to prevent them through preemptive compliance theater. Use “techno-legal” mechanisms (standards, system-architecture-level controls, provenance tools) so that compliance scales without armies of auditors. Create sandboxes so regulators can see what actually goes wrong before writing rules. The explicit preference for “innovation over restraint,” listed as a core principle, rejecting the EU’s precautionary posture. Both committees looked at Brussels and decided that regulating AI the way you regulate pharmaceuticals, before you know what the side effects actually are, is a bad trade for a country where AI adoption is still nascent and unevenly distributed... The liability framework it recommended is graded. The regulated entity remains liable to consumers for any losses, but first-time failures where the entity followed prescribed safeguards and reported promptly would not automatically trigger full supervisory penalties. A rigid liability regime that punishes every probabilistic error will cause institutions to constrain AI capabilities to the point of uselessness.

16. Shyam Saran writes about Marco Rubio's speech at the Munich Security Conference, describing it as an "unabashed white, racist manifesto". 

His remarks celebrated the history of conquest, exploitation, barbarity, and even ethnic cleansing, which has marked the history of Western imperialism and colonial empire-building across Asia, Africa, and Latin America. He wants this to be a source of pride and inspiration, not something to “atone for purported sins of past generations”. What is perplexing is that the history of the world after the Second World War, which is often described as an American era, is instead seen as a period of Western decline: 

“But in 1945, for the first time since the age of Columbus, it [i.e. the West] was contracting. The great western empires had entered into terminal decline accelerated by godless communist revolutions and by anti-colonial uprisings that would transform the world and drape the hammer and sickle across vast swaths of the map in the years to come.” Anti-colonial uprisings, which would include our own against British colonialism, are not celebrated as struggles for freedom and human dignity but as evidence of the abdication of the Western will to rule. Strange that this should come from a representative of a country that is celebrating 250 years of its own successful war of independence against British colonialism.

17. AI is leading to changes in software industry business models, resulting in less predictability and more uncertainty.

Software companies have, for decades, sold their wares on a “per seat” basis, where an employee gets unlimited use of a package of tools. Think of the traditional Microsoft 365 licence... In a world of AI “agents” carrying out duties autonomously, that model makes less sense. The unit of account will no longer be users but tasks completed, queries undertaken, and data “tokens” used. Sticky, predictable, year-round software-as-a-service revenue — the kind of thing that private equity firms love because it makes companies easier to load up with debt — may become an endangered species. Some are already embracing the post-seat era. Snowflake, a data management software maker, charges based on consumption, as does Databricks, an unlisted hotshot valued at $134bn, according to Crunchbase. ServiceNow is one of many working on hybrid models, where monthly fees meet pay-as-you-use add-ons... consumption-based pricing... Software companies’ predictability was an asset that contributed to high valuations.

18. Europe telecom industry facts of the day

Europe has more than 44 mobile operators that each have more than 500,000 subscribers compared with eight in the US and just four in China, according to industry group Connect Europe’s State of Digital Communications 2026 report.

19. China high-speed railway facts.

China’s railways have in recent days been ferrying about 20mn passengers a day, with half a billion train trips expected over the 40-day lunar new year period... Nearly three-quarters of passengers will travel at speeds of greater than 200kph, streaking across the country in the white and silver high-speed trains that have become a defining symbol of China’s industrial might. In December, China reached 50,000km of high-speed rail, enough track to circle the globe, compared with 8,500km in the whole of the EU as of 2023. Just over two decades after it was launched, the network now links 97 per cent of cities with populations of more than half a million... China opened its first high-speed passenger line in 2003 between Qinhuangdao and Shenyang in the north-east, with speeds of 200kph. The World Bank estimated in 2019 that China spent about $17mn to $21mn per kilometre on high-speed rail... Another 20,000km of track is planned by 2035... 

China has benefited from a combination of relatively cheap land, enormous scale, standardised designs and a permissive regulatory environment, experts say. The country’s rail project is now overseen by China State Railway Group, a huge state-owned enterprise that operates the network and helps fund new line development. The group plans to invest Rmb520bn ($75bn) this year... The group’s total liabilities have mounted to Rmb6.4tn. China State Railway reported a modest profit of Rmb11.7bn in the first three quarters of 2025, following several years of losses during the Covid-19 pandemic. Analysts said profits from the freight network helped offset losses from passenger high-speed rail. Local governments typically share the burden of building and operating the tracks. But many are struggling with their own shaky finances following the pandemic and the collapse of the property market.

20. Finally, the US Supreme Court has struck down the tariffs imposed by Donald Trump under the International Economic Emergency Powers Act. Also this. 

Weekend reading links

1. Gig economy may create over a million jobs in FY26, taking the total workforce to 14 million.

According to data from TeamLease Services, ecom and qcom are likely to add nearly 1 million jobs this year, followed by the logistics and warehousing sector. Balasubramanian A, senior vice president, TeamLease, said: “Qcom and ecom are estimated to generate 900,000 to 1 million jobs as they expand into Tier-II, -III cities; logistics and warehousing are expected to create nearly 500,000 roles driven by new multi-modal parks and electric vehicle fleets.” A similar trend was evident last year (CY25) when ecom and qcom firms created 600,000 jobs, logistics players generated 400,000, and the banking, financial services, and insurance (BFSI) sector added nearly 200,000 new gig roles for field sales and digital verification. Similarly, data from jobs and career platform Apna, for financial year 2026-27, said that hiring is expected to be driven largely by qcom expansion into Tier-II and Tier-III cities with around a million jobs. Kartik Narayan, chief executive officer of jobs marketplace at Apna, said: “The top three sectors— qcom, retail, and logistics — will continue to dominate the space. Qcom would add nearly 1 million jobs and logistics may generate approximately 500,000-700,000 jobs.”

On wages

On whether an increase in demand will lead to a rise in salaries or incentives of gig workers, Apna said, “Salaries are variable payout given the job but are approximately between ₹12,000-₹25,000 with the mean being ₹15,000 for nearly 40 per cent of these employees. Gig worker payouts might remain flattish due to intense competition and any increase would be attributed to incentivising festival period delivery and other holidays than the actual pay-out per delivery.”

2. Sanae Takaichi wins the largest majority for the LDP in the 465-seat Japanese lower house since its formation in 1955, securing 310 seats in the snap polls. The result saw the Nikkei rise sharply and bond yield climb in expectation of increased borrowings to fund Takaichi's committed spending program. 

3. Contrary to all the talk of a declining US economy, investors are flocking to US assets.

Last year foreigners poured around $1.6tn into US financial assets, including nearly $700bn into stocks, both new records and significantly higher than the levels of recent years. The story is much the same for US corporate bonds, with foreign purchases up sharply... From Singapore to Seoul, they are staying up all night to trade on increasingly popular after-hours US trading platforms. Among the few foreigners sitting out this buying spree were central banks, which have been moving money from the dollar into gold... Foreign institutions alone now own nearly 15 per cent of US stocks, a record share and up by half from the level a decade ago... Notwithstanding all the America bashing, foreigners now own nearly $70tn in US assets, double the level a decade ago. And in the last year, most of those flows arrived as “hot money”. Foreign direct investment in factories and businesses, which cannot withdraw quickly, was much weaker than portfolio flows into assets such as stocks and bonds, which can reverse in an instant.

4. US plans tariff carve-outs to chip makers, especially the likes of TSMC, who make investments in the US. 

The size of the potential rebate programme would be linked to the recent US-Taiwan trade agreement. The White House has agreed to slash tariffs on imports from the island to 15 per cent in exchange for a $250bn investment in the chip industry in the US. Under the deal, Taiwanese companies including TSMC that invest in the US will be exempt from the forthcoming tariffs in proportion to their planned US capacity. The White House said it would allow Taiwanese companies building semiconductor plants in the US to import 2.5 times the new facilities’ planned capacity tariff-free during the construction period, according to an outline of the trade deal released by the commerce department. Taiwanese companies that have already built plants in the US will be allowed to import 1.5 times their capacity. TSMC would be able to allocate the exemptions it earns under the trade deal to its Big Tech clients in the US, allowing them to import chips from the company tariff-free. The size and scope of the rebates for US hyperscalers depend on the production capacity that TSMC forecasts it can reach in the US in coming years.

5. China is treating data as an asset.

In 2024, China became the first country to allow enterprises to classify data as intangible assets on their balance sheets. Beijing had already declared data a “factor of production” alongside land, labour, capital and technology. The National Data Administration now oversees dozens of data exchanges. China Unicom, one of the world’s largest mobile operators, reported Rmb204mn ($29mn) in assets in its first filing under the new rules. The motivation isn’t purely philosophical. Local government financing vehicles — the off-balance-sheet entities Chinese municipalities use to fund infrastructure — are drowning in debt. Some use data as collateral for fresh loans.

6. The rising Apple margins

7. Mirroring the changing trends, as EV sales slump across the US, EV battery plants are being converted into energy storage systems (ESS) for the surging demand to power data centres. Sample this

Tesla, which incorporates batteries from a range of suppliers including CATL and LG into its Megapack and Powerwall energy storage systems, reported that energy and generation storage revenues grew 27 per cent year-on-year to $12.8bn — up from $2.8bn in 2021, while its revenues from EV sales fell 9 per cent to $64bn. The shift to ESS has been accelerated by weakening government support for EVs, after the Trump administration slashed tax credits established in the Biden-era Inflation Reduction Act and moved to cut tailpipe emission rules and state clean-air standards intended to encourage drivers to switch to EVs... These policy rollbacks led analysts at BloombergNEF to revise down their forecast for EVs’ total share of 2030 car sales from 48 per cent to 27 per cent. EVs currently account for about 8 per cent of US new car sales. Stellantis is selling its 49 per cent stake in a battery plant just over the Detroit River in Windsor, Ontario, to Korean battery giant LG for just $100, after the European car group announced a €22bn writedown last week tied to its aggressive expansion into EVs. It had invested $980mn in the Windsor facility...

While the administration has cut consumer tax credits for EVs, President Donald Trump’s flagship One Big Beautiful Bill Act passed last year retained generous production credits for battery manufacturers. They include a $35 per kilowatt-hour manufacturing credit for battery production, and a 30 per cent investment tax credit for energy storage that will be phased out starting in the 2030s. The credits, along with US tariffs on Chinese energy storage batteries of close to 60 per cent, mean ESS cells can be produced in the US at prices close to parity with the Chinese imports that dominate the market.

8. Migrants make a disproportionately large share of successful US startup founders. 

Some 44 per cent of the 1,078 founders who created a US tech start-up valued at more than $1bn between 1997 and 2019 were born outside the country, according to a Stanford Graduate School of Business study. The top five grey matter exporters to the US were India, Israel, Canada, the UK and China.

9. AK Bhattacharya points to some facts about the Government of India's capital expenditure trends. 

Between 2005 and 2020, a period of 15 years, capital expenditure crossed 2 per cent of GDP only twice — in 2007-08 and in 2010-11... Between 2020-21 and 2024-25, she grew capex by 26 per cent on average every year... As a percentage of GDP, capital expenditure rose from 1.67 per cent in 2019-20 to 3.2 per cent in 2024-25... Interest-free 50-year loans to states... in 2020-21... accounted for only 2.8 per cent of the total capex outlay of the Centre. Over the years, this share has gone up and, in 2025-26, it was 13 per cent and is set to go up to 15 per cent in 2026-27... Almost 41 to 52 per cent of the government’s capital outlay is allocated to PSUs. In other words, the Union government depends not just on the states for executing its capex plan, but also on PSUs... almost half of the government’s capex is dependent on providing equity and loans to PSUs.

10. Martin Sandbu points to Michael Sandel's prophetic warning in 1996 in his book, Democracy's Discontent.

“To the extent that contemporary politics puts sovereign states and sovereign selves in question, it is likely to provoke reactions from those who would banish ambiguity, shore up borders, harden the distinction between insiders and outsiders and promise a politics to ‘take back our culture and take back our country’, to ‘restore our sovereignty’ with a vengeance.”

11. London has the lowest new housebuilding among all major cities in the world!

London has been set a target of building 88,000 new homes per year over the next decade. Last year construction started on just 5,891 — 94 per cent below target, a 75 per cent year-on-year decline, the steepest drop in the country, the lowest tally since records began almost 40 years ago and the lowest figure for any major city in the developed world this century... New starts by private developers were down 79 per cent over the past two years, compared with collapses of 85 and 94 per cent for affordable and council housing respectively, with work started on just 100 council-funded homes in 2024-25 by one estimate.

And rising costs due to regulatory changes are behind this. 

This is a good example of how well-intentioned policies to discourage foreign investors from buying up properties in London (and thereby squeeze out the local residents) may have had a perverse impact. 

Such investors are frequently blamed for worsening affordability, but a 2017 report led by the LSE’s Kath Scanlon found that these investors “had a positive net effect on the availability to Londoners of new housing, both private and affordable”, warning that “there would be real costs to the London housing market if overseas investment . . . began to feel unwelcome”. That is precisely what has happened over a decade of increased charges on owners of second homes and foreign investors.

This about the regulatory layers added in response to the 2017 Grenfell Tower fire. 

This has taken two forms: significant costs of upgrading existing homes to new standards, and the introduction of a new body — the Building Safety Regulator (BSR) — which has added a lengthy and exacting step between planning approval and starting construction, with inadequate resources quickly creating a logjam. This has placed a particular squeeze on the finances of affordable housing providers, who cite “additional costs and delays as a result of new building safety regulations” as a key reason for low build rates, leaving £120mn worth of council-funded homes on hold. Tens of thousands of provisionally approved homes in the capital are waiting on supplementary review by the BSR, which green-lights only a third of cases and takes an average of eight months to do so. These delays — at a point when developers have typically already poured large sums into a project — add huge financing overheads, in some cases expanding projects’ overall cost by more than 15 per cent. Adding to these are enhanced environmental regulations that are far more stringent than those in other European countries and levies requiring developers to invest in local infrastructure.

12. Tej Parikh has an excellent graphical summary that explains how the combination of an extended period of monetary and fiscal accommodation has led to plentiful cheap financing, eroded financial market discipline, kept zombie companies going, lowered business entry and exit, delayed recessions, and led to the accumulation of ever-increasing risks across the economy. 

Weekend reading links

1. Indian software industry productivity facts

Over the past decade, India’s top five outsourcing companies have managed to raise labour productivity by less than 2 per cent annually because of their squeamishness to put more fixed capital behind human effort: The average value added by an employee has risen to roughly $40,000 a year, from $34,000 in 2015. The modest gains are going to labour, although not at the entry level where salaries have been stagnant. Profit per worker, in my calculations, has been practically unchanged in dollar terms.

2. Concentration in the VC industry.

The top 10 most valuable private companies, including OpenAI, ByteDance, Anthropic and SpaceX, have been sucking up funding mega-rounds and are collectively valued at $2tn. The top 10 most active VC funds, including General Catalyst, Andreessen Horowitz, Sequoia and Accel, are heavily focused on AI. “The most influential investors are essentially running concentrated AI funds, not diversified portfolios,” CB Insights concluded. 

One other significant difference today is how the Big Tech companies are reshaping the start-up universe given their overlapping roles as suppliers, customers, competitors, funders and acquirers. The Magnificent Seven US tech companies — Nvidia, Alphabet, Microsoft, Amazon, Apple, Meta and Tesla — dominate the tech landscape in a way that was not the case at the dawn of the internet era. These giant companies are massive allocators of capital in their own right, investing almost as much as the entire VC industry. They also provide start-ups with AI software, cloud computing services and direct investment funding through their own sizeable corporate venture capital arms. But they are furiously rolling out AI themselves in sectors as varied as video generation, healthcare, autonomous driving and scientific discovery. Every time a giant AI company releases a new generative AI model, scores of undifferentiated start-ups shrivel up and die.

3. Oil industry trends 

Oil executives seem to not only be balking at the risk of having assets nationalized but also expressing a view that has become standard across the sector: Big new projects have to survive intense scrutiny. Venezuela’s tar-like oil has to be diluted to flow through a pipeline. It has to be upgraded locally before it even gets to a refinery. That’s a multi-billion-dollar expense. For most of the past 15 years, Big Oil was focused on projects — such as drilling for North American shale oil — that have a quick and predictable payback, even though their production drops off steeply after the first year. To some extent, the companies deprioritized projects such as those in offshore oil, or heavy crude deposits like Venezuela’s, that keep producing at low cost for 10 to 20 years but require more upfront investment to bring online.

So a lot of oil came from fields that were low in risk but relatively high in cost. According to Rystad Energy, a research company, in 2024 North American shale had a break-even cost of $45 a barrel. That was expensive compared with offshore deepwater ($43), offshore shelf ($37) and onshore Middle East ($27). From 2014 to 2024, daily crude production in the United States increased 71 percent, while production in the rest of the world actually decreased a couple of tenths of a percent, according to data in the Statistical Review of World Energy 2025. That’s changing a bit. North American shale is beginning to be tapped out, although the oil majors are using advanced technology to get more oil out at lower costs. Since around 2022, when Russia invaded Ukraine and oil prices spiked, the oil majors have shifted some of their interest back toward higher-risk, longer-payout projects in parts of the world where the oil is cheapest — not North America. Exxon and Chevron have explored bidding on exploration opportunities in Libya. Last year, Chevron signed an agreement in principle to develop Iraq’s vast Nasiriyah oil field and other assets. Exxon is also in discussions with Iraq.

Interesting that Trump is forcing his oil companies to invest in a country that has historically been univestable despite its abundance of oil reserves, one reason being the high cost of extraction of the country's heavy crude (costs $70 to extract a barrel, when oil sells for $58). 

4. In 2017 when Donald Trump said he was going to pull the US out of the Paris Agreement, this was the reaction of corporate America.  

“Today’s decision is a setback for the environment and for the US’s leadership position in the world,” wrote Lloyd Blankfein, Goldman’s then chief executive, in his first post on what was then Twitter. Facebook’s Mark Zuckerberg agreed, saying the move was “bad for the environment, bad for the economy, and it puts our children’s future at risk”. Tesla’s Elon Musk and Walt Disney’s Bob Iger both quit White House business advisory councils. At Apple, Tim Cook said he had tried but failed to persuade Trump to abandon a move that would have “no impact on Apple’s efforts to protect the environment”. And other corporate leaders spoke out with equal force.

Last week he announced US exit from both the 34-year old parent of the Paris Agreement, the UN Framework Convention on Climate Change, and the UN's 38-yar-old Intergovernmental Panel on Climate Change, it was met with silence from the same people. 

5. China violates Taiwan's airspace with a drone for the first time,

A Chinese surveillance drone entered the airspace of Pratas, a Taiwan-controlled island in the South China Sea also known as Dongsha, for four minutes on Saturday. The unmanned aerial vehicle was a WZ-7 known as ‘Soaring Dragon’ according to a Taiwanese national security official. It flew at an “altitude outside the range of our air defence weapons and left following warnings Taipei broadcast via international radio channels”, Taiwan’s defence ministry said in a statement... “China has found another soft spot,” said Kitsch Liao, an associate director at the Atlantic Council’s Global China Hub. “They can repeat this to demonstrate that they can enter Taiwan airspace with impunity. And what do you do if they start flying lower and lower? If you decide to shoot the drone down when it comes into range, China can blame Taiwan because it didn’t do anything before.”

6. Ishan Bakshi makes some very important points on the central government's tax revenues on the back of the lowering of corporate taxes in 2019, the rejigging of the personal income tax slabs in the Union Budget of 2025-26, and the GST rate rationalisation of late 2025.

The net impact of these fiscal steps — even as the direct and indirect tax base has significantly expanded over the past decade — is constrained finances, forcing governments to restrain expenditure, despite the bluster of lavish spending. The estimates of the extent of revenue foregone due to these tax cuts vary considerably. Nonetheless, they are quite significant. For the corporate tax cuts, the initial estimates pegged the revenue foregone at Rs 1.45 lakh crore, while in the case of the income taxes, it was around Rs 1 lakh crore. For GST, while precise estimates are difficult to arrive at, they will reflect slowly in tax collections... Over the past decade, the Centre’s tax collections have barely inched upwards – net tax revenues were 7.2 per cent in 2014-15 and were budgeted at 7.9 per cent in 2025-26. Collections may, in fact, end up being lower this year.

7. Tim Harford writes about smart fitness tracker watches and their health behaviour tracking. 

...in a study conducted with behavioural scientists Linda Chang, Erika Kirgios and Sendhil Mullainathan. The researchers asked a simple question: “Do we decide differently when some dimensions of a choice are quantified and others are not?” The answer emerged loud and clear from a series of experiments: yes, we do. Whenever experimental subjects were offered a choice between two options, they would tend to favour whichever option looked better on numerical measures and overlook qualities that were expressed as graphical elements, letter grades, star symbols or in words (“moderate”, “excellent”, “highly likely”). This was true whether the choice was between hotels, job applicants, conference locations, public works projects, restaurants or charitable causes. Numbers loomed large. What was quantified, got attention. This matters because fitness trackers purport to excel at quantifying some things and do not pretend even to quantify others. If quantification fixation applies, we would expect to see such trackers systematically pushing people towards the quantified behaviour at the expense of other things.

And the perverse incentives generated from such health behaviour tracking.

Larger studies strongly suggest that fitness trackers do not usually hinder weight loss, but the surprising and disheartening finding is an example in miniature of the quantification-fixation problem. In this case, both groups were equally active, but those using a fitness tracker were getting automatic, effortless validation of their effort, which they could then use to justify more indulgent eating. The lead researcher, John Jakicic, speculated at the time: “People would say, ‘Oh, I exercised a lot today, now I can eat more.’ And they might eat more than they otherwise would have.” Calorie counting is joyless, easily fudged — and not automated by the watch. We’re all familiar with the tendency to be virtuous in one aspect of our behaviour, then let ourselves off the hook somewhere else — choosing a healthy salad, then using it as permission to order dessert. Psychologists call this behaviour “self licensing” and fitness trackers encourage it by supplying us with asymmetric data. We are told how much we moved, but not what we ate. We get stark feedback on heart rate and step count, but the tracker looks the other way if we order french fries and a glass of beer.

8. Tej Parikh thinks that China will win the AI race with the US. I think this piece is one of the least persuasive ones from Parikh.

9. As anti-immigration and nationalism trends rise, it is likely that US companies will show increasing preference for US-born chief executives. 

Foreign-born CEOs already face a more difficult time than native ones. Academic research shows they are held to a higher standard for performance and are more likely to be dismissed when things are going wrong. They also have to work harder to prove their legitimacy and trustworthiness. In politicised environments, the margin for error becomes smaller.

10. The continuous weakening of rupee despite the combination of low inflation, high GDP growth rates, and low current account deficit (around 1% of GDP) can be traced to the worsening trade balance and weak FDI inflows. 

Merchandise imports averaged about $62 billion a month in 2025, far exceeding exports of roughly $37 billion and leaving a $25 billion trade deficit. Although services exports offset much of this gap, weak goods exports and a rising import bill — driven in part by higher gold and silver prices — have skewed demand towards dollars... In 2025, foreign portfolio investors (FPIs) withdrew about $19 billion from Indian equities on a net basis — the worst outflow on record... Gross FDI inflows have been stuck at around 1.7 per cent of GDP since early 2023, well below the 3 per cent seen in the mid-2000s... Between January 2024 and October 2025, gross FDI inflows averaged about $7 billion a month, while withdrawals ran close to $4 billion, leaving net inflows of barely $3 billion — negligible for a $4 trillion economy. Once rising outward investment by Indian firms, averaging $2-3 billion a month, is taken into account, the picture worsens. In effect, India has received close to zero net FDI each month over the past 22 months.

In fact, net FDI has been negative for last three months. 

Data shows that net FDI in November was negative $446 million, compared with negative $1.67 billion in October.

11. Disinvestment facts for India.

Lowering the government’s stake to 51 per cent in 78 listed public-sector enterprises (PSEs) could unlock value worth about ₹10 trillion.

12. Ashok Gulati has a summary of the food subsidy.

In the case of rice, the economic cost hovers around Rs 42/kg, and for wheat, it’s around Rs 30/kg to FCI. It gives 5 kg of free rice or wheat to about 813 million people under the PM Garib Kalyan Yojana. Roughly 56 per cent of the country’s population of around 1.5 billion is covered. The introduction of point of sale (POS) machines in more than 5 lakh fair price shops (FPS) was a significant reform of the Modi government. It helped to reduce massive leakages in PDS. But how rational is giving free food to 56 per cent of the population, when, according to the World Bank’s extreme poverty criteria — $3 per capita/day/in purchasing power parity (PPP) terms at 2021 prices — India’s poverty came down to just 5.3 per cent of the population in 2022? Even at a higher poverty line of $4.2/per capita/day, poverty in India was about 24 per cent. One can argue that the extremely poor need to be given free food (antyodaya). Viewed from this perspective, only about 5 per cent of the country’s population needs free food, while others should pay at least half of the MSP. If not, then this policy is nothing but the biggest political revdi (dole) the government is giving consumers for votes.

13. FT Alphaville suggests that the threat of pulling out from the $35 trillion foreign holdings of US financial assets is not a credible option for Europeans and others trying to exercise leverage over the US. 

While the US’s large current account deficit suggests that in theory there is the potential for the USD to drop should international savers stage a mass retreat from US assets, the sheer size of US capital markets suggests that such an exit may not be feasible given the limitations of alternative markets.

14. Amidst China's real estate crisis, this stands out

China had about 440 square feet of housing for each man, woman or child living in cities in 2024, up from 340 square feet only 15 years earlier. It was less than 100 square feet per person before Mao Zedong’s death in 1976.

15. In a ruling that has far-reaching implications for how India applies tax treaties to offshore transactions, the Indian Supreme Court has ruled on the tax treatment of Tiger Global's capital gains from the sale of its investment in Flipkart (done through three Mauritius-based entities) to Walmart for about $1.6 billion in 2018. 

Tiger Global had argued that capital gains on the transaction should only be taxed in Mauritius and not India, in line with a treaty in place between both countries for decades. While a significant amendment in 2017 to the treaty had made capital gains on transactions in Indian shares taxable in India, it also exempted share purchases that were made before the change came into force. The Delhi High Court agreed with this view at the time. Last week’s ruling essentially strikes down this interpretation and makes all transactions vulnerable to being taxed in the country. The exact amount Tiger Global will have to pay the tax authorities is unclear, but some estimates suggest that tax plus penalties may be close to $1.5bn... 

The court said holding a tax residency certificate was not a “magic wand” that automatically bestowed the benefits of the treaty, and that Indian tax authorities could examine whether the structure of an investment had been created primarily to avoid taxes. In his concurring opinion, one judge wrote: “Taxing an income arising out of its own country is an inherent sovereign right. Any dilution of this is a threat to a nation’s long-term interest.” This signals that the court could take a similar approach if presiding over other investments. Foreign investors typically use Singapore, Mauritius, the Netherlands or other treaty jurisdictions to structure their investments into India. The supreme court’s order will force a rethink on this.

16. China is influencing the course of the Russia-Ukraine war by informally supplying drones to both sides. 

China already makes 70-80 per cent of the world’s commercial drones and dominates production of critical elements such as speed controllers, sensors, cameras and propellers, according to analytics provider Drone Industry Insights. That has made it a hidden fulcrum in the conflict. “It just puts into perspective how much control the Chinese actually have over the outcome of this war,” says Catarina Buchatskiy of the Snake Island Institute, a Kyiv-based military think-tank. “They could just choose to supply or not to supply the Ukrainians. I mean, the drone is such a definitive battlefield weapon now. It underlines how China has kind of evolved into a really influential player.” China’s Ministry of Foreign Affairs said the country had “always maintained an objective and just position on the Ukraine crisis” and had “never supplied lethal weapons to any party to the conflict and strictly controls the export of dual-use items, including drones”.

17. AI-related capex contributed as much to the US economic growth in H1 of 2025 as consumer spending, which makes up 70% of the economic output.

18. This sort of sums up Trump's presidency

Trump’s behaviour seems to be becoming even more erratic. Since the beginning of the year, he has staged a military operation in Venezuela; promised to intervene in Iran; threatened to annex Greenland; dispatched hundreds of masked federal agents to Minnesota; and launched law suits against the head of the Federal Reserve, Jerome Powell, and the head of JPMorgan, Jamie Dimon. That is in just three weeks and there are three years of his presidency left to go.