The Week in Business: Upheaval in China
What’s Up? (Nov. 27-Dec. 3)
Chinese Protest ‘Zero Covid’ Policies
China appeared to ease off some of its Covid protocol on Thursday after residents — frustrated by the “zero Covid” approach of the Chinese leader Xi Jinping — began protesting on a scale that is rare for the country. Chinese people flocked to the streets, and videos of marches and rallies surfaced on social media platforms, apparently overwhelming the censors who would otherwise swiftly suppress them. The demonstrations erupted amid a new Covid outbreak that prompted the Chinese government to invoke some of its most stringent measures, which include mandatory lockdowns and quarantining. These policies have affected people’s livelihoods and life prospects — many small businesses have struggled to survive, and youth unemployment reached a record 20 percent. It’s not yet clear to what extent the Chinese government will roll back its mandates, particularly as Mr. Xi has trumpeted the strict management of Covid in China.
Steady Job Growth
Employers in the United States added 263,000 jobs in November, showing the labor market’s continued resilience in the face of the Federal Reserve’s efforts to slow the economy through aggressive interest rate increases. Though November’s numbers are lower than the revised figure for October — 284,000 — the drop is only slight, and still far from the central bank’s target of fewer than 100,000 jobs added each month. The labor market has been more resistant to the Fed’s rate increases partly because many employers are still trying to catch up to demand. While businesses are wary of the economic outlook, and layoffs have roiled some sectors, like tech, many are still hiring.
Efforts to Avert a Rail Strike
President Biden, worried about a potential rail shutdown that he says would “devastate” the economy, signed legislation passed by Congress last week to impose a labor agreement on rail workers and their employers. The two parties have been at an impasse for months over what workers say are grueling and unpredictable hours that make it difficult to take time off for doctor appointments or important family events. A tentative agreement put forth in September — also brokered by the Biden administration to avert a strike — would have allowed workers to take off up to three times a year, which many of the country’s largest rail unions found insufficient and voted down in recent weeks. Mr. Biden faces potential backlash for overriding the will of rail union workers, having vowed to be “the most pro-union president you’ve ever seen.”
What’s Next? (Dec. 4-10)
New Efforts to Punish Russia
A near-total embargo on Russian oil is poised to go into effect on Monday in the European Union, with enormous potential consequences not just for Russia but for the world, as E.U. tankers and insurers make up half of the global fleet. Under the embargo, they would no longer be allowed to aid in the transport of Russian oil. To avoid some of the worst side effects of the ban, European Union diplomats have agreed to impose a price cap on Russian oil sales that would allow the European oil tankers and insurers to continue handling Russian oil exports as long as the oil doesn’t exceed the set price — $60 per barrel. Negotiations around that number had been contentious, partly because some countries in the European Union had been pushing for the lowest price possible — a lower cap would mean less revenue for Russia, and less money to finance the war in Ukraine. The $60 limit is unlikely to significantly crimp Russia’s oil revenues.
A Semiconductor Plant in the U.S.
President Biden will visit a semiconductor plant this week that is under construction in Arizona, an initiative that speaks to Mr. Biden’s interest in developing the semiconductor industry in the United States. This year, he signed the CHIPS and Science Act, which allocated about $28 billion to building up the domestic semiconductor industry as a way to become less reliant on China and to shore up supplies amid a global shortage affecting the production of cars, electronics and electrical grids. The plant in Arizona — slated to open in 2024 — is owned by Taiwan Semiconductor Manufacturing Company, or TSMC, a Taiwanese company whose high-performance chips render graphics in video games and give smartphones their smarts, but that also guide missiles and analyze military data. That has turned TSMC into a vital strategic asset for both Washington and Beijing.
A Test for the F.T.C.’s Agenda
Meta will be the party under scrutiny at a hearing on Thursday with the Federal Trade Commission, but the F.T.C. also faces a crucial test: whether the agenda of its chair, Lina Khan, can hold up. At issue is Meta’s attempt to acquire a virtual reality company called Within at the same time as it’s investing in the metaverse. For Ms. Khan, this is exactly the sort of antitrust problem she has made it her mission to eradicate. A vocal critic of Big Tech, Ms. Khan in July led her agency in filing an injunction against Meta to block the purchase, accusing the company of trying to quash competition through acquisitions. But as she tests the boundaries of antitrust law, the F.T.C. may lose some cases along the way — and Meta may be one of them.
What Else?
The Supreme Court will decide whether President Biden can carry out his executive action to forgive billions of dollars in student loan debt. Ramesh Balwani, the former chief operating officer of the failed blood-testing start-up Theranos who was found guilty of 12 counts of fraud, will be sentenced on Wednesday. This week’s Producer Price Index, an inflation gauge that measures the average change over time in the prices domestic producers receive for their products, will be one of the last pieces of economic data before the Fed’s Dec. 13-14 meeting.
