London’s Brexit Exodus Is More of a Trickle

Date: 22-02-2019
Source: The Wall Street Journal

Mass departures from U.K.’s financial center so far haven’t happened

LONDON—A month before the U.K. is set to leave the European Union, a long-feared exodus of financiers from London hasn’t yet materialized.

Banks and asset managers have built up bases on the continent in recent years to ensure they can access the bloc after Britain’s departure. But, contrary to the widely held expectation that London would lose tens or even hundreds of thousands of jobs, there are few signs yet of a wholesale shift away from the U.K. capital.

Instead, financial firms are keeping a significant presence in London, citing the city’s global standing and well-developed financial ecosystem. For their EU operations, many are hiring locally or moving only a handful of London positions, firms and market observers say.

“Nobody is abandoning London,” said John Liver, partner at financial services firm EY. “Broadly, everybody still treats London as their global financial center in this timezone.”

The struggle to reform China’s economy

Date: 21-02-2019
Source: The Economist

How Xi Jinping could both calm the trade war and make China richer

For the past two weeks Chinese and American negotiators have been locked in talks in Beijing and Washington to end their trade conflict before the deadline of March 1st, when America will ratchet up tariffs on Chinese goods or, perhaps, let the talks stretch into extra time. Don’t be distracted by mind-numbing details on soyabean imports and car joint-ventures. At stake is one of the 21st century’s most consequential issues: the trajectory of China’s $14trn economy.

Although President Donald Trump started the trade war, pretty much all sides in America agree that China’s steroidal state capitalism makes it a bad actor in the global trading system and poses a threat to security. Many countries in Europe and Asia agree. At the heart of these complaints is the role of China’s government, which funnels cheap capital towards state firms, bullies private companies and breaches the rights of foreign ones. As a result, China grossly distorts markets at home and abroad.

The backlash is happening just as China’s model of debt, heavy investment and state direction is yielding diminishing returns. Growth this quarter may fall to 6%, the worst in nearly three decades. Many suspect that the true figure is lower still. By opening the economy and curbing the state, Xi Jinping, China’s autocratic leader, could boost performance within China’s borders and win a less hostile reception beyond them. He is loth to limit the power of the government and the party, or to accept American demands. But China’s path leads to long-term instability.