The Economist Magazine, 8 January 2021

11.8 MB·English

by  Umair Mirza

The coronavirus’s worrying mutations
Britain’s place in the world
Infrastruggles: building back better
How prediction markets see 2021
JANUARY2ND–8TH2021
The future of e-commerce
(with Chinese characteristics)
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Politics Among Nations: The Struggle for Power & Peace
By Hans Morgenthau
Contents The EconomistJanuary2nd2021 3
The world this week United States
6 Asummary of political 16 Fiscal stimulus
andbusinessnews
17 Walmart v the Feds
18 All the president’s pardons
Leaders
18 The Zoom tax
7 Retailing
19 America’s European
The future is Chinese
demography
8 Building back better
20 LexingtonFarewell
Infrastruggles
LamarAlexander
8 Covid-19
The tunnel gets darker
The Americas
9 Digital government
21 AUS-Mexico row
Onlineonslaught
22 Canada’s soy-sauce
10 AfterBrexit
On the cover shortage
Britain’splaceintheworld
Retailers everywhere can learn 23 Argentina and the
from China’s world-beating Russian vaccine
Letters
e-commerce: leader, page 7. 23 ChinaandChileanwines
12 OnEasternAirlines,
The future of retail is Chinese,
families,coal,potholes,
page 47. Trustbusters go after
BobDylan Asia
China’s mightiest internet
24 Digitising Japan’s
titan, page 49. Dealing with
government
Briefing
Ant:Freeexchange,page56
13 Britainandtheworld 25 Fencing off Afghanistan
•The coronavirus’s worrying
Amazingjourney? 26 Rats in South-East Asia
mutationsThe virus is becoming
26 Cremation in Sri Lanka
more infectious: leader, page 8.
That’s how evolution works, 27 BanyanConfucianism in
page 57. America’s stimulus, SouthKorea
page 16. Four books on
covid-19’s impact, page 60 China
•Britain’s place in the world 28 The end of extreme
“Global Britain” is a fine idea, but poverty
requires hard choices: leader, 29 Avirus vlogger jailed
page 10and briefing, page 13.
30 ChaguanSmothering
The UK-EUtrade deal means Xinjiang’s culture
endless negotiations,page 39.
For Europe, it makes the best of
abad business, page 36. Britons’
Middle East & Africa
losses from Brexit, page 40
31 War in the Horn
•Infrastruggles: building back
32 Repression in Uganda
betterInfrastructure isn’t easy:
leader, page 8. But governments 32 An absurd Saudi verdict
and investors stoke a global 33 Anew challenger for Bibi
boom, page 52
34 Ailing Algeria, ailing
president
BartlebyUnused
holidays are a problem
for employers and
employees alike, page 51
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1 Contents continues overleaf
4 Contents The EconomistJanuary2nd2021
Europe Finance & economics
35 Germany after Merkel 52 An infrastructure boom?
36 Europe’s view of Brexit 55 America’s jobs market
37 Russia’s secret police 56 Free exchangeTaming
fintech
38 CharlemagneBlaming
France
Britain Science & technology
39 The Brexit deal 57 Covid-19’s new variants
40 Life after Brexit 58 Treating snake bites
41 Northern Ireland 59 Ause for urine
41 Vaccine roll-out
42 How Brexit happened
International Books & arts
44 The global struggle for 60 The post-pandemic world
human rights
61 Ethiopian music
62 JohnsonAn ode to small
talk
Business Economic & financial indicators
47 China’s everything stores 64 Statisticson42economies
49 Trustbusting in China
Graphic detail
50 Valuing 5G spectrum
65 Forecasting2021
50 Podcasting wars
51 Bartleby Leftover leave
Obituary
66 Barry Lopez, a voice for landscape
Volume438 Number9226
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6 The world this week The EconomistJanuary2nd2021
Governments in Britainand not enough. Mr Trump wants Control and Prevention, an must grapple with inflation, a
across the European Union payments of $2,000, which the independent agency, suggest- weak lira, and Recep Tayyip
rushed to approve a post-Brexit House of Representatives duly ed that the number of people Erdogan, Turkey’s president, a
trade agreement before noted and approved in a sup- infected by covid-19 in Wuhan vocal opponent of conven-
December 31st, the date on plementary bill; the Senate will may have been ten times high- tional monetary policy.
which Britain’s transition now consider the measure. er than officially reported.
period ends. The deal, which An election in the Central
was announced on Christmas The Department of Justice filed Ten people from Hong Kong African Republicwas marred
Eve, covers goods, but says a lawsuit against Walmartfor were sentenced to up to three by turmoil. Violence forced
little about financial services. an alleged lack of oversight in years in prison by a mainland 14% of polling stations to close.
Some disruption for business fulfilling prescriptions for Chinese court on charges Armed groups threatened to
is expected. The eu’s member opioids, which it says helped relating to their attempt to flee march on the capital, Bangui.
states back the pact, though the fuel the opioid crisis. In a from the territory by boat after
measures will come into force strongly worded rebuttal, the the imposition of a draconian Loujain al-Hathloul, a Saudi
only provisionally until the retailer said the suit was rid- national-security law. Two activist, was sentenced to more
European Parliament can give dled with factual mistakes and others, both under 18, were than five years in prison, sup-
its blessing. “cherry-picked documents” sent back to Hong Kong. posedly for trying to harm
that were trying to shift blame national security. Ms Hathloul
Scientists were worried by two away from the Drug Enforce- China’s financial regulators had campaigned for women to
new and more contagious ment Administration. piled the pressure on Jack Ma, be allowed to drive cars. She
variants of covid-19that are ordering his Ant Group to was detained in 2018, shortly
spreading around the world. Argentina became the first big “rectify” its sprawling finan- before the ban on female driv-
Nearly all the countries in the Latin American country to cial-services empire and go ers was, in fact, lifted.
eubegan vaccinating citizens, legalise abortion, after a back to being a simple pay-
a week after the European crucial vote in the Senate drew ments provider. This came Israel’s parliament failed to
Medicines Agency approved more support than had been after the government an- pass a budget and was dis-
the Pfizer-BioNTech vaccine. expected. Women will now be nounced an antitrust probe solved, triggering an election
The Netherlands said it would able to get an abortion for any into Alibaba, also founded by on March 23rd, the fourth in
not start until January 8th, reason up to 14 weeks into a Mr Ma and affiliated with Ant. two years. Binyamin Netanya-
claiming it wanted more time pregnancy. hu, the prime minister, faces a
to implement its programme Bangladeshmoved a second challenge from several former
“carefully”. Spain’s health A court in Shanghai sentenced group of Rohingya Muslim allies. Meanwhile, Israel be-
minister said a registry would Zhang Zhan, a former lawyer, refugees from the mainland to came the first country to enter
be kept of people who refused to four years in prison for the island of Bhasan Char. a third nationwide lockdown
to get vaccinated. “picking quarrels and causing There are now more than 3,000 because of covid-19. But it has
trouble”. She had reported on refugees on the remote island. already vaccinated 6% of its
British regulators authorised a the outbreak of covid-19 in population, well ahead of most
vaccine developed by Oxford Chinain ways that embar- Turkey’scentral bank lifted its countries. Mr Netanyahu is
University and AstraZeneca for rassed the Communist Party. main interest rate by two per- hoping a successful vaccina-
use in the uk. It is the third Meanwhile, a study from the centage points, to 17%. The tion drive will give his
available inoculation for Chinese Centre for Disease bank has a new governor, who campaign a shot in the arm.
covid-19 that has been fully
tested and it can be rolled out
quickly in bulk, notably to low-
and middle-income countries.
State investigators in Russia
laid more dubious fraud char-
ges against Alexei Navalny,
the country’s leading opposi-
tion politician. This came after
Mr Navalny posted a tape of his
phone call with an agent of the
fsbsecurity police, whom he
tricked into admitting that the
fsbhad tried to poison him
with a nerve agent in August.
Vladimir Putin said that if the
police had wanted to poison Mr
Navalny, he would be dead.
In a u-turn, Donald Trump
signed a $900bn stimulus bill
into law. He had threatened to
veto the legislation because, he
said, the $600-per-person it
provides in direct payments is
Leaders Leaders 7
The future of global e-commerce
Retailers everywhere should look to China
Over thepast ten months mostpeopleintherichworldhave beenjusthowmanybigtraditional retailers will go bust—over 30
participated in the biggest shopping revolution in the West folded in America in 2020—and whether a few might manage the
since malls and supermarkets conquered suburbia 50 years ago. shift online, as Walmart and Target have.
The pandemic has led to a surge in online spending, speeding up Yet however safe and siloed Western e-retailing may appear
the shift from physical stores by half a decade or so. Forget the to be, it is now unlikely that it will become the world’s dominant
chimney; Christmas gifts in 2020 came flying through the letter- mode of shopping. Already, outside rich countries, the Chinese
box or were dumped on the doorstep. Workers at a handful of approach is gaining steam. Many leading e-commerce firms in
firms, including Amazon and Walmart, have made superhuman South-East Asia (Grab and Sea), India (Jio), and Latin America
efforts to fulfil online orders, and their investors have made (Mercado Libre) are influenced by the Chinese strategy of offer-
supernormal profits as Wall Street has bid up their shares on eu- ing a “super-app” with a cornucopia of services from noodle de-
phoria that Western retailing is at the cutting edge. livery to financial services. The giant consumer-goods firms that
Yet as we explain this week (see Business section) it is in Chi- straddle the Western and Chinese markets may transmit Chinese
na, not the West, where the future of e-commerce is being staked ideas and business tactics, too. Multinationals such as Unilever,
out. Its market is far bigger and more creative, with tech firms L’Oréal and Adidas make more revenue in Asia than in America
blending e-commerce, social media and razzmatazz to become and their bosses turn to there, not to California or Paris, to see the
online-shopping emporia for 850m digital consumers. And Chi- latest in digital marketing, branding and logistics.
na is also at the frontier of regulation, with the news on Decem- Already, Chinese characteristics are emerging in the retail
ber 24th that trustbusters were investigating Alibaba, co-found- heartlands of the West, partly as a result of the pandemic. The si-
ed by Jack Ma, China’s most celebrated tycoon, and until a few los are breaking down as firms diversify. Facebook is now pro-
weeks ago its most valuable listed firm. For a century the world’s moting shopping services on its social networks, and engaging
consumer businesses have looked to America to spot new in “social commerce”, including in live-streaming and the use of
trends, from scannable barcodes on Wrigley’s gum in the 1970s to WhatsApp, for messaging between merchants and shoppers. In
keeping up with the Kardashians’ consumption habits in the December Walmart hosted its first live shopping event within
2010s. Now they should be looking to the East. TikTok, a Chinese-owned video app in which it
China’s lead in e-commerce is not entirely hopes to buy a stake. In France in the past quar-
new. By size, its market overtook America’s in ter the sixth-most-downloaded e-commerce
2013—with little physical store space, its con- app was Vova, linked to Pinduoduo’s founder.
sumers and retailers leapfrogged ahead to the And new entrants may finally make progress in
digital world. When Alibaba listed in 2014 it was America—the share price of Shopify, a platform
the world’s largest-ever initial public offering. for Amazon exiles and small firms, has soared so
Today the country’s e-retailing market is worth that it is now valued at more than $140bn.
$2trn, more than America’s and Europe’s com- This shift to a more Chinese-style global in-
bined. But beyond its sheer size it now stands out from the past, dustry promises to be excellent news for consumers. Prices
and from the industry in the West, in several crucial ways. would be lower, as China has seen fierce discounting by compet-
For a start it is more dynamic. In the past few years new com- ing firms. Choice and innovation would probably grow. Even so,
petitors, including Meituan and Pinduoduo, have come of age Chinese e-commerce has flaws. In a Wild West climate, fraud is
with effervescent business models. One sign of fierce competi- more common. And there are those antitrust concerns. It is
tion is that Alibaba’s share of the market capitalisation of the tempting to see the crackdown on Mr Ma as just another display
Chinese e-commerce industry has dropped from 81% when it of brutal Communist Party power (see Free exchange). It may
listed to 55% today. Competition has also led e-commerce and partly be that, but China’s antitrust regulators are also keen to
other tech firms to demolish the boundaries between different boost competition. That means enforcing interoperability, so
types of services that are still common in the West. Point and that, for example, payments services on one e-commerce plat-
click are passé: online-shopping platforms in China now blend form can be used seamlessly on a rival one. And it means pre-
digital payments, group deals, social media, gaming, instant venting e-commerce firms from penalising merchants who sell
messaging, short-form videos and live-streaming celebrities. goods in more than one place online. So far American and Euro-
The obvious, multi-trillion-dollar question is whether the pean trustbusters have been ineffectual at controlling big tech,
Chinese model of e-commerce will go global. As has been the despite a flurry of lawsuits and draft laws at the end of 2020.
case for decades, Silicon Valley’s giants still tend to under- They, too, should study China, for a sense of where the industry
estimate China. There are few direct links between the American is heading and how to respond.
and Chinese e-commerce industries, partly owing to protection- There is a pattern to how the West thinks about Chinese inno-
ism on both sides (Yahoo sold much of its stake in Alibaba, far vation. From electronics to solar panels, Chinese manufacturing
too early, in 2012). And Western firms have long been organised advances were either ignored or dismissed as copying, then
in cosy, predictable silos. So Visa specialises in payments, Ama- downplayed and then grudgingly acknowledged around the
zon in e-commerce, Facebook in social media, Google in search, world. Now it is the Chinese consumer’s tastes and habits that
and so on. The main source of uncertainty in e-commerce has are going global. Watch and learn.7