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Is China’s High Growth Era Over?

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China announced an official growth target of around 5 percent on Tuesday, which already appears difficult to achieve. The world’s second-largest economy is facing headwinds, from a consumer slowdown to weak investor confidence and a trade war with the West.

But the growth target tells only part of the story of how Beijing is rethinking economic policy.

Omitted from the statements: a stimulus package. Investors are watching the annual meeting of the National People’s Congress, the country’s parliament and a parallel meeting of China’s top policy-making body, for clues about the government’s priorities. Spending is expected to remain at about last year’s levels, suggesting no major boost is on the horizon.

That’s not good news for Western brands, which have seen massive growth in Chinese consumer spending in recent years. Apple has reportedly seen sales of Chinese iPhones plummet this year.

The growth target is also in line with that of last year, when the economy grew by 5.2 percent after the lockdown. (Some analysts say the real growth rate is much lower.) Global investors must accept that slow growth is the new normal. says Yu Jie, a senior fellow on China at Chatham House, a think tank. “Beijing wants to draw a line under the economic model of the past, which focused on infrastructure and real estate,” she told DealBook.

Beijing’s real focus is reforming the economy. The government knows it faces a host of challenges, but Chinese leader Xi Jinping is trying to move away from debt-fueled sectors like real estate and focus on strategically important industries. The terms it uses are ‘high quality development’ and ‘new productive forces’, including electric vehicles, climate technology, life sciences and artificial intelligence. The latest moves to achieve that: Premier Li Qiang, China’s second-highest official, said on Tuesday the government would increase spending on science and technology research by 10 percent.

More state-led investments are the priority, instead of “other types of more politically painful reforms,” George Magnus, a research fellow at the University of Oxford’s China Center and a former chief economist at UBS, told DealBook.

It could also mean more pressure on private companies to toe the party line bankers are ordered to be more patriotic and developing a “financial culture with Chinese characteristics.”

Donald Trump is expected to score a big victory in the Super Tuesday contests. Voters in fifteen states, including California and Texas, are going to the polls. A landslide Trump victory in the Republican primaries could force Nikki Haley to drop out. Elsewhere, the outspoken billionaire Mark Cuban endorsed President Biden in the general election, and supporters of the third-party initiative No Labels fear the group is no longer politically viable.

The White House tackles ‘corporate fraud’. The Biden administration said Tuesday it was creating a “strike force” to coordinate federal combat efforts “unfair and illegal prices.” It’s part of Biden’s efforts to keep rising prices at bay – a concern among voters which cost him a lot politically – partly about greedy corporations, a topic that will surely come up again during his State of the Union address on Thursday.

Nelson Peltz publishes his full case against Disney. The activist investor shared his white paper outlining his recommendations to turn around the media giant; among them are finding a partner for Disney’s TV broadcasts and scrapping plans to introduce a new ESPN streaming service that would replace ESPN+. Peltz’s 133-page filing comes less than a month before Disney shareholders vote on whether to give him control of two board seats.

European antitrust authorities have finally cracked down on Apple, fining the iPhone maker $2 billion for trying to thwart music streaming competition. A bigger test of the EU’s ability to curb tech giants is yet to come.

The Digital Markets Act, intended to ensure competition between popular digital platforms, comes into force on Thursday. But skeptics think tech giants like Apple will find ways to avoid being boxed in.

The DMA represents an aggressive attempt to control digital competition. Monday’s fine related to the narrow issue of Apple seeking to thwart rivals like Spotify in music streaming. The new law is intended to prevent ‘gatekeepers’ of major platforms – including Amazon, Apple, Google and Meta – from using their market power to exclude newcomers.

The costs of non-compliance are high: DMA violators could be forced to pay 10 percent of their global turnoveror up to 20 percent for repeat violations.

Apple says it will comply with the law, offering multiple options to app developers that it says could reduce their costs. Several of these require Apple to pay a per-download fee once their apps reach a million downloads per year.

But critics say Apple has tried to circumvent the new rules. In the Netherlands and South Korea, which both passed legislation requiring app store owners to allow alternative payment systems, the iPhone maker agreed to open its app store. But it began charging a 26 percent commission to those who used non-Apple payment methods, a move the Korean government said undermined the law.

In a letter to the European Commission Published last week, three dozen companies argued that Apple was taking a similar approach to the DMA. “Apple has a history of skirting these rules.” Daniel Ek, Spotify’s co-founder and CEO said after the EU fine was announced on Monday. “It will continue to act as it has been acting.”

Apple has the resources to fight. The company said it planned to appeal Monday’s ruling and could contest the charges under the DMA. It’s worth noting that the tech giant is still fighting other government penalties, including a €13 billion tax bill handed down by the European Commission in 2016..

The SEC will vote tomorrow on a new rule requiring companies to disclose their business’ climate risks, a key part of the Biden administration’s green agenda.

When the proposal was introduced two years ago, Gary Gensler, the chairman of the SEC, said it would help “tens of trillions of dollars” of investors’ money. But climate experts and former SEC commissioners expect the measure will have been watered down amid intense corporate lobbying and broader conservative opposition to agency power.

The rule was intended to help investors assess climate risks. Money flowing into companies that prioritize environmental, social and governance principles has exploded in recent years, providing a huge profit driver for Wall Street. But ESG investors have begun to pull back recently amid concerns about greenwashing, red state boycotts and regulatory uncertainty.

Some fear muted SEC rules could hamper transparency. Another problem: California And Europe have sophisticated aggressive disclosure mandates, which may require large companies to navigate a hodgepodge of regulations.

What is expected to disappear? The most controversial aspect said to have been abolished these are so-called Scope 3 discharges, which relate to the majority of a company’s emissions. But measuring Scope 3 involves an expensive examination of the entire value chain from supplier to customer.

Scope 3 is a “centrally important metric for investors” and critical to preventing greenwashing, Allison Herren Lee, the former acting chair of the SEC, told DealBook. (In 2021, she pushed for this requirement.)

What’s probably in it? Scope 1 and Scope 2 emissions, which measure a company’s direct carbon footprint, are expected to be part of the new rules, but only if they are considered ‘material’. This qualification leaves companies some room for maneuver.

“If the SEC ultimately leaves climate disclosure decisions to corporate executives, it is a policy choice with an unfortunate history,” said Satyam Khanna, a former SEC climate adviser.

Even watered-down rules can spark a legal battle. Business groups have repeatedly challenged the Biden administration’s environmental agenda in court.

The SEC will be sued “as surely as the sun rises in the east,” said Joseph Grundfest, a professor at Stanford Law School and former SEC commissioner.

— 96 Phoenix, member of the online community WallStreetBets, on Reddit’s IPO plans. Reddit has capitalized on the enthusiasm among its users, but some are instead expressing reservations.

More than a year after Elon Musk completed his $44 billion acquisition of Twitter (now X), challenges – and lawsuits – are piling up.

Musk, who filed his own blockbuster lawsuit against OpenAI last week, has previously faced a mountain of legal troubles. But these distractions come at a particularly difficult time for the billionaire. Musk is struggling with one exodus of investors from Teslahis electric vehicle maker, and the banks that loaned him billions to buy Twitter two years ago reportedly met with him to discuss refinancing terms.

Former Twitter executives are the latest to join. One of Musk’s first acts after buying the company was to fire him Parag Agrawal, the CEO; Ned Segal, the CFO; Vijaya Gadde, head of legal and policy; and Sean Edgett, general counsel. They sued Musk for $128 million on Monday, accusing him of withholding severance payments and stripping him of unvested stock when he took the company private in October 2022.

Musk believes he fired them “for good reason.” The lawsuit quotes Musk as telling biographer Walter Isaacson that he would “hunt” the executives until the day they die.

“This is Musk’s playbook: keep the money he owes other people and force them to sue him,” the executives’ lawyers wrote. “Even if he is defeated, Musk can impose delays, hassles and costs on others who can less afford it.”

The case puts Musk’s many lawsuits back in the spotlight. Here are a few more:

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