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Putin’s new era of repression



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The Economist November 13th 2021

On the cover

Vladimir Putin’s new era of repression will lead to confrontation with the West: leader, page 15. Russia has shifted from autocracy to dictatorship: briefing, page 28

China's other debt problem Evergrande is not the only looming danger in the mainland's financial system: leader, page 18. The government sets its sights on sleazy ties between businesses and banks, page 73

Nuclear power: safe and essential It makes fighting climate change a lot easier, leader, page 20. Rolls-Royce and the British government are betting that small reactors can fix the industry’s tricky economics, page 59. Will the climate crisis force America to reconsider nuclear power? Page 36

Biden's inflation headache A broad pickup in prices puts pressure on the Fed to raise rates, page 75

The right to die Assisted dying is

Spreading, but too many are still denied this basic freedom: leader, page 76. Inthe West the right to die is rapidly becoming legal and accepted, page 62

> The digital element of your subscription means that you can search our archive, read all of our daily journalism and listen to audio versions of our stories. Visit









The world this week

A summary of political and business news


Russia Putin’s repression

The end of life Deciding on death Financial contagion China’s other problem Afghanistan

War, drought, famine

Nuclear power Discreet charm


On economics, Balkan bridges, Shakespeare, mission statements, hydrogen, Facebook, French, Polexit


Russian repression Manacled in Moscow


Bartleby The demands on chief executives require them to be weird, page 67

40 42

43 44 45 45 46

47 48


United States

The southern border Infrastructure year Durham’s indictments Necessary nuclear power Lexington Hispanic Republicans

The Americas Venezuela’s autocrat... ..and Nicaragua’s Bello Brazil’s economy

Asia South Korean industry

Education in Bangladesh...

..and in Pakistan Myanmar’s collaborators

Banyan The great board game

China State-sponsored hacking

The prison lives of Hong Kong’s dissidents

Chaguan Why aim for ZeTO COvid?

Middle East & Africa Vision 2030 at five

Sex and hotels in Morocco

Iran’s weapon of choice Rebels in Congo Liberia’s quest for justice

»» Contents continues overleaf

S B@eleie

Europe 55 Train troubles 56 The Belarus-Poland border 57 Covid-19 57 Turkey's banana spat

58 Charlemagne A fight over minimum wages

Britain 59 Small nuclear reactors 60 Going green, at a price

61 Bagehot Brexiteers’ paranoid triumphalism


62 The rapid spread of assisted dying

Business 65 Hollywood's talent wars 66 Hot commercial property 67 Bartleby Weird bosses 68 Zero covid in China 69 General Electric breaks up 69 Strife at Volkswagen 70 The corporate metaverse

72 Schumpeter The flywheel delusion


Volume 441 Number 9271

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The Economist November 13th 2021

Finance & economics China’s tycoon banks Crypto’s funding craze America’s inflation shock Debt-for-nature swaps

Buttonwood The appeal of cash

Free exchange Lessons from Zillow

Science & technology Diagnosing dementia Those climate goals Plastics and pathogens Better blackcurrants New covid-19 treatments

Books & arts

Dirty money


The cold war on the couch An art collection opens up

Economic & financial indicators Statistics on 42 economies

Graphic detail Twitter's algorithm favours conservatives

Obituary Aaron Beck, the man who revolutionised psychiatry



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The world this week Politics

As delegates haggled over the final drafts at the UN COP26 climate-change summit in Glasgow, America and China issued a joint declaration to work together to reduce emissions. The two countries said they were committed to keeping the increase in Earth’s mean surface temperature to “well below” 2°C compared with pre-industrial levels. China said it would come up with a national plan to curb methane emissions. Time will tell whether their statement was diplomatic showboating or the start of something more substantive.

Belarus kept dumping mi- grants at the border with Po- land and barring them at gun- point from retreating. It has been luring them onto flights from the Middle East with false promises of easy passage to the European Union. The migrants cannot enter Poland, and with winter coming, may soon freeze. The despotic regime of Alexander Lukashenko appar- ently hopes to cause another political crisis in the EU about refugees. Poland has sent 15,000 troops to the area.

The British government announced that National Health Service frontline staff in England will need to be vaccinated against covid-19 by April ist. The latest govern- ment data show that10% of all NHS employees are not fully jabbed. This week was the deadline for care staff to meet the requirement; arounda quarter of those workers have not received their full dose.

The White House urged large companies to press ahead with plans to ensure their staff are vaccinated by early January,

after a federal appeals court temporarily suspended Joe Biden's vaccine mandate. The court said it had “grave statutory and constitutional” concerns about the order. The government asked it to reverse its decision.

Mr Biden was able to claima big victory when the House of Representatives at last passed his $1trn infrastructure bill. The bill had seemed in peril when left-wing Democrats insisted that welfare legisla- tion should come up fora vote at the same time.

It'll still be there

NASA pushed back its planned mission to land astronauts on the Moon, its first since 1972, by at least a year, to 2025. A lawsuit brought by Jeff Bezos’s Blue Origin over the contract awarded to SpaceX to build the Moon lander was one reason for the delay (a judge recently dismissed the suit).

Daniel Ortega, the authoritar- ian president of Nicaragua, won a fourth consecutive term. Joe Biden called the election a “pantomime”. Over the past six months Mr Ortega has imprisoned some of his potential opponents and forced others to flee. Many hundreds of ordinary people who have protested against his regime in the past remain behind bars.

Chile’s Chamber of Deputies approved impeachment pro- ceedings against Sebastian Pinera, after leaked documents raised more questions about a mining deal that the presi- dent’s family signed during his first term in 2010 (he denies wrongdoing). But the opposi- tion will struggle to obtain the two-thirds majority needed to impeach Mr Pifiera formally in the Senate.

The Central Committee of China’s Communist Party held an annual meeting at which delegates discussed a resolu- tion on the party’s history, the first of its kind in 40 years. It appeared to be aimed at justi-

fying an extension of X1 Jinping’s rule beyond a party congress in 2022.

America urged China to re- lease Zhang Zhan, a citizen journalist who was sentenced to four years in prison for her reporting on the early days of the covid-19 pandemic in Wuhan. The government continued to battle a new outbreak of the disease that began in mid-October and has caused hundreds of infections.

Thailand’s constitutional court ruled that three activists who called for reforms to the country’s monarchy during protests last year were guilty of attempting to overthrow the king. The court focused on whether the speeches were constitutional, so no penalty was imposed, but the ruling will stifle debate about the monarchy’s role.

The Duterte dynasty

Sara Duterte, the daughter of Rodrigo Duterte, president of the Philippines, withdrew her candidacy for re-election as mayor of Davao City, kindling speculation that she intends to run for a national post in the presidential election next year. Her father will have served the full presidential term allowed.

Mustafa al-Kadhimi, the prime minister of Iraq, was the target of an assassination attempt. The attack reportedly involved drones, one of which reached Mr Kadhimi’s home. He was unharmed, though six of his guards were wounded. Suspi- cion has fallen on Iranian- backed militias.

Iran’s top nuclear negotiator, Ali Bagheri-Kani, visited Euro- pean capitals ahead of talks with America and European powers aimed at resurrecting the nuclear deal that Iran signed in 2015. Mr Bagheri- Kani seemed to rule out any discussion of Iran’s nuclear activity at the talks, and said that instead they should focus on lifting sanctions. America, which walked away from the deal in 2018, disagrees.

The Economist November 13th 2021 13

= Coronavirus data

To 6am GMT November 11th 2021

Weekly confirmed cases by area, m 3

United States | Asia

Europe | iy ve

190° 2021

Estimated global excess deaths, m With 95% confidence interval 17.1 ies


—— = 5.1m official covid-19 deaths

Vaccine doses given per 100 people By country-income group

Low income 7 Lower-middle 62 Upper-middle 135 High income 142

Sources: Johns Hopkins University CSSE; Our World in Data; UN; World Bank; The Economist’s excess-deaths model

> For our latest coverage please visit coronavirus

France formally handed back to Benin 26 precious arte- facts, including statues anda royal throne, that it had taken when it colonised the west African country in the late 19th century. Other former colonial powers are also under pressure to return looted items. These include Britain, which holds more than 900 “Benin bronzes” that were taken from Nigeria.

A South African court said that Manuel Chang, Mozam- bique’s former finance minister, could be extradited to America. He faces charges there related to kickbacks from loans that funded, among other things, a tuna- fishing firm.

F.W. de Klerk, the last white president of apartheid South Africa, died at the age of 85. He once said that he should not be given the honour of ending apartheid, though Mr de Klerk was instrumental in laying the ground for Nelson Mandela's release and the subsequent transfer of power.


The world this week Business

After years of complaints from investors that its sprawling empire of businesses was hindering profits, General Electric decided to split into three, independently run companies. Its health-care assets will be spun off in 2023; energy and power will be rolled into one and spun off in 2024; and aviation is to remain the sole focus of today’s GE. The conglomerate has been shedding businesses for over a decade. The decision to split heralds the end of arguably the world’s best-known conglom- erate, a titan of American business throughout the 2oth century.

On the road

Rivian, a maker of electric vehicles backed by Amazon, had a successful stockmarket debut on the Nasdaaq. Its stock rose by 30% above the offer price, giving ita market capi- talisation of over $100bn, more than either Ford or General Motors. The company raised around $12bn, making it the biggest IPO in America since Alibaba’s listing in 2014.

At the opposite end of the motoring business, Hertz’s share price fell by 10% on its first day on the stockmarket since the company emerged from bankruptcy.

The European Union’s General Court, the lower tribunal of the Court of Justice, dismissed Google’s appeal against the €2.4bn ($2.8bn) fine that the European Commission im- posed on the company in 2017 for anti-competitive practices that favoured its own compari- son-shopping service. In the one ray of light for Google, which is also appealing against two other blockbuster anti- trust fines in Europe, the court said that general search is not included in its ruling.

Rolls-Royce said it had re- ceived enough investment from private partners to start building small modular re- actors, or small nuclear power stations, in Britain. The gov- ernment is contributing to-

wards the project as part of its “green industrial revolution”.

Britain’s economic growth rate slowed in the third quar- ter, to1.3%. As in other coun- tries, supply-chain problems are hindering the recovery. GDP is still 2.1% smaller than in the final three months of 2019.

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Oil prices climbed higher, with Brent crude once again over $85 a barrel. In America the price of petrol at the pump hit an average seven-year high of $3.41a gallon. California remains the most expensive State in which to fill your car, with petrol averaging $4.64 a gallon, according to the Amer- ican Automobile Association.

The price of fuel is a big factor behind America’s surging inflation. The annual rise in the government’s consumer- price index leapt to 6.2% in October, up from 5.4% in


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September, the largest jump Since late 1990. Stubborn inflation is putting pressure on the Federal Reserve to bring forward an interest-rate rise.

Government relief Meanwhile, the pace of hiring picked up in America, with employers creating 531,000 jobs in October. That is closer to the monthly average for this year and comes after two months of lower-than-expect- ed jobs growth.

The board of Sydney Airport agreed to a A$23.6bn ($17.5bn) buy-out from a consortium of investors. The deal comes amid a sense in the aviation industry that business is really taking off following 20 months of pandemic gloom. America reopened its borders to most travellers this week. Emirates, one of the world’s biggest airlines, reported that pas- senger numbers were up by 319% from April ist to Septem- ber 30th, year on year, though it still made a net loss in the first six months of this year.

Aftera little overa yearasa publicly listed company, McAfee agreed to a buy-out from a consortium of private- equity firms, ina deal worth $14bn. The computing-securi-



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The Economist November 13th 2021

ty company is to refocus en- tirely on the consumer market, having sold its enterprise business in July.

Consumers’ voracious appetite for ordering grub from home is feeding a wave of consolida- tion in the sector. This week DoorDash, America’s largest food-delivery platform, agreed to buy Wolt, based in Helsinki and with operations in 23 countries, for €7bn ($8bn).

Viasat, a satellite company based in California, is to take over Inmarsat, a British rival that counts the American armed forces among its cus- tomers, in a $7.3bn transac- tion. The combined company will compete in the increas- ingly crowded space for pro- viding satellite broadband.

Markets were once again left scratching their heads about the motives behind Elon Musk’s latest stunt, when he asked his Twitter followers whether he should sell 10% of his stake in Tesla to pay tax, in a dig ata Democratic proposal to tax unrealised capital gains. They said yes. Tesla’s share price swooned. Mr Musk then Started selling stock. He had planned to sell at least some of his shares before seeking advice from the Twitterati.



Putin’s new era of repression

It will lead to more confrontation with the West

NDREI SAKHAROV, a Soviet dissident and physicist, used to Aareue that repression at home invariably becomes instabil- ity abroad. His own life was evidence of it. His internal exile was lifted in 1986 by Mikhail Gorbachev, the Soviet Union’s last lead- er, who as the architect of glasnost released political prisoners and tolerated free speech. It was no accident that Mr Gorbachev's rejection of repression coincided with the end of the cold war.

Today Sakharov’s thesis is being demonstrated once again— in reverse. According to Memorial, a human-rights group, Rus- Sia has more than twice as many political prisoners than at the end of the Soviet era. Memorial, which Sakharov helped set up to document Soviet abuses, has itself been branded a “foreign agent” and attacked by state-sponsored thugs (see Briefing).

At the same time, Russia's relations with the West have also entered a dark period. In order to justify repression at home, President Vladimir Putin is telling his people that Western pol- icy is designed to obliterate the Russian way of life. Mr Putin now builds in cold-war confrontation to his dealings with the West. Its leaders need to prepare for what comes next.

The latest phase of repression began in 2020 with the poison- ing of Alexei Navalny, Russia’s most famous political prisoner, and winner last month of the European Parliament’s Sakharov prize for freedom of thought. Mr Navalny survived the attack, only to be incarcerated and abused in Penal Col- ony No 2, one of the country’s harshest jails.

Since then, Mr Navalny’s organisation has been outlawed and much of his team chased out of the country. Those who stayed are being pursued. On November goth Lilia Chanysheva was arrested and now faces ten years in prison for having worked for Mr Navalny while his or- ganisation was Still legal. The net is spreading beyond politics. The same day, Sergei Zuev, the 67-year-old head of the top liberal university in Russia, who is recovering from heart treatment, was taken from house arrest to a prison cell, perhaps to force a false confession in a fabricated case.

A third of the Russian government’s budget is spent on secu- rity and defence. Much of this is directed inwards, at the sort of people The Economist features this week in a documentary film (see people who have had enough of Mr Putin’s rule and the corruption of his regime. As incomes have fallen and discontent has grown, so Russia’s many police and security services have swollen. With 10% more staff than in 2014, they now outnumber Russia's active-duty military forces.

For Mr Putin, repression does not have a reverse gear. He will not be able to restore the prosperity that helped buoy his ratings during his first decade in power. True, the fortress economy that the Kremlin has developed since 2014 can withstand sanctions, especially when energy prices are high, as now. But Russia, which is more like Iran than China, does not have the dynamism to generate sustained, robust growth.

Hence the logic of confrontation. Soviet rulers waged the cold war from atop the ideology of communism. Russia’s secu- rocrats assert that traditional values of family, culture and histo- ry are being corrupted by the liberal and licentious West and that

only they can defend them. Fighting back against the West lets the Kremlin portray all those who oppose it—journalists, hu- man-rights lawyers and activists—as foreign agents. In this way, Mr Putin’s regime depends on anti-Western ideology for its poli- tics just as it depends on oil and gas for its prosperity.

Dictators insist that how they treat their subjects is a ques- tion of sovereignty. In fact, repression is everyone's business. One reason is that human rights are universal. The other is that violence at home spreads beyond a country’s frontiers.

Both Russia and Belarus, where the dictator Alexander Lu- kashenko is propped up by the Kremlin, have murdered dissi- dents abroad. Russia shot down a passenger plane and Belarus hijacked one to arrest a local dissident. Poland and Lithuania have sheltered the Belarusian opposition in self-exile. Backed by the Kremlin, Mr Lukashenko is taking revenge by flying in refu- gees from the Middle East and shunting them to its borders to engineer a humanitarian crisis (see Europe section).

On a greater scale, Mr Putin meddles in Western elections, peddles anti-vaccine propaganda and fights proxy wars with America in Africa and the Middle East. He is using the promise of extra supplies of gas to weaken ties between the European Un- ion and countries like Ukraine and Moldova. He has once again massed troops on the Ukrainian border and is flying nuclear- capable bombers to Belarus.

The good news is that just as most of the So- viet people did not believe in the advantages of communism over capitalism, so most Russians do not believe in the advantages of confronta- tion. For all Mr Putin’s propaganda, two-thirds have a positive view of the West. Nearly 80% say Russia should see it as a partner and a friend. This is most pronounced among the young, who reject state violence and favour human rights instead.

Western politicians should take note of this divergence be- tween the Kremlin and the Russian people. One response is to harmonise sanctions and focus them on the powerful Russians who loot the state and abuse the people. That entails Western countries standing up to the lobbying of their own service in- dustries, which get rich from helping Mr Putin’s cronies launder their reputations, pursue their legal vendettas and shelter their illicit wealth (see Books & arts section).

Think ahead

They should also start laying the foundations for a post-Putin Russia. Nobody knows whether that will come in years or de- cades. But it is hard to see Mr Putin’s system surviving him.

The West should therefore invest in people who share its val- ues. It should speak out against human-rights abuses inside Russia. The flood of Russian students, journalists and intellec- tuals seeking a better life will increase. Western governments should accommodate them. Latvia and Lithuania are hosting in- dependent media outlets and dissidents. Russian students should be welcomed to Western universities. By doing so the West would not just be helping the victims of Mr Putin’s repres- sion, it would also be helping itself. m

Leaders 15

16 Leaders

The Economist November 13th 2021

The end of life

A final choice

Assisted dying is spreading, but too many are still denied this basic freedom

N 1995 AUSTRALIA'S Northern Territory enacted the world’s first

law explicitly allowing assisted dying. It said that terminally ill, mentally competent adults who wanted to die could ask a doctor for help, using lethal drugs. The law sparked outrage. Within months the federal government had overturned it. Yet today five of Australia’s six states have assisted-dying laws.

The Economist first made the case for assisted dying in 2015. We argued that freedom should include the right to choose the manner and timing of one’s own death, while also cautioning that the practice should be carefully monitored and regulated to avoid abuses. Since then, it has become more widely available. Assisted dying is now legal in one form or another in a dozen countries, and the trend seems likely to continue. Last week New Zealand enacted a euthanasia law for the terminally ill after 65% of voters backed it in a referendum. The same week Portu- gal’s parliament passed a broader law. Assisted dying is still ille- galin Britain, but the House of Lords is debating a bill to allow it.

The number of people who die this way is increasing, though still small. In the Netherlands it rose from roughly 1,800 in 2003 to nearly 7,000 in 2020, or 4% of all deaths. As more countries liberalise, the global total will rise further.

Many people object to assisted dying on religious grounds: some faiths deem suicide a sin. Others worry that safeguards will prove insufficient, or that legalisation is a slippery slope. Critics have long predicted that families exhausted by the demands of caring for sick, elderly relatives will place undue pres- sure on them to end their lives, or that cash- strapped states will encourage the most expen- sive terminally ill patients to hurry up and die.

Yet such horrors do not seem to have come to pass (see International section). In places with the longest experience of assisted dying, charities that rep- resent the elderly or disabled have not reported any abuse. It is conceivable that some has taken place unobserved, but scrutiny has been intense and in most countries permission to help someone die is revoked if there is even a hint of coercion. Fears that the poor and marginalised might be hastened to their ends have also proved to be unfounded. In America, the Netherlands and Switzerland the overwhelming majority of those who choose an assisted death are educated and middle-class.

Far from being too lax, the rules have often been too restric- tive. The Australian state of Victoria, for example, bars doctors from mentioning assisting dying to their patients. The aim is to avoid coercion, but the consequence is that many sufferers do not know that it is an option. In some jurisdictions only those with less than six months to live are allowed help to die. Thus, patients can be terminally ill and in intense pain, but unless a doctor estimates that the end is very near, they cannot end their own suffering. In some cases the diagnosis comes too late. In Victoria in the first six months of 2021 no cases were withdrawn because the patient decided not to proceed, but in 90 cases the patient died before receiving relief. Some countries, such as Spain and Colombia, have liberal laws in theory, but in practice health authorities are reluctant to let anyone make use of them.

Last week in Spain a desperate 83-year-old threw herself out of a window after her repeated requests for euthanasia were refused.

Canada offers a better model, because it provides more lee- way for individuals to make their own choices. Anyone whose suffering is unbearable can choose an assisted death. They do not have to be terminally ill. And, uniquely, the question of what constitutes “unbearable” suffering is for the patients them- selves to decide, so long as they are of sound mind. There is a cooling-off period of ten days, in case they have second thoughts. In many cases, simply having the option of an assisted death gives people a sense of comfort and control. In Oregon a third of those people who receive the prescribed lethal medica- tion ultimately choose not to take it.

Even as more societies accept the principle of assisted dying, hard questions remain. Some people worry that its availability may prompt health services to skimp on palliative care. But that is not ordained. Canada’s assisted-dying bill was explicitly linked to increased funding for palliative and long-term care.

If assisted dying becomes common, will old people who re- quire round-the-clock care feel more social pressure to choose death? Many already worry that they are a burden on their chil- dren or carers. Some may feel additional guilt if continuing to live is seen as an individual choice, rather than the blind work- ings of fate. This is a genuine concern. But the possibility that some may agonise over whether to die should not trump the certainty that oth- ers will suffer unendurable pain if their free- dom to choose is denied.

The trickiest questions arise when an indi- vidual’s capacity to make an informed choice is in doubt. Some people with mental disorders have suicidal thoughts that come and go. For them, the bar should be very high. Doctors must be sure they can distinguish between a temporary mental-health crisis and a sus- tained, considered wish to die. If in doubt, they should offer treatment aimed at helping the patient to live.

Free to choose, to the end

Dementia poses the hardest problem of all (See Science & tech- nology section). Someone diagnosed with the condition may make a living will, asking for an assisted death when it becomes severe. But they may change their mind. Such a document should never be used to kill someone against their wishes, and if those wishes are unknowable, they should be left to live. Assist- ed dying should be only for those who can make an informed de- cision at the time they take the drugs.

No rules in this area are perfect. All should be subject to revi- sion in the light of new evidence about how they work in prac- tice, or to take account of medical advances. But the overall prin- ciple—that individuals are entitled to choose how they end their lives—is, we believe, a sound one. The evidence from countries that allow assisted dying is that abuses remain largely hypo- thetical, whereas the benefits are real and substantial. It relieves suffering, and restores a measure of dignity to people at the end of their lives. m


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18 Leaders

The Economist November 13th 2021

Evergrande and financial contagion

China’s other debt problem

Evergrande is not the only looming danger in the mainland’s financial system

CARES ABOUT toxic debt are an ever-present feature of China’s S economy. The latest involves Evergrande, a troubled develop- er that threatens to cripple the property sector. The firm also has tentacles that reach into the darkest corners of the Chinese fi- nancial system, wrapping around banks and shadow lenders. Yet even as Evergrande catches the eye, another risk is emerging: crony capitalism at smaller banks.

A government crackdown on leverage in property has pushed Evergrande to the brink of collapse. Other large developers are weighed down by $5trn of debts. Speculation is swirling that one of them, Kaisa, is also struggling to make payments (it has asked investors for “time and patience”). The turmoil may intensify as more debts come due. According to Nomura, a Japanese bank, the property industry must re- pay $20bn of offshore bonds in the first quarter of 2022, twice the level of this quarter.

Foreign investors have been quick to grasp the risks. The yield on Chinese junk dollar- bonds has reached a crippling 24%, shutting most issuers out of the market. Some home- buyers are holding off purchases, worried about handing over deposits to weak firms. Building has stalled at ma- ny of Evergrande’s 1,000 or more projects.

Itis unclear who is exposed to losses, and to what extent. Ma- ny developers use shell companies, masking their debts, while stockmarket regulators have allowed them to Keep investors in the dark. On November 8th the Federal Reserve warned that Chi- na’s property troubles threaten the global economy.

Losses on property loans will hurt the banking system, al- though by how much remains to be seen. But as we explain this week (see Finance & economics section), lenders also face an- other danger. Crony capitalism has flourished among the coun- try’s small and mid-tier banks. Because the biggest state-owned

High-yield dollar-bond spread

China, percentage points

lenders prefer to make loans to other state firms, private com- panies and entrepreneurs have bought stakes in banks in the hope of getting preferential access to credit.

Although the banks involved are often small they add up toa giant problem. The Economist calculates that up to 20% of the commercial-banking system may have close links with tycoons or private businesses. There have already been blow-ups. In 2019 the collapse of a small lender caused a spike in interbank bor- rowing rates; several more failures have followed. Evergrande was until recently the owner of a captive bank in north-east Chi- na and is said to be under investigation for some 100bn yuan ($15.7bn) in related-party deals.

For Xi Jinping, China’s leader, state control is the answer to both the property and banking threats. To keep building sites ticking over, lo- cal governments are taking control of some un- finished projects. At smaller banks many cor- porate shareholders are being forced out and re- placed by local-government asset managers.

This reveals the limitations of Mr Xi’s eco- nomic philosophy. The expanding reach of state control may prevent a full-blown panic, because it shows that almost all banks are underwritten by the government. But it fails to acknowledge an important truth about the economy.

Many of the distortions that plague China’s markets were created by rigid state control. In plenty of private firms, insider dealing with lenders has been a way to cope with a state-domin- ated banking system that discriminates against them. Mr Xi may succeed in averting a sudden bad-debt crisis by reasserting state authority. But his reluctance to be bound by rules, treat state and private firms equally, and offer predictability to investors will ensure that the financial system is doomed to suffer yet more dangerous distortions in the future.


War, drought, famine

The world must act now to stop Afghans starving

N NOVEMBER 8TH the World Food Programme (WFP), a UN O) seency, said that its estimate of people “teetering on the edge of famine” worldwide had risen from 42m earlier this year to 45m. Remarkably, just one country accounts for almost all those 3m additional people. Afghanistan is on the brink of a humanitarian catastrophe.

Some 23m Afghans, ina