China’s slowest growth in 24 years, Davos angst and honey laundering

The daily briefing “FirstFT” from the Financial Times.

China’s economy grew at the slowest pace in nearly a quarter of a century last year, even as it overtook the US to become the world’s largest in purchasing power terms.

The annual expansion of 7.4 per cent was the slowest since 1990. That slowdown is expected to continue in the coming years, partly as a result of its far larger size, but also as its credit-fuelled, investment-led growth model, reliant on low wages and polluting industries, runs out of steam. (FT)

In the news:

IMF lowered growth forecasts

It lowered its expectations for global growth by 0.3 percentage points for both 2015 and 2016 and said that low oil prices will not be enough to boost the world economy. (FT)

Swissie casualties

Last week’s violent swing in the Swiss franc continues to wreak havoc. A leading European foreign exchange filed for administration and a Danish bank admitted to facing heavy losses. The UK’s Financial Conduct authority has also asked currency brokers to report on the impact the Swiss move had on their balance sheets, in an attempt to assess the damage on the industry. (FT)

Denmark’s rate cut

The Danish central bank cut interest rates to a record low in anticipation of currency speculators on the hunt for their next target after Switzerland ditched its defence of the franc. Investors have been eyeing up Denmark’s strict peg to the euro since the cap was ended on the franc-euro exchange rate. (FT)

An unsettled investment industry

Calpers, the largest US pension fund, is cutting the number of private equity managers it uses and teaming up with other investors to drive down fees. The $300bn pension fund has already pulled out of hedge funds, arguing that they were too costly and complex, and priorities for 2015 include sweeping changes to its portfolio of buyout and venture capital funds. (FT)

Amazon goes to Hollywood

After scooping two Golden Globes and signing up Woody Allen, the company announced plans to produce and acquire original films to show in cinemas and then later on its streaming video service. The company is encroaching on the turf of traditional broadcasters and cable TV groups, and ramping up competition with rival Netflix. (FT)

Hundreds of thousands rallied in the capital of Chechnya to denounce Charlie Hebdo’s caricatures of the Prophet Mohammed. (WSJ$)

Off-piste at Davos:

Lost confidence

Trust in institutions evaporated in the last year, taking public confidence levels back to lows not seen since the financial crisis. Research to be presented this week at Davos will show how events such as the Ebola crisis and the disappearance of a Malaysian airliner have racked public faith in business and government. (FT)

Davos doubts

The World Economic Forum is designed to exacerbate executive angst, says Andrew Hill. Participants will be worrying about whether they are at the right party and wondering why they are wearing snow boots and talking about mindfulness, rather than inspiring staff and tackling crises back in the office. (FT)

It’s a big day for:

Barack Obama who will give his State of the Union speech today, outlining how far the economy has come since the financial crisis and how he plans to boost growth and tackle inequality. His proposal to increase taxes on Wall Street and the wealthy has already been attacked by Republicans and the American Bankers Association. (FT)

Unilever, which kicks off full-year results for the consumer goods sector. Fourth-quarter sales are expected to have picked 2.6 per cent after surprisingly slow growth of 2.1 per cent in the third quarter. While the group will benefit from lower oil and commodity prices, the question is whether that is enough to offset the slowdown in emerging markets, which account for 57 per cent of sales. (FT)

IBM, which reports fourth-quarter earnings today. The company last week unveiled a new version of its corporate mainframe computer in an attempt to end the slide in its computer hardware business. (FT)

Zambia, which goes to the polls today to elect a new president to complete the term of Michael Sata, who died in office last October. Of the two frontrunners, one represents a continuation of Sata’s populist policies while another has promised a more business-friendly approach. (FT)

Food for thought:

Honey laundering

US food detectives have been concentrating their efforts on honey since the Commerce Department put stiff tariffs on Chinese honey and honey imports spiked from other countries without large bee populations. The food scam has been developing for years, even challenging forensic technology. (NYT$)

The two Tunisias

One is productive and concentrated in the coastal areas; the other lies in the interior, where the revolution started, and includes the badlands of the south , where smuggling is rife. But the election of President Beji Caid Sebsi offers a chance to resolve these social and economic disparities. (FT)

The backwards war on terror

Solving the problem of jihadi violence, over the long-run, will be more about the battle of ideas rather than a battle of armies, says Gideon Rachman. But in the meantime there are military campaigns against Islamist movements under way in Africa, Asia and the Middle East. (FT)

Shares in Sony have bucked the recent negative publicity after the grouped was hacked, rising 35 per cent in the past three months. (FT)

Video of the day:

ECB QE won’t be enough

Alberto Gallo, head of macro credit research at RBS, explains why investors are sceptical about the ability of quantitative easing to reflate the eurozone. (FT)

This article is published in collaboration with The Financial Times. Publication does not imply endorsement of views by the World Economic Forum.

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Author: FirstFT is the Financial Times’ editors curated free daily email of the top global stories from the FT and the best of the rest of the web.

Image: People walk past a lantern decorated with a dragon pattern ahead of the Lantern Festival at Yu Yuan Garden in downtown Shanghai February 5, 2012. REUTERS/Carlos Barria.