China’s Covid Contagion

The people have spoken.Credit…Noel Celis/Agence France-Presse — Getty Images

Zero-Covid protests rock China, and Western markets

Protests across China over the country’s strict zero-Covid policies shook up global markets over worries that the authorities will take longer to reopen the world’s second-largest economy. The visuals were jarring: Thousands took to the streets over the weekend in the biggest challenge to the authority of the Chinese Communist Party in years.

The market response was swift. Exchanges in Shanghai and Hong Kong closed lower, as did those in Japan and Australia. Investor jitters quickly spread west, with Europe down at the open and U.S. futures dropping. Among the stocks to watch: Apple, which was down nearly 2 percent, as investors worry about the company’s iPhone production hubs in China. Crude prices, meanwhile, fell to an 11-month prewar low.

Why are Chinese protesting? The demonstrations started after 10 people died in a fire on Thursday in Urumqi, a city in Xinjiang where some residents have been under lockdown for more than 100 days. Many Chinese blamed Covid restrictions, saying residents were unable to escape in time and rescue efforts were delayed. (The authorities deny the allegations).

Anger erupted on social media and thousands took to the streets in multiple cities, including Shanghai, Wuhan and Chengdu, and on university campuses in Beijing, where students held blank sheets of paper to protest widening censorship.

Chinese state media even allegedly censored images of maskless fans at the World Cup in Qatar, after the images had infuriated Chinese social media users. Elsewhere, Twitter was reportedly grappling with a deluge of Chinese-language spam content apparently designed to drown out coverage of the protests. In Shanghai, some demonstrators called for Mr. Xi to step down — an extremely rare public challenge — and many were arrested, including two foreign journalists.

Demonstrations are not unheard-of in China, but it is highly unusual for widespread protests in multiple cities on a matter so central to the party’s signature domestic policies.

Zero Covid could be around for a while. The authorities had signaled this month that they would start to ease restrictions that have hammered the economy, raising hopes that the country would soon reopen. But a recent spike in infections has led to more restrictions, with a third of the population put under full or partial lockdown last week, according to Nomura.

Deutsche Bank said in a note to clients that the country would not reopen until late spring 2023. “Until then, we see China’s growth stagnating,” it said.

Some analysts said the public anger was proof that the strategy was not sustainable and would have to lead to an easing. “If there’s a glimmer of light, it’s that once the winter infection surge is over China will move to ZCiNO: Zero covid in name only. It cannot keep people locked up,” said George Magnus, an associate at Oxford University’s China Center and former chief economist at UBS.


Black Friday sales surge, though the economy weighs on shoppers. By several measures, spending on the closely watched shopping day grew over 2021 — Mastercard estimates 12 percent year-on-year — as stores pushed sales. But retailers worry that consumers concerned about high inflation and the prospects of a recession will ultimately spend only if offered deep discounts.

Adidas is said to have been warned of the risks of working with Kanye West. Senior executives were briefed as early as 2018 that putting employees in “direct exposure” to the rapper and designer, with whom it shared the Yeezy venture, could pose legal headaches, The Wall Street Journal reports. Adidas said last week that it would review workplace misconduct claims against Mr. West, with whom it severed ties last month.

Qatar seeks a record valuation for the Paris Saint-Germain soccer club. The emirate is in talks to potentially sell a stake in the group at a valuation of more than €4 billion ($4.2 billion), the highest for a club. That could also buoy bids for other soccer franchises on the market, including Inter Milan, Liverpool and Manchester United.

Elon Musk says he would back Ron DeSantis for president. The C.E.O. of Tesla and Twitter is the latest billionaire to offer support to DeSantis, the Republican governor of Florida, if he were to run in 2024. Mr. Musk noted on Twitter that he had previously supported Barack Obama and, “reluctantly,” Joe Biden for president.

Advertisers maintain their distance from Twitter. Multiple ad agencies told The Financial Times that nearly all their big-brand clients had paused spending on the platform, citing concern about reduced content policing since Elon Musk took over. Others are reportedly spending a minimal amount in an effort to avoid Mr. Musk personally calling their executives to berate them. Tomorrow: the verified check option for paying subscribers is scheduled to go live after a series of delays.

Crypto investors see trouble ahead

Crypto asset prices sank again on Monday even as Binance, the industry’s biggest exchange, tried to restore investor trust by pushing for greater transparency across its exchange following the collapse of its rival, FTX, earlier this month. How bad could it get? Mark Mobius, a co-founder of Mobius Capital Partners, told Bloomberg this morning that his new price target for Bitcoin is $10,000, implying a further drop of nearly 40 percent.

Binance sought to calm investor nerves. This weekend, Changpeng Zhao, its founder, said that the exchange had enough Bitcoins on hand to meet customer redemptions, and that anyone could track its reserves on a new website. (It’s not yet clear whether Binance has enough Ether or other digital coins in its reserves to ease investor concerns.)

Since FTX imploded amid a flood of customer withdrawals earlier this month, C.Z., as Mr. Zhao is known, has argued that the industry has to embrace such a proof-of-reserves system. He has increased Binance’s potential commitment to an industry rescue fund to $2 billion; more than 150 companies have applied for the aid. Still, the price of the firm’s native digital token, Binance Coin, has fallen over 5 percent in the past 24 hours.

Elsewhere in crypto:

  • The crypto lender Genesis Global Capital is one of several companies facing inquiries from state regulators in a sweeping review of industry practices. Genesis, which is part of the crypto conglomerate Digital Currency Group — which also owns the trade publication Coindesk and the investment firm Grayscale — has hired financial restructuring advisers.

  • The Bahamian attorney general, Ryan Pinder, defended the country’s handling of its investigation into FTX, which has its headquarters in the island nation.

  • The chief digital officer of Farmington State Bank, and its online lender Moonstone, Janvier Chalopin, said the small Washington state bank had no “transactional interactions” with FTX, which invested $11.5 million into Farmington earlier this year, or Deltec, the crypto-focused Bahamian bank, whose chairman Jean Chalopin is also the chair of Farmington’s holding company, as well as Janvier’s father.

  • Several U.S. accounting firms said they are treating crypto clients as high risk, The Financial Times reports, subjecting those companies to more invasive and expensive audits.

You won’t believe this Yahoo ad deal

Yahoo on Monday announced one its first major moves since it went private last year: taking a 25 percent stake in Taboola, the company known for serving up attention-grabbing links (often derided as click bait) on websites, The Times reports. It’s deepening its push into digital advertising even as the industry is in a slump.

Yahoo and Taboola are making a 30-year bet on each other. You read that right: They have signed a three-decade partnership, in which Yahoo will give Taboola the exclusive license to sell its native ads across Yahoo’s sites, with the two sharing revenue from those sales. Yahoo advertisers will also be able to sell their ads on sites across Taboola’s network. They expect the partnership to yield at least $1 billion in annual revenue.

As part of the deal, Yahoo will become Taboola’s biggest shareholder and will get a seat on its board.

The deal comes despite major advertising headwinds. The sweeping decline in digital ads has battered even internet giants like Google and Facebook, and Taboola has been no exception: Its stock is down nearly 80 percent over the past year. Taboola has been racing with Outbrain, its largest native-advertising rival (and onetime merger partner), to lock up deals with digital publishers.

But Yahoo’s C.E.O., Jim Lanzone, said that his company’s still-vast platform — it claims 900 million monthly users across its properties, including AOL, TechCrunch and Yahoo Sports — will still depend in part on digital ad dollars. “We have hundreds of millions of people consuming news and sports and finance on market-leading properties that are heavily monetized through advertising — and will continue to be,” he said.

“I think the idea that forget it, this is over — it isn’t.”

Anthony Fauci, the White House’s outgoing chief medical adviser, on how the Covid pandemic is far from over. Last week, Fauci said roughly 300 Americans were dying each day from the virus.

The week ahead

A barrage of economic reports, including U.S. jobs and a key eurozone inflation indicator, will be released this week. Plus, DealBook hosts its annual Summit in New York City.

Tuesday: The Consumer Confidence Index provides a snapshot of how consumers viewed the economy in November. Earnings: Intuit, Workday, Hewlett Packard Enterprise.

Wednesday: Revised estimates for U.S. third-quarter G.D.P. are due, as are eurozone inflation figures for November and “JOLTS” data on job openings for October. Also, the DealBook Summit.

Thursday: October data will be released for the Fed’s preferred inflation measure, the Personal Consumption Expenditures Price Index. Earnings: Dollar General, Ulta Beauty and Kroger.

Friday: Economists expect the U.S. jobs report for November to show 200,000 new jobs — down slightly from 261,000 in October — and for the unemployment rate to remain at 3.7 percent. Earnings: Cracker Barrel, Genesco.



  • A potential deal to take Japan’s Toshiba private has reportedly stalled amid banks’ drawn-out deliberations over whether to lend to the preferred bidder. (Bloomberg)

  • Macquarie, the Australian investment giant, said it had raised $13 billion for its latest infrastructure fund. (Bloomberg)

  • T. Rowe Price, the biggest shareholder in News Corp after the Murdoch family, said that it had concerns about its plans to combine with its corporate sibling, Fox. (NYT)

  • How slices of financially risky companies owned by private equity are being bundled into complex securities — and then marketed to ordinary investors as solid investments. (FT)


  • The U.S. expanded bans on telecom and surveillance equipment from Chinese companies including Hikvision, Huawei and ZTE, citing national security concerns. (WSJ)

  • The U.S. gave Chevron a limited license to expand its energy operations in Venezuela. (NYT)

  • Some E.U. officials accused the United States of unfairly profiting from the war in Ukraine, citing sales of American gas to Europe and weapons to Kyiv. (Politico)

Best of the rest

  • Warren Buffett donated $750 million in additional Berkshire Hathaway stock to foundations associated with his family last week. (CNBC)

  • The market for work-from-home jobs is getting increasingly competitive. (WaPo)

  • A “shrinkflation” investigator exposes sneaky price increases. (NYT)

  • “Get ready for a net zero business backlash” (FT)

  • E-sports has exploded in popularity. Profits, so far, haven’t. (NYT)

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