TheChek News Flow

Steep fall in November nearly wipes out profit growth in 2025 as Beijing steps up pressure on over-investment

China’s industrial profits last month fell at their fastest pace in more than a year, as President Xi Jinping’s economic planners struggled to contain the fallout from industrial overcapacity and lacklustre consumer confidence.

Profits at industrial companies with annual revenues of more than Rmb20mn ($2.8mn) fell 13.1 per cent in November compared with a year earlier, data from the National Bureau of Statistics showed on Saturday, down from a 5.5 per cent decline in October.

The November slump brought profit growth for the year to date down to 0.1 per cent above the same period in 2024, down from 1.9 per cent growth in the January-to-October period.

China’s economy has struggled to find long-term drivers of strong growth in the wake of the collapse of the debt-fuelled property sector, which is now entering its fifth year of crisis.

While China has relied on exports of low-cost goods to boost headline growth, the world’s second-biggest economy has been wracked by deflationary pressures, weak domestic demand and falling investment. The producer price index has been mired in negative territory for three years.

On Sunday, China’s finance ministry reiterated a pledge for a more proactive fiscal policy in 2026 but provided few commitments on the scale or scope of expanded expenditure.

In a statement following a two-day policy conference, the ministry said that as part of the drive to boost consumption it would continue to support trade-in programmes for consumer goods. While no further detail was given, the statement signals a potential extension of a programme that was launched in 2024 and expanded in 2025.

The ministry also said it would increase funding for investment in “new quality productive forces”, a Communist party phrasing that loosely refers to overhauling traditional manufacturing via innovation and development of cutting-edge technologies.

Lan Fo’an, the finance minister, promised fiscal support for employment and income growth as well as social security, health and education.

The latest factory data highlights the challenge for policymakers to boost confidence among the country’s companies and consumers, despite a truce in the US-China trade war and a boom in high-tech manufacturing exports.

Yu Weining, NBS chief statistician, said China’s economy faced “structural adjustment pressures” as it transitioned from “old to new” growth drivers, adding that the international environment was also marked by “many unstable and uncertain factors”.

The central government in Beijing has long resisted calls from economists — both inside and outside China — to unleash broad-based stimulus and roll out deep social security reforms to boost sentiment and kick-start the economy.

It has also increasingly taken aim at what authorities call neijuan, or “involution” — excessive industrial competition that they blame in part for overproduction in some sectors that is driving down prices.

In an article published in Qiushi, the flagship magazine of the Communist party’s central committee, Xi this month urged officials to work more urgently to address the problem of insufficient domestic demand.

“Expanding domestic demand is related to both economic stability and economic security; it is not an expedient measure but a strategic move,” he said.

Xi also reiterated calls for officials and companies to exercise more discipline over investments, following earlier criticism of industrial over-investment, which has resulted in brutal price wars and unfair treatment of suppliers.

Earlier this month, the NBS reported that fixed asset investment declined 2.6 per cent in the January to November period from a year earlier. Retail sales, an indicator of household demand, expanded 1.3 per cent in November on a year earlier, the slowest pace of growth since December 2022. Both data points were below analysts’ expectations.

The latest NBS data highlighted some bright spots in China’s manufacturing industries. High-tech manufacturing and the auto industry posted year-on-year improvements of 10 per cent and 7.5 per cent respectively.

Tokyo wants to more than double the share of electricity generated from nuclear energy, but a full-on renaissance seems distant

Japan plans to restart reactor No. 6 at Kashiwazaki-Kariwa, a large reactor offline since the 2011 Fukushima disaster.

The government aims to increase nuclear power’s share of electricity to 20% by 2040, up from approximately 9% currently.

Public opinion in the reactor’s area is divided, with 50% open to restart and 47% opposed, and 60% believing it is too soon.

TOKYO—On a sandy coastline 180 miles from Tokyo, a giant nuclear reactor will soon come back to life after more than a decade offline.

The reboot of reactor No. 6 at Kashiwazaki-Kariwa on the Sea of Japan coast will mark a milestone for a nation that in 2011 suffered one of the world’s worst nuclear disasters, when an earthquake and tsunami triggered a meltdown at the Fukushima-Daiichi atomic power station.

The reactor is of a similar design to those that failed at Fukushima and its size will make it the largest reactor brought back into operation since all 54 were shut down in the wake of the disaster.

The restart follows years of safety inspections, new construction to shield the reactor from natural disasters and a yearslong effort to reassure people living nearby that they won’t be put at risk when the reactor starts up again. A 15-meter concrete wall has been erected to stop the reactor from being flooded by a tsunami.

The Japanese government says it wants to more than double the share of Japan’s electricity generated from nuclear power to 20% by 2040, from around 9% currently. Like other countries, Japan is eager to wean itself off fossil fuels while also meeting the energy needs of power-hungry data centers and semiconductor foundries that fuel the artificial-intelligence revolution, without pushing up everyone else’s bills.

Still, a full-on nuclear renaissance seems distant. More than a decade after Fukushima, only 14 reactors are up and running and 19 are still mothballed. More than 20 were shut down for good. Public anxiety about atomic power remains substantial in a country prone to earthquakes.

The government’s 20% goal, if it is ever met, would leave nuclear’s share of Japan’s power mix below the 30% it was before the Fukushima meltdown. Officials have instead penciled in a far bigger role for renewables such as solar and wind in their power ambitions, which they want to provide 40% to 50% of Japan’s electricity.

“Everybody says they want nuclear power, but they are not using their political capital for restarting,” said Nobuo Tanaka, a former executive director of the International Energy Agency and Japanese government official. Tanaka says meeting the government’s 20% target will require more and faster restarts of idled plants.

The government says the 20% goal isn’t a mandatory target and it expects to make progress in building new, more advanced reactors.

Japan’s caution follows a global trend. Although many governments, including the Trump administration, say they want more nuclear power, concrete progress toward building out the world’s aging fleet of reactors is limited, with renewables taking a far larger share of new investment.

That is a reflection, say experts, of nuclear’s high costs, public skepticism and missed promises on new technologies such as small, factory-made reactors that can be hooked up to the grid quickly.

In the U.S., the number of new nuclear reactors under construction is zero, according to the International Atomic Energy Agency. Of the 62 under construction worldwide, China is building 28, according to the IAEA.

Yet even that effort pales against China’s push on renewable energy. If completed, those 28 nuclear reactors will produce around 30 gigawatts of electricity. China added 357 gigawatts of solar and wind capacity in 2024 alone, according to the country’s National Energy Administration.

“Does that sound like a nuclear renaissance to you?” said Mycle Schneider, who publishes the World Nuclear Industry Status Report, an annual look at nuclear energy activity worldwide. He said the number of working reactors, their share of the world’s energy mix, and other indicators of nuclear industry activity peaked years ago.

When back up and running, Kashiwazaki-Kariwa No. 6 will produce some 1.4 gigawatts of electricity, enough to power around 450,000 homes. Operator Tokyo Electric Power Co. said it plans to restart the reactor on Jan. 20.

The reboot comes after more than a decade of work to bring the reactor into line with tougher regulations for nuclear power plants.

In addition to the giant tsunami wall, the facility is now equipped with new backup power systems, reinforced walls, pipes and trusses to boost resilience in an earthquake. It also has a reservoir that holds enough water to cool the reactor for seven days without interruption. Stray hydrogen is converted into water to minimize the risk of explosions, and filters remove radioactive particles from the gases vented into the air.

Niigata prefecture is a coastal idyll of steep mountains and lush rice paddies. The region’s governor gave the go-ahead for the restart in November, after lengthy consultations with businesses and residents. That was eight years after Tepco initially received regulatory approval to restart the reactor, though it was hit with an operating ban in 2021 after regulators found a number of security flaws. That ban was lifted in 2023.

Opinion polls conducted in the area before the governor’s decision suggest residents are divided. A survey commissioned by the prefecture showed 50% were open to a restart but 47% were opposed no matter what measures were taken to boost safety. Sixty percent overall thought it was too soon to restart the reactor.

Hiroshi Sasaki, a professor at Niigata University who lives in the prefecture and opposes restarting the reactor, said residents don’t have enough information about evacuation plans and other safety measures for it to proceed.

“If people truly understood the situation as affected parties, they would realize things are far worse,” he said.

Also an irritant for some locals: Most of the power will go to Tokyo.

“Having electricity sent from Kashiwazaki-Kariwa is extremely important for the resilience of the capital,” said Hidekazu Oshita, executive director at the Tokyo Chamber of Commerce and Industry.

“Although it is difficult, we want the government to implement policies that truly accelerate the speed of these restarts,” he said, adding that nuclear power is essential to ensure a reliable electricity supply and keep a lid on energy prices for businesses.

At Fukushima in 2011, three reactors melted down after the plant’s cooling systems malfunctioned due to an earthquake and tsunami. Thousands of people were evacuated and many still haven’t returned to their old homes.

In the years since, Japan has ramped up imports of natural gas and other fossil fuels to meet its energy needs. The burning of coal and natural gas generated more than 60% of Japan’s electricity last year, according to the IEA.

Japan, which has little in the way of natural resources, has long been anxious about its dependence on energy imports, concerns amplified by events such as Russia’s invasion of Ukraine.

In a revamped energy strategy published in February, Japan’s government said nuclear power offers big advantages over imported fossil fuels, such as stability of supply and low carbon emissions. New Prime Minister Sanae Takaichi is a longtime supporter of nuclear power.

Toyoshi Fuketa, who was president of Japan’s Nuclear Regulatory Authority from 2017 to 2022, said regardless of the role nuclear plays in Japan’s energy mix, regulators need to stay vigilant as memories of Fukushima fade.

“People really do forget the heat once it passes, you know?” he said.

Air Force’s E-7 Wedgetail jet program is behind schedule, and costs rising; Congress has stepped in to keep it going

The U.S. Air Force’s new Wedgetail radar plane is designed to scan for threats hundreds of miles away, stay airborne for long stretches and act as a mobile battle station for dozens of fighters at once.

The aircraft is also behind schedule. Its cost has ballooned. Some military officials have said newer technologies could do much of the same job within the next decade.

The Boeing-built plane’s shaky standing led the Pentagon earlier this year to say it would cancel the purchase of two prototype E-7 Wedgetail jets. The price tag had climbed to $724 million per aircraft, up from around $588 million in the program’s early stages.

The contract looked doomed—until Congress stepped in. The $901 billion defense policy package enacted this month blocks the Pentagon from ending its Wedgetail contract. Senate lawmakers this year lined up $847 million in additional funding for the two prototypes, though the program’s long-term future remains uncertain.

The Wedgetail’s turbulent history illustrates the challenges Western military leaders face in trying to keep complex weapons contracts on track, while freeing up resources for other technologies.

The tab to upgrade America’s land-based nuclear missile arsenal under the Sentinel project has nearly doubled to more than $141 billion, partly because of steep construction costs for new missile silos still on the drawing board. Delays and cost increases at U.S. shipyards have driven the Navy to scale back and cancel some construction contracts.

Before Congress restored funding for the E-7 Wedgetail program, Pentagon leaders argued it would be more cost-efficient to focus on existing surveillance fleets while space-based technologies are developed.

“If we have systems and platforms that are not survivable in the modern battlefield, or they don’t give us an advantage in a future fight, we have to make the tough decisions right now,” Defense Secretary Pete Hegseth said in a June House committee hearing. “The E-7 is an example of that.”

Hegseth said space-based technologies will soon surpass some existing airborne capabilities.

A Boeing spokesman referred questions about the program’s cost to the Air Force. Steve Parker, the head of Boeing’s defense and space business, has said the U.S. will in the long run need a balance between airborne and orbital technologies.

“I don’t see this as a budget issue,” Parker said at a November industry event.

Sporting a rectangular radar array from Northrop Grumman attached to its roof, the Wedgetail has the ability to scan the air for potentially hostile aircraft. It can relay details about enemy positions and missiles to friendly aircraft and weapons systems on the ground.

Boeing began designing the plane at the turn of the century, adapting its 737 NG commercial jet for military use. Boeing pitched the new design as a straightforward upgrade to the smaller E-3 Sentry planes that have patrolled the skies since the Cold War.

Australia’s air force was the first customer for the Wedgetail a quarter-century ago. Software problems and other snags at first delayed deliveries, though the Australian government later brought costs under control and had a full fleet by 2015. A government audit reported a base cost of $3 billion Australian dollars, equivalent to about $2 billion, to acquire six Wedgetail jets.

Over the past decade, Australia has used its Wedgetails in training exercises with U.S. jets, searching the Indian Ocean for Malaysia Airlines Flight MH370 and patrolling the skies around Eastern Europe.

Boeing has delivered 14 finished Wedgetails to customers in Australia, South Korea and Turkey.

The U.S. Air Force in 2024 agreed to a $2.6 billion contract for two prototype Wedgetail aircraft. It changed course in June and announced plans to cancel the contract, citing the project’s significant delays and cost increases.

Senate appropriators responded in July with a bill to preserve Wedgetail funding, arguing that ending the program would leave the Air Force too reliant on still-nascent satellite technology and diminish early warning and control capabilities. Lawmakers also recognized the project’s “affordability concerns” and ordered the Air Force to present a plan to streamline requirements and control costs.

An Air Force spokesman said it would comply with the defense policy law Congress passed this month. U.S. officials have said they can save money by shipping two unfinished 737 air frames to the U.K., where they will be outfitted with military gear before flying back to America for final touches. The Air Force said that arrangement will take advantage of the U.K.’s previous experience working on the jets.

Some former U.S. officials argue that the U.S. should change course. The Navy fields a fleet of Northrop Grumman E-2D Advanced Hawkeye surveillance planes, which are already in service but have a shorter range and lack the cabin space for long airborne missions.

The Wedgetail’s larger cabin offers some advantages over the Sentry and Hawkeye. It features more advanced radar technology, fits 10 mission consoles and can stay aloft longer than older models.

Other countries are having second thoughts on the Wedgetail. The Dutch military earlier this year said that the North Atlantic Treaty Organization would scrap plans to buy six E-7 jets and instead search for other aircraft that could do the job.

U.K. officials have scaled back plans to buy five Wedgetails and will instead field three. Australia plans to retrofit its own Wedgetail fleet to keep up with the times.

U.S. military officials say the need to replace decades-old Sentry jets hasn’t changed. The nearly 50-year old surveillance planes are often grounded. Replacement parts are expensive and in short supply.

“You can’t expect to fly them forever,” said Glen VanHerck, a former Air Force general and commander of the North American Aerospace Defense Command, or Norad, who retired in 2024. “They were not meeting my mission requirements when I retired, and they will only get worse in the future.”

NATO militaries and startups aim to tackle the unique challenges of fighting in the Arctic, as the risk of conflict there increases

Sending drones and robots into battle, rather than humans, has become a tenet of modern warfare. Nowhere does that make more sense than in the frozen expanses of the Arctic.

But the closer you get to the North Pole, the less useful cutting-edge technology becomes. Magnetic storms distort satellite signals; frigid temperatures drain batteries or freeze equipment in minutes; navigation systems lack reference points on snowfields.

During a seven-nation polar exercise in Canada earlier this year to test equipment worth millions of dollars, the U.S. military’s all-terrain arctic vehicles broke down after 30 minutes because hydraulic fluids congealed in the cold.

Swedish soldiers participating in the exercise were handed $20,000 night-vision optics that broke because the aluminum in the goggles couldn’t handle the minus 40 degree Fahrenheit conditions.

“The Arctic is the ultimate adversary,” said Eric Slesinger, a former Central Intelligence Agency officer who now runs a venture-capital firm bankrolling defense startups, including some trying to master arctic fighting.

In Ukraine, armed forces use off-the-shelf gear, from power sources and communications tools to chemicals and lubricants. In the Arctic, using such basics often requires thorough re-engineering.

Great-power competition is growing in the High North as climate change opens sea lanes and access to natural resources. Russia is militarily dominant there, with nuclear-submarine forces, missile bases, airfields and ports on the Kola Peninsula. The shortest flight path to North America for Russia’s next-generation hypersonic cruise missiles is over the North Pole.

Of the eight countries with Arctic territory, only Russia isn’t in the North Atlantic Treaty Organization. Among NATO members, the U.S. and Canada’s main worry is Russian missiles, while Finland and Norway’s borders with Russia make a land incursion a more pressing concern there.

An arctic conflict would force war planners back to basics. Extreme cold makes the most common components brittle. Low temperatures alter the physical properties of rubber, causing seals to lose their elasticity and leak. Traces of water or humidity freeze into ice crystals that can scratch pumps and create blockages. Wires should be insulated with silicone rather than PVC, which can crack.

Oil and other lubricants thicken and congeal. In most standard hydraulic systems, fluid becomes syrupy and can affect everything from aircraft controls to missile launchers and radar masts. A single freeze-up can knock out an entire weapons platform or immobilize a convoy.

One of the Arctic’s great tourist attractions is, for military planners, one of its great irritants: the northern lights.

Aurora Borealis, as the green lights dancing across the sky are known formally, are caused by charged sun particles interacting with the Earth’s magnetic field, which is most intense at the poles. They interfere with radio communications and satellite-navigation systems that provide positioning and timing data.

One lesson that does apply from the war in Ukraine is the critical role that private startups can play in driving innovation in collaboration with governments.

Two British explorers earlier this year launched Arctic Research and Development, a startup aimed at putting autonomous systems into the polar regions. Ben Saunders and Frederick Fennessy, who have traveled roughly 7,500 miles on skis in the Arctic between them, compare designing High North technology to building a miniature space program. Their employees have backgrounds in space research, intelligence, climate science and the military. Slesinger, the venture capitalist, is an early investor.

They develop software specifically for use in the Arctic, along with virtual maps that portray the region more accurately than widely used Mercator projections, which distort polar distances. They test gear in a large freezer in an industrial unit in rural England, where they can expose equipment to minus 94 degrees Fahrenheit.

“How come we have had a Perseverance Rover on Mars for years, happily sending data back, and we haven’t had an autonomous rover in the Arctic?” said Saunders. “For so much of human history it was ‘Here be dragons,’ blankish map territory.”

One of the company’s products under development is an orange box shaped like a suitcase called Icelink, a high-bandwidth communications hub weighing less than 40 pounds, which also contains GPS antennas and specialized batteries that last for days.

Saunders knows the importance of stress-testing even the smallest bits. Once, on a solo trip to the North Pole, he snapped a piece of his ski binding and was forced to abort the entire expedition, writing off a trip that cost more than $200,000.

Arctic weather itself means that a war there would look different from anywhere else. Ukrainian drone manufacturers have been churning out hundreds of thousands of inexpensive, agile quadcopters that rely on digital communications to find targets. They would fail in the Arctic, where drones must be equipped with deicing systems, robust propulsion to deal with strong winds, and run on jet fuel or diesel instead of batteries. They are usually so large they need a trailer or runway to launch.

Powering radios alone is a logistical nightmare. The Swedish military was recently approached by a private company offering a charger for their batteries to be carried by sled. Weighing over 400 pounds, it would have gotten stuck at the first sight of powdered snow.

“The problem right now is that many in the industry have no idea what the guys on the ground need,” and their ideas are theoretically feasible but impractical, said Frederik Flink, commander of the international training wing at the Subarctic Warfare Center in Northern Sweden. “We on the ground also have an idea of what we want,” he said, but added their ideas are “probably not technically realistic.”

For the last three winters, the Subarctic Warfare Center has been giving feedback to a U.S. company developing a new type of cross-country ski with bindings that don’t break under the pressure of a soldier working in the field.

AI is also of limited use in the Arctic. In Ukraine, it is used to speed up decision-making by processing vast amounts of data. The country’s east is heavily urbanized, with a population density about 50 times that of Arctic Scandinavia and Finland, where every square mile houses on average five people. It is home to extensive road networks and railroads, energy production and heavy industry. If the Arctic becomes a battleground, a lack of such things means AI would have less data to work with.

Man-made interference also hits harder in the Arctic. In the High North, satellites orbiting the equator can often be obscured by the curvature of the Earth, meaning fewer visible satellites than elsewhere on the planet. That means jamming, a nuisance elsewhere, becomes a serious safety concern.

In 2019, Norway’s communications authority Nkom registered six GPS failures in Eastern Finnmark, in the country’s north bordering Russia. In 2022, the year Russia invaded Ukraine, it recorded 122. Since late 2024, jamming has become so frequent that the regulator has stopped counting.

“You need to accept that this is the situation, and find solutions,” said Espen Slette, head of the department for spectrum management at Nkom.

To that end, representatives from more than 100 companies assembled on the Norwegian island of Andøya in September for Jammertest. The annual event sees tech geeks test gear, including drones, atomic clocks antennas and chips, against jamming in the harsh Arctic climate.

Heidi Andreassen, partner and founder of Testnor, which organizes Jammertest, said she believed the jamming isn’t an act of Russian aggression, but a spillover effect of Moscow’s efforts to protect its military assets on the nearby Kola Peninsula from drones.

“In the Arctic, if you have very challenging weather conditions and no line of sight, then jamming can be critical,” Andreassen said. “Just a few years ago, this was not something people cared about because it was rare. But now, it has become a daily problem.”

Recent deals boosted optimism for the new year, but firms are still sitting on a glut of portfolio companies

Private-equity firms made progress clearing their shelves of dusty investments this year. There is still plenty more to do in 2026.

Firms have been sitting on a glut of unsold companies for years, leaving many of their investors frustrated and making it harder to raise new funds. Despite a pickup in broader deal activity this year, the backlog of companies is up from last year.

About 12,900 U.S. companies sat in private-equity portfolios as of Sept. 30, according to PitchBook, up slightly from the end of 2024.

The average hold period—the time between buying and selling—is nearly seven years, down from the 2023 high but still elevated compared with before the pandemic.

Just a few years ago, private-equity firms were spending liberally to snap up companies. Then in 2022, interest rates ratcheted higher, making the debt used to fund big buyouts more expensive and effectively ending the buying spree.

Now firms are reluctant to accept meager returns—and lower performance-based compensation for employees—on companies they bought at generous valuations during the boom times.

That is gumming up private-equity’s tried-and-true formula of raising money from investors to buy companies, then flipping them for a profit a few years later.

Private-equity investors have been sitting on mounds of “dry powder,” or funds committed by investors that haven’t yet been deployed.

Firms in the U.S. were sitting on about $880 billion in undeployed capital as of September, according to accounting and consulting firm PricewaterhouseCoopers. That is down from a record $1.3 trillion in December 2024.

A thawing in the deal market helped boost the overall value of global private-equity sales or initial public offerings by more than 40% in 2025 through Dec. 22, according to LSEG.

Some deals this year offered encouraging signs for 2026. Medline, the medical-supply company acquired a few years ago by a trio of private-equity firms, this month completed the biggest initial public offering since 2021. Earlier in the year, Carlyle Group and Oracle sold U.S.-based chip designer Ampere Computing to SoftBank for $6.5 billion.

Executives generally expect more offloading of older investments in 2026.

A highly-anticipated boom for initial public offerings offers an exit strategy for private-equity firms. High-profile private companies, including rocket maker SpaceX and artificial-intelligence startup Anthropic, are among those mulling listings.

“I would be in the camp that we’ve sort of moved from taxi to takeoff as it relates to transaction activity [and] the IPO market,” Blackstone President Jonathan Gray said at the Goldman Sachs financial services conference.

Aging power infrastructure threatens ability of U.K. and others to capitalize on AI boom

In an age of energy-hungry data centers, countries around the world have raced to install solar panels and wind turbines. One unexpected bottleneck: aging electricity grids that can’t handle the power.

In the U.S., decades-old transmission lines have been blamed for hindering the rollout of new energy projects. In Europe, a sweeping blackout in Spain in April highlighted how big power swings can overwhelm the system. Meanwhile, China’s rollout of ultrahigh-voltage transmission lines is now seen as giving it an edge in the artificial-intelligence race.

Global investment in electricity generation has surged almost 70% over the past decade to $1 trillion a year, but annual grid spending has only risen to $400 billion, according to the International Energy Agency.

The U.K. offers a cautionary tale. Britain built a vast network of wind and solar farms and generates a higher proportion of its power from renewables than most places in the world. But it didn’t build the transmission lines needed to move all that clean energy around.

Britain’s grid hasn’t undergone a major upgrade since the 1960s, when the rising popularity of refrigerators and washing machines turbocharged demand for electricity. The country is now embarking on an expensive building boom, sparking outrage at unsightly transmission towers and the potential harm to bats, dormice and other local wildlife.

At stake is Britain’s ability to capitalize on the AI boom, and secure the jobs and investment that come with it, as well as to lower household electricity bills.

National Grid is investing the equivalent of about $40 billion to upgrade the U.K.’s power networks over the next five years in a project dubbed “The Great Grid Upgrade.”

Grid upgrades and associated costs add to what are already some of the world’s most expensive electricity bills. The average-size British household paid almost $1,500 for electricity last year, more than double the bill in 2008, government data show. That’s close to the $1,700 that American households pay each year for consuming three times as much electricity.

Outdated infrastructure has created massive distortions in the energy market. Wind farms off the coast of Scotland are far from customers in the populated south, and leaving them constantly on risks frying the grid. The U.K. paid power generators $2.3 billion in the year to March to not produce electricity, a bill that is set to rise in coming years.

The lack of grid capacity means there is a green-energy bottleneck. Want to build a new wind farm or battery storage unit? Get in line. It takes five to 10 years to get a grid hookup.

When Lindsay McGrow first started helping wind farms in Scotland connect to the grid two decades ago, it would typically take a little over two years. Today’s longer wait may be fine for large, offshore wind farms that can take five to six years to design and build, “but for a battery site, people think it’s crazy,” the consultant said.

To speed things up, the U.K. recently scrapped its first-come, first-served system for grid hookups. Grid operators are now fast-tracking connections for projects that they see as ready-to-go and aligned with national targets, and kicking other projects off the wait list.

The roots of the grid problems lie in the 19th-century build-out of Britain’s early electricity supply.

Historically, most of the U.K.’s electricity came from coal-fired power stations in the center of the country, which transmitted out across the island. Britain shut its last coal-fired power station last year, some 142 years after opening the world’s first.

The transition to renewable energy has upended how Britain gets its power.

Today, wind is the primary source of electricity generation in the U.K., contributing roughly a third of the country’s total supply. But a lot of wind farms are in Scotland, meaning the region generates far more power than it requires and needs to transmit some south, where most of the demand is. The current infrastructure isn’t sufficient to transport all that power.

“If you’ve just built a shiny new wind farm in the north of Scotland and we don’t have a network that extends up that far, no amount of technology can help you with that. You’ve got to build a new line,” said Steve Smith, National Grid’s chief strategy and regulation officer.

Another problem: The output from new solar panels and wind turbines depends on the weather, which doesn’t always align with demand.

In the past, the grid operator could coordinate with coal-fired power plants to increase output when it knew Britons would return home from work and start turning on lights and TVs. But the wind doesn’t take instructions on when to blow.

A fully modernized grid is years away. Building a new transmission line can take up to a decade, with most of that time spent consulting local communities and securing various approvals. National Grid would like to cut that time in half, but that would require changes in government policies, Smith said.

New transmission towers, known locally as pylons, aren’t always welcome. Objections from local residents and nature conservation organizations have been a major hurdle to speeding up grid upgrades.

Years of consultations on National Grid’s plan to upgrade a 112-mile power line in the east of England generated more than 20,000 responses.

Suffolk County Council demanded information about the impact on hedgerows, which are home to bats and dormice. Multiple responses raised concerns about the new equipment’s noisy hum. Another called for an existing overhead line to be removed because it runs close to the cottage featured in John Constable’s 1821 painting “The Hay Wain.”

To assuage wildlife concerns, National Grid in 2020 built a bespoke bat barn during the construction of a new overhead line. Last year, it installed an acoustic barrier to shield bats from noise while replacing underground cables.

Tariff deals with the US have bought time but investment momentum is elsewhere

Pharmaceutical companies have long complained Europe spends too little on drugs. It took the arrival of Donald Trump — threatening steep tariffs and accusing European countries of “freeloading” on the US — for the warnings to register.

In response to the threats, European governments raced to strike deals. The UK secured a zero tariff arrangement in return for higher spending on medicines and lower costs for drugmakers. The EU and Switzerland accepted a 15 per cent cap.

The question is whether these concessions will be enough to reset relations between the sector and Europe.

“Europe now has an opportunity to raise its game and keep pace with a sector that is moving forward,” said Nigel Layton, head of life sciences and pharma at Forvis Mazars. “Whether this agreement is enough will depend on what happens next, but for now, it’s a positive signal that progress is possible.”

The message drugmakers have been at pains to convey for some time is that without policy changes, Europe will fall further behind the US on innovation and access to medicines and may struggle to keep pace with China’s rapid progress.

One of Trump’s complaints has been that because US consumers pay significantly more for medicines, European countries are “freeloading”.

His administration is pushing for the industry to adopt a “most favoured nation” pricing policy, which would mean cutting US prices to the levels paid in many other developed countries.

On a GDP per capita basis, high income European countries spend roughly half of what the US does on innovative medicines, according to a report by EY. At the same time, pharma R&D investment in Europe has fallen.

According to the European Federation of Pharmaceutical Industries and Associations lobby group, by 2022 the continent’s share of R&D investment in rich world countries had fallen to 31 per cent, compared with 41 per cent two decades previously.

In 2024, R&D spending in Europe increased 4.4 per cent year-on-year but it was outpaced by the US at 5.5 per cent and China with 20.7 per cent.

The industry had become particularly frustrated with the UK, which drives a hard bargain on how much the country’s National Health Service pays for prescription medicines and has strict value-for-money rules on new drugs.

Partly emboldened by Trump, over the past year major drugmakers have said they will cut back their investment in the UK.

Eli Lilly paused plans for a laboratory site in central London in September and Merck, known as MSD in Europe, has scrapped a proposed £1bn research centre. In January, AstraZeneca cancelled a £450mn plan for a UK vaccine manufacturing plant.

The UK setbacks are part of a pattern of waning investment across Europe.

“It’s a trend that’s very visible,” said Nathalie Moll, director-general of EFPIA, “and that investment has gone to the US and Asia, mainly China. It’s not that it has disappeared, the money has just moved elsewhere.”

Moll said obstacles included rising rebates — discounts on bulk medicine sales to healthcare systems — and the high cost of R&D in Europe.

This has led to the continent for the first time falling behind China for the launch of new medicines, while the share of clinical trials in the European Economic Area has nearly halved over the past decade, falling to 12 per cent in 2023, from 22 per cent in 2013 despite a global increase in trials.

“Those obstacles make Europe unattractive,” she added. “And because they’re so different and so varied, there’s no way of fixing them in one go. You have to go country by country and product by product and address it, otherwise compared to countries like the US or China that have huge populations and one system, it’s already a competitive disadvantage.”

The main demand of industry however — that the UK and the EU spend more on medicines — has become increasingly difficult to meet. Public finances are squeezed, healthcare costs are rising as populations age and European governments are spending more on defence because of the Russian war on Ukraine and disengagement of the US.

The UK’s pharma deal with Washington is forecast to cost £3bn and raise NHS spending on medicines from about 9.5 per cent of its budget to 12 per cent.

“The big question is where will the extra money come from?” said Francis Ruiz, a policy fellow at the London School of Hygiene & Tropical Medicine. “If the government is committing extra funding to increase the pharmaceutical spend . . . this could be a good deal for the UK. But if this is coming out of existing NHS budgets it could lead to lives lost as more cost-effective treatments are crowded out to make way for expensive new drugs.”

Some patient groups have already raised the alarm about this possibility. Ceri Smith, head of policy at the MS Society, a UK charity focused on multiple sclerosis, said the lack of clarity about where the funding would come from was “concerning” given that vital services for people with MS, such as physiotherapy, are already struggling because of a lack of funding.

Yet the pharma industry would like governments to go further.

Eli Lilly chief executive David Ricks told the Financial Times that his company would like the UK’s National Institute for Health and Care Excellence, which decides which drugs are used by the NHS, to approve its Alzheimer’s medicine Kisunla.

Nice has previously declined to recommend the drug, saying this year that while it delays the onset of moderate Alzheimer’s by four to six months, “the overall costs of purchasing and administering the drug remain high and the benefits too small”. Kisunla costs about $32,000 a year in the US.

“The UK will serve as a litmus test for what will happen in the [most favoured nation] related to Europe,” said Sean Conroy, an analyst at Shore Capital.

“You’ll start to see a bit more clarity with the negotiations with the EU. It’s in pharma’s interest to get prices up elsewhere outside of the US . . . and that could mean higher prices in Europe. They had the bargaining chip to pause investments in the UK.”

North Sea suffers worst year since 1970s as drillers freeze investment

Exploration falls to lowest level since oil and gas were discovered in UK basin 60 years ago

The UK oil and gas industry suffered its worst ever year for exploration in 2025, with investment set to plunge further, as companies shelved plans in the North Sea while they waited for clarity on the government’s tax plans.

Wood Mackenzie, the energy consultancy, said no exploration wells were drilled in UK waters this year, the first time there has been no fresh exploration activity in the basin since oil and gas was found there in the 1960s.

Investment, which was £4.4bn in 2025, is set to fall more than 40 per cent to just over £2.5bn next year, marking the lowest level since the UK oil industry was buffeted by high costs, industrial strife and rampant inflation in the early 1970s.

“Drilling is at an all-time low,” said Gail Anderson, Wood Mackenzie research director for the North Sea, who expects the number of North Sea operators to shrink further as consolidation continues, driven by a headline tax rate of 78 per cent.

While there was no new exploration, 36 appraisal and development wells were drilled in the North Sea, although this is half the figure for 2020, the first year of the coronavirus pandemic.

“Activity was terrible in 2025 because there was so much uncertainty,” said Martin Copeland, chief financial officer at North Sea oil and gas producer Serica.

However, executives and analysts said that while 2025 and 2026 likely marked a nadir, investment in UK waters would pick up in anticipation of a more generous tax regime that starts in 2030.

The UK North Sea is in long-term decline, with production falling from a peak of about 2.3mn barrels of oil a day in 1983 to 530,000 b/d, according to government data.

The oil majors that once operated there have sold down, merged their assets or exited entirely to pursue more lucrative opportunities, leaving the basin in the hands of smaller independent companies.

The industry blames the energy profits levy (EPL), introduced by the previous Conservative government in 2022, for accelerating the fall. The levy imposes an additional 35 per cent tax on profits when oil prices exceed $76 a barrel or gas prices go above 59p a therm. 

Oil has traded below the threshold for most of 2025, but gas exceeded 140p a therm early in the year and has remained well above the level that triggers the levy. 

Official forecasts show that EPL tax receipts are set to plunge from £2.9bn in 2024-25 to £300mn in 2029-30, as companies optimise their tax strategy or leave the basin.  

“It’s the worst of the fiscal environments among all the countries that [we] operate in,” said Linda Cook, chief executive of Harbour Energy, one of the North Sea’s largest producers, adding that the UK industry was competing with “one arm tied behind its back”.

The Labour government has said that from 2030, when the EPL expires, additional tax will only be levied on revenues on oil sold above $90 a barrel and gas at 90p a therm.

“What has replaced the EPL is a very pragmatic system which will work for all parties,” said James Midgley, an oil and gas research analyst at Cavendish, adding that companies could start investing from 2027 in order to start production in 2030.

Copeland said Serica would target “quick and easy” opportunities for now, saying there were “probably things companies can do that are economically sensible and good for our shareholders”. But he also said the UK government had “missed a trick” by using the North Sea to drive economic growth.

But Cook at Harbour said the UK remained a hostile environment for oil and gas investment. Recent projects such as Equinor’s Rosebank development and Shell’s Jackdaw field have been hit by legal cases and the government has yet to rule on whether they can proceed.

“Every other country, when I visit, asks us what they can do to encourage us to invest more. In the UK, the discussion always feels like the opposite. I continue to struggle to understand why, as long as the UK needs oil and gas, it does not choose to be supportive of producing it domestically,” said Cook.

The UK government said it had set out a plan to build a “prosperous and sustainable future for the North Sea — with record investment to grow clean energy industries, while supporting the management of existing oil and gasfields” during the transition to green energy.

“We know oil and gas will be with us for decades to come, which is why a new permanent windfall tax will replace EPL when it ends, giving the sector and its investors the long-term certainty to plan, invest and support jobs.”

China’s cash-strapped local governments drive record sales of asset-backed securities

ABS issues bring in badly needed money but some assets are of uncertain quality

Chinese offerings of asset-backed securities have hit a record high this year as cash-strapped local governments struggle to plug fiscal holes.

The number of deals in China involving sales of ABS — financial instruments based on the revenue streams of an underlying pool of assets such as property rentals or leases — reached 2,386 as of December 24, surpassing the previous record set in 2021, according to data provider Wind.

The rise in deals this year was driven by authorities at the provincial level and below, said a Chinese broker who advises companies on ABS issuance.

The value of new ABS deals in the country has totalled $2.3tn, the highest in four years, the Wind data shows.

Highly indebted local governments hope the sales will help solve liquidity problems stemming from a weakened economy and property market crisis and raise money for new investments to help them meet central government growth targets.

But the rush to securitise assets — some of which appear to have highly uncertain underlying value — is itself fuelling questions about the long-term sustainability of Chinese local government finances.

Such is the need for liquidity that one local leader, Li Dianxun, governor of central Hubei province, has coined the slogan: “Turn every possible state-owned resource into an asset, every possible state-owned asset into a security, and leverage all possible state-owned funds.”

“This emerging campaign reflects the surging need for local governments to address mounting debt and fiscal pressures,” said Yubin Fu, vice-president and senior analyst at Moody’s Ratings.

China’s local governments have been under pressure since the Covid-19 pandemic, which devastated their finances. A crackdown by the central government in Beijing on property developer leverage has also hit land sales that were previously a crucial source of revenue for provincial and city authorities.

Local governments’ official debt plus borrowings by their off-balance sheet financing vehicles — which raise money and build infrastructure on their behalf — soared to about 84 per cent of GDP in 2024 from 62 per cent in 2019, according to IMF figures released last year. 

Beijing has helped settle local government financing vehicles’ maturing debt and improve liquidity conditions through a $1.4tn debt swap scheme, but liabilities associated with these vehicles remain vast at about $10tn, analysts say.

“Beijing wants to press the local governments to monetise their state assets to make them more efficient,” said Robin Xing, chief China economist with Morgan Stanley. “A lot of local governments do have state assets, but many of these are not running in the most efficient way to make money.”

Repackaging these holdings as asset-backed securities is attractive to local authorities, since it can bring forward the income they are expected to generate in the future while retaining state ownership.

Hubei’s Li spearheaded efforts to convert idle assets into cash in his previous role as deputy governor of neighbouring Hunan province. Under his leadership, Hunan began repurposing spaces under bridges and other unused properties as public amenities such as parking areas and sports grounds.

From 2022 to 2024, Li’s programme contributed nearly 11 per cent of Hunan’s total fiscal revenues, according to official data.

By the end of last year, Hubei had compiled an inventory of state assets that could possibly be securitised worth Rmb21.5tn ($3.06tn). Southern Guangdong province and central Anhui have also compiled inventories. 

While local authority ABSs offer investors — mainly government-backed institutions such as banks, wealth management funds and securities traders — an implicit state guarantee, analysts have raised concerns about the quality of the underlying assets.

“All the high-quality assets were largely sold or securitised early on, leaving mostly lower-quality assets. With local government finances under pressure, authorities are exploring every possible avenue to reduce debt,” said the Chinese broker. 

The government-owned public transport group in Hubei’s capital Wuhan, for instance, early this year sold a first Rmb600mn tranche of a planned total of Rmb4bn in securities backed by assets of the company that operates all regular bus routes in the city.

But the bus company is making a net loss, which deepened to Rmb821mn in the first half of 2025 from Rmb13mn for all of last year. The 10-year notes are already trading 5 per cent below their face value.

Another Wuhan state-owned group sold asset-backed securities based on a previously struggling property development, the Hongshan AI Building, for Rmb300mn last year. The group claimed that by adding unspecified artificial intelligence features it had changed the tower from a building with 30 per cent occupancy to an AI centre with three times as many tenants — including 60 AI companies.

When the Financial Times visited the address, office workers in the building said they could not identify new features that made it particularly suited to AI.

The tenants included several state-owned companies that had been relocated to the Hongshan building from other parts of a surrounding industrial park. There was also a tech company whose staff were mostly engaged in censoring posts on Kuaishou, a short-video online platform, work that is generally regarded as low-skilled.

In another case, the Wuhan city government-owned Bishui Group turned a former underground flood chamber into a wedding centre — the kind of move that fits Li’s programme of “turning every possible state-owned resource into an asset”.

The facility includes a “Monet Park” by the riverside for banquets and a Tang Dynasty-style reception hall underground.

Analysts said that for local governments, tapping the ABS market offers a new funding channel as China’s slow domestic economy makes it ever more difficult to raise money.

But there is also a risk that if low-quality projects are securitised, they could become another source of financial vulnerability for local governments that Beijing has spent huge sums bailing out.  

At the Hubei marriage facility, for instance, there were no customers in sight in the vast facility during a recent visit. Marriages in Hubei are falling, reflecting a broader demographic decline across the country.

“The peak time was before 2022,” said a photographer from the wedding photo studio. “Now after Covid and weak consumption, people are less inclined to spend lavishly on weddings.”

Investor made famous by ‘The Big Short’ is shorting Nvidia and Palantir

Quick Summary

Michael Burry has seen this movie before.

Take, for instance, the scene in “The Big Short” in which Christian Bale—who is playing Burry—tells investors about his bet against the U.S. housing market. If he is right, the market collapses and the hedge-fund manager will collect a $700 million jackpot on insurancelike contracts. If not, he will be insolvent in a few quarters.

“Watch. It will pay,” the fictional Burry says. “I may have been early, but I’m not wrong.”

“It’s the same thing!” an investor yells back.

Now, Burry (the real one) is trying to convince Wall Street that he can profit off a fall of the artificial-intelligence companies Nvidia NVDA 1.02%increase; green up pointing triangle and Palantir Technologies PLTR -2.81%decrease; red down pointing triangle. The industry has underpinned the market’s rally to new highs throughout the year, but Burry, who has mostly kept a low profile this past decade, has emerged to pronounce there is a bubble that soon enough will pop.

The problem? He isn’t sure when.

“Michael, if he had one failing in the dot-com cycle, it was being early to the process. The housing bubble? It was being early to the process,” said Michael Green, a former hedge-fund manager who is now chief strategist at the active-ETF manager Simplify Asset Management and who, like Burry, has warned against popular trends—in his case, passive investing. “This is a significant issue, right? How quickly does this end?”

Burry is the kind of outspoken outcast who makes for a good character in a Michael Lewis book: a neurologist by training who made it big in his off-hours betting against Wall Street’s best and brightest.

It isn’t all self-aggrandizement. Warren Buffett once called him a Cassandra—the mythological Trojan priestess whose grim prophecies were ignored. Since his successful bet against the housing market, Burry has amassed a legion of online fans who pore over his posts in forums including Reddit’s Burryology. He has embraced this persona. On X, he is known as Cassandra Unchained, and he posts screenshots of Bale from the movie version of his life to his million-plus followers.

He has credited his unorthodox point of view to the loss of his left eye to a childhood cancer, as well as his adult autism diagnosis. As if to emphasize his status, he is an avowed metalhead, occasionally recommending tunes such as “I Am Hated” by Slipknot.

Burry is feeling the heat now. Last month, he formally closed his hedge fund. In its wake, he launched a newsletter he said would share his latest big thesis with investors, focusing on why the AI stocks would deflate. Within weeks, Cassandra Unchained became one of the top-selling finance newsletters on Substack, with some 171,000 subscribers, though typically only a small percentage pay. Burry asks $379 a year—a relative bargain, when some of his competitors charge upward of $1,000 a year.

Burry’s call tapped into anxiety about how AI-themed companies were investing in each other and the practical limits of data centers. His underlying idea isn’t a jeremiad against AI as a whole, but that the market has detached from reality.

“This bubble looks an awful lot like the dot-com bubble,” he said on a podcast hosted by Lewis, whose book first catapulted Burry to fame. “Which was not really a dot-com bubble. It was a data-transmission bubble.”

Burry didn’t respond to a request for comment, but said on Lewis’s show that he usually declines to talk to reporters.

So far, he has had little noticeable impact on the stocks, though some concerns have increased surrounding AI infrastructure.

Burry is just as likely to be dismissed on social media, where jokers trot out a version of a wisecrack that he predicted 20 of the last two recessions.

Many of Burry’s most-dramatic predictions about market crashes have been wrong during the past 15 years. In a gnomic Jan. 31, 2023, post he urged his followers to “SELL.” While Silicon Valley Bank cratered two months later, the S&P 500 index has risen around 70% since then, and he has said that it was the wrong call.

After publication of this article, Burry took to X to defended his record, including his 2023 call.

“Two banks failed, market fell, I corrected myself at the bottom and suggested it was all clear to buy again,” he posted.

Alex Karp, the chief executive of Palantir PLTR -2.81%decrease; red down pointing triangle, called Burry “bats—crazy” on CNBC.

On Nov. 3, Burry revealed a bet against Nvidia, the chip maker that is now the world’s most-valuable company, and Palantir, a major AI software business. Together, they account for about $5 trillion in market value. Burry’s bets were relatively small, about $10 million in put options, but could amount to more than $1 billion if those stocks drop significantly.

“Palantir and Nvidia are the two luckiest companies on the planet,” he told Lewis.

Burry said his short bets were for different, but related, reasons. Palantir is too dependent on stingy government contracts and overly generous to its executives, he said. He also pointed out fierce competition, particularly from International Business Machines. His bet pays off if Palantir drops in 2027 to $50 a share from the roughly $200 it has been trading around.

Karp said on CNBC that he believes Burry was trying to manipulate the market and rejected Burry’s analysis.

Nvidia’s problem has to do with its customers, like Oracle and Meta Platforms, where Burry has said he sees a web of issues.

Nvidia has been helping fund some of their purchases in deals that, Burry said, resembled the way that companies like Enron financially supported its vendors purchasing its products.

Burry has also focused on the accounting at the companies and Nvidia about the life expectancy of the chips, helping the companies inflate their earnings, he alleged.

If the bubble bursts, a cascade effect of lower stated profits, shrinking share values, and less investment could weigh on Nvidia’s future sales.

Burry’s bet pays off if Nvidia falls about 37%, to $110, by 2027. It is around $190 now.

Nvidia has denied Burry’s analysis. “Nvidia does not resemble historical accounting frauds because Nvidia’s underlying business is economically sound, our reporting is complete and transparent, and we care about our reputation for integrity,” according to a memo that was earlier reported by Barron’s.

While Nvidia and Palantir shares have fallen since Nov. 3, the decline has been choppy.

For now, that might actually be fueling those investors who see no end in sight.

“I would actually argue that awareness of this has encouraged people to defect and basically become more convinced that stocks can go to unlimited levels,” Green, the chief strategist at Simplify Asset Management, said.