Multinationals like GSK now need China more than China needs them

Outlook: Clive Cowdery’s think-tank says a third of Britain is unaffordable to low earners

When it comes to curing the pharmaceuticals industry’s problems of flat sales, falling profits, the loss of patent protection for key treatments and the difficulty of finding replacements, China is a blockbuster drug. 

While the West bumps along the bottom with its monetary easing, addiction to debt and inability to lock in meaningful economic growth, China frets about a slowdown to a 7.5 per cent annual increase in GDP. Which is, anyway, largely planned.

Even if the country replaces its gallop with a more sustainable canter, it will still comfortably outpace the West for years, assuming politics don’t get in the way (always a risk when you have an increasingly educated and wealthy populace without the franchise).

That’s why GlaxoSmithKline rapidly agreed to assume to the position with respect to the bribery allegations it faced yesterday. According to the Chinese authorities, its managers used a network of travel agencies to funnel payments to corrupt officials and doctors, boost sales and hike the price of its products.

It’s ugly stuff, and Glaxo was quick to issue a statement saying it regretted the affair and “shares the desire of the Chinese authorities to root out corruption”. If even half of what has been alleged is true, GSK richly deserves what it has got coming to it.

But it is notable that it isn’t the first big foreign company to find itself in the authorities’ cross-hairs, and it probably won’t be the last. Is there an element of nationalism, and even protectionism, at play here, particularly in a country where local firms often find themselves at a disadvantage against big foreign players with recognisable brands and reputations?

Or is it simply that the Chinese Communist Party wants to make sure that those companies are in no doubt about who’s boss?

Does it matter? It might be rather refreshing for a company like GSK to operate in a country where it has the whip hand held against it rather than the other way around. In much of the world, countries queue up to attract multinationals, offering tax breaks and sweetheart deals, and sometimes turn blind eyes to questionable business practices.

In China, it’s the other way round. Now that it is fulfilling its vast economic potential, multinationals need China more than China needs them. Up until now, it’s only really America that has enjoyed that distinction.

Fairer pensions scheme may not impress Tories

How will the Conservatives react to the proposal to introduce a single rate of tax relief on pensions for everyone, regardless of which tax bracket they fall into? It will be interesting to see.

The Pensions Policy Institute reckons the current incentive for pension saving is a failure. It primarily benefits those on high incomes, and higher tax rates, who will probably save anyway, while doing much less for those with more modest means.

Even after auto-enrolment, people on basic-rate tax contribute 50 per cent of the savings, but get just 30 per cent of the tax benefits. So the institute suggests tweaking the rules to offer a single rate of tax relief on pension saving to all.

That makes a lot of sense, because it would mean the system would be better targeted and more equitable.

Polling also suggests that it would be quite popular. Not as popular as the 70 per cent plus support levels enjoyed by, say, the benefits cap, introduced nationwide yesterday, but popular none the less.

The benefits cap is seen as fair because supporters argue that it is wrong for people to receive more than the national average wage from the state for doing nothing. Its imposition will largely affect Labour supporters, but is a trap for the party because much of the measure’s support comes from Labour voters.

Redistributing pension tax relief from the wealthy to the less wealthy is different. It would ensure that everyone gets the same, so it meets the fairness test, but it could cost higher-rate taxpayers quite a bit long term. These largely Conservative supporters won’t have to move to cheaper areas, but they might have to give up second homes in retirement. So the party might not be quite so keen.

Cowdery’s home truths: Alarmist or alarming?

Clive Cowdery is making some noise beyond the City with his Resolution Foundation, and it may have a more positive impact on the country than his dalliances in the insurance sector. Let’s just say they made him a lot of money. 

Yesterday the foundation came up with the figure that a third of Britain was unaffordable to people on low incomes. Alarmist, said the Housing minister, Mark Prisk. Alarming, to anyone who isn’t socially illiterate.

Even if you disagree with the foundation’s figures, or its methodology (and these can be debated with any research like this), it’s a commonly accepted fact that there is a desperate shortage of state-provided social housing in this country. Thanks to the Bank of England’s Funding for Lending programme, which makes cheap money available to mortgage lenders, home loans are getting a little easier to come by. But you’ll still require a chunky deposit, and buying remains expensive.

Which leaves the private rental sector as the only option for a huge number of people. In desirable areas, private landlords have huge pricing power.

There will be consequences stemming from this. In the private sector, wages may have to rise as firms are forced to pay up to get hold of staff in certain regions. Expect to pay even more for your Starbucks, or your pint, or your burger, in places like London and the South-east. Expect even more pressure on schools, and hospitals too, which don’t have the option of bumping up wages. If you’re going into, say, teaching, why on earth would you do it for a laughably small inner London allowance to live in a hovel?

Sport
Thiago Silva pulls Arjen Robben back to concede a penalty
world cup 2014Brazil 0 Netherlands 3: More misery for hosts as Dutch take third place
Sport
Robin van Persie hands his third-place medal to a supporter
Van Persie gives bronze medal to eccentric fan moments after being handed it by Blatter
News
Ian Thorpe had Rio 2016 in his sights
people
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

PROMOTED VIDEO
News
scienceScientists have developed a material so dark you can't see it...
News
Monkey business: Serkis is the king of the non-human character performance
peopleFirst Gollum, then King Kong - now the actor is swinging through trees in Dawn of the Planet of the Apes
Arts and Entertainment
Blackman: Landscape of children’s literature does not reflect the cultural diversity of young people
booksMalorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Voices
Mrs Brown's Boy: D'Movie has been a huge commercial success
voicesWhen it comes to national stereotyping, the Irish know it can pay to play up to outsiders' expectations, says DJ Taylor
Arts and Entertainment
Curtain calls: Madani Younis
theatreMadani Younis wants the neighbourhood to follow his work as closely as his audiences do
Life and Style
Douglas McMaster says the food industry is ‘traumatised’
food + drinkSilo in Brighton will have just six staple dishes on the menu every day, including one meat option, one fish, one vegan, and one 'wild card'
Life and Style
Once a month, waistline watcher Suran steps into a 3D body scanner that maps his body shape and records measurements with pinpoint accuracy
techFrom heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
News
Soft power: Matthew Barzun
peopleThe US Ambassador to London, Matthew Barzun, holds 'jeans and beer' gigs at his official residence. He says it's all part of the job
Sport
Joe Root and James Anderson celebrate their record-beaking partnership
cricketEngland's last-wicket stand against India rewrites the history books
News
Gavin Maxwell in Sandaig with one of his pet otters
peopleWas the otter man the wildlife champion he appeared to be?
News
Rowsell says: 'Wearing wigs is a way of looking normal. I pick a style and colour and stick to it because I don't want to keep wearing different styles'
peopleThe World Champion cyclist Joanna Rowsell on breaking her collarbone, shattering her teeth - and dealing with alopecia
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

Otter man Gavin Maxwell's bitter legacy

The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

Joanna Rowsell: 'I wear my wig to look normal'

The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

Bill Granger's quick and delicious marinades

Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

Anyone but Argentina – why Brazilians don’t love their neighbours any more

The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

The Open 2014

Time again to ask that major question - can Lee Westwood win at last?