The Economist. Hello and welcome to The Intelligence from The Economist. I'm your host Rosie Bloor. Every weekday we provide a fresh perspective on the event shaping your world.
China is infamous for enforcing its one-child policy with ruthless efficiency. Now the Communist Party wants women to have two or even three babies. It's trying some of the same tactics. And Nike and Adidas have long dominated the market in running shoes. But many other brands that were slower off the starting blocks are beginning to sprint ahead.
First up, though. Nine countries in the world have nuclear weapons. And America is at the forefront of trying to keep any others from joining that club. In particular, Iran. In 2015, Barack Obama unveiled the Iran deal as one of the hallmarks of his presidency.
After two years of negotiations, we have achieved a detailed arrangement that permanently prohibits Iran from obtaining a nuclear weapon. It cuts off all of Iran's pathways to Obama. But his successor, Donald Trump, tore up that agreement in 2018. The deal lifted crippling economic sanctions on Iran in exchange for very weak limits on the regime's nuclear activity.
and no limits at all on its other malign behavior. In his first term, Trump insisted he would force Iran into a tougher deal, but that never came together. And Iran is still at risk of escalating his nuclear capability. Iran has made big strides in its nuclear program. Over the past four years, it's enriched uranium to within a hair's breadth of weapons grade. Greg Colstrom is our Middle East correspondent.
At the same time, it's managed to do that without coming under the sorts of sanctions and economic pressure that Donald Trump imposed in his first term. Now he's going to get another chance at using sanctions to pressure Iran over its nuclear program. So we'll come to Trump's role in a minute, but you say Iran has enriched uranium to within a hair's breadth of getting a bomb. Just lay out for me exactly how the risk has changed.
So there are three main components in developing a nuclear weapon. There's enriching uranium to weapons grade. There's figuring out how to fashion that uranium into a warhead. And then there's fitting that warhead onto a missile or some other delivery system.
The original nuclear deal, the Joint Comprehensive Plan of Action, or the JCPOA, which was agreed in 2015, was really focused on the enrichment piece. And so it imposed the cap on Iran's stockpile of enriched uranium. It limited Iran to having 300 kilograms of uranium enriched to 3.67 percent purity, which is quite a low level. The weapons grade is 90 percent.
And that was it. That was the cap on Iran's entire uranium stockpile. And the idea was to keep what's known as the breakout time, the period Iran would need to produce one bomb's worth of highly enriched uranium to keep that breakout time at one year. If you look at now the most recent reports from the International Atomic Energy Agency, the UN's nuclear watchdog, Iran has blown past those caps. It has nearly 6,000 kilograms of uranium
Enrich to various levels people think that if you're on made the decision to enrich that uranium further it would have a bombs worth of enriched uranium in as little as two weeks a far cry from that one year breakout time. And what progress has been made under the Biden administration.
The short answer is not much. Joe Biden took office in 2021, promising to go back into the nuclear deal. But he hasn't been successful at doing that. I think some of that is the administration's fault. It missed some early opportunities to pursue diplomacy with Iran in the first six months after Biden took office. But a lot of that is Iran's fault because there was a very conservative Iranian government in power for several years that had little interest in negotiating with the United States.
At the same time, it's not really suffering economic sanctions as a result of that. The unilateral sanctions that Trump reimposed when he was in power remain in force, but the Biden administration hasn't really enforced them. And so Iran's oil exports, which were at a low of about 500,000 barrels per day in 2019, they have recovered to 1.8 million barrels per day.
earlier this year, almost all of that oil being sold to various middlemen through China. So Iran is doing that at a discount. They're not making as much money as they could, but they have been able to skirt these American sanctions. And so there are a lot of analysts who think if the Trump administration did enforce those sanctions, it could block up to 1 million barrels per day of Iranian exports and do that quite quickly. So what might the Trump administration do?
I think if you look at the people that Trump has nominated so far for many of his cabinet posts, there's going to be a lot of appetite for going back to what they call maximum pressure, these very tough economic sanctions on Iran. Now, the question is what they want to achieve with those sanctions. They're meant to be a means rather than an end.
There are some people in Trump's orbit who think sanctions are a way to achieve regime change in Iran. There are a way to create enough economic pressure that the Islamic Republic collapses. But there are other people who argue that sanctions should be a tool to achieve a new nuclear agreement. There are various ideas floating around for what that might look like. America could ask, for example, that Iran
dismantle some of its nuclear facilities, particularly the ones that were used in the past. They could ask Iran to sign up to what's called the additional protocol of the Nuclear Non-Proliferation Treaty, which would give the IAEA more powers to do inspections in Iran. And they could push for things that are directly related to Iran's uranium enrichment. They could ask for curbs on Iran's missile program or promises from Iran that it would stop giving military support.
two groups like Hamas and Gaza or Hezbollah in Lebanon. The problem with all of this though is that diplomats have tried to negotiate these sorts of provisions in the past, and Iran refused all of this. Iran has not been willing to go any further than it went in the JCPOA.
This is where people who advocate for maximum pressure think Trump might be their sort of secret weapon because he could threaten not just sanctions, but attacks on Iran's nuclear facilities. He could say, if diplomacy doesn't work, America is going to carry out airstrikes on nuclear facilities in Iran. And the hope for advocates of that policy is that Ali Khamenei, either Supreme Leader in Iran, might think Donald Trump was enough of a madman that he would take those threats seriously and he would be more inclined to negotiate.
The Madman School of Diplomacy seems rather inflammatory. Greg, the Middle East has changed beyond recognition since Trump was last in power. How does war there change the dynamics of the negotiations that could take place?
It has changed a lot and the question is what happens if Iran decides to call Trump's bluff. There are people around him arguing that America should not be involved in the Middle East that needs to focus on China. It shouldn't be too confrontational with Iran. So what if the Iranians instead of offering to negotiate a more comprehensive agreement, they offer a far more limited agreement?
If Trump were to go along with such an agreement, the Israelis would be very unhappy. Benjamin Netanyahu, the Israeli Prime Minister, opposed the original nuclear deal. He would be very disappointed with an agreement that just pulled Iran back from the nuclear threshold. But he may not be in a position to sabotage that agreement the way he's tried to do in the past, because he has helped build Donald Trump up into someone who in Washington is seen as being Israel's greatest champion.
If Iran did advocate that very limited agreement, there would be support for it, I think, in Iran from people who are desperate for sanctions relief. There would also be support for that from the Gulf states. And I think this is a very significant shift from the last time there was nuclear diplomacy a decade ago. Countries like Saudi Arabia, the United Arab Emirates,
They are very worried that if America pursues a confrontational policy with Iran, they're going to suffer the consequences for that. The Saudis remember in 2019 when their oil facilities were attacked by Iranian-made missiles and drones. That was during the maximum pressure of the first Trump term. They don't want to see something like that happen in a second Trump term. And so they have been, for several years now, pursuing a rapprochement with Iran. And so what they are telling the Trump administration
is that they would support a nuclear agreement. They would support American efforts to lower tensions with Iran. That's something very different from what they said the first time around. And I think it'll be quite significant for the way this new presidency approaches the Middle East. Greg, thank you very much for talking to me. Thank you.
Everyone is wondering what might happen next year. On Thursday, at a subscriber-only event, Tom Standage, editor of The Economist's World Ahead, will explore 10 trends that will shape 2025. Go to economists.com and search World Ahead to sign up.
In China, married women in the 20s and 30s have started getting phone calls that sound something like this. On picking up the phone, a local neighborhood official will ask them questions, often quite invasive ones. When was your last period? Are you planning to get pregnant? How and when do you plan to have a baby?
Jason Chow writes about world affairs. This happened to someone we'll call Ms. Mao. She's 28, and she wasn't sure when her last period was. The caller said, no worries. We'll put a random date on the records, and I'll call back every two weeks. Ms. Mao found these phone calls, pushy.
But many other women her age are receiving them too. So Jason, tell me why women in China are getting these weird calls. China is facing a demographic crisis. So the average number of births per woman in China has dropped to 1.1. And that's far below the 2.1 needed to keep the population stable.
The phone call campaign marks the latest escalation in China's efforts to get more people to have more babies. And so as the demographic crisis deepens, the authorities are really cooking up both conventional ways of increasing newborns, but also unorthodox policies like this phone call campaign to get people to have children. So what are some of the things they're doing to try and encourage women to have more children?
So let's start with some of the conventional ways of doing this. And this you see in a bunch of other countries in the global South and the West as well. And that's really child tax credits and maternity subsidies. That's fairly new for China. There's also more funding for children's health care.
There's going to be more investments in the public childcare system, which hasn't been funded properly for a while. In addition to that, the policies are addressing some of the concerns that a lot of Chinese families are facing, education, employment. There's going to be more support in those areas.
Housing is also a big problem for a lot of Chinese families, and so now access to loans for housing will be linked to fertility. But obviously there are some less conventional methods endorsed by the Chinese leadership, specifically Xi Jinping, and this you won't find in other countries necessarily. Okay, so tell me about some of these more particular methods.
They stem from this belief among Chinese leaders that raising the birth rate requires a cultural sea change. And it's about trying to get young people to share the right marriage and child rearing values. A lot of leaders think that as China modernizes and socially liberalizes in the past two, three decades, that a lot of young people have lost these traditional values.
And so last year, Xi Jinping lectured his delegates at the National Women's Congress, which features speeches mainly by old men, our party members, about the importance of telling good stories about family traditions. She is trying to get young people
to share what the party deems as the right marriage and child wearing values. And so from his guidance, the covers of textbooks for third graders used to feature a family with one child, and that's essentially a legacy of the one child policy. Now they've changed that cover of the same family to have two children and a pregnant mother.
Jason, 10 years ago, I remember Chinese publishers saying that they didn't like to have books for kids that had siblings in them. So this is a really big change and really fast. How's it going down?
This change has attracted a lot of discussions. What's amazing is that the party is using the same type of messaging that it used for decades during the One Child Policy era to make the opposite argument here. For instance, they used to say that pregnancy would reduce women's intelligence.
Now, China's National Health Commission actually just recently published an essay on the four benefits of childbirth. And they talk about how women will be smarter, will be less prone to cancer, and will have fewer menstrual pains after childbirth. So the same organization that was enforcing the one child policy is now promoting this pro-natalist agenda.
And this obviously was met with swift backlash online. So for example, people who saw this change said things like the government is ridiculous because they will come up with anything they can to get people to have kids. And some people will say, I don't believe these deceptions coming out of the government because
I'm actually intelligent. And so you see there are people that specifically women who are not happy with this change in the messaging and find it quite intrusive, especially with the population becoming more modernized and open-minded that they care about privacy more and they're more concerned about the government telling them what to do with their own bodies.
Jason, the one child policy was astonishingly effective, almost terrifyingly so. Will this one work? Will China manage to increase its fertility?
So if we look at other countries in the world, such policies like child tax benefits or maternity subsidies usually don't work so well. And our publication has written about this extensively. But China is very unique in many ways. Now, we're not sure if some of the benefits would work, but
China has been very effective at enforcing its one child policy, and the party has been pretty uncompromising when it comes to an issue like reproductive rights. So while benefits might not work, a more heartline, sticks approach should not be underestimated.
As part of reporting, I spoke to a head of a maternity hospital in Fujian who interacts with a lot of family planning officials. And the message is really this. Unlike the West, Chinese bureaucrats are relentless at implementing policies that's been decided in the upper echelons of the party. They will knock on doors and they will get people on board. And that is the messaging that's been directed to local officials across China
If there is a country that might get this to work, it could possibly be China. The Chinese Communist Party is back in bed with its population again. Jason, thank you so much. Thanks for having me on.
A few weeks ago, I went to Zurich to visit On. It's a Swiss sportswear company, the face of which is Roger Federer. That's how most people know the brand. Evantica Chocotti is our global business correspondent. And they have this incredible headquarters. It's huge. It's got a really slick store in it. The most exciting part is their lab.
They have all these designers and engineers in this room filled with machines and tools. And they're creating what they're called monsters. They're taking a trainer, a shoe, and they're just sticking and cutting bits on and off it.
Someone might decide to shove some sort of gummy circles to the bottom of a shoe. Someone will try it on, they'll go for a run with it, and he'll see, does this work? Does it make the shoe more comfortable? Does it make me faster? Someone else will cut a bit off a pre-existing shoe and see, does that help for create these air pockets in this section of the sole? And when I was at On's Labs, I met the brilliantly named Thor, who is an engineer, a product designer, who works in that lab, creating these monsters.
We are in a prototyping space, a place where we can make our dreams and concepts come to life, basically. So what you see here is a lot of machines, a lot of processes that are dedicated to mainly the dusty, noisy and smelly parts of the footwear creation process. And it really just felt incredibly innovative.
So, Evantica, there's been quite a lot, as you say, about tech and shoes. But this is bigger than that, isn't it? It's about the whole trainer market, not just for running, but for streetwear. So, what's going on? Sportswear is a $400 billion industry. It's huge. But it's really trainers that make or break a brand. For one, trainers are the biggest part of their sales, if you're Nike, or Adidas, or any player.
And secondly, that's how you differentiate yourself. It's very difficult to produce a t-shirt that you can say improves performance, but you can produce a trainer that really builds your brand as a performance sportswear market. So this is where new entrants come in. This is where you basically have competition.
Nike and added as the two firms that dominate this industry are actually losing a bit of market share because you've got new rivals not just on the brands like hawker or new balance or a six emerging that are taking more and more of that market share. When did these new entrants emerge and how have they done it.
There's a couple of things that happen. So firstly, when an industry booms, that's when you get upstart firms emerging and branded footwear sales in the sports market. That's grown almost 50% in sales over the last five years. So it's now a $100 billion industry around the world, just branded sports shoes.
Part of the reason for this is basically that people have started running a lot more, especially since the pandemic. You've got run clubs and more and more people signing up for marathons. And at the same time, you've got this casualization going on. People wear trainers to the office, sometimes even with a suit has become totally normal. So you've got a booming market, which of course attracts new entrants.
And it is an easy market to enter in many ways. The barriers to entry are low because most of these brands produce their shoes using two or three suppliers in East Asia, the same suppliers. So there's not great economies of scale from being bigger. You pay the factory roughly the same amount, no matter who you are.
And the second really interesting thing is a huge part of building a sportswear brand is marketing it. And when it comes to sports, running is a relatively easy sport in which to build a name. If you're a football company or you're working in basketball, these are sports that are watched by huge audiences. And so getting a sponsorship deal, signing up an athlete is incredibly expensive. Running is that little bit cheaper. And it means that new brands can emerge, get a sponsorship deal, have a famous face attached to themselves quite quickly.
And you said that the market overall is growing. So is it that Nike and Adidas are losing market share or are their sales actually falling? So they're a bit different. So Nike at the moment has actually seen year-on-year declines in sales. What's really buoying the sales for
as is not sports shoes. It's the Samba, the Gazelle, the Specielle. They're these sort of lifestyle trainers that are buoying their sales. And a lot of analysts' concerns are actually when you're making a fashion shoe, fashions come and go. So they're managing to stay afloat, but how long can that last?
So can Nike and Adidas catch up? Yeah, and this is the thing, you know, there's no point getting too excited. This is not a total upending of this industry because Nike and Adidas are still huge, right? Together they make up the majority of the footwear market and they do know that this innovation that I saw it on is a threat to them. And so they're doing things. So Nike is a new CEO and he's promising to shake things up. Nike also brought out a range of new products earlier this year. They've fast tracked their most popular running models.
Adidas, one thing that's really dragged the company down is this line of shoes, the Yeezy that they produced with Kanye West, that they've been trying to sell down their stock because there was a series of outbursts, anti-Semitic outbursts by Kanye West and they had copped this partnership. And what's happened more recently is that they've managed to sell the stock. And by the end of this year, that stock will all be out the door. And so that's really been a drag on their financials and the companies hoping that being rid of that distraction will really help
One thing that the firms both did that really hurt their market share was a few years ago, they both decided that they wanted to sell directly to consumers. They didn't realize is that people want to go to a running store and try on a shoe and get some advice. And that empty shelf space that they left was filled by these competitors of late. They have completely u-turn. They're trying to rebuild their relationship with those retailers. They can't just do direct sales. Even that alone, I think, will make a difference to this market going forward.
Thanks so much for talking to me. Thanks, Adam, you're easy. That's all for this episode of The Intelligence. Do let us know what you think of the show. You can get in touch at podcasts.com. We'll see you back here tomorrow.
