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This is an audio transcript of the FT News Briefing podcast episode: Chile veers left

Joanna S Kao
Good morning from the Financial Times. Today is Tuesday, December 21st, and this is your FT News Briefing.

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There’s a new reason US consumers are having a hard time getting the gifts they want. Grinch bots are beating humans before they can click the buy button, and a Chinese technology company that was blacklisted by the US has found a workaround. Plus, Chile has a new leader, and it could mean big changes for the country’s business landscape.

Michael Stott
It’s the election of the most radical president Chile has had since the return to democracy after Pinochet in 1990.

Joanna S Kao
I’m Joanna Kao in for Marc Filippino, and here’s the news you need to start your day.

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US retailers are nervous they won’t be able to get consumers the goods they want for the holidays. It’s not just because of high demand and supply chain disruptions. More and more hot items are being snapped up by bots. The industry calls them Grinch bots, software that scans websites and then buys in-demand products as soon as they’re available. They’ve targeted everything from limited edition sneakers to video games. Some people use them to nab items for their own Christmas trees, while others buy products in bulk and then sell them on at a profit.

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The Chinese artificial intelligence company SenseTime plans to relaunch its listing in Hong Kong this month. This comes after the US blacklisted SenseTime just last week for its involvement in Beijing’s repression of the Uyghur Muslim minority. Here’s what the company does.

Ryan McMorrow
They do everything from putting traffic light cameras that can tell if you’re wearing a seatbelt to building facial recognition software that can tell if you’re a Uyghur Muslim.

Joanna S Kao
That’s the FT’s China technology correspondent Ryan McMorrow. Now SenseTime postponed its original IPO because of the blacklisting. But Ryan says the company quickly found new backers. Chinese state companies.

Ryan McMorrow
From its action we can see that the US’s ability to stop these companies from raising money and being traded publicly is limited. I mean, all these Chinese state-owned entities stepped up within a week to either double down and put more money into SenseTimes’ offering or just came out of nowhere and put up hundreds of millions of dollars to invest in the company. So even if US investors aren’t there and can’t put in capital, China has plenty of its own money and doesn’t really need Wall Street.

Joanna S Kao
Ryan McMorrow is the FT’s China technology reporter.

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Joanna S Kao
One of Latin America’s richest countries has a new leader. This weekend, voters in Chile chose 35-year-old Gabriel Boric as their president. He’s a former student protest leader, and he defeated an ultraconservative opponent with promises to raise taxes and scrap student debt. The FT’s Latin America editor Michael Stott joins me to talk more about what this means for Chile’s future. Hi, Michael.

Michael Stott
Hello, Joanna.

Joanna S Kao
So Chile has long been known as a stable, business-friendly country, a kind of oasis in Latin America. So how big of a shift is this?

Michael Stott
It’s a very important shift, Joanna. I mean, Chile, as you say, was held up as a model for economic development in the region, somewhere that alternated between governments of centre-left and centre-right, but didn’t change radically. It avoided some of the crazy economic experiments of its neighbours in Argentina or Peru. But that all changed in 2019, when we had the uprisings that led to big demands for change, and those have expressed themselves at the ballot box with this presidential election.

Joanna S Kao
And what are some of the things that led to this shift in voter sentiment then?

Michael Stott
Well, the uprising of 2019 was motivated by anger, inequality and expensive, poor-quality public services in Chile, a sort of feeling that the economic growth we’d seen over the previous three decades had benefited mainly the rich, but it had not percolated down very far through society. That was part of it. The other part, I think, was just that expectations had risen a lot. As the country became wealthier, people expected a lot more. They had aspirations for free university education, for example, or much better public healthcare. They weren’t ready to settle for the sort of limited or expensive alternatives that were on offer.

Joanna S Kao
One of the things that Boric said was that he was going to scrap the private pension plans. What does that look like? What does that mean?

Michael Stott
Yes, that’s potentially very significant. So there’s an issue with Chile’s private pension scheme. It was pioneered in the 1980s as one of the first in the world to have individual savings accounts which were invested on capital markets. And the good side of it was it created a very efficient and deep capital markets in Chile for local issuers including the government to borrow on. The less good side of it was that the pensions were inadequate, mainly because contribution rates were very high. The main burden of contribution was entirely on the employee. So what the first generation to retire found was that when they did retire, these private pensions didn’t deliver them enough money to live on. So Boric’s answer to that was to scrap the system and go to a state model that would give, you know, state-guaranteed pensions at a higher level to all Chileans. But of course, the difficulty there that’s raised is if you do that, you run the risk of destroying the local capital market and severely limiting it. And so that’s why it’s been quite controversial.

Joanna S Kao
And what about Boric’s other economic campaign promises? What do those mean for the economy?

Michael Stott
So Boric wants to raise taxes. He’s been very explicit about that. And it’s true that Chile’s tax take is relatively low by international standards. The concern is he wants to raise taxes quite fast and quite sharply. So he talked initially about seven percentage points of GDP in tax rises. He then moderated that five percentage points. But if that were implemented, that would still be one of the sharpest tax rises of any Latin American nation in recent times, and it remains to be seen whether that would actually work or whether you just see more capital flight and investors running away. He says the main bulk of the taxes would fall on the rich and on business, and he wants to put up taxes on mining, which is of course, the biggest industry in the country. Chile’s the world’s biggest copper producer. So again, there’s a concern, you know, can he balance the need to raise more money with the risk of killing the goose that lays the golden eggs?

Joanna S Kao
So with all of these changes that he’s proposing, do you think the country will become less business-friendly?

Michael Stott
I think it’s a fair bet that investors will be concerned by the prospect of more radical change and higher taxes. Whether Boric manages to convince them that his sort of inclusive growth agenda can also be good for investors I think is the big question. He said in his victory speech last night that he plans to cancel a $2.5bn mining project called Dominga. He’s also said repeatedly that if Chile was the birthplace of neoliberalism, referring to the economic reforms, it will also be its grave. On the other hand, he also tried to extend some olive branches last night, so he also said, I’ll be the president of all Chileans, and I’ll work for broad agreements in Congress. Change will come gradually. So we know we’ve seen mixed signals, I think it’s fair to say. And one of the things markets will be looking for most intensely is what his cabinet choices are, who he picks for key roles in the cabinet and particularly who he picks as finance minister.

Joanna S Kao
Michael Stott is the FT’s Latin America editor. Thanks, Michael.

Michael Stott
Thank you, Joanna.

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Joanna S Kao
Before we go, another pandemic trend we’re watching is micromobility. That’s people avoiding crowded public transit and turning to e-scooters and bike shares. Companies have been racing to meet demand and many have gone public so they can grow faster. The latest with plans to list is Voi. It’s a Swedish e-scooter start-up that operates in 18 cities in the UK. It plans to enter the market in the coming year, and it says it will use the new funding to expand more into Europe and also offer additional vehicle types such as e-bikes.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.

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