The slight middle-aged man holds a bare-bottomed granddaughter in one arm and a spool of thread in the other, as he contemplates the future of his family textile workshop in Zhili, the children’s clothing capital of China, the FT reports. Mr Song – who declines to give his first name – is an inevitable casualty of China’s maturation. He has been farmer, factory worker, and sweatshop owner, but now he must find another way to make ends meet, as China moves upmarket. “I could not make a living as a farmer, so I came here – but doing this business I can only cover my living costs,” he says, gesturing at the front room of his home in a grim village on the outskirts of Zhili, where seven of his relatives hunch over sewing machines for 12 hours a day, making cheap clothes for the domestic market. The Chinese Communist party’s vision for the country’s manufacturing industry does not include workshops such as this one: China’s leaders want the country to stop making shoddy junk and start inventing things. But Mr Song, at 46, is too old, poor and uneducated to climb the value chain laid out by the economic planners. Read more

Toyota is forecasting record sales for 2012 as it rebounds from two natural disasters that disrupted its supply chain and production and halved its profits this year, the FT reports. The Japanese carmaker said on Thursday that it expected its worldwide sales of Toyota and Lexus premium-brand vehicles to rise 20 per cent to 8.48m next year, from 7.05m in 2011. This would surpass its previous sales record of 8.43m vehicles set in 2007. Toyota said that the forecast did not take into account incentives for lower-emission cars recently approved by Japan’s cabinet. The tally does not include vehicles made by its Daihatsu and Hino subsidiaries. Toyota said that it expected its global sales to increase a further 6 per cent in 2013 to 8.95m. The company, which overtook General Motors as the industry’s largest carmaker in 2008, will lose the title this year after seeing its production hit first by Japan’s earthquake and tsunami in March, then flooding in Thailand in October. Read more

European and US equity benchmarks are higher in a generally mixed market, where investors are still absorbing the implications of the European Central Bank’s half a trillion euro cheap loan splurge, reports the FT. The Stoxx 600 is up 0.7 per cent as some dealers welcome the ECB programme as a useful tool in reducing financial system funding angst. In the US, a downward revision to US third-quarter GDP weighed on stocks. But other reports released on Thursday showed further shrinkage in weekly initial jobless claims, a higher than expected rise in December consumer sentiment and broad-based gains in a leading economic indicators index for November, supporting a 0.9 per cent gain in the S&P 500 index. Stocks briefly pared gains after Bloomberg reported that Standard & Poor’s cut Goldman Sachs’ credit rating. The stock slid 1 per cent right after the report but recovered as S&P said it had taken no action on the company. The Goldman Sachs Group is rated A- with a negative outlook by S&P. Shares were trading higher at $93.50. Read more

A top European Central Bank policymaker has called for “quantitative easing” to be used to boost the eurozone economy if deflation risks emerge across the 17-country region, the FT reports. The comments by Lorenzo Bini Smaghi, ECB executive board member, are the strongest indication yet that the central bank would expand its policy tools to prevent a possible disastrous economic slump in continental Europe. In an interview with the Financial Times, Mr Bini Smaghi also hinted at frustration over the UK’s reluctance to join efforts to strengthen the eurozone. The euro’s success was in the City of London’s interest, he said. “The European Union, and ECB, would certainly contribute to help Britain if London was in difficulty. I would thus expect a reciprocal attitude.” Speaking in Frankfurt on Thursday, Sir Mervyn King, governor of the Bank of England, said swift implementation of measures to shore-up the eurozone was of “utmost importance”, warning that “stressed financial conditions are passing through to the real economy”. Read more