The Debt Supercycle Comes to China By Kenneth Rogoff |
Explaining a decline in the Chinese economy boils down to reduced demand from an aging, contracting population. READ HERE
What To Do About North Korean Nuclear Weapons
by Christopher Ford via Hoover Institution Press Recounting the history of North Korea’s nuclear weapons program and the failure of past efforts at negotiated “denuclearization,” this essay explores the options of (1) continuing with denuclearization diplomacy or (2) pursuing “arms control” with North Korea but instead recommends (3) a policy of prolonged pressure and isolation to limit the development of North Korea’s capabilities as much as possible and make its example unattractive to future would-be proliferators.
Turkey’s Increasing Balance Sheet Risks
by Brad W. Setser
Is China Quitting the Economic Race?
America Needs a “Cold War” Strategy for China Breaking China’s Hold
China’s Technology Strategy: Leverage Before Growth
Dan Blumenthal and Derek Scissors | June 2023
The Debt Issue Isn't Over By Allison Schrager
As usual, the debt ceiling drama came and went. But drama obscured the important fact that US debt is still too large and growing to much higher levels on the path it is on. It is a problem that needs to be addressed. READ HERE
What Happens When Cities Run Out of Money
By Henry Grabar | SlateFrom the East and West Coasts to the Midwest, cities around the country are struggling to manage the financial implications of a “death spiral:” flagging transit ridership, reduced traffic in business districts, and an increasingly remote workforce. READ HERE
Erdoğan’s unorthodox economic policy
As the Chinese economy sputters, could it be headed for a “lost decade”? Desmond Lachman compares China’s stagnating economy Jobs Are Booming. Productivity Growth Isn't. What's Up with That? The Happiest Way to Change Jobs
Iran: The Dollarization Temptation by Amir Taheri
— David P. Goldman (@davidpgoldman) April 16, 2023
In new research for AEI, Derek Scissors forecasts these dynamics to suggest why China may not be able to keep up with the United States into the 2040s.
When the Fed stopped focusing on inflation, it undermined the stability of our financial system.
READ MORE ›
No Money, No Nukes: Time to Bankrupt China's Regime by Gordon G. Chang
China’s (Rough) Economic Trajectory to 2050
Derek Scissors | April 2023 Since the Chinese economy has matured and the policy trend is established, long-term forecasting should be more accurate. It’s still imprecise, of course, and vulnerable to any sharp domestic change. The COVID-19 pandemic and recovery interrupted an economic slowdown that began in 2011 and will resume in 2024–25. China will still outperform in the 2020s, but its trajectory will be unmistakable by the end of the decade. The 2030s will be worse. Aging will be the principal reason, augmented by a large debt burden and (unless lifted) self-imposed constraints on innovation. In the 2040s, these factors will effectively bring growth to a halt. READ MORE
China’s Demographic Prospects to 2040 and Their Implications: An Overview
Nicholas Eberstadt | Psychoanalysis and Psychotherapy in China | May 26, 2020
Federal Reserve Borrows $184 Billion Without Congressional Authorization, Circumventing the Debt Ceiling
Paul H. Kupiec | Hill
https://www.bloomberg.com/news/articles/2023-03-14/hsbc-starts-to-dig-into-what-it-bought-from-silicon-valley-bank
https://www.reuters.com/markets/billionaire-investor-mark-mobius-says-he-cannot-take-money-out-china-fox-2023-03-05/ https://asia.nikkei.com/Economy/China-sees-first-net-capital-outflow-in-more-than-2-years
Silicon Valley’s Lesson: How to Change Banking to Prevent Crises and Bailouts
By John H. Cochrane via The Hill John Cochrane writes that the recent bailout of large depositors of Silicon Valley Bank demonstrates that the banking regulation system is fundamentally broken and has provided perverse incentives for financial institutions to take enormous risks at what is ultimately the taxpayer’s expense. As an alternative to the current system, Cochrane recommends that banks funnel all deposits and short-term debts into interest-paying reserves at the Fed and short-term Treasury investments. Such a policy, he argues, would end bank runs and ensure that there would always be money to satisfy depositors.
Tangled Up in Blue
City and state New York Democrats can’t decide what they stand for. Electoral reform could help clarify matters
Our Military Leaders Need a National Security ‘Fast Lane’ To Compete With China
By Mike Holmes & Dan Patt, The Hill: "The Chinese spy balloon incident highlights both the brashness of China’s military ambitions and the U.S. military’s struggle to counter China’s bold moves with new capabilities such as modern air surveillance tools."  China’s Future Ain’t What It Used To Be by Josef Joffe via Tablet Magazine In January, China’s National Bureau of Statistics made it official: After decades of fabulous GDP growth, the rate is now down to 3%. The culprit is Xi Jinping’s “zero-COVID” policy, plus ruptured supply chains and soaring energy prices. In the post-lockdown recovery, growth will of course bounce back, but not into the enduring double-digit rates prevailing since the 1980s, when China became the envy of the world. Reports: Saudi Arabia to deposit $1 billion in Yemen’s central bank The European Union also announced additional funding for Yemen, while a famine watchdog said that economic warfare is increasingly causing hardship for Yemenis. Netanyahu advances judicial overhaul in Israel's Knesset The government of Prime Minister Benjamin Netanyahu took the first step in getting its judicial reform adopted by the Knesset.
How To End Putin’s Forever War quoting Stephen Kotkin via The Nation In a wide-ranging and exceptionally thoughtful interview with The New Yorker, the historian Stephen Kotkin, best known as a biographer of Joseph Stalin, cast a cold eye on the notion that more of the same can lead to a negotiated peace. Kotkin notes that a war of attrition can continue indefinitely unless Russia’s military production capability—its ability “to resupply and produce more weapons”—is damaged.
Michael Rubin writes: Back to the present: Regime change in Iran will be difficult, but it is inevitable. Khamenei will die, and it is unclear any new ayatollah will be able to consolidate power. The Revolutionary Guards will play the role of the Russia-backed reactionaries of a century past as they intercede to stymie more liberal-minded politicians. It will be a tough fight—and very likely a violent one—but the sheer suspicion Iranians have of charismatic figures may ironically give them a second chance at democracy. After 115 years, they deserve one. – 19FortyFive Michael Rubin writes: President Donald Trump betrayed Syrian Kurds in order to appease Erdogan. Despite Biden’s promise to resist Erdogan’s blackmail, the default position of his team remains to appease. If Biden wants to drive a nail into the coffin of the Islamic State and Iran’s destabilization of the Middle East, there is no other option. The strategic interest of the United States should be to support and reinforce Kurdish autonomy and the AANES. – 19FortyFive Stanley Chao writes: Whether it’s throwing punches or doling out flowers, China is not really interested in ideological alliances or an international rules-based order. Whether you call it socialist market capitalism or pseudo-communism, China’s approach is one of a kind. Going it alone often begets chaos. It’s simply hard to predict China’s mood at any given time. Ultimately, however, Beijing does want to be a global citizen, just on its own terms. Expect surprises, good or bad, and then roll with the punches when they inevitably come. – The Hill Former Pakistan Prime Minister Imran Khan was granted protective bail by a court in the eastern city of Lahore on Monday, providing him respite from arrest for two weeks in a case that involves charges under the country’s anti-terrorism laws. – Reuters Chris Pope explains the mammoth task facing lawmakers as they attempt to curtail explosive federal spending and balance the budget in the next ten years. China’s Global Ambition And The US Response by Elizabeth Economy via PolicyEd Hoover senior fellow Elizabeth Economy provides her perspective on Xi Jinping’s global ambitions and how likely he is to succeed in reaching them. Nine Recommendations for Presidential Candidates on China Policy Dan Blumenthal, Zack Cooper, and Derek Scissors | AEIdeas There is bipartisan agreement that America’s next president will confront intensifying Sino-American competition and an aggressive People’s Republic of China. To develop comprehensive policy on how to approach the threats that China poses, Dan Blumenthal, Zack Cooper, and Derek Scissors put forth nine recommendations to presidential candidates. On the economic front, the US should ban Chinese participation in key supply chains, require the disclosure of lost intellectual property, and fully implement export controls. To deter military aggression, the US should replace strategic ambiguity, bolster military preparedness, and find ways to work with allies on technology issues. Lastly, the US can use all its recourses by creating a comprehensive counter-coercion strategy for Taiwan, go on the economic offensive against the Chinese Communist Party, and set up structures of collective defense in Asia. Read more here. >> Learn about AEI’s New China Playbook here. >> US “Guardrails” with China Are Shaky at Best Hal Brands | Bloomberg Opinion For much of 2022, America and China looked to be barreling toward conflict. As 2023 begins, Hal Brands notes that while the relationship has a new atmosphere, that will not last. Neither side is budging on its key interests, all the major disputes remain, and domestic politics are poised to play a spoiling role. What has emerged is a two-track relationship. Track one is intensified diplomacy, featuring renewed engagement on the climate and other transnational problems. The relationship’s second diplomatic track features ongoing and intensifying competition. Neither the US nor China has stopped seeing the other as its chief antagonist. Neither is slackening its efforts to strengthen its position. Continue here. >> Defense Funding—Highlights from Fiscal Year 2023 to Inform Fiscal Year 2024 Elaine McCusker | AEIdeas The new Congress must immediately begin performing its most critical duty—developing and debating defense policy and funding initiatives. Elaine McCusker provides three specific considerations for fiscal year 2024. First, cuts to the defense top line, particularly those that would revert to 2022 levels, would be irresponsible, wasteful, and dangerous. Second, as capacity is a capability of its own, and the current inventory of ships, planes, munitions, and ground assets is shrinking, procurement accounts should be a priority, even at the expense of research accounts if necessary. Lastly, Congress should gather real data on the impacts of three critical disruptors to the industrial base—inflation, workforce, and supply chain—to find spaces to save taxpayer money. Learn more here. >> Turkey: Putin's Open Door for Harming Western Interests by Burak Bekdil Gatestone Institute January 20, 2023 https://www.meforum.org/64064/turkey-putin-open-door-for-harming-western When Did Growth Begin? Evidence From England
by Jón Steinsson via Analysis Over the past few hundred years, economic growth has transformed the standard of living of a large and growing portion of humanity. In the early nineteenth century, the vast majority of people lived in what we now consider extreme poverty. Today, however, the fraction of people living in extreme poverty has dropped to less than 10 percent and keeps falling. The main driver of this monumental change is economic growth.
Priorities for Economic Policy Toward China
Derek Scissors | AEIdeas Increasing suspicion about China is causing many states to consider banning Chinese acquisition of US land. State governments can ban Chinese acquisition if they choose and it may prevent future problems, but it will do almost nothing to address our current economic vulnerability. Full Story
China's Rising Holdings of U.S. Agency Bonds
by Brad W. Setser
Iraq lowers dollar-dinar exchange rate
The Iraqi dinar has been depreciating against the dollar amid restrictions from the US Federal Reserve and other issues.
According to Hal Brands, PIVOT TO ASIA BEGINS
A Possible New Leader in the Global Economy
Allison Schrager, E21 The world is currently taking stock on the benefits of globalization, especially an overreliance on China which experienced spectacular growth in the last few decades. But China's economic future faces many challenges. Read more here....
Can a Staff Exodus Save Higher Ed?
If university administrators are unhappy, there’s the door.
The Master Negotiator?
By Javan David Frazier, Strategy Bridge: "The Gulf War, Tiananmen Square, the collapse of the Soviet Union and the end of communism in Europe, the Middle East peace process, and the ethnic fighting that erupted in Yugoslavia were just some of the challenges that Baker faced."
The International Monetary Fund’s Economic Crystal Ball Seems to Be Broken
Desmond Lachman | 19fortyfive.com
China and Russia Deepen Their Ties by Judith Bergman
Three years of strict pandemic controls in China and a real estate crash have drained local government coffers, leaving authorities across the country struggling with mountains of debt. The problem has gotten so extreme that some cities are now unable to provide basic services, and the risk of default is rising. – CNN
Gordon G. Chang writes: China has continuing debt defaults, a stagnating economy, plunging property prices, worsening food shortages and a deteriorating environment, in addition to facing a viral outbreak that is “by far the world’s largest.” Moreover, the country has entered into a decades-long period of steep demographic decline. Xi is being blamed for all the problems confronting the regime, and that means the infighting in Beijing is bound to get worse. – The Hill
Middle East military rankings: Turkey highest, Lebanon lowest per global index
Turkey stands out as the most powerful country in terms of its military capacities in its region while Lebanon is the weakest, a global military strength index finds. CHINA'S REOPENING: THE SLAUGHTER CONTINUES; MEXICO'S NARCO-TERROR STATE; BRAZIL REJECTS MARXISM1/11/2023  China’s Saudi visit reveals GCC goals for economic alternatives China’s presidential visit to Saudi Arabia is expected to yield a host of deals as the GCC increasingly looks eastward on trade. Russian delegation heads to Turkey amid potential Syria offensive The top Turkish diplomat aired a rare complaint over the Russian stalling of constitutional talks between the warring Syrian actors, calling on Moscow to allow the process to resume. Some Egyptian companies still dealing with Russia's alternative financial system Some Egyptian companies are secretly dealing with a Russian alternative financial system, in anticipation of international sanctions by the United States. MI’s Allison Schrager highlights the government’s mistake in assuming that interest rates would remain low when issuing massive short-term debt. The cheap debt dream has ended, and this wakeup call will serve as a lesson around locking in long-term low interest rates for governments and consumers alike. Contrasting the rise of Amazon’s Jeff Bezos with Alibaba’s Jack Ma, Barthold points to the incompatibility of state direction with fast-moving innovation. Is Stagflation Coming? Allison Schrager, E21 The great resignation was good for workers while it lasted. The latest data from Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics reveals that quits have fallen over the last year after peaking during the pandemic. The number of job openings has also declined. This suggests a labor market that remains very tight, but has started to weaken. Read more here.... Gulf currencies pegged to dollar keep migrant workers’ families afloat While the strong dollar has played in favor of Gulf migrant workers, they are not exempt from wage increases falling behind the inflation rate. Saudi GDP growth continues on back of high oil prices Saudi Arabia’s non-oil economy is also growing, boding well for its ambitious economic diversification projects. Drug shortage adds to Tunisia’s woes In light of the successive crises facing Tunisians, pharmacies across the country are suffering drug shortages, which the authorities are unable to resolve. Egypt’s non-oil private sector records two years of contraction The last time the Purchasing Managers Index, which offers insight into the private sector, recorded expansion in Egypt's economy was back in November 2020. Egypt’s trade with Nile Basin countries jumps amid Ethiopia dam crisis Cairo’s exports and imports with the region increased substantially in 2021, but they still represent a small portion of the total and growth remains uneven. World Bank says debt increasing in Middle East countries Egypt, Iran and Turkey’s debt rose significantly last year. Iran top Central Bank official removed as unrest triggers currency crash The dismissal of Iran's foreign exchange head follows the unprecedented depreciation of rial, following three months of anti-government protests. US, Russia stall Turkey's ground operation, but Kurdish gains under threat The Russian and US policies of appeasing Turkey have averted a new Turkish ground operation in Syria for now, but they both lay the ground for a gradual undoing of Kurdish gains in the north. Gulf central banks raise interest rates after Fed move Many Gulf nations have mirrored the US Federal Reserve’s decisions on interest rates all year. Israel and Egypt have also raised rates, but Turkey has been cutting — despite skyrocketing inflation. Turkey’s economic growth loses steam as elections near President Recep Tayyip Erdogan has persistently prioritized economic growth but might face the risk of stagnation ahead of Turkey's crucial elections next year. The Caravan Issue 2237: Prospects For Lebanon via The Caravan Issue 2237 of The Caravan is now available online. The journal is a periodic symposium on the contemporary dilemmas of the Greater Middle East. "India Must Have Internal Harmony To Have External Security": Raghuram Rajan
interview with Raghuram Rajan via The Indian ExpressHoover Institution fellow Raghuram Rajan notes, "communal harmony and unity is something that the country needs, regardless of what political party you are in.” |
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