China Buys Less, Ethiopia’s Covid-19 Response & Vietnam-EU Trade Agreement

We Are The World.* From South Africa to Sweden, from Brussels to Brazil, there have been demonstrations around the world protesting the murder of George Floyd. This global phenomenon raises two questions. First, why does the world care so much about what happens in America? And second, why do we not see similar worldwide demonstrations against systemic problems and abuses in other countries? For example, do not Uyghurs’ lives matter? We think the answers are related.

People around the world are more likely to join protests addressing issues in America because they know there is a better chance of changing America than there is, for instance, China. America, despite all its many faults, is a democracy that has continued to change over time. China is an authoritarian dictatorship less likely to respond to worldwide pressure from demonstrations in the streets.

We actually think China would be susceptible to such pressure and we outline ways to use such pressure in our upcoming book but it’s understandable that America is seen as a more malleable target by the world. But second, and even more important, America, again despite all its many flaws, sees itself, and is seen by many in the world, as a beacon of hope, as an idea of liberty. That America has often failed in being that beacon spurs people all the more to make it so.

Te Nehesi-Coates once wrote “I propose to take our countrymen’s claims of American exceptionalism seriously, which is to say I propose subjecting our country to an exceptional moral standard.” That’s what the world is doing. If America does indeed start holding itself to a higher moral standard, because of our size, power and history, standards will also be raised for the whole world, including for authoritarian countries.

America is not currently a beacon for liberty around the world. But it may one day be so again, and many people around the world are working to make it so. And we aim to make a brighter day by giving information on how China is lessening its influence, Ethiopia’s successful Covid-19 response and Vietnam’s under reported new trade agreement. It’s this week’s International Need to Know, aiming to be the Quincy Jones of weekly international information and data.

*It was recently the 35th Anniversary of We Are The World, which at the least is far less offensive than its sister Do They Know Its Christmas**, one of the four most offensive holiday songs ever written. But Ray Charles? He can sing any song and redeem it.
**We defy you to defend these lyrics: “And there won’t be snow in Africa this Christmastime; The greatest gift they’ll get this year is life;
Where nothing ever grows; No rain nor rivers flow; Do they know it’s Christmastime at all? Here’s to you; Raise a glass for everyone”

Without further ado, here’s what you need to know.

China Buys Less But Wants More Influence

When Obi-Wan Kenobi said, “If you strike me down, I shall become more powerful than you can possibly imagine” he was ripping off Jesus Christ but he was also onto something as we’ve seen over the last two weeks. China’s leaders, when it comes to trade, may want to study Obi-Wan. Last week China released trade data showing its May exports dropped 3.3 percent from a year earlier and its imports plummeted 16.7 percent from the previous year. China’s exports dropped less than might be expected partly because of its continued medical supply exports. Its imports plummeted because of a lack of demand domestically. As we wrote last week, no economy is an island during a pandemic and China is no exception. But we also need to remember that China in the long run is hoping to become more self-contained and build more of the stuff it currently imports. Pandemic or no, China may continue to import less. One current geopolitical strategic advantage China has is that it is so entwined in the world economy. It uses its large market to leverage that. We write in our upcoming book, “China is the largest trader in the world, accounting for 12.4 percent of global trade compared to the U.S.’s of 11.9 percent.” But if China reduces its imports, then its status as the world’s trader will be dead. And unlike Obi-Wan, China will be far less powerful.

We Need To Talk About Ethiopia

Covid-19 data is like Seattle weather in June: very heterogeneous (it might be 80 one day and 59 the next), very difficult to predict, and often dissuades one from leaving their house. At the beginning of the pandemic many were worried the devastation it would wreak on Africa once it traveled there. But so far Africa is doing okay. Recently we pointed to Ghana’s success, this week we take a look at Ethiopia. Both infections and deaths are remarkably low in Ethiopia The last couple years we’ve been touting Ethiopia even while recognizing its challenges. Although Ethiopia has limited both infections and deaths from Covid-19, we are cautious in complimenting its approach to containing the virus. We are guessing there are factors we don’t understand that play a part in Ethiopia’s success, and for that matter other developing countries’ success. It’s true that Ethiopia readied central quarantine and isolation locations (unlike most of the U.S.), but thus far they haven’t really needed them. They have not locked down but have encouraged social distancing and hand washing. It is a young population so perhaps that explains part of the success in terms of a low death rate. Maybe the government is not fully reporting infections and deaths though it seems at this point we would be finding some evidence of misreporting. There is much about this pandemic we are yet to understand. In the meantime, we cautiously add pandemic response as another feather in Ethiopia’s increasingly multi-plumed cap.

Dept of Underrated News: Vietnam-EU Trade Agreement

In a world awash in news, don’t forget that Vietnam this week ratified a free trade agreement with the European Union. The agreement was signed a year ago, ratified by the EU in February and now will begin implementation. “The EU will lift 85% of its tariffs on Vietnamese goods, gradually cutting the rest over the next seven years. Vietnam will lift 49% of its import duties on EU exports and phase out the rest over 10 years.” In a separate, parallel investment agreement, “E.U. companies will receive equal treatment with domestic bidders in competing for public contracts in Vietnam.” Vietnam is on a bit of a roll. They so far have successfully contained Covid-19. Like all economies, Vietnam’s has slowed during the pandemic but is doing much better than other parts of Southeast Asia. They are benefiting from countries diversifying out of China and this agreement aims to accelerate that as Vietnamese economist Pham Chi Lan explains, “COVID-19 has given Vietnam a hard lesson about being dependent on China,” It also showed other countries, including the EU, the negative impact of relying too much on China in their product value chain. The EVFTA (free trade agreement) comes in the right time as all parties realize they need to pivot and restructure to diversify the supply chain.” Vietnam poses one of the five most important questions in the world. As they continue to develop economically, will they follow the path of Taiwan, South Korea and other developing countries that after fast economic development and reaching higher levels of GDP per capita start to liberalize politically? Or will Vietnam follow China’s new path of becoming more authoritarian to maintain power even while focusing on growing the economy?

We’re All in This Together, We Need to Talk about Sweden 3 and Shorter and Younger Trees

It occurs to us that too often we mistake good events for bad. For example, the protests in the street* about the murder of George Floyd. Like everyone else, our initial reaction was unrest in the streets is a sign of how bad the year 2020 is. But protests in towns and cities across America are not a sign of more bad, but of good. It’s like the MeToo movement when every week another sexual harasser or assaulter was revealed. Many of us were horrified. In truth, what was horrific was the many years of previous hidden sexual assaults and harassment. The revelations were the beginning of trying to solve the problem. So, too, are protests against police violence. Since Ferguson in 2014 (which we write about in our upcoming book about China—how is Ferguson relevant to China, you ask? You will have to read the book to find out!), in big cities there has been a reduction in the use of police force, as Samuel Sinyangwe details in his Fivethirtyeight.com article. This is partly due to the greater attention given this issue over the last 6 years due to the protests in 2014. Of course, that same article points out there has been a rise in police violence in the suburbs and rural areas–there is much, much more to do. Sinyangwe, who given his first name, is obviously wise, is the co-founder of Campaign Zero. This organization has created a list of research-backed, evidence-based policy solutions for reducing police violence. At the website, you can even track where your state and city are in implementing these policies. Here is a Twitter thread briefly listing and explaining these policies. If you are feeling gloomy about the last week’s events, I highly urge you to read the links. They provide a rational path forward and a way for all of us to get involved in walking down that path. As we roll up our sleeves, we kneel on bended knee while remembering we’re all in this together, reexamining Sweden and pondering why trees are getting younger and shorter. It’s this week’s International Need to Know trying to understand what it means around the world and here at home.

*The looting and destruction of businesses is wrong but they are a separate issue from the largely peaceful protests. But since we raise the issue,we point out we are concerned at how many city officials are imposing curfews to deal with the violence and looting. Curfews are not needed. There are already adequate laws in place allowing for the arrest of people stealing and committing violence. Curfews, on the other hand, are pernicious and allow for further corruption by the authorities as you see in this video where an American citizen is detained for breaking curfew while exercising his inalienable right to assemble and express free speech. Mayors should stop reflexively using curfews during the continued protests and unrest. 

Without further ado, here’s what you need to know.

Reminder: We’re All In This Together

A former elected official Facebook friend of ours keeps clamoring for Washington’s governor to re-open the economy. We try to remind him you can lead a pandemic citizen to a three martini lunch at their favorite restaurant but it doesn’t mean she will drink or eat. A nation’s economy won’t fully recover until the world’s economy recovers which means the world as a whole must successfully contain the virus. On March 26th in this space, we noted that we’re all in this together when it comes to the pandemic, both health-wise and economically. More evidence of this comes this week as Barron’s examines two countries that have successfully contained Covid-19 but whose economies nonetheless are severely affected by the pandemic, South Korea and Taiwan (Yes, CCP, Taiwan is an independent country—a very successful one at that–no matter what you want the rest of us to think). The article observes “Taiwanese consumer spending has plunged at the fastest rate on record even though the virus has been contained and the government never imposed lock downs.” The same is true in South Korea which since largely containing the initial large outbreak of Covid-19, has also seen retail and service sectors sales plummet. Now it’s true that both South Korea and Taiwan’s economies are doing better than in countries such as the U.K. and U.S which have not contained the virus. Job losses in those two countries are about twice what they are in Taiwan and South Korea. There are two lessons to be learned from this. An individual country’s re-opening doesn’t save the economy; containing the virus does. All countries’ economies do not recover until the virus is contained. In the current pandemic, the economic problem is a health problem.

We Need To Talk About Sweden Part 3

Like a Norwegian nationalist in 1814, we’ve been keeping an eye on Sweden. In our case because of Sweden’s limited shut-down policies. Now two and a half months into the epidemic, data shows they really are doing much worse than most other European countries. In Sweden, deaths per million people continues to rise while other European countries have bent that curve and in some cases are well on their way to zero. Sweden’s approach, at least through the first two and a half months of the pandemic, seems to be achieving much worse mortality results than many other European countries. That being said, we will note the caveat of their nursing home situation. We reported a few weeks ago that Sweden has many more nursing homes than its neighbors of Finland and Denmark. Professors from the University of Stockholm and George Mason University give Sweden a D for their elderly care but a B- for their overall response to Covid-19. Putting aside that professors seem to think they can grade everything, including countries (we didn’t know it was a test!!!), the two professors note that “upwards of 70 percent of the COVID-19 death toll in Sweden has been people in elderly care services, primarily the nursing homes.” For us to be convinced of the nursing home theory, we would want to see nursing home deaths pulled out of the data for all these countries and compare the results of non-nursing home deaths. If they are similar, than perhaps Sweden is onto something. If not, then Sweden’s approach is reaping much worse morbidity results, at least at this stage of the pandemic.

Trees Are Getting Shorter and Younger

As time passes, inevitably I will get older and shorter. Unfortunately for humanity, trees are getting shorter and younger. According to a new study published in Science last week, “The world’s collective forests have become shorter and younger overall in the past 50 years.” This is problematic for a number of reasons, including that taller trees sequester more carbon and provide more shelter for a whole host of species. The report determined that in North America and Europe, tree mortality is doubling over time. The reason for higher tree mortality is multifold but massive wildfires, invasive species, logging and encroaching development are among the main factors. Interestingly, one place where tree mortality is decreasing is here in our little neck of the woods, the Pacific Northwest. Around the world, there are efforts to plant multitudes of tree, which is good, but we also need to do a better job of protecting our old forests.