Archive for month: January, 2016

This week at International Need to Know as we mourn the death of a pioneer in artificial intelligence*, Fish and all non-Golden State Warrior teams in the NBA, we also examine just how much the Yuan has devalued, who are the largest employers in the world and the extent of China’s dominance as a trade partner. Welcome to this week’s edition of International Need to Know, providing the facts and figures needed to understand our rotating orb.

Of course, if you don’t want to know, just hit “unsubscribe” at the bottom or reply to this email and I’ll remove you from the list. Alternatively, if you want others to be in the know, hit “tell a friend” which can also be found at the bottom. Without further ado, here’s what you need to know.

The Wandering Yuan

You often hear folks express concern about China unfairly devaluing the Yuan. We here at International Need to Know are always skeptical about the utility of devaluing currencies to promote one’s exports  In China’s case, we are skeptical they are devaluing much at all.  As you see in the graphic below, it’s those darn Canadians and Mexicans whose currencies have greatly devalued against the dollar over the last 12 months. Of course, that might have something to do with the drop in oil prices not currency manipulation. The Chinese Yuan dropped against the dollar at roughly the same rate (5.6%) as the British pound. Clearly it’s time to introduce trade sanctions against the UK.  Will China purposefully devalue the Yuan this year to export more?  China is a large exporter but in order to export they have to import. That smart phone or tablet you’re reading this on? It may say “made in China” but probably 70 to 90 percent of its components came from outside China. If China suddenly devalues the Yuan, the cost of imports will rise making goods assembled in China more expensive which will counteract any advantages from cheaper exports. The knee bone is connected to the… Now, whether the Yuan will suffer devaluation for market reasons ala Canada and Mexico? That’s a more important question.

The Largest Employers in the World

We should celebrate those who want to employ us, right? Well, via Ian Bremmer, here are the world’s largest employers.

World’s largest employers (workforce #)

1. U.S. Dept of Defense: 3.2m

2. People’s Liberation Army: 2.3m

3. Walmart: 2.1m

4. McDonald’s: 1.9m

5. UK NHS: 1.7m

It’s interesting to note that Walmart perceives Amazon (151k employees) as its biggest competitor and many U.S. politicians perceive China as America’s.  One also wonders if every time an order of McDonald’s fries are sold in Liverpool whether UK NHS hires another employee.   

Traders to the World

Why is the slow down in China such a big deal?  A whole lotta reasons but here’s one via Connectography: 

• Countries for which China is the largest trading partner: 124
• Countries for which America is the largest trading partner: 56

   *Stand by in next week’s INTN for news of a big advancement in AI

Welcome to this week’s edition of International Need to Know–three pieces of information that will help you understand this complicated globe we call home. Even as we mourn the loss of Major Tom to other environs, this week we look at Peak Oil (not what you’re thinking), the future of the automobile and what beer sales in China portend.

Of course, if you don’t want to know, just hit “unsubscribe” at the bottom or reply to this email and I’ll remove you from the list. Alternatively, if you want others to be in the know, hit “tell a friend” which can also be found at the bottom. Without further ado, here’s what you need to know.

The Real Peak Oil

Ten years ago or so it became fashionable to worry about peak oil, the idea that we were soon reaching the moment of maximum rate of extraction of black gold. It’s a legitimate worry since at some point we’ll run out of the stuff, right? But whether we have or will soon reach peak rates of extraction, we have now reached peak consumption of oil in the United States. In fact, as you see in the graph below, U.S. oil consumption was lower in 2014 than it was in 1997. Couple this data with the fact that we are seeing steady improvements in electric car battery technology, exponential increases in the use of solar energy (a subject for a future Need to Know) and it appears oil’s expiration date looms. We have not yet reached peak oil consumption worldwide but I wager we will be there soon. No, really, last year I made a bet with Stand Up Economist Yorum Bauman  that we will reach peak oil consumption within 10 years. Any other takers?

  

Money Flowing into Self-Driving Cars

Speaking of cars (or at least of the fuel we once put in them), perhaps you are reading this on your smart phone while driving. If so, cut it out. But, in the much sooner future than you think, you can safely read International Need to Know in your self-driving car. It was announced last week that Lyft raised $1 billion, with $500 million coming from General Motors for a partnership on self-driving cars. Uber is in this game as is Google as is Microsoft along with our international friends, BMW, Toyota and others. And two days ago, Tesla announced its new Summons feature  and outlined their road to fully self-driving cars. Last month while visiting Chinese electric automaker BYD in Shenzhen, I saw a demonstration of their self-driving capabilities. All over the world the drive is on for fully autonomous vehicles.  What’s that line from Poltergeist? “They’re here…”

Beer, Star Wars and China

Figuring out China is tough since the official statistics are like NFL referees, neither overly accurate or helpful. But there is other data that might tell the real story. To paraphrase Deep Throat, follow the beer.  According to U.K. beer-research firm Plato Logic (how do I get a job there?), beer sales in China last year were flat (though the beer itself had a good head). Until last year, beer sales averaged 6% growth for over a decade. If beer is a good barometer than growth is likely much lower than the official GDP growth rate of 6.9%.  On the other hand, the new Star Wars movie had the biggest film opening in China history so folks in China do spend on some luxury items. But still we ask how fast is the Chinese economy growing and more important how fast will it grow this year?  You must use the Force to determine whether the beer glass is half empty or full.