Archive for month: August, 2017

Border disputes, China AI and Successful Startups

In today’s world, the peacock is more admired than the chacalaca. The bold maneuver more than the quiet effort, the hare more than the tortoise, the eloquent loud speaker above the quiet toiler. We often celebrate what people have done but rarely what they did not do, which in some cases is more valuable. Our former boss (from back when the world was young), former U.S. Rep John Miller has written a book on the latter, about a mostly forgotten non-event in the U.S. revolutionary war when a group of officers appeared set on mutiny and wanted George Washington to lead them in marching on Congress. These officers felt the military could rule the country better than the civilian politicians. Old George resisted temptation to power, a temptation that most would succumb to. He quelled the mutiny and there was no march on Congress. John, in his excellent book, The Man Who Could be King, notes that though Washington did many great things (and John also details Washington’s flawed actions, including owning slaves), it is what he didn’t do that may have been his greatest achievement. We, too, have not done many great things, but alas on a different order than the father of our country. As we continue to not do great things, we update you on the India-China border dispute, detail China’s latest AI efforts and note which countries see fewer businesses quit. It’s this week’s International Need to Know, growing gray and blind in service of international news and data.

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

Other World Disputes Update

Two weeks ago we noted a border dispute between India and China in Donglang that included a somewhat comical skirmish between troops of the two countries. Not so funny is the idea of the world’s two most populous countries escalating the dispute into something larger and more dangerous. We said to keep an eye on it and we’re pleased to report that the two countries have stepped back from confrontation with China stopping construction of a controversial road and India disengaging its troops from Doklam (for those who have no idea where that is, as in our first story we display a now peaceful map below). Probably not coincidentally, this pulling back from the brink occurs a week before Prime Minister Modhi travels to China for a summit of the BRICS countries (Brazil, Russia, India, China & South Africa). As China’s political power continues to build, they will find themselves, like all emergent powers throughout history, involved in ever more complicated political waters. How they navigate those rapids will not only be interesting, but increasingly impactful for the rest of the world.

China AI

China continues to go big into artificial intelligence. Via Next Big Future we learn that Baidu, the largest search engine in China, and China Life, a state-owned life insurance company, are teaming up to create a US$1 billion investment fund focused on AI research. According to the South China Morning Post, “The fund will invest in unlisted companies Involved in artificial intelligence (AI) and internet finance.” At the same time all this is happening, China continues to try to restrict an outflow of capital. In the Post article, China Life notes “The capital control rules by the forex regulator would expect our overseas investment plan. We would have to invest in a manner compliant with the regulatory requirement.” China continues to be bold and ambitious in striving for success in cutting edge technologies. As with navigating challenging international political waters, it must accomplish this technology goal with interesting domestic regulatory and policy requirements. Chinese captains of industry (and government) must be very smart navigators indeed. In the meantime, progress in AI, as evidenced by the graph below, continues to accelerate.

Who Quits?

One of our big concerns about the U.S. is the trend of less entrepreneurship. For example, the rate of business startups are way down from previous decades. We have our theories why but since our beat is international let’s look at which countries internationally are seeing successful entrepreneurs. One metric is the rate of ending a business. A survey conducted by Global Entrepreneur Monitor finds that among developing countries (or as this study categorizes them, “factor driven” economies), India has the lowest rate of business exits, followed by Vietnam, Egypt and Iran. This, of course, is only one metric of entrepreneurship, but at least in the cases of India and Vietnam the data squares with our anecdotal experience. We also found Egyptians very entrepreneurial when we were there but that was more than 20 year ago. A number of the countries on the list below will likely elicit surprise, or at least did for us.


China’s Innovative but Nixes Ideas, Africa’s Millionaires, Who Publishes the Most Books

ESPN is dead. Maybe not Dickens doorknob dead but at least JK Rowling’s Professor Binns the ghost at Hogwarts dead. We are an NBA fan and as we were about to leave our office earlier this week we glanced at Twitter (the world’s fourth worst invention) and saw the news of the trade of Kyrie Irving to the Boston Celtics. We clicked on a link that brought us to three writers from The Ringer website discussing the trade on Facebook Live. Unlike a couple of years ago, it never occurred to us to turn on ESPN or to even go to their website. There has been lots written over the last year about ESPN’s financial slowdown and now we experienced personally what is happening to the company. Indeed to all television companies. Television is dying too. Ironically this may ultimately mean if not the death of, then a slowdown in professional athletes salaries. Or will sports leagues be able to squeeze out large revenue streams from Facebook and other entities? As we await the answer to that question we inquire into the battle of innovation and censorship in China, answer where the African millionaires are and interrogate who publishes the most books. It’s this week’s International Need to Know, providing international wisdom and data on any medium that will have us.

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

China In With Innovation, Out with Ideas

If China was a romantic relationship, it would be the one you tell your friends is complicated.  The question is can a country with so many contradictions continue its economic success or will it break up in an angry economic divorce? We are no Dr. Phil but early last year we noted that China does not get enough credit for being innovative, that too many people still think China merely copies what others are doing. This week brought more evidence of China’s innovation in an article by the always interesting Connie Chan outlining the 16 ways QR codes are being used in China. The Chinese use QR codes for pet tags, sharing bikes and even providing more information about pandas. QR codes are used far more in China than in the United States. At the same time, however, China’s government continues to crack down on the free flow of ideas. Innovation is built off of ideas and if one does not have access to them, well, then innovation may be in trouble. The most recent example is the attempt to force Cambridge’s China Quarterly to remove 300 articles that the Chinese government deemed offensive. At first, Cambridge caved but then later in the week decided they would not remove the articles. Now China Quarterly is inaccessible in China. An enterprising programmer scanned the articles in question and created the word chart below to give a sense of what China’s government is scared of. 


Where are the African Millionaires?

Where are the Bruce Waynes of Africa? It is rare to see a story about African millionaires–other stories tend to dominate coverage of that large and diverse continent. But we recently saw a graph of which African countries are home to the most millionaires. Unsurprisingly, South Africa is number one with 40,400 millionaires, followed by Egypt, Nigeria and Kenya. Nigeria, of course, is home not just to millionaires but also to the billionaire Aliko Dangote who is trying to buy the British football club Arsenal so he can fire its coach (sports team buying billionaires no matter the continent have similar personalities). Mauritius, which is classified as Africa although it is 1200 miles off the mainland, last year had the fastest growing rate of millionaires. On the actual mainland, the countries with the largest increase in millionaires in Africa are Ethiopia, Rwanda (bet you didn’t guess that one), Uganda and Kenya. However, last year saw an overall 2 percent decrease of millionaires in Africa. This is a continent in which a bit more income inequality, or at least a larger increase of millionaires, might be seen as a helpful sign for economic growth for Africa as a whole.

Who Publishes the Most Books?

Did you get through your summer reading? Made it through that beach book while relaxing this August (we’re nearly through with Anna Karenina–Russian authors are not a happy lot so thank goodness for summer sunshine to leaven the sadness)? The International Publishers Association (IPA–there should be a book themed beer, it has a hint of mustiness and yellow-sheaved paper) recently released global publishing stats. No surprise that China and the U.S. are the two largest publishers of books in the world as you see in the chart below. They are followed by the UK, France and Germany. China, of course, is a large country so no surprise they would publish lots of books. But perhaps a more interesting insight is books published per capita. In that statistical slice (see chart below), the UK, Iceland and Denmark (the happiest country in the world–coincidence?) rank as the top three. China ranks far down the list, even below Bosnia and Herzegovina.


Russian Money, China-India Border Dispute and Cholera in Yemen

International Need to Know, as the name indicates, is focused on the rest of the world. We leave the United States, including its politics, to other analysts and commentators of which there is no shortage. But when in the course of human events we elect a president doing and saying things that our current one does and says, everyone has an obligation to speak up. Let it be noted that many years ago we worked for a Republican and on any number of issues are still more moderate than the current Democratic party. But, this is not a partisan issue. Our current president is a disgrace and despite his winning the electoral college should be removed from office. He should either be impeached or Article 25 should be invoked. We tend to take a magnanimous view of people. We are not the sum of our faults, and all of us, including, perhaps especially, yours truly, have them. But despite some strenuous attempts, we are unable to find one redeeming feature of the man currently occupying the White House. His long slow dance with racists, Nazis and white nationalists culminating in this week’s kiss on their cheek is inexcusable. His complete inability to study any issue at any depth below a backyard plastic kiddie’s pool is dangerous. His Lynden LaRouche-like supporter on a street corner providing off-the-cuff remarks on various international issues have put America and the world at unnecessary peril. We look forward to his being removed from office as soon as possible. We appreciate your indulgence in our political haranguing and we admit this week’s catastrophic presidential events lead us to a series of not particularly positive stories, but nonetheless we bring information on where Russian money is, inform you of an India-China dispute and raise awareness of the cholera epidemic in Yemen. It’s this week’s International Need to Know, aiming to tear down statues of international ignorance wherever we find them and promising to erect more positive ones next week.

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

From Russia With Love, To the World With Money

What does one say about a country like Russia? I haven’t been there in many years but remember its dysfunction well and even from afar can see it like I’ve got long distance 20-20. It’s a troubled country with unfortunate leadership. new paper, however, charting Russia’s income inequality (we have issues with that part of their paper) reveals some rather startling statistics. Russians hold more wealth overseas than do those in the country itself. Or as the paper notes, “there is as much financial wealth held by rich Russians abroad–in the United Kingdom, Switzerland, Cyprus, and similar offshore centers–than held by the entire Russian population in Russia itself.” But given the facts on Russia’s ground, why wouldn’t Russians store their wealth outside of the country? This kind of statistic is not surprising when one thinks about it. It’s the kind of problem China is trying to avoid but perhaps drawing the wrong lessons in how to avoid it.


Stop Worrying About That, Worry About This

After talking with your friends, family and colleagues, we have determined you need more to worry about. And so we call your attention to a China-India dispute on the Doklam border (What? You don’t know where that is? Nor did we until a few weeks ago). The border stands between Bhutan and China, both of which claim that piece of geography. We almost wrote about this dispute in this space late last month but it was difficult to verify details and some were disputing the severity of the, well, dispute between India and China. But now comes word of apparently yet another incident between India and China. Reuters, for example, reports that “a source in New Delhi, who had been briefed on the military situation on the border, said soldiers foiled a bid by a group of Chinese troops to enter Indian territory in Ladakh, near the Pangong lake.” That’s India’s view, of course. In a description that seems more from a drunken fraternity battle or an early scene from 2001, A Space Odyssey, the article notes “Some of the Chinese soldiers carried iron rods and stones, and troops on both sides suffered minor injuries in the melee.” This is hardly tanks and cruise missiles but the border dispute has plenty of people nervous about whether it could spin out control. As you worry about North Korea and other matters, save some fretting for this geographical dispute as well. You’re welcome.


*Disclaimer from our lawyers: Gittes Global Cartography will not be held responsible for any misplaced borders and lousy red graphics

Meanwhile in Yemen

Also speaking of underreported news, according to the World Health Organization, “the total number of suspected cholera cases in Yemen this year hit the half a million mark on Sunday, and nearly 2000 people have died since the outbreak began to spread rapidly at the end of April.” Believe it or not, the news could be worse. Overall cases of cholera have actually declined slightly since July. But, at 5,000 people infected daily, Yemen’s cholera epidemic is currently the worst in the world. The conflict in Yemen is the chief reason for the epidemic. The health system has collapsed because of the conflict preventing access to hospitals and treatments. This is especially tragic because cholera is eminently treatable. WHO reports “More than 99% of people sick with suspected cholera who can access health services are surviving.” BUT, 15 million people are unable to get basic health care. There is certainly more than enough strife in the world. Next week we promise to bring more positive news.

Expensive China, Estonian Autonomous Buses and Cheaters in India

Last weekend we attended a gathering of Washington, D.C. refugees. That is, a group of us who once worked in Washington, D.C. but now live in the more beautiful, successful Washington in the Pacific Northwest. Just as back when we worked in D.C., the gathering included people from both Republican and Democrat congressional offices. When we worked back in the nation’s capital, the Washington delegation had one congressional softball team comprised of staffers from both Republicans and Democrats. Same deal with our flag football team (which won the championship one year–the older we get the better we used to be). It wasn’t just Washingtonians who hung out together. I remember grabbing a drink at Bullfeathers where often the Republican Minority leader Bob Michel could be seen having a drink and singing by the bar, with various representatives of the two political stripes standing around him. Like wide ties and pastel colors, fashions change, but not always for the better. In as bipartisan a way as possible we analyze just how expensive China is, examine Estonian autonomous buses and consider whether cheaters prefer government work in India. It’s this week’s International Need to Know, the fire and fury of international news and data.

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

Just How Expensive is China

We’ve mentioned this before but China is not as cheap a place to produce things as it once was. In fact, you may be surprised to know that it’s more expensive than markets such as Japan, Mexico and India. According to new research by Oxford Economics, “labor costs adjusted for productivity in China are only 4% cheaper than in the U.S.” Sad to say for our readers down under, Australia has the highest labor costs when including productivity (see chart below). At the same time,Bloomberg reports that total factor productivity in China–“the extra output that the economy produces without additional labor or capital”–has been essentially zero since 2007. Bloomberg contends this is due to the massive stimulus program that has propped up state owned companies (and thus GDP growth) at the expense of private companies: “Today, state companies get almost 30 percent of all loans but contribute less than a tenth of GDP.” All of this may make other countries a more attractive place for manufacturing. Will China be able to avoid this cycle as they continue to transform into services?

Estonian Kool Aid Autonomous Bus

Tallinn, Estonia is one of our favorite towns. Autonomous vehicles are one of our favorite technologies. So when we learned about self driving buses being tested in the Estonian capital, it was like the French apple pie at Ala Mode*, we devoured it right up. As part of  Estonia’s 6-month stint as EU president, they are running these autonomous buses from the city center out to where the EU presidency headquarters are located during Estonia’s half-year term. The buses are only temporary but thus far have apparently worked well with no problems reported. Tallinn is not an easy place to navigate with its old city and tough roads. When we were originally there in 1992, one of our colleagues was badly injured by the Russian mafia while walking back to the hotel from a bar we were at. If only self driving buses existed then. But, the Estonian autonomous bus is more evidence that commercial autonomous vehicles may take off internationally before they do in the U.S.


*Like Agent Cooper, we are a pie aficionado so can responsibly report that Ala Mode Pies in Seattle bakes the best pies in the world

Are Cheaters Attracted to Indian Civil Service?

We are no strangers to soul sucking bureaucracies. We once wrote a feature length screenplay inspired by a three-hour experience at the Washington, D.C. Department of Motor Vehicles. The civil service is not like the D.C. DMV (which would be a great handle for a MC, btw). It is not even of the same magnitude of existential horror. But its reputation is also not sterling. A new paper from researchers at Harvard and U Penn may provide an answer as to why. Their paper claims that “Students in India who cheat on a simple laboratory task are more likely to prefer public sector jobs. This paper shows that cheating on this task predicts corrupt behavior by civil servants, implying that it is a meaningful predictor of future corruption.” They used a variety of methods to test individuals tolerance for corruption but the most interesting one is where they asked them to roll a die 42 times. Each time they rolled a 1, they were paid a certain amount of money. Students who were more likely to lie about the number of times they rolled a 1, were more likely to get a job in public service. There are, of course, many ways to interpret how such people might function as government employees in India. Nonetheless, when working with the Indian bureaucracy, you may be rolling the dice more than you realize.


Do exports limit food poisoning, an Oily World and What People Worry About

Seattle is hot this week. Not Seattle-hot where Seattleites complain it’s 80 degrees and the rest of the country snickers. No, it’s in the mid to high 90s and may reach triple digits. A legitimate heatwave. Making it more difficult, most people do not have air conditioning. Making it personally difficult, the International Need to Know Spouse (INTNS) has been angling for central air conditioning for many months which we have resisted by arguing we would only use it a few days each year. This week’s heatwave has caused some additional heat in our household and led us to jerry-rig an air conditioner into one of the bedroom’s sliding windows, restoring temporary peace into the world. If only peace were so easily achieved around the rest of the globe. But as we sip a cold beverage we take a cool look at how exports are making food safer in China, examine why oil prices will remain lukewarm and turn up the heat on which countries are worried about which threats. It’s this week’s International Need to Know, enjoying the dog days of August by casting eagle eyes around the globe.

Exports Limit Food Poisoning?

The other day we ate some cherries that had been sitting out at the market for quite some time. Not only did we not get sick but they were quite tasty, more than likely because they were world renowned Washington State cherries. People have not had such confidence in Chinese food and you’ve probably seen news stories documenting food safety problems there. It turns out, according to Food Navigator Asia, that food exports from China are safer than food sold domestically in China. This makes sense, if these exporters are to compete in markets internationally, they would have to match standards in those countries. China is taking that basic fact and using it to make domestic food production safer. China’s Certification and Accreditation Administration launched a program last year to encourage Chinese food companies “to bring the same production processes used for exporter goods to those sold locally.” The program has attracted more than 1,500 brands and resulted in US$1.4 billion worth of export-quality food products being sold domestically in China, at least according to the CAA. That’s a start. More than 20,000 companies in China export food and agricultural products to more than 180 countries. We always assumed the food safety issue in China would be solved. If you think we’re worried about eating Chinese imports, think about the Chinese who have to deal with the problem every day.

An Oily World

As we predicted over a year ago (we just sprained our hand patting our own back), oil prices have remained moderate. We still assume, though there could be fluctuations in the short to mid-term, that oil prices long-term are on a steady downward slope. That’s partly because of increasing use of substitutes (i.e. electric vehicles) over the coming years but also because of new technology that has allowed new production of oil to come online (which may, in the short run, dampen the substitutes). As you see in the chart below, world crude oil reserves have been going up since 2004. Investment in new oil and gas activity fell in 2016 as prices fell so perhaps there will be a tightening of supply and demand, but supply seems to be coming online in shorter cycles than in the past so a large increase in oil prices, absent some large external event, still seems unlikely. Enjoy your cheap drives this summer and prepare for cheaper, cleaner drives five to ten years from now.

Flight or Fight Depending Where You Live

We are a world of worrywarts. But we don’t all worry about the same things and our worries, like our tastes in music and movies, evolve over time. What we were worried about twenty years ago is different than what we worry about today. 100 years ago, people tracked wolf attacks in France (big wolf data of its time), which back then were not uncommon and quite worrisome. Today, although there are certainly wolves in sheep’s clothing, we aren’t so concerned about bites. A new Pew Global poll shows that instead the world’s top worries are ISIS, cyberattacks and climate change. But who worries most about these things depends on who you are. Parts of Europe, the Middle East and the U.S. view ISIS as the top threat. In Latin America and Africa, they are more likely to view climate change as the top threat. Cyberattacks are the number one concern in Japan. The poll also delved into worries about the influence of China, Russia and the U.S. Around a third of people view these countries with alarm. The Asia Pacific region is most concerned about China, the Middle East about the U.S. and Europe about Russia. For those who are concerned most about the global economy, it is mainly countries whose economies are in distress such as Venezuela and Greece. Where you live determines what you fear, for better or worse.