We attended the Washington Council on International Trade’s annual Trade Summit earlier this week. As always, it was informative and educational and we especially appreciated and were informed by the sage Spencer Cohen and legendary David Tang’s words. In these times of transition–from a U.S.-led world, a post-World War II global architecture, an era of established civic norms–discussing the importance of international trade amongst mostly like-minded people, was a bit of a shelter from the storm. But the squall continued to rage outside the hall of the conference, and occasionally inside it. Even speakers sympathetic to trade claimed that trade had been disruptive. There are always some losers in trade but the vast, vast majority gained from open trade. Those attempting to blame trade for the loss of manufacturing jobs in the U.S, must grapple with the graph below–every country lost manufacturing jobs over the last forty years. Even China has fewer manufacturing jobs. This has nothing to do with international trade or any liberalization of it, otherwise the slope of manufacturing job loss would not be the same for every country. We know that introducing facts and data into the debate will not stop a single nonsensical statement or policy from presidential candidates of both parties. But we tilt at our windmill–the blades built in Japan, the generator in Pennsylvania, the base in Germany and finally assembled in China–nonetheless. And at the same time we tilt in the direction of who owns Huawei, Japan’s Obi and Road Initiative and Africa’s first high speed rail. It’s this week’s International Need to Know, turning to Sancho for comfort as we travel the rocky road of international information and data.
Without further ado, here’s what you need to know.
Who Owns Huawei?
In the storm drain of new information in today’s world, it’s hard to keep track of continuing stories of importance. Take Huawei, for instance. Remember that the company’s CFO was arrested in Canada? Her case continues through the Canadian courts and Huawei’s 5G technology contends in the court of world opinion. Through it all there has been debate about who actually owns Huawei, whether it’s a private company or actually state-owned, an important question for a company which hopes to manage information networks in countries around the world. But government control is often difficult to discern in the Chinese corporate world. A new paper by Donald Clark and Christopher Balding claims to solve this mystery. The paper states, “The Huawei operating company is 100% owned by a holding company, which is in turn approximately 1% owned by Huawei founder Ren Zhengfei and 99% owned by an entity called a “trade union committee” for the holding company.” Clark and Balding assert this holding company is really the state. “Given the public nature of trade unions in China, if the ownership stake of the trade union committee is genuine, and if the trade union and its committee function as trade unions generally function in China, then Huawei may be deemed effectively state-owned.” Huawei has ineffectively pushed back against the paper and the CIA has weighed in. We await more information on this point. [Last minute update: This morning Huawei’s Chief Secretary spoke to reporters with what he claimed was evidence showing Huawei is employee owned. Reporters did not seem to buy it.]
Japan’s Belt (Obi) and Road Initiative
As 29 countries gather in Beijing this week for a Summit on China’s Belt and Road Initiative, a provocative article at warontherocks.com details Japan’s own Obi and Road initiative. It turns out that even now Japan owns far more overseas assets than China. According to the article, “At the end of 2016, Japan’s stock of foreign direct investment in major Asian economies (excluding China and Hong Kong) was nearly $260 billion, exceeding China’s $58.3 billion.” And Japan is working to increase its investments in infrastructure projects in Asia, nearly doubling its infrastructure exports since 2017. At the same time, Japan is cooperating when it can in the Belt and Road with Prime Minister Abe saying, “Under this Free and Open Indo-Pacific Strategy, we believe that we can cooperate greatly with the Belt and Road plan touted by China.” But Japan is also distinguishing itself from the Belt and Road by emphasizing “quality” and environmental concerns. Note the U.S. is nowhere in all of this. The Asia Century progresses.
Sub-Saharan Africa’s First Bullet Train
When we drive to Portland, Oregon from Seattle, which once we could do in less than three hours, but with increased traffic now can take anywhere from three and a half hours to six days (our math may be exaggerated), we dream of a high speed rail between the two cities. It will never happen, at least not in our lifetime, for political, regulatory and economic reasons. But you may be surprised to hear that sub-Saharan Africa’s first bullet train project is getting underway that will connect land-locked Rwanda with the port in Dar es Salaam in Tanzania. Each of these two countries has agreed to split the $2.5 billion costs nearly evenly. Construction was originally to have begun last year but has been delayed. Will it start soon and how overbudget will it be? If Rwanda and Tanzania pull this off, it will be a major milestone for these African nations. We will keep an eye on it while stuck in traffic–and we will soon report to you on some additional eye opening Africa progress. Stay tuned!
Many years ago, we decided to transplant a dwarf maple tree from one part of our front yard to another. We began digging. And digging. And…the tree’s roots were much deeper and wider than anticipated and before we knew it perhaps half of the front yard was a rather deep and wide hole. But the roots were not yet free and clear so once more we thrust the shovel deep into the ground and—clang!!!. We hit metal. We looked up from our toils and saw we were lined up perfectly with the natural gas meter. We had hit the main gas line into the house. But fortunately had not broken it. We, of course, stopped digging, snipped the remaining roots and moved the mighty dwarf to its new, what we considered, much better location. Not too long after that we started dating, then got married and moved to a new house. One night we drove by our old home and saw that all our work had been uprooted, including the dwarf maple, which had been moved yet again. It was then we truly understood the impermanence of life.* We thought of the dwarf maple when watching Notre Dame burn this week. Like our tree, we assumed it would live forever. We have visited this 800-year-old structure, and stayed in an apartment but a few blocks from it. But, like everything on this earth and off, Notre Dame shall someday pass away and be lost to the vestiges of time. Until then, we bring you China’s Planet of the Apes, China’s own Notre Dame destruction and Europeans views of the EU. It’s this week’s International Need to Know, singing Ava Maria to all our world’s wonders while you read the Mueller Report.
*Perhaps you believe the moral of this story is to call the gas company before digging in your yard.
Without further ado, here’s what you need to know.
China’s Planet of the Apes
The old cliché that given enough time a monkey typing on a keyboard would eventually write Shakespeare is being transformed by Chinese scientists who have introduced human brain genes into macaque monkeys. The Chinese researchers claim these monkeys are smarter as a result of the new genes. According to Vox, “In a study published last month in Beijing’s National Science Review journal, researchers took human copies of the MCPH1 gene, which is believed to play an important role in our brain development, and introduced it into monkey embryos by means of a virus that carried the gene.” This, of course, is controversial, especially since six of the 11 monkeys they tried this on died. The researchers claim that the monkeys with the human gene performed better on short-term memory tests and that their brains “developed over a longer period of time, which is typical of human brains.” Where this will all lead and whether these Macaque Monkeys are really smarter we do not know, but we expect in the future macaque monkeys will conduct strange experiments on other animals. Or as a future macaque monkey might say, “Ay, in good sadness is he; and talks of the basket too, howsoever he hath had intelligence.”**
**Merry Wives of Windsor
China’s Notre Dame Problem
The venerable Notre Dame is not the only historic building recently felled by man. Notre Dame was an accident but the destruction of the Keriya Mosque in Xingjiang, China was not. Yes, in the same area where some one million Uighurs are in concentration camps, in an attempt by the Chinese government to stamp out Islam, the Chinese government last year destroyed an historic religious building even older than Notre Dame. Rachel Harris in The Guardian reports this mosque “dating back to 1237…a towering architectural monument” was bulldozed leaving nothing but metaphorically scorched earth. Man is both careless and cruel in nearly equal measure.
European Views of the E.U.
The EU is 26-years-old which is still young by country standards. In fact, it is still so young that PEW Global surveyed the EU’s constituent countries on what they think about it. Three-fourths of Europeans believe the EU promotes peace, nearly two-thirds believe it promotes democratic values, and a majority believe it promotes prosperity. From there, the EU’s popularity goes down with a majority of Europeans believing the EU is intrusive, inefficient and does not understand the needs of its citizens, making Europeans sound like employees in the movie Office Space (all hail 20th anniversary). Unsurprisingly, Greece has the least favorable view of the EU followed by the U.K. Since we don’t remember seeing polls of whether Vermont or Arkansas has a favorable view of the United States, we assert we will know the EU has fully made it when Pew no longer needs to survey European countries’ views of the E.U.
Public perceptions are a strange commodity. We admit to perverse amusement at the college entrance cheating scandal, including the arrest of two Hollywood actors. One of them, Felicity Huffman, has now pled guilty and given the best apology we’ve seen by any public figure in the last eleven years and seven months. The contrition was complete and genuine, accepting full responsibility with no hedging or excuses. Which means, we suppose, given the way of our world, that she will be forever shunned. Certainly her public persona will be forever tarnished. On the other hand, NBA basketball player Dwayne Wade, who retired yesterday, was feted in a Budweiser commercial for all the good deeds he’s done off the basketball court. And though one of those kind acts was to fund someone’s college tuition (not Lori Loughlin’s daughter), we found the whole thing distasteful. We prefer people like Ken Griffey, Jr. or Prince who toil in good acts quietly without fuss over those who tout their accomplishments in a nationwide beer commercial. We are not saying in a life review that Felicity Huffmann should be ranked above Dwayne Wade–we do not know either person or all their deeds and misdeeds–we merely assert that at least this week we appreciate her more than him And now that your perceptions of us are substantially lowered we launch a branding campaign on the continued need to fight hunger, market the progress on clean energy and advertise the continued challenges of energy. It’s this week’s International Need to Know, wishing we were attending French Quarter Festival even as we sing the world’s praises and perform dirges about its faults.
Without further ado, here’s what you need to know.
Hungry to Curb Hunger
More than once in this space we have trumpeted that we are living in the most peaceful, prosperous time in human history. And it is true–you and I have hit the generational jackpot. However, the last few years have seen some worrying trends and so in the interest of full transparency we present the latest data on hunger, which is one of those new worrisome trends. As you see in the chart below from Ourworldindata, far fewer people around the world are undernourished than 15 years ago, but unfortunately there has been a slight increase over the last three years. Much of the increase is due to sub-Saharan Africa where there has been some backsliding over the last few years, apparently due to climate change issues and increased conflicts. So, there you have it, we live in a great era but if we don’t get our act together, we could be entering a new, less great one. We could end up like Kevin Durant leaving the Golden State Warriors.
There has been talk of getting a back-up generator at the INTN worldwide headquarters. But, it is quite expensive to buy and install one capable of powering the entire house that is hooked into our electrical system. And, we remember that since the early days of INTN, we have noted the possibility that renewable energy will transform power generation more quickly than people realize. Former Microsofter (softie? softist?) Naam Ramez brings us the latest data which startingly shows that not only are wind and solar now often cheaper than installing new coal and gas oil plants, but that they are starting, in some places, to be cheaper than “existing coal or gas.” And, a number of entities are predicting this will be true in most geographical locations by the mid-2020s, including in China and India. As Naam points out, this has revolutionary implications for our world. There are still intermittency problems to address (when the sun does not shine and the wind does not blow—this sounds like a Mel Brooke’s Blazing Saddles joke somehow), but there continues to be progress in storage issues and smarter grids. It is a definite possibility that most power will be generated by renewables within 15 years…and sometime during that timeframe it would make more sense to install solar rather than a backup generator at INTN’s headquarters. In the meantime, no earthquakes, wind storms or electromagnetic pulse attacks allowed.
The Empire Strikes Back
Okay, that’s the good news on clean energy. Now for the bad. First, despite the more competitive price of renewable energy, China’s current plans are to add another 290GW in coal-fired power over the next five years, according to a study by Global Energy Monitor, Greenpeace and the Sierra Club. And, even though the world will increasingly use renewables to generate energy, the world is also using more energy so we will need to generate more and more clean energy in the future. Case in point, last year world energy use increased 2.3 percent, which is twice the annual growth rate of previous years. The main culprits for increased energy use? China, India and the United States (though over the last twenty years, U.S. per capita energy use has remained flat—but it has rapidly increased in China and India). This is why, as analyst Noah Smith and others have pointed out, any Green New Deal, or any climate policy, must concentrate on how the U.S. can help the rest of the world, perhaps by developing and spreading new technologies or through other means.
At 6:30 pm our cat, Willow, expects to be fed and our other cat, Putter, expects to be taken outside for his afternoon jaunt. During his time patrolling the yard, Putter will purr, rub against our leg and give us a gaze of love, contentment and gratefulness. At 7:37 pm Pacific Daylight time on October 17, 2001, the Seattle Mariners last played in the playoffs, losing in heartbreaking fashion to the New York Yankees. As of 11 am today, the Seattle Mariners, in a self-professed “step back” year, are 7 and 1 and in first place in the American League. We arrived yesterday at the doctor’s office at precisely 10:15 am, per their request 15 minutes before our 10:30 am appointment. One and a half hours later, at 11:45 am, we still had not seen the doctor, despite informing them we were to give a speech at 12:30 pm at a location forty minutes away. When exiting the medical office’s parking garage, we were told we had to pay for parking because we had been there for longer than one and a half hours despite the fact it was the doctor, who we never did see, who kept us waiting. We were very late to the speech. As you can tell from this series of seemingly unconnected events, Putter is, of course, much better than the U.S. healthcare system, but perhaps much more distressingly, so too are the Seattle Mariners baseball team who, as we have noted, have caused little but torture to their fans the last 18 years. So even as we nominate Putter for Surgeon General and the Mariners as our insurance carrier we diagnose India’s popularity, put a stethoscope to Korea’s aging heart, and wonder at the natural medicine of the India-Pakistan dance off. It’s this week’s International Need to Know, diagnosing all the world’s ailments.
Without further ado, here’s what you need to know.
Is India a Cricket Player or a Nerd?
The world is not exactly like an American high school but there are certainly in-crowds and even mean girls. Pew Global recently conducted a survey testing India’s popularity. Pew polled six Asia-Pacific countries on whether they have a favorable or unfavorable view of India. As you see below, all view India more favorably than not, with Americans being least likely to hold a favorable view, which probably says more about America today than India. South Koreans look on India most favorably. We very much wish Pew had been able to conduct their survey in China. In addition to surveying Asia-Pacific countries, Pew also asked people from 26 countries “whether India is playing a larger role in the world today.”Indians themselves think so as you see in the second chart below. The French are most likely to think India is playing a larger role, Argentenians least likely. If India continues to grow faster economically than China, as it has in recent years, it will indeed play a larger role in the global campus. Upcoming elections in India are as important as any in the world this year. So I guess student government is more important than I thought.
Korea is Old
South Korea is an amazing success story. Fifty years ago its economy was the same size as many African countries. Today it is the 12th largest in the world and transitioned from an authoritarian government to a democratic one. But as Mick Jagger surely realizes as he prepares for heart valve surgery and as he crooned fifty years ago, “What a drag it is getting old.” Because Korea, like many other developed countries, and especially Japan, is a rapidly aging country due to a fertility rate that has plunged below one birth per woman. In fact, under current trends, Korea’s population will start shrinking in less than 10 years, in 2028. They will then join Japan as a country whose population is getting smaller. Already people over the age of 65 make up 14 percent of Korea’s population. The shrinking of the developed world (with China soon to be added to that list) is the third-most important trend of our world, one that will offer many challenges for economic growth and innovation.
Good God, It’s a Dance Off!
We are perhaps late to the great India-Pakistan Wagah Border Dance Off, but we worry you too did not know about this fantastic ritual. So we end the week, thanks to our favorite Twitter thread of 2019, presenting to you a ceremony that takes place each afternoon at the Wagah border between India and Pakistan, in the north of both countries. As the border prepares to close for the day, the Pakistani and Indian sides scream and shout…and then engage in a John Cleese-like march off, often to pop songs of the day. We feel that every border, every point of conflict, should be settled in this way. In fact, the next time we encounter conflict in our life, we intend to scream and lift our legs high in the air, whether to Cardi B, Marshmello or Ariana Grande, we’re not sure.