Archive for year: 2019

Clones vs. CRISPRs, Falsified Japanese Data and Distressing China Data

Life is not circular but perhaps it’s a Mobius strip. Take our relationship with Kareem Abdul-Jabbar, for example.*  As a young child, we very much admired him, reading a children’s biography of him when he played for the Milwaukee Bucks. But then when he forced his way to the Los Angeles Lakers (Lebron did not start such shenanigans–and btw Kareem is too often given short shrift for GOAT status), our distaste for all things Los Angeles sports related impelled us to turn on him. His style of play and his ability to get away with offensvie fouls also drove us to distraction. But then in recent years as we read his incisive essays, watched his thoughtful interviews and generally admired his intellectual pursuits, we have again become a huge admirer. His most recent essay on the new controversial movie, The Green Book, informed us and gave us a new way to look at a variety of issues. And, now that he is writing for the reboot of one of our favorite TV shows, Veronica Mars, we will defend him to the death. We wonder how Kareem’s journey would have trekked had he not been 7′ 4″ tall with a unique ability to place a ball in a basket via a sky hook. We guess it would have been just as fruitful if perhaps not as much in the spotlight. And similarly we wonder about cloned vs. CRISPR horses in Argentina, Japan’s faulty economic data and China’s distressing economic data. It’s this week’s International Need to Know, looking for international data and information in all the right places.

*Ignoring the fact that Kareem doesn’t even know we are in a relationship, the cad.

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

Can the Clones Beat the CRISPRs?

As much as we think we may understand the world, nary a day goes by that we don’t learn something startling. For example, we were completely unaware that cloned horses compete in polo and that these Xeroxed horses are winning matches. According to a 2016 article in Science Magazine, “Last Saturday, at a prestigious match in the Buenos Aires neighborhood of Palermo, polo player Adolfo Cambiaso rode six different horses to help his team win…What is noteworthy is that all six horses were clones of the same mare—they’re named Cuartetera 01 through 06…”And according to Next Big Future, Kheiron Biotech, who cloned those horses, is using “CRISPR gene editing to create super horses.” The CRISPR-generated horses will be born later this year. The use of such advanced biotechnology is further along than is commonly realized (by me, at least) with all the benefits and challenges that presents. No comment from He Jiankui.

A horse of a different color…every horse is the same

Japan’s Falsified Economic Data

We’re accustomed to Chinese government economic data being unreliable but were unaware that Japan may have similar problems, at least when it comes to wage data. According to the Japan Times, the Japanese Ministry of Health, Labor and Welfare for the last 15 years has been publishing data that undercounted wage levels. This led to the government’s failure “to pay over ¥50 billion in benefits to nearly 20 million people.” According to the article, “Under existing rules, the ministry must review all business establishments in the country with 500 or more employees. But in Tokyo it had collected data from only a third of the roughly 1,400 such establishments, leading the data to show nationwide wages that were lower than they actually were.” This mistake, of course, has not gone over well, with Prime Minister Abe’s popularity taking a hit and 80% of Japanese saying they’ve lost trust in the government’s economic data. Lack of trust. It’s the theme of the two thousand teens.

China SOEs vs Private Sector

In our continuing “what is really happening in China’s economy” series, we offer a few data points. According to Andrew Browne at Bloomberg, “…while China’s per capita GDP, measured in terms of purchasing-power, is similar to Brazil’s, its consumption per capita is comparable only to Nigeria’s. If Chinese consumed like Brazilians, their spending would double.” Elsewhere it is pointed out that state owned enterprises receive 50 percent of all credit even though they only account for just 20 percent of GDP. Private companies (although even many of these are tied to the government in some way) also account for 80 percent of employment. But, the economy is slowing down as we pointed out last week. Another sign: China’s imports from Korea dropped 18 percent. China is going to try to bolster its economy. In fact, this week they are offering incentives to companies that limit layoffs. But we are curious to see if they concentrate their efforts on helping SOEs, and if so, how effective that is, both short and long term.

Tony Soprano Mystery of China, Christopher Moltisanti Sadness of Europe and Meadow is Being Watched

All good things come to an end. But so too bad things, and even things that are neither good nor bad. It is the way of our world, perhaps all worlds if string theory is correct. Most days here in the world headquarters of INTN we drive on something called the Viaduct, a double story highway traveling along Seattle’s waterfront, offering spectacular views of Elliott Bay and the Olympic Mountains. Tomorrow the viaduct closes forever to be replaced by a tunnel. There are good reasons to do so but it is also true that it ends the democratization of spectacular views in Seattle. While stuck in traffic we see Hyundais, Mercedes, semi’s, garbage trucks, old pickups and every other type of vehicle reflecting every demographic with every driver and passenger stealing at least a glance at the beauty. On the non-water side, one can peer into offices, apartments and parking garages, which if not as beautiful, are sometimes more intriguing. Progress is good but like Seattle’s weather all changes are colored gray, bringing both benefits and losses. And so too is life and the world as we examine China’s Tony Soprano mystery, Europe’s Christopher Moltisanti sadness and the surveillance of China’s Meadow and Anthony Soprano. It’s this week’s International Need to Know, riding down the open highway of international information and data with no tunnel vision.

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

The Tony Soprano Mystery of China

Like the continuing question of whether Tony Soprano died or not (the answer contained in this link), there are many mysteries in our world. But we find it strange that people continue to question whether China’s economy is slowing no matter the official GDP figure. It has and is. But I think what people are really asking is if the era of high GDP growth is over in China. The answer is also yes. GDP growth comes from increased productivity and/or an increase in the working age population. China’s working age population is at best flat and some experts believe it is actually falling. Caixin Global reports that a paper released by the Chinese Academy of Social Sciences (CASS) “said that China’s working age population, defined as the number of people aged between 16 and 64, declined by 1.6 million in 2013, marking the beginning of a serious structural change to the population: a shrinking workforce.” China’s official productivity statistics still show strong growth of just over 6 percent though this is lower from earlier in the decade. As the great urban migration slows and its economy matures, China’s productivity increases are likely to continue to slow. Oh, and if you examine China compared to other Asian tigers, the end of rapid GDP growth is right on time as the chart below shows. But for China extreme bulls, don’t stop believing.

The Christopher Moltisanti Sadness of Europe

With so much attention on China these days, it’s easy to forget the European Union, the Christopher Moltisanti of world economies. The EU’s economy, after a few years of relative stability, is also facing problems. Germany, the largest and in the past strongest part of Europe’s economy, is slipping into recession, experiencing its second straight quarter of negative GDP growth. France’s economy is not so tasty at the moment and its politics worse with Macron’s approval numbers below 25 percent. Meanwhile, Italy appears to be on the brink of recession with negative growth in the third quarter and continued high unemployment. Who would have guessed that in the midst of a Ross and Rachel like relationship with the EU, that the U.K.’s economy might be the strongest of the lot. Perhaps most worrisome is that the EU is being out innovated by, well, just about everyone. Korea now registers more patents than Germany. In fact, one U.S. company—IBM—registers more patents than all of Germany. And China is catching up to the EU quickly. It’s not surprising that populism has found such fertile European ground for its gnarly, knotted roots.

Meadow and Anthony Soprano are Being Watched

Two weeks ago we wrote about Chinese government policies that could retard future innovation. The Chinese government laughs at our concerns by using technology to more closely monitor its students. According to the Telegraph, “Schools in southern China are forcing children to wear uniforms embedded with computer chips that track their movement and trigger an alarm if they skip class.” The chips are sewn into the school jackets of the students. So take off the jackets you might suggest. Try again since “facial-recognition scanners at school gates match the chips with the correct student, meaning that any who try to swap jackets in order to bunk off will be caught.” Apparently the chips also somehow monitor if the students fall asleep. All in all, it’s just another brick in the wall.

What is Going on in China’s Economy, Foxconn in India and World Pollution

As we entered 2019, we read about police called to a house where neighbors heard a baby screaming and a man yelling “Why Don’t You Die?” only for the police to find the arachnophobic man trying to kill a spider. And so we recalled our time battling a praying mantis. We had arrived back in Washington, D.C., where we then lived, after midnight, and let ourselves into the second floor apartment of the townhouse. We went to our bedroom to get some shut eye. But before we turned off the light we saw an extremely large praying mantis on the window sill making eyes at us. We slashed down at the large insect with a broom but only managed to knock it under the radiator. This would not stand. We needed proof of the beast’s death. So on our hands and knees we peered under the radiator but saw nothing. We looked from above down into the radiator. Still nothing. We tried hitting the radiator with our broom, hoping to flush it out. We strode the bedroom, broom in hand, searching for the treacherous mantodea. Until the phone rang. It was the tenant in the downstairs apartment, a formidable RICO lawyer for the Department of Justice, who fought organized crime. She wondered why we were making so much noise at one in the morning. We sensed this resilient esquire may not understand our epic battle with the praying mantis so we merely apologized and promised to keep quiet. We hung up, stared at the radiator, and slipped into our bed with one eye on a good night’s sleep and the other on the lookout. 2019 is sure to be full of many miscommunications but today we communicate clearly about China’s economy, big news in India and how we might utilize air pollution. It’s this week’s International Need to Know, welcoming a new year of international data, information and trends.

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

What is Going on with China’s Economy?

It is one of the four most important questions of 2019 (welcome new year, may your time on this planet be fruitful, fun and wise). Even as the Chinese economy continues to officially grow at 6.5 percent there is speculation that it is actually doing much worse. A variety of China watchers and economists opened up the hood of the apparently reliable China Volvo, examined its carburetor of underlying data and began to worry the engine block may be cracked. The China bear Christopher Balding points out in Bloomberg that consumption tax revenue has declined each of the last two months, 62 percent and 71 percent year over year. He also notes possible trouble coming down the pike, “With new loans outpacing new deposits by 13 percent in 2018, how the government recapitalizes a strained banking sector will be a major theme in the coming year.” Meanwhile, manufacturing is weakening with the manufacturing purchasing manager’s index (PMI), a gauge of factory work, dropping below 50, a sign of contraction. However, the non-manufacturing PMI rose to 53.8 so maybe this is all part of the long talked about transition from a manufacturing to service economy. Ah, but there are allegedly 69 million empty apartments in China. So, what’s happening in China? We don’t know but perhaps 2019 will reveal more than her retired cousin 2018.

Foxconn Begins Assembly in India

Speaking of China, although the trade war between China and the U.S. is not having large aggregate effects on the countries’ economies, we are seeing supply chains change which portend long-term effects to the world’s economy. One apparent such change are the reports that Foxconn, the large Taiwanese electronics manufacturing firm with huge assets in China, will start assembling iPhones for Apple in India later this year. [Ed note: this was written before Apple announced “subdued sales”–our correspondent may have more to say about that next week]. Apparently the new plant, which will be located in Tamil Nadu, will concentrate on high-end iPhone models. Whether these will be additional phones or Foxconn is moving some assembly from China is not clear. But if true, it’s another tangible sign of the world’s supply chain evolving in response to new geopolitical (and economic) realities.

World Air Pollution

Progress on the emission of climate changing pollutants has stagnated over the last year. And given the protestors in France, Americans voting down carbon taxes and other such recently expressed sentiments around the world, there does not seem to be much appetite for curbing the emissions. But perhaps if we frame the problem as air pollution there will be more progress. After all, air pollution is a visible and huge problem around the world. The World Health Organization reports, “nine out of ten people worldwide breathe polluted air.” Where is air pollution the worst? Yes, China has bad air pollution but it’s even worse in India, Pakistan and Egypt as you see in the map below. This air pollution has visible effects and, unlike climate change, impels people to complain and protest. Maybe the world uses this problem as the trojan horse to solve climate change emissions. We will all breathe easier if so.