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India's Foreign Minister told a conference that China's forward deployments at Galwan in violation of 1993 and 1996 agreements was an attempt to change the Line of Actual Control. China after years of peaceful development under previous administrations, during which China had gained from the trade relationship with the US and foreign investment from the US business community, sought  to put India at a disadvantage using its larger economy and technological assets obtained through American business assistance. This was done by making forward deployments right at the Indian border to change the Line of Actual Control in progressive steps. Jaishankar made it very clear. "It is hard work, very patient work, but we are very clear on one point, which is we will not allow any unilateral attempt by China to change the status quo or alter the LAC. I do not care how long it takes, how many rounds we do, how hard we have to negotiate- this is something we are very clear of." Going back to the period of independence with Nehru in 1947- China's occupation of Tibet was an occupation of a peaceful country that led to the situation that India faces today of a border stretching from east to west on the Himalayas that faces China. Faced with the partition and refugees from that partition India under Nehru was not in a position to respond effectively to that occupation. Does China gain anything from being at that border through the occupation of Tibet is a serious question? Why? Because it faces a Vedanta and Buddha driven culture and people with population of 1.8 billion stretching to the Indonesian islands that were and still are the fundamental source of  China's own Buddhist culture and tradition.  US business has allied with one country after another Japan, China and now India. The US has faced wars with Japan, and sometimes in a failed attempt to understand the aspirations of  Southern Asia allied with British ideas of the region which were based on the policies of British Empire to divide the region on religious and language, caste based barriers. US business also lacked a true perception of the importance of working class and families in the US as it sent factories and surrendered its own manufacturing to China. The world is now changing following the pandemic and new supply chains and manufacturing policies of the US are being structured. It is in this context where India's pace of economic growth and technological advancement will change its capabilities and its capacity to meet the aspirations of 1.8 billion people in Asia with a common tradition and culture. It is in this context that one can ask the question does China have anything to gain from the occupation of Tibet and being on the border with a country and cultural tradition of 1.8 billion people stretching across South and South east Asia?  ...

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DJT was asked if China's celebration of Victory Day with Russia recently in Tianjin had any message for the US. He said he did not see it that way, that US has good relations with China. In this context the Smithsonian Museum exhibit on military history of the US shows a real aspect of the World War II in loss of life- Russia 17 million dead, China 11 million dead, Germany 10 million dead, Poland 5 million dead, Japan 2.5 million dead, US 1 million dead, UK 800,000 dead. Russian and Chinese losses of 28 million dead are 15 times the losses of US and UK combined of 1.8 million dead. With the scale of losses of such magnitude Victory Day celebrations in Tianjin can be seen in the context of this shared history and major losses overcome as much of the world knows with US help. A sobering view is that the colonial powers Imperial Japanese Army, French and British policies caused famines in World War II leading to 6-7 million deaths in India, Indonesia and Vietnam which is 4 times the 1.7 million US and UK deaths. Views of China in the Context of the Ukraine War and Russia are very different in US than in France and Europe and are widening in differences in 2025. In the US as in this report in the WSJ China is seen as a trade partner and competitor with certain issues, many of China's university leaders and experts question the prospect of a long term alliance with Russia, and for DJT Russia is a nuclear power with which US seeks good relations and a political settlement of the Ukraine War. In France as shown in the article in Le Monde adjacent to this the European attitudes towards Russia throughout European history since 1700 of regional rivalry between France and Russia, Germany and Russia since 1900, Britain and Russia since 1700. FDR led the alliance with Russia against the Nazis and Imperial Japanese in the 1930's and 1940's. Herbert Hoover led the effort to bring relief supplies and aid to Russian in the period of the Civil War after the Bolshevik Revolution in 1917. With China America kept the government in China functioning as it retreated from the invasion by the Imperial Japanese Army in the 1930's and 1940's and the only hope with Gen. Joe Stilwell in China alongside Chinese leaders. ...

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Zeit Online takes a look at German chancellor Angela Merkel's statement made in a beer tent in the Muich suburb of Trudering- "The times in which we can completely rely on others are somewhat over, as I have experienced in the past few days." Zeit Online says the words "ein Stuck" in German were meant to say a bit or somewhat, but the essence of the statement that the depending on the trans-Atlantic alliance was now over comes right through.

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Foley cites a recent survey by the Zhejiang Academy of Social Sciences shown in the South China Morning Post. This survey shows 96% of respondents "resenting the rich." In 2007, the Asian Development Bank estimated the Gini coefficient for China at 0.47%, up from 0.28% in 1983, same as Sweden, Japan and Germany. Now its closer to Argentina and Mexico. This is happening as less than 70% of graduates have jobs. And a peculiar situation is occurring in China where the retail prices are not increasing but prices of real estate and of commodities like iron ore and oil are high. There is too much liquidity with $1.5 trillion of governmet manadated bank lending and inflation is rising creating a speculative bubble in stock and real estate. And there are protectionist pressures with the USA sensing that cheap imports subsidized by artificially low currency in China is worsening America's trade deficit.

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Labor Department reports U.S. created 209,000 jobs in July 2014. The unemployment rate goes up slightly to 6.2%. Wages went up only by a penny and remain only 2% higher than a year ago. Retail was up by 27,000 jobs, manufacturing by 28,000 in July. Economists say the steep drop in the unemployment rate to 6.2% does not reflect the true conditions in the labor market, as the labor force participation rate is at 62.9%. One economist called this disturbing as some of the youngest workers are dropping out of the labor force. The Alliance for American Manufacuring pointed out that the U.S. manufacturing sector has recovered only about 30% of jobs lost during the recession following the 2009 financial crisis. It said the the lack of investment in infrastructure, high trade deficits and currency manipulation by China and Japan, remain obstacles for American manufacturing's resurgence.

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The port of Hamada in Shimane perfecture Japan is seeing a jump in foreign trade with Russia. Its on the sleepy side of the Sea of Japan on the opposite side from where major cities like Nagoya and Tokyo are located. Its become a hub for trade with the Far East. Hokkaido Japn's northern island is seeing more Russian tourists. Japanese car companies can cut the time it takes to reach their plants in St Petersburg by shipping from Japan to the Russian Far East and using rail across the country.

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Much of the information Friedman says comes from Ruchir Sharma could be seen through simple observation. By the time it is written about so much has already happened. For example Tech firms crowding out innovative new firms starting from scratch is happening since 2000, from the Clinton, Bush and Obama administrations. By the time the concept makes it into the economics textbooks many years later it is obsolete. In economics textbooks of the eighties crowding out referred to governments crowding out private firms in the competition for capital. Concepts of comparitive advantage in economics textbooks were similarly obsolete when Japanese and Chinese competition in the last three decades brought into play a very different model of competition of subsidized private and state run companies focussed on dominating key industries that never made it into textbook economics and theories of experts. Comparitive advantage theory in textbooks were too simplistic not able to account for real life situations in which a determined national competitor could move up the ladder every few years in sophistication and technology to compete in products at many levels. The old textbooks simply said Portugal would make wine because it had some advantages and America with its advantages in steel production would make steel. This kind of theory put many people to sleep as other nations took over American markets- first steel, then electronics, then telecom, and then renewable energy. To protect American workers Robert Lighthizer and other American negotiators of trade with China, Japan, South Korea, used their own head and observation of what was happening. This was a better guide to the best response to protect American workers. Doing what makes sense, doing what works for final delivery point to the intended beneficiary, the American worker, or European worker, or Indian worker, provides a better way to get things done.   ...

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Feldstein wants to see a stronger dollar, that is less inflation eroding the value or purchasing power of the dollar at home. Abroad he wants to see a weaker dollar in relation to Europe, Japan and Canada where about half of US imports originate. And a weaker dollar in relation to lower wage Asian countries to improve America's trade balance. Better to do this now than to wait a few years when the adjustments needed would be greater. America needs to export more and import less to improve the trade balance. A competitive dollar in relation to trading partners in Europe and Asia would provide the improvement in the trade balance that the U.S. needs for keeping economic growth. With the risks to the economy from declining housing prices improving the trade balance becomes important. During the 1985-1988 period the dollar declined in value significantly, falling 37%, but the inflation rate averaged 3.1%,says Feldstein. This is what he means by having astrong dollar at home, which is to say not eroding its purchasing value, while at the same time increasing exports and reducing imports. During this period merchandise exports increased by 40% while imports increased at half that pace. A repeat of that experience is possible and necessary to maintain growth, according to Feldstein. See the link to McKinnon, at Stanford, The Yuan and the Greenback, WSJ, August 29, 2006, which cautions against anything but a very gradual and carefully managed appreciation of the yuan, giving importance to inflation and interest rate differentials between the US and China. One point to note narrowing of interest rate differentials between the US and China is seen as backdrop for dollar weakening on exchange rate basis. McKinnon appears to consider a smaller interest rate differential as a cue for an even lower appreciation of the yuan, see his example of 2% inflation in the US and 3% interest rates. Interestingly the two approaches may complement each other. Offering a perspective of China maintaining its growth and not risking deflation or slowdown, and of the US maintaining its growth and not risking a slowdown from the housing market collapse, by strong domestic investment and exports. How to keep both economies going may be the policymakers challenge for strong global economic growth....

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Over 50% of respondents in the 2012 Gallup poll view Japan as the U.S.'s most important partner in Asia, compared to 39% for China. The shift in how Americans view China is pronounced in the last 3 years. In 2010 the two countries were tied 44%-44%. In 2011 China was 39% to Japan's 31%. In 2011 India, S. Korea and Australia were added to the poll as partners. Among "opinion leaders" such as business executives, government officials, academics and journalists, China gets 54% to Japan's 40%. The poll is conducted by Gallup for the Ministry of Foreign Affairs of Japan since the 1960's. The analysis shows that respondents picked China for economic reasons not for political reasons. A survey of the general population shows 84% view Japan as a dependable ally, up 2% froom 2011, with similiar trend for opinion leaders.

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Strong growth in Europe and Japan and in the rest of Asia plus the weaker dollar which has energized exports will help the US to handle the housing crisis. Asian countries will be less affected than before because of a surging trade between Asia and Europe, Europe just passed the US as China's leading trade partner this year, as well as trade between Asian countries which is also surging. Still if consumer spending is impacted heavily it will affect big export oriented economies in Asia to some extent. Its interesting how the mortgage securities that were passed on from the US to Europe, show up also in the holdings of the likes of Mizuho bank in Japan.

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Issues of inequality and lack of upward mobility came up in the last presidential election. A Federal Reserve Survey for 2018 shows the financial fragility facing many Americans. One quarter of working individuals say they do not have any retirement savings. About 17% of households say they cannot pay all their monthly bills. About 40% of Americans say they do not have enough cash to cover an unexpected $400 expense, and would have to rely on credit cards balances or loans from family to make the payment. This survey by the Federal Reserve is done each year since 2013, after the financial crisis hit in 2009 it became more important. Still Americans are showing unusual resilience and upbeat spirit. About 75% say they were doing Ok or living comfortably up from 63% in 2013. And two out of three described lovcal economic conditions as "good" or "excellent."  This shows that the financial vulnerability resulting in the loss of jobs in the U.S. both from jobs lost in manufacturing going overseas,  jobs lost through automation or industrial decline in some sectors, and the hit from job loss during the financial crisis and its aftermath years of 2009-2014 is still leaving a lot of families financially vulnerable. Low interest rates and stagnant wages also meant savings growth for ordinary Americans was less than it should be in a healthy economy without booms and busts. This is also the environment in which the U.S. is tackling challenges to its technological leadership in 5G following a decline in sectors such as autos and electronics, with job losses to Japan and South Korea. New trade agreements are focussed on correcting the imbalance, first with Mexico, South Korea, and now with China. Focus is also on fair wages and labour overseas to raise American wages in key sectors. The damage done by a low interest rate to savings of ordinary Americans outside the stock markets is also being seen as a downside in the boom bust cycle, that includes loss of jobs for vulnerable American families. The rise of the tech sectors has diluted the traditional protections of working class Americans with the shifts and realignment of the major parties. ...

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What a change DJT's first 100 Days and actions on immigration and tariffs , Ukraine and Russia, have made in China's and World relations in Asia, and in Europe - all for the better, significantly better relations worldwide.  China has worked out a peace settlement in Ladakh frontier with India. It has come together in Tokyo with Japanese prime minister Ishiba and China's Foreign Minister Wang Yi holding hands, and South Korea joining, all three nations vowing to remember history and work together. In Europe Russia is being brought back into the community of nations for big power cooperation with the US after 3 years of war in Ukraine. And Germany has removed its constitutional brake on spending that frees up $1 trillion in funding for infrastructure to replace much of its rail and other infrastructure built in 1900. One would not know this reading the NYT on democracy or the WSJ on tariffs or the Washington Post on assault on federal workforce, or the Atlantic, Politico, DW.com or FR24, Der Spiegel, nor Le Monde, much of the world media slanted on way or another. One does not hear about military exercises so often as the world realizes that so called large economies China, Germany, Japan and India all depend on American goodwill and willingness to give rather than take for most of the post war period since 1950. For the last 6 years in the latter half of the Trump administration and the 4 years of the Biden administration during the pandemic relations between China and the US deteriorated and China first retreated into its own then opened up a bit. The initial idea that it could manage the DJT trade actions evaporated as Biden continued the DJT first round of tariffs. Now Navarro, Lighhizer, and his deputy Jamieson are all back advising DJT for anew round of reciprocal tariffs and tariffs on Canada, Mexico and China for not stopping fentanyl flows.  In 2022 in eastern Ladakh China's PLA had a big standoff with Indian forces in eastern Ladakh at Galwan and Pangong Lake. The Quad was active with Australia India and the US in Indo Pacific and China conducted military exercises close to Taiwan.      ...

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This editorial in the WSJ argues against Trade Representative Lighthizer's move to increase the percentage of North American content in a vehicle so that it creates more jobs. Currently Nafta rules require 62.5% of a duty free vehicle be made in North America. Lighthizer wants to lower the content coming from Asia or Europe. This is not favored by Canada and Mexico and it makes Mexico less competitive than it is now.

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Extraordinary pictures taken by a photographer from Edinburgh who left Britain for Singapore and Far East in 1862 at the age of 25 years. He had worked as an apprentice with an optical manufacturer and learned photography. What is astounding is that this was the time when Japan was opening up to the ideas and technology from Europe with the Meiji restoration around 1871, China in transition under the Manchu dynasty which was to collapse in 1912 ending the monarchy. A major rebellion happened with the Taiping rebellion in southern China in 1854 that lasted till 1862. The Taiping rebellion was against the Manchu dynasty as a foreign dynasty imposed on Han people in China, and the result of famines, difficult conditions for peasants, opium addiction, poor economic prospects for a large population. Mao considered the Taiping rebellion as an unfinished revolution which the Communists continued this time against other foreign rulers the Japanese and European colonies in China,  and the Nationalist rule of Chinag-kai-Shek with corruption and wide disparities of incomes. John Thomson took pictures of China in the 1870's, now in the Wellcome collection and displayed in an exhibition at Heriot Watt University in Britain. Women and children in Guangdong, Canton and Beijing are shown in these pictures of China. Between 1872 and 1942 is a period of only 70 years with tumultuous events and huge changes in China. By 1944-1949 Communists controlled vast parts of China with Mao's forming of the People's Republic of China for the Chinese people, free of foreign influence, corruption, and opium trade of the British. And again 40 years later by 1989 China using a market economy to change China into a modern nation as advanced as Japan, Europe and America. For India the new People's Republic of China under Mao also brought the PLA army to the borders of India. In 1950 China invaded Tibet at Chamdo, and in 1951 annexed the country under a 15 Point Agreement making it a region of China. With that invasion India and China face each other for the first time in the Himalayas across a border stretching east to west for thousands of miles. A war in 1962 was followed by incursions across the border in 2020 in the Ladakh region. Both sides build infrastructure on either side of the Line of Control that stretches for 3500 kilometres. Most of the Indian people remain ignorant of the changes happening in China from the Manchus to the Communists. Most Chinese have little knowledge of the changes happening in India from British period to the post independence period under Jawaharlal Nehru and Indira Gandhi , and further to the changes for modernization happening under Mr. Modi. Large populations of over 1 billion people facing each other but knowing little about each other in one of the strange situations in the world, and armies building infrastructure on either side of the line of control. ...

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Comments on X that cause difficulty for DJT chief of staff Susie Wiles to keep a clear narrative and the loss in the Wisconsin SC election are leading to a sense that Elon Musk could be a political liability. DJT focus is on the midterms and keeping the majority in the House, which is also why Elise Stefanik was asked to not accept the job of UN Representative and remain in the US Congress. The immediate focus is on tackling the Tariffs Liberation Day action April 2, 2025 so that followup negotiations with about 50 countries including major ones with Japan, Taiwan, Israel, Britain followed by European Union, South Korea and other nations. This would reassure markets as country after country is developing a new trade relationship that respects US manufacturing goals. China could then be tackled as a special case with America limited to loss of $146 billion in energy and grain sales which would be diverted to Europe's energy needs and farmers could be given a $50-100 billion support package. China would then have to find a way to preserve its $1 trillion surplus without the American market  which would require it to find other markets, and create a domestic market, if it chose not to negotiate and accept American manufacturing goals. ...

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S. Korea and the U.S. propose limiting trade imbalances to 4% of each country's GDP by 2015. S. Korea is the host of the current G-20 meeting. Germany and Japan oppose this move, arguing that their governments cannot engineer such outcomes, as it was determined by economic activity in the private sector. Japan's representative, Finance Minister Yoshihiko Noda, said that while he was dubious about the idea of setting strict numerical goals, it would be acceptable to use them as reference numbers. Germany has traditionally opposed the idea. Germany wants to be counted as part of the European Union, rather than as a single nation, in any such reference goal. China has not commented on the target. S. Korea has presented the idea as a way to use more than currency exchange rates to achieve a global rebalancing. And People's Bank of China Deputy Gov. Yi Gang said Oct 10, that China is planning policies that could result in its surplus falling below 4% of GDP in 3 to 5 years, from about 5.8% in 2009....

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Compromise reached at the October 2010 G-20 meeting in S. Korea to reduce trade imbalances, and for countries with current account surplus exceeding 4% of GDP (China 4.7% and Germany 6.1%) to bring these balances down by 2015. Countries with large current account deficits, Turkey 5.2% and South Africa 4.3%, were expected to bring their deficits down and increase national savings. The US is at 3.2%. The US proposal for a target was accepted by Japan as long as it was not a fixed target but a reference point. Germany was opposed, saying it was a return to planned economy thinking. China did not comment on the issue. Canada, Australia and the UK supported the US position. The compromise was an effort to continue pressure on China to redirect its policies away from exports to increasing domestic consumption, while still refraining from a fixed target. It also takes some of the pressure off a fast track currency rebalancing, with China expected to increase the value of the yuan, but given more flexibility than the rhetoric would suggest....

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Risks to China's banking system from the bond market in China. China's bond market has grown rapidly to 25.5 trillion yuan or $4.1 trillion yuan, especialy in the period following the stimulus. But it is not similiar to bond markets in developed countries, the U.S., Japan and France. It has a patchwork of regulators, is closed to foreign investors, and does not offer protections to investors. It also lacks an effective ratings system. Most bonds are held and traded by the banks, which concentrates the risks in the banking system. In developed countries the risks are spread out among investors. Bond markets offer the advantage of reducing dependence on banks for lending but with banks holding most of the bonds in China, including that of local governments, the risks if bond issuers default are concentrated in the banking system.

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There are similarities in the Republican and Democratic party platforms in 2016. One area of agreement is in the reinstatement of Glass Steagall Act. That legislation made in the Depression period to separate commercial banking from investment banking was changed  when president Clinton made changes in a deal with Senators Phil Gramm and Jim Leach in 1999. The too big to fail problems of banks and the problems of investment banks during the 2008 financial crisis are attributed to the lack of Glass Steagall protections for financial stability and safety. The result is that in the post 2016 environment banks can expect a tougher regulatory environment. Another are is in trade where both parties are expected to take tougher positions to protect U.S. interests. The Republican platform calls for "better negotiated trade agreemets that put America first."

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A senior Indian diplomat, and former ambassador to China, Gautam Bambawale, says China's action in the June 15 clash at Galwan Valley was the worst violence since 1967. He sees it as a premeditated and well thought out action. His view is that India's relations with China will deteriorate further. That this was an action by the PLA to take territory to what it sees as the LAC or border. For small tactical gains he says "China has strategically lost India." This will impact trade and other relations going forward in his view.  Nothing of this sort was expected says Bambawale. All the agreements put in place since 1993, everything for tranquillity at the border, all the mechanisms, have now collapsed. Bambawale has provided a very lucid and clear account of the relations and the border issues. He goes on to say that Chinese observers have given reasons for the Galwan clash with PLA- that India should stay away from the US and other democracies such as the European Union. Some reflection shows that the opposite has happened. And further reflection would show that the same situation was repeated in the period of transfer from British Empire to Republican India, and from Nationalist China to Communist China from the period 1947 onwards. Different perceptions and different leaderships that gave the perception of gaps between the two countries. In the 1950's after the Korean War Chinese perceptions about India could have led to the incursions that brought China to the borders of India in 1950, similar perceptions of gaps in development and capabilities could have led to the conflict in 1962. From 1993 peace prevailed with India after China entered the World Trade Organization under president Clinton in 2001 following a 10 year effort. Because the focus in China was on development after a series of crises, internal sense of a widening technological gap with the US and Europe, disagreements with the Soviet Union, and the experiments with market economy, internal struggles for democracy. With that period coming to a close as the new trading relationship has led to working class losses in factory jobs in the US, China is faced with protecting its economy as it and the US look at changing supply channels and how it affects both countries. It is a critical time for China as it faces governments in US, France, UK and Canada determined to protect their own interests in manufacturing jobs, renewing supply channels, and in technological advancement. The response is similar to that in 1962 when seen from the Communist party perspective as a gap has opened up with India following China's progress in the 30 year trading relationship with the US and Europe. That gap and the difficult situation China faces today with the US and EU in trade and technology has brought forward the Galwan clash and future clashes in Ladakh and at the border.  As Mr. Jaishnkar, India's Minister of External Affairs as well as former ambassador to China,  has pointed out this is a very different aspirational India that China faces. The same kind of grassroots development that happened in China and rapid pooling of capital, human resources and technology inputs for development is taking place in India, and will continue for the next two decades, quickly bridging any gaps in modernization between the two countries. The difference between a youthful population in India and aging population in China and Japan, is likely to add another dimension. China's Buddhist culture that came from India is not likely to go away, more likely is that China will see a revival of Buddhist ideas of wellness and living more as culture than religion. The experience with British colonialism that prevailed both in India and China, and which from its base in India caused so much grief to China during the Opium wars will recede from memory. Extending borders from historical memory of Japanese incursions into border areas in Manchuria could have led leaders after 1950 in China to extend borders to remote areas in the Arunachal region of India and communist theory books may have created the perception of defensive moves. In the context of an aspirational India similar to China, and no real intention on the part of India to extend itself in any way to China's provinces in Sichuan, this extending of borders as a defensive move will be seen as stemming from memories of Japanese incursions in the 1930's, but simply costly and not relevant in any way to China's own aspirational development and progress. ...

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WTO Trade talks and the negotiations between EU, US, Brazil, India, China, Japan, and Canada continue with difficulties in getting India's agreement. Mr Nath of India has come to speak for all the world's poorest countries in Africa and Asia and also the growing emerging economies like S. Korea and India. THe EU and the USA are keen on access to India's growing market. And India and Brazil want to see concessions from the EU and the USA that will help the poorer countries especially promises made at the Doha round that were to ease global poverty that have not been fulfilled. With the difficult economic situation in the EU and the USA there is less give on their side and the Indians and the Brazilians are insistent.

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The G-20 summit in April had as its achievement the $1 trillion that would go to aid for emerging countries and other countries in need. But this number may not be what it appears to be and should be seen with care. Prof. Eswar Prasad, former division chief for China at the IMF, and now Professor at Cornell University, says there is double counting in the numbers, and a lot of the money has not yet been committed. With trade financing only a quarter of the $250 billion is fresh cash, the rest is trade financing that is rolled over every 6 months. For the Special Drawing Rights issuance of $250 billion, a kind of virutal currency that is set by a basket of real currencies like the dollar and the euro, the IMF will issue SDR's to all 185 of its members. This is not cash but a form of credit, against which a country can borrow. The Obama administration that came up with this idea thinks it will create $15 to $20 billion in additional credit for the poorest countries. For this to happen the US has to lend out its special drawing rights to poor countries, and this requires congressional approval. Of the $500 billion in direct commitments, Dr Prasad says less than half has been commited by Japan, the EU, Canada and Norway. China says it will put in $40 billion probably by buying bonds issued by the IMF. The US contribution of $100 billion has to be authorized by Congress. Even with the US contribution Prasad sees a shortfall of $145 billion of the $500 billion in donations. And the Saudis, the Indians will require a bigger say in the IMF to contribute some of this. ...