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Large investments in infrastructure by president Biden with bipartisan support in Congress is having positive effects. New technologies and rising pay in the trades is leading to many young people joining it instead of the college route as the US rebuilds itself from scratch in the third decade of the 21st century.

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China follows Japan in the proportion of its elderly population at a similar juncture in its development. A paper from Japan's Research Institute of Economy, Trade and Industry pointed out that the proportion of child and elderly populations in China as of 2020 was similar to Japan's in 1990. China reached that inflection point faster with fertility rate falling from 2.74 to 1.28 in a 4 decade period, while Japan's fell from 1.75 to 1.29. That paper also shows India's proportion of child and elderly population in 2020 was similar to China's in 1980 when its economic boom took off. The overconcentration of supply chain in China is now being addressed by business in US and Europe after the pandemic showed its weakness. Prime minister Modi says this overconcentration has hurt even and balanced development worldwide.

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The threat of climate change is becoming real in China with drought and heat waves. The impact on agriculture is feared as it may affect the autumn crop. For the first time the awareness of climate change is taking on a new urgency, with state media reporting on it with new emphasis. China having to import grain would put pressure on world supplies of foodgrains. It is therefore imperative that China also join in support of keeping Black Sea ports of Ukraine free and able to supply Egypt and North Africa to reduce pressure on world foodgrain markets.  This could also help shorten the war with a return to work on  important goals of climate change, renewing homes and industry for conversion to renewable energy,  restructuring trade so that there is no extreme dependence, and social security, healthcare needs of the Chinese people.

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China's total public debt was 95% of GDP in 2022, Japan's was 62% in 1991. It's population aging faster than Japan's with population declining in 2022, Japan's declining in 2008 twenty years after its bubble burst. China's per capita income at $12,850 in 2022, compared to Japan's at $29,000 in 1991. China is facing more difficult headwinds than Japan in many ways. There is also higher tension in trade relations with US and EU limiting export growth. There is also the policy stance of the Communist Party that sees rural areas left behind with about 35% people in rural areas and Xi is slowing growth to reduce disparities and housing construction led speculative growth. In Japan urbanization was 77% in 1991, compared to 65% in China today. 

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Greg Ip says inflation will be moderate about 2.3% instead of 2% as tariffs will probably be use as a negotiating method and tariffs at 20% with 60% tariff as a negotiating tactic by Trump.  Greg Ip says as important than inflation and GDP are the workers displaced and with loss of income through surge in imports and loss of manufacturing in the US. 

Robert Lighthizer, who was trade ambassador in Trump’s first term and is likely to return to manage trade says-

“Globalization produces disruption, dislocation, and destruction. Conservatives by contrast seek to defend traditional values and institutions, preserve the social fabric, and ensure the conditions for families and communities to flourish.”

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China will continue to keep its $1.19 trillion dollar U.S. bond holdings as it is a liquid and secure place for its foreign exchange reserves, say sources close to SAFE which handles the investments. China has over $3 trillion in foreign exchange reserves.

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Economists raised projections for GDP growth for U.S. to 3%, up from 2.9% last month and 2.4% last year, according to the WSJ survey of private The question now is whether this can be sustained. Economists in the survey predict a slowdown or a recession as the effects of the tax cut fade and the repercussions of trade conflicts and tariffs are felt. The tax cuts are seen as a temporary stimulus with effects fading much as that in the first year of the Obama administration following stimulus spending.

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Lori Chavez handles questions from Senators on the Pro Act and trade unions during a nomination hearing. Senator Rand Paul asks for a commitment to letting states that have pro work state laws to be able to keep these laws for labor practices.

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With the end of the yen carry trade and the flight to safety the surges 10% last week.

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With the change in U.S. position on climate change, carbon emissions, and the move to raise tariffs on China's exports to the U.S. China faces a new dimension in its global relationships. Against this background China is shifting to a long term view of its relationship with India. China's new foreign policy leaders after the recent party Congress, vice president Wang Qishan and Foreign Minister Wang Yi, now see the need for new partners in a multipolar global world for the long term as China and India countries with large populations and a need for stable world trade share common interests. Wang steers the Central Foreign Affairs Commission with Yang Jiechi as director. China now sees " a lot of shared interests, concerns and positions," in the words of China's Representative Lu, in the long term issues of globalisation, urbanization, pollution, and concern for achieving stable development with high growth rates.  China now takes the long view looking back at the unprecedented change of the last 100 years, as it maps out its plans for the future. The U.S. has challenged the ideas in the blueprint for development of "Made in China 2025," particularly as it relates to western transfer of technology to China. This has created a new situation for which China is still looking for answers, and ways to come up with new strategies for development without the nearly unrestricted access to western technology of the last 2 decades.  Shared positions on world trade with India and India's close relations with the U.S. add credibility in China's  negotiating positions with the U.S.                  ...

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Greg Ip points out that the stronger dollar in 2018 is creating serious problems for Argentina, and will have an effect on Turkey, Indonesia and other developing countries. Dollarization hurts because it increases debt as debt servicing becomes costlier with dollar denominated debt and imports denominated in dollars become costlier. The dollar has increased in importance in the global economy. This is why the economic growth has suffered in developing countries in 2018. It is also why president Trump believes he can cut off Iran from the U.S. banking system to increase chance of new negotiations to fix flaws in the Iran nuclear deal, says Ip.   Argentina has seen internal problems compounded by the rising dollar causing the peso to drop by 17% so far in 2018. 88% of Argentina's imports are denominated in dollars. A rising dollar means it costs more in pesos for imports. Argentina's different levels of government have $98 billion in dollar denominated debt, and private sector has an additional $68 billion, the total being a third of its GDP. A decline in the peso means this is harder to pay off. About 40% of world trade, according to Harvard economist Gita Gopinath, is invoiced in U.S. dollars, four times U.S. share of world trade, and developing countries together owe $2 trillion in dollar denominated debt according to BIS. This makes it harder for developing countries such as Indonesia, Turkey, India, Argentina, Brazil, as they now face rising oil prices in combination with a rising dollar. In Argentina a poor crop for soyabeans and other agricultural exports in 2018 creates additional woes.   ...

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WSJ reports DJT action on tariffs and Fed's new forecast of slight uptick in 2025 inflation to 2.7% from 2.5%, on growth slowing to 1.7% in 2025. Fed's head Powell says- “That’s really due to the tariffs coming in,” Slowing inflation  “is probably delayed for the time being.” The tariff action is based on reciprocal tariffs, "we charge them what they charge us," and is based on the principle of fairness in world trade that was carelessly sacrificed by previous US administrations under Clinton, Bush and Obama. DJT and Trade Representative Lighthizer highlighted the issue of unfair trade and created a consensus around this issue for creating a level playing field with American action on tariffs that was accepted by the Biden led Democratic adminstration to rebuild American Manufacturing. What happened under previous presidents was ignominous for America and these administrations as they allowed the loss of whole industries first in lower technologies and then in advanced technologies as foreign countries used hidden subsidies. America's textbook economists at Ivy League universities and previous administrations used economic theory that had little connection with reality to allow shipping manufacturing overseas, destroying communities and towns with loss of jobs and public services across the US. ...

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 China exports to the US $438 billion vs $143 billion the US sends to China - the US deficit with China 2024 equals $295 billion. This is the fact that the media continues to ignore. Behind this is the gutting of the industrial base of the US shipped offshore to China since 2000 by American companies. 5 million jobs lost and tens of thousands of factories destroying the backbone of the economy, America's middle class.  Much of the US exports are oil and gas which can be shipped to Europe, India and other places. The soyabeans and grain from America's farmers is the other part of exports of $13 billion. The US can find other markets for the farm products including India under a trade agreement, and farmers can be supported with agricultural subsidies. It only makes sense to rebuild America's industrial base and pull back from an unfair trade arrangement that can only be the result of serious neglect of their responsibilities of previous administrations before DJT in 2016. The piecemeal efforts 2016-2024 have not worked to rebuild America's middle class,  recover jobs and factories, as a result a new bolder approach is needed in 2025 to rewrite the rules for world trade for an even playing field where everyone is treated with fairness. ...

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Walt Gillette started at Boeing in 1964. He has been behind major advances in most of Boeing's planes- from the Dreamliner 787, 747, 737, 767. Gillette was the inspiration behind the use of twin engines for long haul flights, with the 767 wide body twin engine aircraft. He also helped solve problems related to putting powerful engines on the wings of a 737, using analytical methods called (CFD) Computational Fluid Dynamics. The studies led to using five parameters in a new combination that remains a trade secret at Boeing. The Dreamliner is his greatest achievement. What amazes Gillette is the huge advances in air travel, with about 600,000 people travelling around the world in Boeing planes on a single day. "I wanted to work on something that benefits the world," says Gillette.

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Reforms planned by the administration of prime minister, Naoto Kan. Plans to raise the consumption tax, to make changes to social security, and to commit Japan to join the Trans Pacific Partnership. Japan's business community supports the plan to join the free trade community called the Trans Pacific Partnership. This group consists of USA, Australia, New Zealand, Singapore, Malaysia, Peru, Chile. South Korea has signed free trade agreements with the USA and the EU, and Japanese business does not want to be left behind.

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How does one ensure social justice and fairness in a society, US society, where two thirds of kids in the 4th grade can't read with proficiency? A section of society is handicapped for life when it can't read and is excluded from its benefits and discourse. This weakens democracy. It also means the quality of manpower in manufacturing and other essential occupations suffers, putting the country at a disadvantage in competition with other nations.

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The effects of the pandemic on education are seen in the drop in scores for 4th and 8th graders in the US for math and reading. In math at 8th grade cores fell from 34% being proficient in 2019 to 26% in 2022. For 4th graders from 41% being proficient to in 2019 to 36% in 2022. Reading scores declined in more than half the states in a downward trend and only about a third of students were proficient.

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Petrilli of the Fordham Institute calls it a national emergency. Former NY Mayor calls it "a five alarm fire with no elected officials responding," others call it a long education Covid. Two thirds of 4th graders cannot pass the ACT reading comprehension test in 2022 is a reflection of the ability to read and write at all grade levels. A separate look at Readers Letters in NYT on the Petrilli article is also shown on this page.

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Oil prices in the U.S. drop to $55 a barrel on the New York Mercantile Exchange, and $65 a barrel for Brent crude price. Earlier expectation of the impact of reimposed sanctions on Iranian oil shrinking global oil supplies have been reversed with increased production from Saudi Arabia, Russia and the U.S.

Another new development that caused this reversal in sentiment is that the Trump administration granted waivers to some buyers of Iranian crude oil. The U.S. trade dispute with China has also added to this with lower growth forecasts. Unlike in previous years OPEC or Saudi Arabia cannot by itself shrink global supplies with production cuts. The U.S. and Russian output also plays a significant part.

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This report in the Hindusthan Times compares the relatively few comments from India's Ministry of External Affairs on the Dokalam standoff between India and China, and the frequent and patriotic comments from the state media in China. India took a firm position on the sensitive border area road construction by China, because the Doklam plateau is the narrow area in the mountains that allows entry to India's northern plains. India and China announced disengagement following the incident. This report points out that the resolution happened on the eve of a BRICS meeting in China. Indian prime minister Modi's absence from the BRIC's meeting would have been an embarrassment for China, says the Hindusthan Times. The resolution would have happened after both sides realized that the border issue escalation was not in the interest of China and India as both sides face more important issues- India in the focus on modernization and China on sustaining growth and maintaining trade relations with the U.S. Trump administration at a time when the debt to GDP ratios exceed by some estimates 280% and trade has become a sensitive issue in America's midwestern states. ...

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This WSJ editorial says Donald Trump's first foreign policy speech is full of contradictions. Mr. Trump says foreign policy should be "unpredictable" yet this also means says the WSJ, that the country should trust his instincts, and everybody else a loser- "I'm the only one-believe me, I know them all- I'm the only one who knows how to fix it." It says the speech gets an "Incomplete" at Trump University. It criticizes Obama, but in failing to stand up for peace through strength that marked the post war peace since 1945, WSJ says that more than people realize Mr. Trump is a continuation of Mr. Obama's policies of withdrawing from global engagement that has ensured that peace. Trade wars with China, Mexico and Japan could lead to a world recession. Though much needs to be done to ensure trade is fair to U.S. workers and business, Trump has no clearly stated path to do this, instead relying on brinksmanship that could end up in trade wars.

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In a tactical move the Trump administration links a trade deal with South Korea with progress on the denuclearization of the Korean peninsula and bringing North Korea to talks on denuclearization. After some offers by the North to open this issue in talks the progress is stalled. The move is an effort to bring more pressure on both Koreas on this issue.

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China's effort to tie Vietnam and Malaysia to its economic system- will it work? China has trade worth $982 billion with 10 neighbors in South East Asia compared to trade of $786 billion with EU and $688 billion with US.

Some of that $982 billion is product shipped to Vietnam by China, assembled there and shipped to the US. This is why DJT/USTR put 46% tariff on Vietnam, now reduced to 10% for 90 days till negotiations. President Xi of China visited Hanoi, Vietnam, to sign 45 bilateral cooperation agreements to bind Vietnam closer to China's state run capitalist system. At the same time premier Lam of Vietnam is seeking negotiations with US and has talked to president Trump. What is going on? Vietnam hope to have ties to both US and China. Will it work?