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Andy Kessler looks at the prospects for China's effort to dominate the market for advanced chips used in everyday devices, just as it did in solar panels and electric vehicle batteries.  He says Apple leaves US manufacturing technologies at a disadvantage by securing its M1 processor chip from Taiwan's TSMC. Intel has fallen behind in 10 nanometer chips and will need a few years says Kessler.  Kessler says Chinese threat to invade Taiwan which has made the US and the EU take a firmer stand on Ukraine poses a danger to TSMC which has 5 fabs or factories in just 1 science Park- Hsinchu Science Park. This poses a question is it safe to concentrate about 92% of the world's semiconductor production in one place Taiwan so close to the mainland of China? And knowing sit tight taking no action? Google's last chairman Eric Schmidt asks this question in the WSJ and calls for a new investments in the US to manufacture advanced semiconductors and other semiconductors for everyday use so that the US national security is protected. Even the $50 billion that is in Congressional legislation has yet to be approved by the US Congress, says Schmidt, showing that US Congress is not moving quickly to address this problem. South Korea and Taiwan including TSMC need to be told to make a large part of the semiconductors in the US and other locations such as India to diversify production. 92% of world semiconductors made in Taiwan that could be taken out with a few missiles, is no way to diversify manufacturing, when manufacturing can be done in India or other parts of the world with lower costs and with needed engineering manpower. ...

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What happens as the population of elderly people rises and there are many older homes vacant as the population ages. This report in the BBC looks at the "ghost homes" in Japan that no one wants particularly in parts of the country and towns where many elderly people reside. These are also older homes that were build from wood in the old Japanese style making them more prone to collapse in earthquakes and fires. They are given almost for free with subsidies by town governments with few takers. A separate article this week shows China's median age rising. For the first time we see two large Asian societies, Japan and China experiencing or beginning to experience this problem.

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Wessel describes the changes in American manufacturing as it goes through some of the same changes that happened in Germany in the years after reunification. With high unemployment German manufacturing companies worked with unions and the government for wage restraint over the last decade, resulting in wages barely keeping up with inflation. The increase in productivity and wage restraint helped Germany become more competitive with factories in Asia and Eastern Europe. Wages are now increasing with larger wage increase negotiated by the unions in Germany, as skilled labor is becoming scarce. In the U.S. Labor Department figures show an increase in output per hour in American manufacturing of 13% in the last 5 years and 21% in the five years before that. Typical of the wage changes in manufacturing- American Axle & Manufacturing plant in Three Rivers, Michigan hires assembly workers at $10 per hour, with older "legacy workers" making $18 per hour. General Electric brought back manufacturing work from Mexico paying workers $13 per hour for new hires, compared to to $21- $23 in prior years. At GM, Ford and Chrysler workers make $16-$19 per hour in base pay compared to older workers with legacy rates of $29-$33. The Bureau of Labor Statistics shows earnings for production workers in manufacturing averaging $19.15 per hour in April, which is where they were in 2000 adjusted for inflation. The impact of this large increase in productivity with new machinery and production methods, and the wage reductions in manufacturing, is a return of offshored jobs. Wages increased in China and Mexico in the last decade. After a 35% decrease in the number of manufacturing jobs in the U.S. from 1998-2010, the number of jobs has increased by 4.3% to 11.9 million in April 2012, according to the Labor Department....

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A supply chain crisis with shortages of goods is affecting all economies in the world. The price of oil has increased to $80 and supply chain shortages are affecting most industries. Power shortages in China lead to cutbacks in consumption for industry and some large cities not having essential  electricity for traffic lights. Coronavirus pandemic has disrupted supply chain factories in Vietnam and Malaysia because of lockdowns. Once a product is manufactured it still has to be shipped from far flung places in today's cumbersome and costly supply chain. Cost of shipping is up 3 times according to one shipping index in one year. Prices to ship from China to Rotterdam in Netherlands is up 6 times in one year. Global supply chains at such high cost of shipping means that companies will look to invest in manufacturing at home so that they do not pay high shipping costs and also create jobs at home, and are able to build critical experience in manufacturing technology. ...

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Did Kirsten Tatlow points out the different perceptions of China's anti-corruption initiative in a country with deeply rooted corruption. China's ranking dropped to 104th of 175 countries ranked for corruption in Transparency International's Corruption Index for 2014. The current campaign under Xi Jinping is lacking because it is partial, opaque and politically driven say researchers at Transparency International. For it to be effective it has to be done in a transparent manner, and with stronger laws for bribery, whistleblower protection, asset declarations, according to the researchers. China dropped 20 places since 2013. China's score declined by 4 points to 36. Denmark is highest at 92. Turkey dropped by 5 points. Norway, Finland, Sweden and New Zealand, are at the top of the list. Transparency International points out that free speech, accountable government an independent judiciary are essential to tackle corruption. These are not sufficient however as the example of India shows. A culture of corruption or lack of transparency and effective laws can enable corruption to grow even in countries with genuine democratic process. Democratic process does provides remedies through a change in administration as happened in India with the decisive defeat of the corruption scandal affected Congress government....

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Factories near Ho Chi Minh city and a Vietnamese port are example of how China reroutes steel through other countries and exports it to the U.S. This part of Vietnam is a fast growing exporter of Chinese steel that is galvanized for export to the U.S. China uses transshipping as it has overcapacity in its steel industry.

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Food inflation is affecting a wide range of countries not just poor countries. Even in the US where on average only 7% of the income of households goes to food, for poor and lower income households this can go up to over 30%. In Turkey with a high inflation rate of 80% in June over prior year, the problems of food inflation are severe. Turkey, Egypt, Tunisia and other Arab countries get most of their wheat from Ukraine and Russia through Black Sea ports. Across Asia the situation varies with less food inflation in countries that are self sufficient in food production such as China, India and Vietnam, to countries such as Sri Lanka where inflation is severe and takes up most of the budget for ordinary families. Lebanon is an extreme example with the collapse of its economy and 332% inflation with food inflation severe. Ethiopians spend about 45% of income on food. Somalia faces drought conditions and severe food shortages. This part of Africa is the most fragile and most prone to breakdown. Being self sufficient in food was an important goal for countries that faced famine in the past such as China and India- this has produced good results. Even in Europe small countries that make their own food with agriculture getting importance such as France and Switzerland the benefits are immense. Switzerland food inflation is as low as 1.5% lowest in the world. Where as in Africa this importance of agriculture has been neglected the consequences are seen today. In Latin America Argentina and Brazil are exporters of soyabeans and other food. This helps insulate them from the worst effects of the food crisis.     ...

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S. Jaishankar, Indian Foreign Minister speaks at the University of Delhi on his chapter in the new book Modi@20 Dreams meet Delivery. He also discusses the war in Ukraine, the Indian view on people and shortages created by the war of energy and food, and India's approach to Pakistan and China.

 

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Otis Elevator is moving a plant based in Nogales, Mexico, back to the U.S. This plant was moved to Mexico in 1998 for cost reasons. Now Otis CEO, Didier Michaud-Daniel, says producing at a new South Carolina plant will cost less than Mexico. Logistics and freight costs are 17.3% less in the U.S. than Mexico, and an additional 20% in savings come from "efficiencies" gained by having all its white collar workers associated with elevator design and production. Most companies that manufacture in China and Mexico keep their design and engineering jobs in the the U.S. It is not clear to what extent American companies have considered all the costs of separating design and engineering from manufacturing, including the opportunities for close cooperation possible in one location that are lost when everything is so spread out. At Otis toolmakers in Dallas and engineers and designers located in Indiana and Arizona traveled to the Nogales, Mexico plant. This can be especially important when as in Otis's case the new plant in Florence, South Carolina, plans the launch of a new generation of elevator designs. In this case there is an added benefit by making it easier for customers to visit the plant and look at the product. The new plant will have more automation and use fewer workers on the factory floor. The new factory will employ 360 workers including white collar workers, the same as the Nogales, Mexico, plant with a lower number of factory floor workers. ...

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China's farms are becoming larger as more farmers rent out their land and live on the resulting income. This shift is leading to the development of larger firms that use modern equipment requiring less labor. Typical is a farmer who decided to live in retirement after renting out his land for about $500, income on which he lives comfortably in a well manicured courtyard home in the village.  These farmers do not want to join their children who now live in the cities. As one farmer says "fallen leaves go back to their roots."  China's agriculture is not dominated by large commercial farms as it is in the U.S. This process is now beginning in China as more farmers prefer to rent out their land and live off the resulting income, resulting in larger farms and automated operations as in the U.S.  and Europe. Farmers now feel more confident about land rights to rent out their land. China first went through the communes under Mao, followed by return of land in small plots to farmers in the 90's. The changes today start a new phase which will change the look of Chinese agriculture. ...

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Public perceptions in the USA of China are changing. Today 42% have unfavorable views of China vs. 39% tha have favorable views of China from survey results released in August by the Pew Research Center. This is a change from 2007 when 42% polled had a positive view of China and 39% a negative view. Things that have changed since then are the Tibet riots and China's strong reaction, the issues of contaminated Chinese products entering the USA market and the nationalism in China on the eve of the Olympics. The last touches McCain and his senior advisor on China, Michael Green of Georgetown University, who finds the Chinese reaction on issues like trade to be cocky but cocky to the point of being arrogant. His comment "the combination of arrogance and insecurity can be dangerous." Green was on the National Security Council under President George W. Bush. McCain and Green want to bolster trade relations with other Asian countries like India to help the USA strengthen its bargaining power with China. McCain wants to strictly enforce trade agreements with China including blocking unsafe products from China. The shift in opinion in the USA at a time when there is a shift in opinion in China to a nationalistic tone sensitive to criticism of China even when it concerns issues like Tibet which do not affect any vital interests of China should be seen as significant. This is happening at the same time as a candidate like McCain who has less tolerance for Russia and a similar position for China is running strongly for President and has the experience and support of most Americans on foreign policy issues. Its useful also to see that the figures given here show 60% of Russians seeing China in a favorable light and only 30% in an unfavorable light. And when you look at France and Germany, 72% in France and 68% in Germany see China in an unfavorable light, only 28 and 26% respectively having a favorable opinion. Britain is an exception because 47% of the British public has a favorable opinion of China, only 36% having an unfavorable view. The figures are from Pew Research Center polls of 4,257 adults in he five countries conducted in March and April (international views)....

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Mokoto Rich of the NYT discusses sentiment in Japan as the North Korean nuclear program advances. A majority of Japanese surveyed do not favor preemptive strikes. Japan's Constitution only allows acting in self-defense. Experts say Japan has to consider what it would do for missiles flying over Japanese territory in the direction of the U.S. A Japanese government ruling in 1956 allows acting in self-defense in a broader way. Yet the public in Japan is not sure what is the best way to respond. Also to be considered is how this will be seen in South Korea and China- would Japan taking a greater defensive role and building its own anti-ballistic missile system defenses lead to greater tensions in the region.

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Without hydropower and the clean energy from dams estimates are for 10% more use of burning fossil fuels. China and Brazil have added 12.5 gigawatts of power from hydropower, 50% of this in the world for 2017. Africa added 1.9 gigawatts in this period and 6 countries depend on hydro for 90% of electricity production.  The entry of private capital and the financing from the government in the case of China and India is replacing the role of the World Bank. 

The effect of lack of electricity in India and Africa is underestimated in how it affects people's lives in these regions with lack of water supplies, and lack of electricity severely hurting people in large numbers who are marginalized or forgotten because they never had access to lighting at night before.

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VW which has failed to build market share in the US is leaving aside its appeal point of German engineering in 2023 and now selling itself as an American brand. VW has become dependent on China for half its sales and badly needs to avoid overconcentration in one country. It is trying to enter the SUV market with the Scout brand for buzz as an off road vehicle and will introduce 2 dozen models. Scout is a 4 wheel drive recreational vehicle designed in America for International Harvester, a company VW acquired in 1981 when it was called Navistar. It is a mashup of a World War II Willy Jeep and a pickup truck with its boxy shape. Half a million were sold from 1960 to 1980. With this plan VW with only 4.5%  of the American market is trying one more time, this time as a way out of overconcentration in China. Realizing that America is where the automobile entered mass production in the factories of Detroit. South Carolina's assembly has approved $1.3 billion to support VW in building a new plant near Columbia to build the Scout.   ...

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This report in the BBC looks at China's telecom Huawei and points out that the new headquarters of the African Union were built in Addis Abba, Ethiopia at a cost of $200 million in Chinese aid. Later Le Monde Afrique reported that data from the headquarters was transferred to servers in Shanghai. 

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Sandstorms from Inner Mongolia and areas north of Beijing have covered the capital in an orange haze in March 2021. This has shown the importance of tackling climate change and ensuring that grasslands and vegetation are protected in Northern China and surrounding countries. Experts say this is not the only problem, much depends on how the overuse of ground water for industrial, mining and other purposes is tackled.

Worst hit by drought as a result of climate change is Yunnan. Also affected are eastern coastal provinces of Zhejiang, Fujian, and the southern province of Guangdong.

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Greg Ip looks at the Chinese economy its strengths and and many weaknesses including debt and declining foreign investment in 2023, as president Xi visits the US this coming week. With a slowing economy, high youth unemployment and excessive debt, China remains a resilient economy because it has strengths in manufacturing. It would take the US the next decade to build up its manufacturing capabilities after neglecting this important field with mistaken policies for three decades under presidents Reagan, Bush, Clinton, Obama and Trump. President Biden is taking steps for this new manufacturing revival to take place.

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Patricia Cohen show here that the global economic system (globalization) was a project that benefitted one country: China. President Biden talks repeatedly about reversing these trends at an AFL-CIO campaign rally in Philadelphia- building infrastructure and infrastructure jobs here in the USA. Biden talked about investments, in trillions of dollars, in renewable energy, chips, science, airports, bridges, the I95 repair, that had all one common thread running through it- jobs in America, jobs for union workers and families. And the idea behind it of respect, respect for the dignity of hard work of workers in the US and union workers.

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The Chinese negotiating team after the changes in the organization at the senior ranks of the government under Jinping lacks the experience in trade matters of the U.S. team led by Robert Lighthizer. Liu He who leads China's negotiating team is an economist who has the confidence of president Xi Jinping. Lighthizer is a veteran of trade negotiations going back to negotiations he held with the Japanese under the Reagan administration.

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Mead points out that the world with an effective U.S. leadership based on democracy and the values we cherish is needed now more than ever, after the failures of the Bush and Obama administrations to provide the kind of balanced leadership all Americans can stand behind. A world without an effective and enlightened leadership from the U.S, is one in which the world could fall apart in regional rivalry, one in which the hundreds of millions of people in the poorer parts of India, China, Russia, Brazil, and other developing countries of the world, will have less opportunity to meet their aspirations for a better life. This is because a focus on development requires less regional rivalry and because serious missteps can reverse in a few years decades of economic progress as shown in the 2008 global financial crisis. More so because we live in an increasingly interdependent global economy. It is also the kind of world where suppression of freedoms and suppression of the opposition as in China and Russia, provides a wrong kind of message, a world in which we or our children would not want to live in. Russia, India and China, are too driven by rivalry and lack the deep experience to go it alone, multipolar is more likely to end up being multipolar rivalry leading to a race to the bottom, which would be bad for all, especially for the poor in Asia and the developing world. The 2008 crisis showed what some serious economic mistakes could do to employment and incomes in the world with output dropping by a third in most places. Political missteps could lead to a slippery slope of this magnitude but more difficult to correct. Greater participation in the political process and more enlightened leadership is needed in all countries to allow many voices and greater interaction across boundaries, focussing on the dangers of such multipolar rivalries. The world of the G-7 is already moving to the G-20 where many voices are heard and serious discussion of differences takes place, but participatory is different from multipolar....

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Apple and Foxconn will add production sites in Karnataka state and Hyderabad in addition to expanding manufacturing in the site at Chennai. Apple plans production of 20 million iphones in India at the Chennai plant by 2024 and having 100,000 workers. The head of Foxconn met pm Modi this week in New Delhi. The supply chain for Apple is being shifted from China to India and other countries.

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Kristalina Georgieva, head of the IMF says at Davos Forum that the economic outlook "is less bad than feared a couple of months ago." Inflation heading down, and the reopening of China were two positive factors, says Georgieva. The IMF now expects the world economy to grow at 2.7% in 2023. The strength of labour markets has led to consumers maintaining spending growth.

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The dollar has reached the mark of 86 yen by the begining of August 2010. Japanese analysts see the dollar at 90-100 yen as reasonable for Japan's export based companies. One factor causing this is the Chinese government increasing its holding of Japanese government bonds. By May 2010 China had accumulated 1.27 trillion yen according to the Japanese government. This rise of the yen will have a negative effect on Japanese exporting companies.

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Irresponsible talk of former officials of the previous administrations, that engages in speculation about China's motives and it's interests in Iran. 
Russian interests are to be respected as a part of western civilization as a part of evolving modern Northern Europe since 1400, and in the 20th century since the development of nuclear weapons a technological world power that sees its first responsibility to prevent nuclear proliferation and maintain the health of the planet. China's interests as a world power are also first and foremost about its responsibilities for nuclear non proliferation, responsibilities it shares with the US and Russia. China and India also see western civilization as a role model with the Renaissance, the Enlightenment, and the scientific and industrial revolutions, and wish to embrace them for their entry into the Modern World.

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India takes on the G20 presidency on December 1, 2023. Modi's phrase "this is not an era of war" becomes the classic part of India's vision for G20, that the next generation will miss out on development if conflict takes the place of cooperation. India stands firm on this point at the G20 and it is accepted by world leaders at the summit in Indonesia and makes it to the joint declaration as a key point. Modi also extended his hand to China's Xi Jinping showing where India stands. India's connections to Indonesia from ancient times, from the Buddhist and Hindu periods of Indian civilization, the connections to Hanuman that extend to Indonesia, were mentioned by Mr. Modi as he took on the role held by Mr. Widodo of Indonesia. India offers a new path forward and a lifestyle suited to the period of tackling climate change through its ancient Yogic civilization, Mr. Modi said.