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It will take some time for AI software firms (Apple, Amazon, Microsoft and Google)  to generate returns. Yet AI enabling goods, the AI chipmakers (the hardware) made by Taiwan, South Korea and the US's Nvidia are making large profits from the boom in AI investments worldwide. South Korea's Samsung SK Hynix, Taiwan's TSMC and Nvidia in the US are chip makers making huge sales revenue in AI enabling goods- $2.6 trillion for Asian makers including Japan, $1.4 trillion for all US chip makers. This report in the WSJ says whether and when the AI software makers (Google, Microsoft and Amazon)  turn a profit the AI boom is changing the habits of ordinary investors, surging the market capitalization of TSMC, Samsung, SK Hynix and Nvidia, and creating a big surge in stock markets in Asia and a bit smaller by comparison in the US. Total spending in 2026 for worldwide AI services, infrastructure and software was $2.6 trillion in 2026, going up to $3.5 trillion in 2027. The most astonishing aspect of this is how much the AI boom has increased the Asian stock market indexes- TAIEX index of Taiwan which has gone up 55% year to date Jan-June 2026 in value and South Korea's Kospi index which has increased 110% in value. Taiwan's TSMC shares doubled in value. Japan's stock market index Nikkei up year to date Jan-June 2026 32%.  Another aspect of this is that just one company TSMC makes up 42% - market capitalization as a percentage of the overall stock index- of TAIEX Taiwan's stock market index. And just 2 companies Samsung and SK Hynix make up 55% of South Korea's KOSPI Index. By comparison the US S&P up 11% in the same period year to date Jan-June 2026. This report looks at the speculative fever as ordinary investors in the middle and lower income classes in Asia in Taiwan and South Korea from cab drivers, insurance agents, software programmers and elementary school teaches, to high school students with parental sponsored accounts, are all engaged in speculative trading in AI related stocks. What all this means in terms of the cost of living issues, the price of oil and gas with Hormuz and the Memorandum with Iran to open it, the social fabric splintering, the cultural issues splitting electorates in the US and Europe, the migration issues, the issues on world trade is a separate question. It is similar to the railroads and steamship building in the 19th century and the construction of the interstate highway system in the 20th century (in the 1950's in US and in 2000's in China, 2020 in India) different aspects of the Industrial Revolution that overlap with the social and political changes of each period in history. Speculative booms in financial markets accompanied these changes till they returned to a degree of normalcy. It still required regulation, oversight, building the modern institutions of government that improved the economic life of nations and people during the FDR/Truman/Ike  period, and the period after the sixties that shaped the European Union and economic progress in Europe, similar changes in China and India, Brazil. And the many changes now needed in 2026 in the US, and Europe for reindustrialization, and modernization in India, continued development in China. ...

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The Stimson Center looks at the closing of an era of Conservative politics in Japan which ended in 2025 after the death of Shinzo Abe and the 2 year premiership of Kishida. Interview is conducted by the Stimson Center of a senior Japanese political figure with 30 years of experience in the Foreign Service, and the author of the only English language book on Shinzo Abe, reflecting the paucity of research on Japan. Shinzo Abe was premier for a short time in 2005-2006 and for a full term in 2012. He made changes to Japan's SDF, its partnership with India, Australia in the Quad, and his economic policy which increased women's participation in the economy. For the first time in post war Japan there was a new sensde of confidence under Abe and he is missed sorely in Japan today. Yet as this senior Japanese politician says, Japan has changed the way the US and Europe have changed, and nationalist politics are replacing old Conservative politics of the LDP. In a way also how the deindustrialization of US, Europe and Japan has also taken place discrediting that era. Takaichi Sanae is itself a representative of the new era, as she did not hesitate to say Japan would get involved if China attacked Taiwan. Her popularity is at 62% and she has called a snap election, as she came in to replace Shigeru Ishiba in October 2025 and was not directly elected PM. Yet in the long view this is also a misconception because neither the Stimson Center or the interview participants had a keen sense of who Abe really was and Abe's grasp of the history of the Kamakura period of Buddhist Japan and China, India, of the 12th century before the foreign invasions from the north. One of Shinzo Abe's biggest legacies is the relationship that was close to his heart, the relationship with India and prime minister Modi. This week chancellor Merz of the Federal Republic of Germany was at the kite festival with PM Modi in Ahmedabad and at the Sabarmati Ashram of Gandhiji. The same degree of warmth shown by the German leader and Modi reflecting Vivekananda's time in Germany, was seen long time back between Modi and Abe. The bullet train project Mumbai to Ahmedabad and the ones that follow across India are a testimony to the warmth shown by Abe for India, and his knowledge of history from the Buddhist period in India when by the 12th century in Japan in Dogen's time Tenjiku (India) was the sacred homeland of Buddhism. Today India has revived the Buddhist traditions and centers of Buddhism, the universities and research centers for Buddhism from that period in Indian history. Buddhism started in India near Nepal in what is now Bihar state at Sarnath and Kushinagar, and spread through China to Japan and Korea. The whole continent of Asia would reflect Buddhist ideals and ideas without the intervening period of Vedic culture in India and China's Mongolian and Manchurian northern invasions, and the periods of European colonialism. Today Buddhism and The Bhagavad Gita are itself strung like pearls on a string as the Gita itself says, part of the long spiritual traditions of three nations- India, China and Japan, and of the many others Vietnam and Korea. ("All these worlds have their rest in me as many pearls on a string." -Mascaro tr. of Bhagavad Gita, Penguin). As Asian nations and peoples come to their own inner selves, find their inmost self, this is the culture that really pervades all of Asia. ...

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China's manufacturing sector contracts in June with the PMI index dropping below 50 - to 49.0.  Exports were also coming in lower. Experts say the increase in interest rates by the US is reducing imports of Chinese goods into the US. This comes as local governments are strained in their finances by $900 billion, and a budding revolt is taking place from property buyers with developers in financial trouble, as reported in the WSJ. Psychological hurdles now loom in the loss of confidence in the public in the property sector, loss of confidence of foreign investors with many constraints in operating, mental health issues for the population in many cities with the covid lockdowns.   The growth has slowed to 0.4% and there is now a realization dawning that there was overdependence both on property sector and foreign investment that set up new factories offshored from the US and Europe that alienated the public in these countries. Unlike wih the situation of Japan in the sixties and seventies for modernizing its economy growth of the scale China was pushed into by misguided and self interested  business interests in the US including its investment banks and local government officials in China without restraint by the central government in Beijing, ultimately led to trade friction and permanent damage to US China friendly relations. Communities in the US and the EU simply could not cope with the hyper growth from hyper shift of factories from the home countries to China that pushed this hyper growth. The property sector played the same role in the domestic front with too big a burden carried by it resulting in hyper growth. This did not have to happen. It happened because of a lack of understanding that this would have consequences in the longer run which is now showing up. ...

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This WSJ editorial says China's nationalist sentiment should not be underestimated and there are risks of a skirmish between Japan and China over disputed islands. The Japanese government's decision to buy the islands was meant to counter the effort of nationalist Tokyo governor Ishihara's attempt to buy the islands, and should not have been seen as a provocation by China. It says the U.S. should stand by Japan. WSJ reported on Sept. 25, 2012, joint exercizes with Japan's Self Defense Force on the island of Guam, providing American training on island defense.

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The world is truly changing again. China followed Japan as Asia's second economy going through rapid industrialization and urbanization in the 1990's. After two decades of hypergrowth with huge imbalances of trade with the US, China is not only slowing, it is now experiencing the kind of deflation that hit Japan at this point in its development as a modern economy. 

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Trading relationships and supply chain relationships of China with Japan, and other ASEAN nations built up since China joined the international trading system and became a major exporter are interconnected with the political relationships unraveling over issues such as Taiwan and maritime disputes. It took three decades for China to build up exports and manufacturing for exports of $1 trillion to the US and EU in 2021. Freedom of navigation in international waters and oceans, respect for international law, is important to all trading nations particularly Japan and China, that depend on maritime trade for their economies. 

 

 

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US Iran Memorandum of Understanding signed by DJT and Iranian president Masoud Pezeshkian, May 17 2026, with Pakistan as mediator. Pakistan, Turkey, Egypt and Qatar tried to bring the two sides together within Iran the RGC Revolutionary Guard Corps military and the president elected in 2024 (to tackle cost of living and other economic issues). and narrow their differences with the US. A key factor was China and the US president called China's actions "fantastic" in achieving the signed agreement to work out the details within 60-90 days of talks. Without China's help in imports and other assistance Iran's economy would be hard to sustain. China's own interests are best served by maintaining peace in the region as it continues to develop and modernize its economy. Russia also supported the agreement. Another contributor was India by setting an example for modernization and economic development as the true pathway for the people of West Asia, by bringing UAE, Egypt and other Arab nations in North Africa such as Morocco together in the direction of economic development and showing that cooperation in the region including with Israel is the best way forward. From the perspective of long term future of the region the presence of Modi and India at the G-7 meeting next to Macron and DJT shows there is now a G-8, with India joining Japan as two key Asian nations in the G-8. In this way the administration has achieved something that was never possible in either the old G-8 (that included Russia) under previous administrations after 2000. DJT's meeting with Putin in Alaska, and his visit to Beijing for discussions with Xi Jinping in 2025 and 2026, achieved the G-8 setting with India plus keeping China and Russia fully engaged in separate one on one arranged talks. This is a rare feat achieved in 2026 for the US, China, India and Russia, EU, Germany, that has never been done before to the lasting credit of the leaders DJT, president Xi, prime minister Modi, president Putin, and chancellor Merz- to their patience even in times of disagreement, their efforts to persevere when times were rough, and their foresight and wisdom in seeking agreement around what they shared in common.  ...

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Zelensky is going to Hiroshima to make his own case for support directly to all G7 leaders. The fact that G7 leaders are meeting in Japan also has significance as Japan unlike Europe with NATO faces Russian presence in its northern islands and China in the South China Sea and around Taiwan, North Korea, with only the American defense agreement in any conflict. Japan, Australia and India would want to see a clear end to the conflict in Eastern Europe that also sends a message that the status quo will be preserved on Taiwan and other issues in Asia. 

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After a weeks long standoff both sides disengage expeditiously in the India's border dispute with China over construction of a road in the Doklam plateau region of Bhutan. In this NYT report experts in Hong Kong point out that it is not in China's economic interest with an aging population and debt crisis, tense economic relations with the U.S., and for India struggling with modernization issues, to turn a remote border issue into an open conflict. It would also complicate relations in the Asian region with Japan and economic relations with the U.S, countries with whom China's economy is intertwined through supply chains and other ways. Disputes with China and South Korea have in the past affected the Chinese economy, and China has developed trade with India as its companies look for growing markets. India's Modi administration is focussed on the economy. In this context of broader relations the road construction in Doklam appears to be an aberration that is hard to explain except as a miscalculation and poor understanding of the best interests of the region and of the world.   ...

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India and Vietnam are key countries for reinvention of the supply chain to cover home production in the US with supplies from friendly nations. After the G20 meetings in New Delhi president Biden will go to Hanoi, Vietnam. Vietnam also maintains trade relationship with China as it depends on China for its manufacturing exports. China and Vietnam are both socialist nations, yet after a border war in 1979 Vietnam is building a stronger relationship with the US. It also has a trade relationship with Japan and Vietnamese workers help meet worker shortages in Japan.

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In India's southern coastline state of Kerala, PM Modi has pursued a strategy of working with the CPI led government on development projects, and at the same time contested elections to set up a BJP government in the state. The capital city of Trivandrum (Thiruvananthapuram) local election has led to a BJP municipal government in 2026. In an address to supporters in Trivandrum PM Modi said he was gratified by the results in elections for the capital city of Trivandrum (Thiruvananthapuram), and wanted to make it India's model city., It reminded him he said of the situation in Gujarat when the BJP party won elections in Ahmedabad for the first time in 1987 for city government. By showing good governance in Ahmedabad, BJP was able to win elections in the state and provide good government and industrialization for Gujarat for the decades since 2001 when Modi formed the state government. This bodes well for Kerala said the Indian PM. Many schemes for improving the welfare of farmers, for people in health, housing and small business loans are coordinated by the federal, state and city governments to get the best results and this speeds up industrialization and modernization in the Indian model to create the kind of results China and Japan achieved in their heyday. ...

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US shipbuilding in 2025- US nuclear submarine built for South Korea by South Korea's Hanwha at PhillyShipyard in Philadelphia. South Korea is investing heavily in shipbuilding in the US under the new DJT effort to rebuild the US Navy. This happens when shipbuilders UK and the US who led the world in shipbuilding have ceded places to Japan, South Korea and China PRC. The once mighty shipbuilding industry in places like Glasgow and Philadelphia now makes less than 5% of the world's ships. South Korea is the only nation with the shipbuilding capacity and technologies that competes with China. Much of the world's shipping logistics and port networks are now controlled by China. It is not even the situation where Teddy Roosevelt or Franklin Roosevelt as Secretaries of the Navy build  America's shipbuilding industry before World War 1. The situation today requires a resolute effort to build up the shipbuilding industry that was neglected by the shortsightedness of a generation of American business and managers who mesmerized by financial markets failed to see the importance of essential infrastructure. ...

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There may be psychological hurdles in China's growth with the effects on mental health from lockdowns in major cities, the revolt in the property sector with home buyers losing confidence in developers, the loss of confidence of foreign investors from US and EU. The dependence on the property sector to carry so large a burden of growth for the last 2 decades in China may now look like an error. The dependence on foreign investment may also be an error as the loss of confidence could mean some withdrawal and a lack of sustained investment.  It could even be said that restraints on both sectors property and foreign investors could have created alternative paths to growth, and reduced the shift of factories from the US and Europe to China that have now caused trade friction and and a reverse shift of investment back to home countries of US and EU. Trade friction has it appears backfired in a way that extends to the overall relationship which could have been prevented by preventing the hyper growth that happened. Greg Ip of the WSJ has argued that compared to Japan's growth in the sixties and seventies from a country of 100 million the hyper growth for a country of 1 billion for 2 decades created a massive impact on communities in US and EU that were dependent on factories that were lost to China. This has alienated large sectors of the public in the US and EU which could have been prevented by restraints on hyper growth in China. Ip says the growth was too large and too fast for the US to cope. It may have permanently damaged the relations between the two countries showing that trade and globalization had unintended effects when left to business and governments staying away from keeping an eye on how it was happening. ...

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China's role for World War II defeat of Imperialist Japan given prominence in 2025. China made huge sacrifices in fighting the Japanese just as Russia made huge sacrifices fighting the Nazis in Germany, yet US help was crucial in helping China stay in the war to the end in 1945. Roosevelt sent one of America's best soldiers personally selected by Gen. George Marshall, Joe Stilwell to China. The best documented writing about this period of the war and the role of Stilwell is in Barbara Tuchman's book- Stilwell and the American Experience in China. Stilwell starts his knowledge of China in the period of the First World War when he decides to take the position as military attache to the American consulate in China. Tuchman is the only writer who was welcomed by China's revolutionary leader Mao to write about China during the renewal of US relations. She gives the best account there is of how Stilwell in his different trips to China learned the language and lived with the ordinary people, embracing the conditions of China's backwardness and war torn countryside as Japan invaded. No American or European in history could be said to have done what Stilwell had done in restoring the morale and giving self respect to China at an extremely difficult time of poverty, backwardness and war. To read it is to realize how America and Americans fought all the colonial ideas of the British and the French and Dutch and embraced the dignity and culture of the Asian people. Gen. Joe Stilwell was the best of America- of whom it could be said in all races, especially in China, he defended justice and protected the weak. ...

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The NYT covers the GAESA tourism enterprise of Cuba (that operates independent of the government of Cuba) that overinvested in Tourism at the expense of agriculture industry and infrastructure during the Obama administration, leading to collapse with Trump's 2014 embargo on Cuba. GAESA controls about 50% of Cuba's economy, run by military and people from Castro's family.  That left 121 hotels built in the boom years of tourism at 30 percent occupancy. The Iberostar high rise hotel is one of these hotels that rises over dilapidated housing in Havana, the Cuban capital. The investment in tourism by the GAESA enterprise that runs about 50% of the Cuban economy is 13 times what is spent on healthcare and education, says the NYT. The Castro family, Raul Castro family, runs this business venture that was started when the Soviet Union as sponsor of Cuba had collapsed by 1991. The NYT says this 'devolved' the ideas and promise of the revolution. "Devolved?" What kind of word to describe a complete loss of faith, and enormous failure with severe hardship for the Cuban people? It means the whole idea of communism or Marxist revolution has been proven false, even as it survives in Mexico and parts of Latin America. One can be against the Batista regime- similarly against corrupt regimes in Latin America or Asia- that ruled Cuba before the Castro Cuban revolution and still look for better choices and alternatives than what Castro came up with as an answer to Cuba's needs. Much of Latin America is suffering from the same problems of dictatorships and turning to Marxist alternatives - particularly the alternative put forward by Castro in Cuba- that has also destroyed the Venezuelan economy with Chavez's turn to Castro's Cuban revolutionary slogans and ideology. That came up with temporary solutions for the poorer sections of society, yet failed badly for all sections of society in the long term. How else can one explain one fourth of Venezuela's population and about the same of Cuba's leaving the country, some of those who left the critical human capital that would form the core of the human input to combine with capital and technology for advancing the economy. If Cuba were like the Dominican Republic or other parts of the Caribbean to depend on tourism for its national income then would it not be better to have friendly relations with the US, the main source of tourism revenue. The Obama administration was only holding up a failed idea by holding out a helping hand to tourism in Cuba knowing full well that a change to a Republican administration would simply lead to heavy investments in tourism at the neglect of infrastructure, public services and the economy, of health and education, to become large economic losses. This is what has happened.  As China and India have proven and are proving there are no magical ways to economic development- the same route that was traveled by the nations of Northern and Western Europe with scientific advances, technological advances, have to be taken, the same route that was traveled by the US in its industrial revolution and building of infrastructure, that same route has to be taken by all nations. It does not have to take a time period of centuries as in Europe. The US accomplished it faster with new technologies and vast human and natural resources over 100 years, Japan in 50 years, China in 30 years. India in 25 years ongoing.There is room for intelligent solutions to problems, for speed and tapping into new technologies, yet the same inputs of land, labour, capital and technology have to be put together for development. For states or regions, cities, within China and India, the same inputs, the same access to foreign investment and new technologies is the only route to rapid development. Long range plans are set in motion, decades of stable efficient, clean governance is put in place, and alliances are built with the nations of Europe and with the US. This road is traversed though hard work as Japan and China have done, and India today is thoroughly engaged in. ...

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Instead of a jinx much to the contrary the US economy outlook for 2030 in Feb 2026- a surge in investment spending in 2026-2030, new manufacturing investments and lower energy costs, moderating inflation, are likely to propel the US economy ahead to 2030.The effect of tariffs as a policy making tool has been muted because of exemptions, reversal of tariff rates once key objectives were secure for tariffs as a way to get action on foreign policy as with Indian purchases of Russian oil, deals with Japan, South Korea and China, India, UK and the EU. Some sources such as the Philadelphia Fed see price rises reaching 3% in some inflation guages more than the moderate 2.5% in the consumer price index for January 2026. These sources see the hiring slowing down just as layoffs begin to happen in the latter part of the year which is a possibility but less likely. At this point in Feb 2026 there is a tendency not to layoff and to hang onto employees, and hiring has been slow in 2025. January's report of 130,000 jobs added is the first sign of strengthening of the jobs market. Overall a cautious view would be to call it a soft landing after the inflation surge of the covid period. Another way of looking at is is more in line with the strategic direction of the US economy- freeing up the economy with investments in energy,  reducing the key costs of production, tax policy of Bessent's complete one shot depreciation of equipment increasing business investment, tariff policy making the world trading system fairer and now more attuned to US interests, all creating an investment and jobs surge in 2026-2027. There is an added benefit from US efforts to free up the world trading system from the stranglehold placed on it by China with its control over world manufacturing. A dominance and unwise concentration gained from the serious mistakes of the Bush-Clinton period of not putting in safeguards for US factories and jobs (that form the backbone for families in neighborhoods towns and regions across the US), and US business interests growing indifference to the very communities they were based in by outshoring to China destroying whole regions in America. Even where it is criticized or seen as negative there are huge benefits when the US acted. Tariff increase on India is a clear example- it built Indian resilient attitude in June-Feb 2026, and during this period it cut funding Russia's war in Ukraine by sourcing energy from other sources, the US policy led to India and EU+ Germany signing trade agreements to double their effort and double trade and scientific cooperation ( a goal secured for the US as it reduces concentration in China), was followed by US signing its own trade agreement with India within days, and increases world trade of US and EU and Germany in ways that will bring 2.5 billion people into a strong partnership that overshadows anything that happened in China in the Clinton-Bush-Obama years of failure. ...

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The Bank of International Settlements warns that China's "credit to GDP gap" is 30.1. A figure of 10 normally is considered to be high and needs watching. The People's Daily carried an article presumably by president Xi Jinping warning about the consequences of the debt that had been growing "like a tree in the air." The debt to GDP ratio was at 255% at the end of 2015, and is up 107% since 2008 when the financial crisis led to a huge stimulus that has accelerated debt growth. The corporate debt is at 171% of GDP. The article in the People's Daily warned about reflexive stimulus every time growth slows and said that China cannot any longer "force economic growth by levering up." Cross border liabilities is one area of progress falling by a third to $698 billion, as companies cut debt quickly before the U.S. Federal Reserve raises rates. In the future China is more likely to roll over debt as Japan had done following its debt surge and bad debt with zombie companies, which would in turn lead to lower growth. In the past the government was able to absorb the growing debt because it was not as high as it is today, and the economy was growing rapidly. This is no longer the situation, the reason for alarm at the situation facing China. A spike in interest rates of 250 basis points is cited as one situation which could affect China adversely. ...

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More than a retreat it gives the US, EU, India, China and the nations in Asia and Africa, Latin America most affected by higher oil prices and lower economic growth a time to pause and rethink dependence on the Gulf region for oil supplies. It is not mentioned in the media yet there has to be a link between the US president's visit to Beijing and Beijing's support for a normalized US China relationship, and offering its support for a settlement. This gives EU, China, India, Japan, and poorer nations in Africa, Asia, such as Pakistan, Turkey, Indonesia and Brazil, some relief from reduced access to oil supplies. US is also planning a supply from Venezuela to India to take pressure off oil supplies in Asia by offering Venezuela as an alternative source. China is in many ways joining the US to bring about a denuclearized Middle East, doing it in a quieter way with Iranian public opinion making a shift to put its economic development ahead of missile development. As the two sides have different interpretations and it is still only a Memorandum of Understanding it is not a situation where the US is sending billions of dollars to support the military in Iran as Obama had done. Attention will shift to the Iranian economy over the next 12 months.  US conveys that it has nothing to gain from wrecking the Iranian economy or nation as the Iranian people if avote were held today would clearly choose putting the economy first by huge margins considering the widespread protests in Iran in 2025 that started this crisis. The US naval blockade was effective and is always an option, with US and partners having greater experience in the situation presented by the narrow straits in Hormuz. Arab partners also acted with restraint and is itself an opportunity for Iran to change direction. China's making cuts of 3 million barrels a day in oil supplies from Hormuz is itself along with acceleration of renewable energy in both China and India is one of the dividends of this crisi. Another is the gradual shift to alternative supplies from other regions of the world so that Hromuz region can no longer dictate oil prices in the world. Accelerating Venezuelan and UAE, US, other oil and gas  supply growth will also put increase supply and renewables reduce  demand growth as a result of the crisis to break the hold on oil prices of the oil cartels of Qatar, and Saudis. As a transition fuel oil can be be kept below $50 a barrel, not at prices at the whims of the princes in the Middle East at the expense of the people of the Arab world from Egypt the most populous and Tunisia, Morocco, to the Muslim nations such as Turkey and Pakistan,Iran itself which bore the brunt of this Hormuz crisis. The US has several priorities including in its relations with oil cartels dominated Mexico that  brings drugs and people across US borders, with other nations in EU and Asia that have benefitted through deindustrialization in the US leaving it poorer across a vast part of America. Advancing objectives in one area such as denuclearization does not mean not addressing priorities at home and in relations with other regions. China shares American interest in denuclearization of the Middle East this should now be put to the test. It is an entirely different situation in 2026 than what weak leaders from Bush to Obama allowed to happen by  wars in the Middle East - the US naval blockades of 2025/2026 are entirely different in cost in terms of men and dollar investment and used to convey America's determination not to waste vital resources of the Nation. The best policy is not to pursue policy for absolute wins but make intelligent choices and in some situations pause to reflect on the best course of action and other ways to reach goals. By getting China and the US as world powers for denuclearization even though this is not vocally said, both gain and both will come up with solutions. ...

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Shinzo Abe talks about China and Japan being similiar to competing powers Britain and Germany towards the end of the 19th century at a meeting in Davos.

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Both China and Taiwan have applied to join the 11 nation Transpacific Trade Agreement. Australia, Canada, New Zealand, Mexico, Peru, Chile, Malaysia, Singapore, Vietnam, Brunei, and Japan. Taiwan says if China is admitted this obviously affects its application.

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China faces the problem of an ageing population as births decline and their are fewer young people to support senior citizens. The shift to a two child limit after the policy limiting children to one per couple has not accomplished the goal of restoring the birth rate. The Central Committee of the Communist Party and the president Xi Jinping have taken the decision to allow three children per family.  This comes at a time when the old policy meant a fine of 10 times the disposable income for having a third child. The law was not enforced in all regions but acted to deter larger families. Yet there is a cultural effect of decades of having smaller families that will not be easily overcome with a change in the law. In Latin America smaller families are the result of decades of cultural change towards smaller families. Young people are increasingly aware of the cost of raising and educating an additional child, and the effect on the standard of living. Experts say it is too costly to raise another child  and housing is not cheap in China.  This discussion with 3 billion comments over Weibo in the discussion of this policy in China last week, misses a more obvious point from the graph shown in this report in The Guardian. That graph shows the curve for the birth rate in 2019 dropping faster in South Korea and Japan than in China, so that in 2019 the birth rate in Japan and South Korea was lower than in China. This shows that even without a one child policy the birth rate in Chia would be closer to that of South Korea after industrialization progressed and society experienced profound cultural and economic change. Japan today has the lowest birth rate in Asia. The Latin American experience also confirms this shift to small families. ...

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This report in WSJ says China's government faces severely strained government finances. Local government entities sale of land financed 40% of local government revenues in China, and most of these have dried up with the very real loss of confidence in property sector. Government now faces $900 billion in shortfall in revenues says this report. There may be psychological hurdles in China's growth with the effects on mental health from lockdowns in major cities, the revolt in the property sector with home buyers losing confidence in developers, the loss of confidence of foreign investors from US and EU. The dependence on the property sector to carry so large a burden of growth for the last 2 decades in China may now look like an error. The dependence on foreign investment may also be an error as the loss of confidence could mean some withdrawal and a lack of sustained investment.  It could even be said that restraints on both sectors property and foreign investors could have created alternative paths to growth, and reduced the shift of factories from the US and Europe to China that have now caused trade friction and and a reverse shift of investment back to home countries of US and EU. Trade friction has it appears backfired in a way that extends to the overall relationship which could have been prevented by preventing the hyper growth that happened. Greg Ip of the WSJ has argued that compared to Japan's growth in the sixties and seventies from a country of 100 million the hyper growth for a country of 1 billion for 2 decades created a massive impact on communities in US and EU that were dependent on factories that were lost to China. This has alienated large sectors of the public in the US and EU which could have been prevented by restraints on hyper growth in China. Ip says the growth was too large and too fast for the US to cope. It may have permanently damaged the relations between the two countries showing that trade and globalization had unintended effects when left to business which has no comprehension of how the macro developments can affect the relations between the peoples if the other effects in the relationship such as community impacts are ignored which business says is not its role,  and governments staying away from keeping an eye on how it was happening and adjusting for ill effects with restraint and redirection of business policies. ...

LyrArc Article Gist
BJP Modi election win in West Bengal and upset by TVK party in Tamilnadu states of India are a result of existing state governments not meeting the aspirations of young people in India for jobs, lack of progress in industrialization and lack of investment in infrastructure. These are the pressing priorities in India. Whoever can deliver on modernization and industrialization, jobs and infrastructure to meet the aspirations of the Indian people is likely to prevail. This is also no different than the process underway in the US and Europe for reindustrialization and remodernization, updating infrastructure built in the 19th century, jobs and incomes. The BJP party of prime minister Modi has set the bar high for modernization of the scale of China and Japan for India, and to even surpass them.  It is definitely doable, particularly now that India has built trade links for import of new technologies with the US and the EU, and when it is already an economy the size of Germany or Japan. Most of the Opposition parties cannot believe this is possible, and most of the media that covers India has the same views. As a result the titles and the discussion in the media are like that of 15 years back when India was led by parties that lacked the will and drive for industrialization and modernization, corruption and mismanagement dissipated resources, could not create the master plan and execution needed,  and lacked the leaders at the ministerial level to accomplish this to deliver on every promise. In fact the elections of the last 2 years have created a new northeastern India - changed the map completely with the growth in a region half the size of the European Union of 300 million people that is able to grow at 20% a year for 10 years in Bihar, West Bengal, and Orissa, Assam regions, where the mighty Ganges and the Brahmaputra rivers flow into the seas from the Himalayas. There is that much potential and it means India itself can grow at rates of 10% once all the conditions are right in a few years to 2047 for Vikshit Bharat, Modernized India. The world economy can also grow with such a vibrant dynamic India. ...