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German economic growth drops in 2026 to below 1%. What is happening?Germany manufacturing jobs drop to 6.6 million lowest in 10 years in 2026 as China makes same products for less and better. China is shipping more of its products to the German market and displacing German products in world markets. The same problems affecting the US in loss of manufacturing jobs is affecting Germany. This is happening as China uses long range plans coordinated with industry and state owned companies to deliver superior results in world markets to American and German companies competing on their own without coordination with the government in a long range plan and effort. The American and German companies face greater uncertainty in markets and are slow to invest in critical areas and technologies as a result leaving them exposed to Chinese competition. China has used the Japanese style subsidizing its industries and has another advantage in doing this in that many are state owned companies or heavily subsidized and supported by the state. After 1990 the fall of the Soviet system led to a sense that free markets in their purest form were better. This was not really true as the soviet system of state planning failed because it did not use the best features of the market economy that work. Japan adapted the market system to its needs and used state partnership with private industry to produce good results. The US did not learn from Japan's example. China learned from both the failure of soviet style planning and the success of the Japanese system to adapt its state plannning system by including aspects of the market economy. The US and Germany can only learn from these examples and adapt US market economy by including aspects of what worked for China and Japan of state plannning and long range plans of industry and government. Look back to how FDR won the war- within 5 years 1940-1945 he combined the best aspects of the planning and coordination of government and industry to achieve goals not thought possible. Britain did the same which shows such planning and coordination is not only a part of the US system of business and industry, it is just that these lessons and the lessons of other nations like Japan and China after 1950 were forgotten. India is now adapting its system for business and industry, and government for five year plans borrowing and learning from the examples of the US, Japan, China and the EU. ...

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In the period approaching the 70th anniversary of the Communist Party of China and its role in the revival of China after centuries of decline, confrontation with European and Japanese invasions, and poverty, China is taking a long view of Hong Kong protests. Carrie Lam stated China was too conscious of Hong Kong and China's international reputation and was pursuing "the long game," in dealings with Hong Kong protesters and its relations with the U.S. and Europe. This approach sees the need for China to create a positive image as it seeks to settle the trade dispute with the U.S. that hurts China's efforts for improving the standard of living and continuing its modernization. This means keeping relations with the European Union on a good footing as it pursues tit for tat tariffs and resumes talks with the U.S. without giving up what it sees as its sovereignty for industrial policy and trade matters.  A new sign of this is changing the focus of Hong Kong protests from the Chinese government to Hong Kong tycoons who China says have created the housing shortages through their policies. By not releasing land they own for building new affordable housing and driving up prices because of the greed for returns the tycoons in real estate are asked to take some of the responsibility for the mess in Hong Kong and anger of protesters. The social and economic tensions have contributed to anger of protesters for which the government has become a easy target says China as it looks for ways to tackle the issues underlying the protests and separate the negotiable issues from the issue of "sovereignty" or China's right to decide its internal affairs. In the light of the Communist party's struggles against European colonialists and Japan's Imperial Army, "sovereignty" is a sensitive topic in China.  As part of this approach Carrie Lam, Hong Kong leader held a Chinese version of Town hall meeting to listen to the complaints of Hong Kong leaders for the first time after weeks of protests, to let people vent out their feelings and complaints.    ...

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China sees the situation in Hong Kong spiralling out of control after two months of protests and leading to a loss of China's sovereignty in Hong Kong. The Chinese official in charge of Hong Kong Affairs in the State Council, Zhang Xiaoming, met with the Hong Kong government representatives in Shenzen and made it clear offering a dire assessment and the most severe since China resumed sovereignty over Hong Kong in 1997 from Britain. Zhang stated- "If the situation worsens further, and there is turmoil that the Hong Kong government is unable to control, the central government absolutely will not just watch without doing anything." He also stated that the central government had enough strength to end the unrest, that the Party center and military force if necessary is behind the Hong Kong government. Wang Zhmin, China's top official in Hong Kong gives a better view of how this is seen in the Party in Beijing. He even called it a "life and death war" comparing it to the "color revolutions" the democratic movements that unseated governments in Georgia, Ukraine and Serbia. China sees this differently than western countries. With its long struggle against colonial rule in the territory controlled by Western powers along China's coastal region, China's ruling party leaders have a very different perception of the situation than is shown in most western media, particularly during the two decades of China's reconciliation with Japan and the U.S. in its effort to catch up. In the rest of the world the perception is very different. The use of a military garrison or riot police from other parts of China would affect China's image carefully built up over two decades of a peaceful developing country working hard to catch up in living standards and technology. As the economy slows to 5-6% the damage would be to business confidence and investment, and to Hong Kong's status as a world financial center. This could also affect China's relations with the U.S., European Union and Britain. with criticism on action by China. Unlike negotiations with Japan by Mr. Lighthizer for president Reagan, when Japan enjoyed a trade surplus such as that of China today (where there were no such issues with Japan as the U.S. had offered security guarantees to Japan), negotiations with China on trade could be affected by issues such as status of Hong Kong. This could lead to a worsening of trade relations, indefinite duration of tariffs and lack of any settlement on trade, further slowing the Chinese economy and hardening positions. ...

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Oil prices expected to drop from $70 per barrel to $60 per barrel in July 2026 easing oil crisis in advanced and developing nations. A drawdown of inventories by 163 million barrels happened to OECD countries in the 4 months of the Hormuz crisis. Advanced European nations will replenish their inventories starting in the 4th quarter, the US next year in 2027, China with a billion barrels in inventory is not in a hurry to replenish at this time. Factors improving the situation are that the UAE has increased production and sends it though Fujairah that is separate from Hormuz after it left the OPEC oil organization (which sets production quotas for members to control prices). Kuwait is doing the same. Saudis have also increased production routing it away from Hormuz. The advanced countries have learned from the Hormuz crisis. China has changed its oil consumption policy to use it more efficiently one of the big changes from the Hormuz crisis. Instead of importing 10 million barrels a day oil China now imports 6 million barrels a day. China was always a prolific user of oil and as long as oil was plentiful China did not pay enough attention on how to use oil as efficiently as some European nations and Japan are doing. During the crisis the rest of the world including India had time to figure out ways of running their economies using less oil and will continue to do so knowing that Hormuz had allowed one country (Iran) to put the whole family of developing nations in Africa and Asia, Latin America at risk. Hormuz channel itself has opened and about 40-60 ships are making their way through each day. There are risks that Iran will try to close Hormuz again or that the war will restart and this means all nations advanced and developing nations are finding and securing alternative oil supplies. US is also increasing production through its oil base and oil base of its allies, and American plus European oil companies will act to increase supplies and new sources of oil to prevent the world being threatened again in the way it was at Hormuz in 2026. ...

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President Trump has taken a careful response to events in Hong Kong so that the situation does not affect U.S. China trade talks and tariffs negotiations. For the first time he tweeted that China's restraint would be reciprocated by the U.S.

Mr. Trump has described the Hong situation as "a tricky situation," and has called for the protests to be handled "humanely." He tweeted- "I know President Xi of China very well. He is a great leader who very much has the respect of his people. He is also a good man in a 'tough business.' I have ZERO doublt that if President Xi wants to quickly and humanely solve the Hong Kong problem he can do it." Concluding "Personal meeting?"

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The new national security law put forward for Hong Kong in China gives key powers to Beijing to enforce national security In Hong Kong. A dedicated national security office will be setup in Hong Kong to make assessments, advise and supervise local authorites. This is seen as a move to unravel the legal autonomy Hong Kong had under earlier agreements with the UK that resulted in the transfer to China.

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Hormuz channel on July 13, 2026 -Iran Memorandum with US is meaningless as IRGC military in Iran and elected Iran government are in a power struggle. Every time the elected president confirms a ceasefire and opening of Hormuz by Iran to all shipping without tolls, the IRGC makes a show of agreeing under pressure from Pakistan, Turkey, Qatar and Egypt, then next day IRGC asserts that Hormuz is closed and all shipping take place on the Iranian side only with tolls. This means Iran is shutting down the Omani side of Hormuz channel which was opened by the US. This is against international law and open navigation of the seas for shipping. The result is that the US government and DJT have lost any confidence in negotiating with the IRGC who make the decisions. The US response is to restart the naval blockade, to be paid for by tolls at 20% to pay all costs of US to ensure safety of oil tankers. The news media is taking the Iranian side which is against the poor countries freely accessing energy and oil supplies at reasonable prices (Egypt, Indonesia, Philippines, Bangladesh, Pakistan, Sri Lanka, India and China a population of close to 4 billion people). Media does this by putting titles like "Iran is playing the long game," because of the opposition to the DJT administration by Democrats. The opposition Democrats fail to address the question about Iran having a nuclear weapon and the resulting danger to the region. DJT administration response is also to find alternative supplies to Hormuz so that India, China and other countries can meet their oil needs outside of Hormuz. As shown in Lyrarc this has already take place and China, India, Japan, cutting back its fuel use after prolific use of oil, and replacing it with renewable energy, more efficient use of energy. ...

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President Trump signed the Hong Kong Human Rights and Democracy Act passed with near unanimous support by the U.S. Congress. The original U.S. law on Hong Kong passed in 1992 requiring yearly reports on the autonomy of Hong Kong for it to get the "special status" granted to it. This requirement for yearly reports expired in 2007. This requirement is now reinstated. The law signed by Mr. Trump requires the State Department to certify Hong Kong' autonomy annually. The WSJ describes it as a "grim trigger" strategy" which would cause damage to Hong Kong capital markets and is of a magnitude that makes it less likely to be used. Mr. Trump pointedly remarked that he had signed it "out of respect for Mr. Xi, China and Hong Kong," and Mr. Trump has shown respect so far for the protesters but also shown respect for Mr. Xi and China in the middle of the unending nature of the protests. The new Act does not give Mr. Trump any additional powers than he already has. It only changes one aspect of relations- it makes Hong Kong relative autonomy a part of permanent high level issues in China - U.S. relations, including trade and Hong Kong's status as financial center. ...

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Britain will offer a pathway to citizenship to 3 million Chinese in Hong Kong, British Foreign Secretary, Dominic Raab confirmed an earlier statement. This applies to British National Overseas status (BNO) and their dependents upto 3 million. He stated that the new security law to control protests in Hong Kong were a "flagrant" violation of the agreement made with China 23 years ago.  He called it a "clear and serious breach of the joint declaration" of the two countries in 1997. The new arrivals from Hong Kong and their dependents will be given 5 years limited leave to stay and work in the country, at that point they can apply for settled status and after 1 year of settled status they can apply for British citizenship. The Foreign Office expressed alarm at one provision article 38 of the security law that seeks jurisdiction over anyone who criticizes China wherever they are in the world, putting them at risk if they travel to Hong Kong or China. ...

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President Prabovo says he is a great admirer of Modi. He says he has studied Modi for a long time and as there is no copyright for this he is copying Modi's development plans in India for Indonesia in many fields. Modi said about his visit- “Every aspect of my visit and program has been very well planned. The attention to detail given by President Prabowo to every element of my agenda, as well as the outstanding implementation, truly left me in awe and at a loss for words.” The ancient Prambanan Temple Compound is being completely renovated by president Prabowo. Modi is shown here on a vist to that historic site where the two cultures of India and Indonesia meet since ancient times. Modi said that he appreciated the fact that Sanae Takiachi, who he described as his younger sister, was from Nara, during Takaichi's visit to India. Nara is the city with ancient Buddhist temples of Japan, with India and Japan having a shared Buddhist history, India being the motherland of Buddhism. During these visits of the last month Modi has connected the ancient cultures of the largest nations in Asia- India, Indonesia and Japan- which will guide Asia in the years and decades ahead, and hopefully bring China also into the fold of nations with a common Vedic and Buddhist heritage since the time of the Buddha.   ...

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China is still interested in a trade deal with the U.S. even after Mr. Trump signed a bill passed by Congress that it criticized as interference in its internal affairs. Mr. Trump's signing statement gave China an opening to continue its persistent effort to seek a trade deal that would lessen the effect of tariffs on its economy. It mentioned "constitutional authorities with respect to foreign relations," and stated Mr. Trump had signed the bill "out of respect for Mr. Xi, China and Hong Kong." This has credibility because Mr. Trump has consistently supported an effort to bring a peaceful end to protests and any efforts to that end that Mr. Xi has and would continue to make. Both sides see the role of the biggest economies in the trading system as too significant to be affected by different views on Hong Kong, as long as mutual respect is sustained.  

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In this interview with France24 Foreign Minister Joseph Wu of Taiwan says his country is a front line democracy fighting an authoritarian regime. He warned that after Hong Kong "Taiwan might be next." He also said the mood of the European Union was changing and perceptions had changed after observing the situation in Hong Kong, the escalation at the India-China border, and in the South China Sea. He sees the threat of military intervention against Taiwan as having "intensified."

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Taiwan's president Ma Ying-jeou calls on Beijing to allow true democracy in Hong Kong. For the first time in the debate on Hong Kong and democracy Mr. Ma challenged the idea that democracy is not suited to China. He told the Taipei National Day audience "Now that the 1.3 billion people on the mainland have become moderately wealthy, they will ofcourse wish to enjoy greater democracy and rule of law. Such a desire has never been a monopoly of the West, but is the right of all humankind." Ma called on China to experiment using the pragmatic sense shown by Deng in adopting capitalism- "Thirty years ago, When Deng Xiaoping was pushing for reform and opening up in the mainland, he famously proposed letting some people get rich first. So why could'nt they do the same thing in Hong Kong, and let some people go democratic first."

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Areddy describes the choices facing China's president Xi Jinping as he faces protests in Hong Kong demanding the resignation of Chief Executive Leung Chun-ying. Protestors are also calling for canceling of a plan to limit nominations for chief executive to a committee loyal to Beijing. Xi Jinping has experience with Hong Kong affairs as he held the portfolio for Hong Kong affairs as part of the leadership when he was vice president. There are precedents where Beijng has changed course, as it sees it important to put memories of Tiananmen protest suppression behind. In 2003 six years after Britain handed Hong Kong to China -under an agreement for "one country, two systems," that granted separate status and system of government to Hong Kong- an anti-subversion law was pulled back. And the unpopular Chief Executive Tung Chee-hwa, a shipping magnate, resigned after 18 months. Beijing has to balance its concern for the "contagion effect" of protests on other parts of China, with the need to maintain the right climate for business and investment in Hong Kong and other financial centres. With slowing growth and limits to overexpanding credit, a crackdown in Hong Kong would further exacerbate problems with the international community, and create tensions in Taiwan about future reintegration with China. China warned foreigners not to interfere, and the American Consulate in Hong Kong stated it "strongly supports Hong Kong's well-established traditions and Basic Law protections of internationally recognized fundamental freedoms, such as freedom of peaceful assembly, freedom of expression and freedom of the press." The British government also pointed to Hong Kong's "fundamental rights and freedoms, including the right to demonstrate," which were in the spirit of the 1997 transfer agreement....

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A new security law for Hong Kong is passed at the end of a weeklong session of the National People's Congress. This gives China's agencies powers to police activities in Hong Kong and removes Hong Kong's autonomous status established by a treaty with Britain that arranged the handover in 1997. 2878 lawmakers voted with one dissent. China says it is intended to control separatism, terrorism and foreign interference in Hong Kong. It bypasses Hong Kong governing authorites and the effect is that it removes the "one country, two systems" basis of the handover by the British.  This sets the stage for the U.S. to remove Hong Kong special status in trading relations. The U.S. is joined by Canada, Australia and Britain in expression of "deep concern," and Japan has also said it is "seriously concerned" and "will address the situation in an appropriate manner." Under the U.S. Hong Kong Policy Act of 1992 the U.S. treated Hong Kong as autonomous for trade and economic matters. Mr. Pompeo, the Secretary of State for U.S. says this status will no longer continue. As supply chains are being reassessed during the coronavirus, the end of autonomous status for Hong Kong would mean the beginning of a new period in changing economic relations across Asia and the Pacific. ...

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Beijing's sensitivity to the Hong kong protests from the ongoing efforts to maintain economic growth in the face of the trade conflict with the U.S. and a tariffs war.

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Alibaba begins a delicate balancing act between sentiment in Hong Kong and sentiment in Beijing with the acquisition of The South China Morning Post newspaper in Hong Kong.

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Under Article 23 of the Basic Law, Hong Kong's constitution stated Hong Kong would pass legislation to stop national security crimes such as treason, secession and espionage. The Basic Law also had a provision to grant universal suffrage. It is important that the universal suffrage or democracy was never granted or made a priority by Hong Kong people during the boom years under the British, as a French commentator for La Croix aptly points out in FR24. He says he watched incredulous as Hong Kongers selfishly pursued money.  The Article 23 also provides for the National Peoples Congress to add laws for national security. The last time that Hong Kong people were faced with the National Peoples Congress passing such laws was in 2003 when half a million came out in protest. This was shelved at that time. It is now law today. Why now? More protests are expected and an election in July would bring more seats in the legislature for the pro-democracy parties, says the WSJ. Another factor is that Hong Kong at one time represented 16% of China's GDP in 1997, today it is down to about 3% in 2019. It is no longer that important to China, even while continual protests from Hong Kong detracted from other vital issues facing China as it shifts away from its trading relationship with the U.S. and as the U.S. imposes strict conditions on trade, investment and technology flows. Under the Hong Kong Human Rights and Democracy Act passed by U.S. Congress in 2019 an annual assessment has to be made by the State Department whether "one country, two systems" is operating. This is why Mike Pompeo, U.S. Secretary of State has made his comments that "no reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China." The new assessment would diminish confidence among foreign businesses in the city, in addition to ending its special trading status with the U.S. ...