Why it’s China’s turn now – Asia Times

In the next half of the 20th centuries, macrohistorians like Paul Kennedy, Francis Fukuyama, and Alvin Toffler created’grand stories’ to forecast changes in the coming decades. They covered various aspects of society including philosophy, technologies, religion and culture.

These models were used by macrohistorians to forecast significant historic changes in geopolitics, strength relations, and economics. Interestingly, none of them predicted that China may come as a opponent to US international preeminence.

In the late 20th centuries, fantastic stories fell out of favor. Intellectuals claimed that fantastic or meta-theories neglected the differences between civilizations. Microhistories tended to elicit a Eurocentric view of the world by never acknowledging diverse cultural ideas.

When viewed in a historic context, China’s rise as a global power is less unexpected. For much of recorded history, including the colonial time, China was the world’s largest business, rivaled only by India. The US did not take the top spot until the close of the 19th centuries.

In 2030, China is expected to regain the top position as the world’s largest economy  YouTube Screengrab: https ://www. tube. com/watch? v=4-2nqd6-ZXg

However, some researchers may have predicted the pace at which China’s modernization was quick. The West took two decades to modernize, China did it in less than 50 years. China acted as the world’s stock and a tarantula in the website of the global supply chain as a result. China had come to a halt if it were to be shut down, and the rest of the world do.

China has recently changed from a low-cost consumer goods manufacturer to a cutting-edge producer of electronics and natural tech. Robots and AI have taken the place of cheap labour. A new stock for Xiaomi, formerly a smartphone manufacturer, produces a new electric vehicles every 76 hours, or 40 per minute, without being touched by human hands.

In his international bestseller When China Rules the World: The End of the Western World and the Birth of a New Global Order, American artist Martin Jacques chronicled China’s development. The second significant change to the world’s political and cultural environment in 500 years, according to Jacques, will result from China’s future economic strength.

Jacques argued that China ’s arrival as a significant economic, social, and cultural energy is a traditional inevitability, requiring a adjustment in the American view of the world. He writes:

“There has been an notion by the American popular that there is only one way of being present, especially by adopting Western-style institutions, values, customs and beliefs, such as the rule of law, the free marketplace and political norms.

This, one might add, is a view that is normally held by people and cultures who view themselves as more developed and ‘civilized ’ than others: that those who are lower down on the evolutionary scale must become more like those who are higher up in order to advance. ”

Jaques brought up Fukuyama, who predicted that a new idealism that may embodie the American concepts of the free business and democracy would be the foundation of the post-Cold War world.

Fukuyama, in his 1992 report “The End of History”, argued that Western liberal democracy had won and that all countries in the world, including China, did eventually accept American liberal democracy.

Fukuyama did not anticipate the burgeoning crisis in Western democracies, the West’s partial deindustrialization, the rise in wealth concentrations, or Donald Trump’s election as president of “America First ” in his 1992 writing.

Trump sparked a trade war with China that his successor, Joe Biden, has gotten worse. The cost of the expensive products from China had been a boon for American consumers, but they also came with a price: the deindustrialization of major cities in the country and the loss of millions of jobs.

The trading conflict between the West and China is a repeat of the trading conflict with Japan on a larger scale. Japan decimated the Western automotive and consumer electronics industries in the 1980s. The West realized that Japan had eaten its lunch when it was too late. The Chinese are now ready to eat dinner.

Workers and Merchants

In 2001, US president Bill Clinton gave the green light for China ’s membership of the World Trade Organization ( WTO ), the American-led body that regulates global trade.

China agreed to lower tariffs on non-agricultural goods and take several steps to expand China’s financial sector, including those involving the life insurance and securities sectors.

According to the US government, China would become more politically liberal if its economy were liberalized. Fukuyama’s “End of History ” appeared to give credence to this theory. As it turned out, China liberalized economically but not politically. The Chinese government wished to maintain a tarn between government and business.

The American futurist Larry Taub, author of “The Spiritual Imperative”,   framed the conflict between China and the West in terms of Worker and Merchant, archetypes he adapted from Indian philosophy. Worker and Merchant, together with Scholar and Protector, are four generic categories that form the basis of societies.

The Indian “social-psychological” archetypes emerged after humans transitioned from nomadic, hunter-gatherer life to form communities and cities. Each archetype covers a vital role in a community – teaching, producing, trading, and protecting.

Different psychological profiles and worldviews are present in each of the four archetypes. Workers, in Taub’s model all those who work for a wage or salary, value safety, stability, and solidarity. They are followers, not leaders. Merchants value opportunity, innovation, and freedom. The main concern is generating wealth.  

The four archetypes Taub adapted from Indian philosophy

In Indian philosophy, the four archetypes are in a cyclical struggle, one trying to overcome the other. The Indians used astronomical timescales that spanned millions of years, but Taub contends that the four archetypes can account for both the present and the future.

The current conflict between the West and China is a battle between the Worker and Merchant worldview, according to Taub’s model. China ’s psychological profile most closely resembles the Worker archetype, and the West, especially the US, most closely correlates with the Merchant archetype.

Neoliberalism

According to Taub, the Industrial Revolution’s conflict between the Worker and the Merchant began in the 19th century. The Merchants were demanding better working conditions from the workers. Socialism and communism merged to bring together workers to fight for their rights.

By the 1960s, the Workers had made massive gains, among them a five-day workweek and a social safety net, including healthcare and pensions. Employee unions had developed into powerful structures that could influence government decisions.

A backlash came in the 1970s, with the emergence of neo-liberalism. This reactionary hybrid ideology advocated market-oriented reform such as deregulating capital markets, and privatization of state-owned industries. It was an anachronistic plea for a partial return to the free-for-all environment that persisted in the 19th century.

With support from Merchants, the neoliberal agenda gradually spread into politics. In the 1980s, the neo-conservatives Ronald Reagan and Margaret Thatcher embraced the neoliberal agenda, followed in the 1990s by the “leftist ” Bill Clinton and Tony Blair. They marketed neoliberalism as” The Third Way” to their ignorant supporters. ”

Soon it became clear that neoliberalism did n’t benefit the US as a nation. Millions of Americans left the middle class, and wealth concentration reached levels of the 19th century. In 1970, the US was the world’s largest creditor nation. It is currently the most debated country, while China has grown to be its most popular creditor.

The legacy of Neoliberalism

The US and China’s decision to reverse their roles suggests that traditional Western ideologies are no longer a useful tool for understanding global changes.

ideologies were created in response to social and economic changes. Communism ( like fascism ) was a Worker response to the imperialist Merchant-dominated colonial era. It resembled a liberation theology in terms of secularism.

Ironically, orthodox communism became untenable because it sidelined the Merchants. Neoliberalism fails because it restricts the worker. All of the four archetypes are necessary for a fully functioning society, as the Indian sages pointed out centuries earlier.

Reciprocity

China reintegrated the Merchants into society with the reforms led by Deng Xiaoping in the 1970s, without allowing them to break into the political system. When celebrated billionaire Jack Ma, founder of Alibaba, became too big for his boots, the government put him in his place.

China’s leaders continue to liaise only superficially to communist ideology, but the nation has entered a post-ideological era. Pragmatism has returned as a guiding principle. As Deng famously remarked, it does n’t matter if a cat is black or white, as long as it catches the mouse.

China is currently looking at its own rich cultural and social history to find a way to advance beyond political ideology.  

That does not imply that China has ever ceased to be Chinese. China remained a Confucian nation throughout the revolutionary era of communism and even through the Cultural Revolution’s ideology-driven vandalism.

Confucianism is foundational to Chinese consciousness. It is what distinguishes India from the nation. Confucianism, in turn, was based on the notion of Tao and inspired the development of a key feature of Chinese society: the notion of reciprocity.

Confucius based his social construct on the I Ching, the “bible ” of the yin-yang system. The I Ching is based on the Eight Trigrams, compounded yin-yang symbols denoting eight natural phenomena. The interaction of the Eight Trigrams in Chinese cosmology affected the natural world.

Confucius “appropriated ” the Eight Trigrams for his social construct.

Consucius enlarged the qualities of the Eight Trigrams by including the eight members of a nuclear family. This linked China ’s social structure to the yin-yang principle of nature. The children are a mix of yin and yang, the father is yang, and the mother is yin.

The yin-yang system has a hierarchical dimension, but in the social context, this hierarchy is situational. A man is yang to his wife, but yin to his boss, even if the boss is female. A woman is yin to her husband but yang to her children, both boys and girls. In a social context, let alone in an international context, determining what is yin and yang in any given situation is an art, not a science.

The Yin-Yang system operates on the principle of reciprocity. It implies that everyone has a shared vision and values. Unlike altruism, which is based on unequal relationships, reciprocity is based on mutual dependencies.

Reciprocity is a core component of Chinese society’s social fabric and interpersonal relationships, as well as social and family life. It maintains harmony within families, communities, and business life and fosters a sense of solidarity, cooperation, and teamwork.

China ’s traditional, primarily collectivist culture partly explains its rapid modernization. Chinese civil engineers pioneered industrial methods like prefabrication, standardization, and modularization. The city of Daxing, a metropolis of 84 square kilometers built in the 6th century, was completed in one year.

A new story

China learned from the West to become the world’s top industrial nation. Like Japan before, it avoided and took what it thought was valuable from the West in opposition to its values and worldview.

In barely one generation, China became an industrial superpower. It dominates 75 % of the technologies currently considered necessary for the Fourth Industrial Revolution globally.

The US has not been sure-footed in its response to the Chinese challenge. Given the influence of neoliberalism and the polarization in US politics, it would be necessary to significantly alter the government’s priorities in order to outperform China economically.

The dilemma facing the West is brought up by cultural communication expert Bill Kelly, author of” A New World Arising.” “Neoliberalism, ” according to Kelly, “led to community breakdown, the alienation of the individual, and the loss of an overriding aspiration that a majority can embrace. In terms of socially mobilizing its citizens to support government leadership, this puts the West at a significant disadvantage. ”

Neoliberalism is a remnant of colonial times and the ugly manifestation of the Merchants ‘ mindset. It tries to perpetuate Western military and financial hegemony at all costs because it is aware it ca n’t compete with China’s industrial giants. It wages foreign wars under the pretext of defending democracy and freedom in its own country, a ruse intended to divert attention from the workers.

The neoliberals should have heeded the advice of historian Paul Kennedy rather than copying Francis Fukuyama. Kennedy explained that the relative decline of great powers frequently comes from overstretching in his book” The Rise and Fall of the Great Powers.” Declining powers go beyond what their economic resources allow them to sustain with their military engagements.

The US is overstretched, has a small industrial base, and has one of its biggest trading partners, which is also one of its biggest creditors. It also has a very high level of debt. When something does, the US and its Western allies will need a new story that is contemporary with the twenty-first century.

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For a start, Washington, amend the H1-B visa process – Asia Times

With the introduction of rapidly advancing professional artificial intelligence, the US-China technology opposition is unlikely to slow down in the near future. Though no without  risk, even the most emerging Artificial applications hold significant  promise  for nations who are able to successfully expand and integrate their ability to help their national objectives.

A major factor in a state ’s ability to harness AI is its individual money. The US-China technical competition will increasingly depend on the availability of highly qualified AI-relevant work force. Which nation will have a significant first-mover edge in shaping the future of the AI-integrated world economy.

Despite the high margins of the continuous tech war, new political pacific exchanges between the two parties indicate a shared desire for peaceful conflict.

The US-China Science and Technology Agreement was  ; extended, though briefly, in early March. Less than two months earlier, a  readout  The need to prevent “veering into fight or confrontation ” in all aspects of the relationship was the subject of a late January meeting between US National Security Advisor Jake Sullivan and PRC Foreign Minister Wang Yi in Bangkok.

Further evidence of Washington and Beijing’s willingness to implement handrails on a fast-moving industry that is essential to both countries ‘ national interests is a nod to an anticipated spring 2024 reciprocal on AI. Decision-makers in both countries continue to be concerned about the perceived philosophical intensity that characterizes the tremendous power software competition, despite the slightest evidence of reconciliation between the two.

Worry about the weakened post-pandemic world economy, which, despite steadily improving, also serves as a reminder of the uphill struggle for economic growth faced global, contributes to this worry.

In a January 2024 statement, the IMF raised its  forecast  for earth GDP production in 2024 to 3. 1 %, up from 2. 9 %, largely due to the better-than-expected performance of the US and Chinese economies. Consequently, both the US and China saw improved development perspectives, with rises to 2. 1 % from 1. 5 % and 4. 6 % from 4. 2 %, respectively.

However, many significant challenges remain for Beijing and Washington – to differing degrees – as they attempt to revive and support increased growth, including but not limited to: higher inflation, high unemployment, reduced consumer spending, and lower investor confidence.

The  <a href="https://www.caixinglobal.com/2024-01-27/chinas-debt-to-gdp-ratio-climbs-to-record-2878-in-2023-102161022.html”>record  great reached by China ’s latest debt-to-GDP amount, coupled with  <a href="https://www.caixinglobal.com/2024-01-27/chinas-debt-to-gdp-ratio-climbs-to-record-2878-in-2023-102161022.html”>record  Low foreign direct investment flows are becoming increasingly alarming factors that are influencing Chinese management to get all-in on. funding in AI  and various emerging technology as a hoped-for long-term financial offset.

In light of this, it seems generally strategy-driven how quickly big economies have been willing to embrace and adapt to built-in AI systems across public and private institutions, businesses, and organizations. With a technology that sees significant advancements every few months, there is little room for postpone. To be a late user, one is left behind.

AI-Generated Image: Microsoft Bing Image Creator from Designer, January 28, 2024

Despite the limitations that exist in today’s budding models, the company utilize case has now demonstrated the viability of early adoption. In McKinsey’s 2023 Global Survey, companies that had incorporated AI were now reaping a second of their total income directly from the systems. Given the numerous ways that AI may improve business, these results are surprising. operations, such as increasing pricing and workforce capabilities, identifying previously ignored markets or niches and transforming standard predicted planning and risk mitigation, among various complicated and generally time-intensive analyses.

According to the McKinsey report, businesses that are early adopters of AI technologies have continued to hire both for traditional ( such as broad-purpose software engineers ) and for increasingly specialized ( such as generative AI prompt engineers ) positions. These businesses expressed an further assumption that they would spend a lot of money upgrading their current workforce to meet the changing needs of the sector going forward.

Through the landmark Creating Good Opportunities to Develop Semiconductors&nbsp, US policymakers have made strides toward creating a domestic AI-ready labor in addition to these initiatives taking place in the private sector. ( CHIPS) and Science Act  and  the Executive Order  on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.  

However, to bear fruit, both private and public sector planning for integrating AI skillsets requires a crucial ingredient: time. Making a path for highly qualified, relevant foreign experts to remain in the US and contribute to the AI sector would allow for the time needed to develop local, field-relevant talent.

The US must first overhaul the aging&nbsp in order to take a significant lead in the tech market and keep it there in the near future. H1-B  Temporary visa requirements to allow highly educated and qualified foreigners to fill positions that are most important for the advancement of AI.

According to the latest  statistics   by the American Immigration Council, the Congress-approved cap of individuals able to obtain H1-B visas has remained the same since 2006: 65,000 entries, plus an additional 20,000 for graduates from US master’s and doctoral degree programs.

Beyond the strict cap, it is known that the H1-B process is extremely expensive for applicants and the businesses that will sponsor them. costs  increasing due to inflation. In October 2023, the U. S. proposed by the Department of Homeland Security and the US Citizens and Immigration Services changes  The proposed amendments do not address the harmful effect that strict caps have on U.S. citizens, but they do modernize and increase the efficiency of the H1-B process. S. national security imperatives.      

Washington has a significant advantage over Beijing because of the abundant stream of foreigners studying advanced technology-related degrees at its highly regarded elite education institutions. lacks.

Congress needs to significantly improve the entry requirements for people who want to work in the US and support its vision of global AI leadership. A crucial first step would be to increase the cap on the number of allotments. If a comprehensive overhaul of the nonimmigrant visa becomes a bipartisan issue, different caps could be placed in positions of particular national significance.  

Amending the H1-B visa process would not, of course, guarantee a permanent lead for the US over China in the wider tech competition; but it would also provide a significant benefit that would enable the US to maintain its competitive edge as it works to develop a complementary local workforce over the next ten and beyond.

T. Talibhy Anderson ( tabatha@stanford. edu is a master’s student at Stanford University studying international cyber policy, and he works as a geopolitical analyst for a cybersecurity firm. She has served as a Young Leader for the Pacific Forum since 2023.  

This article, reflecting on the workshop “Techno-Optimism, Geopolitics, and the Future of AI” convened by the Center for Global Security Research ( CGSR ) at Lawrence Livermore National Laboratory ( LLNL ) on January 17-18, 2024, was originally published by Pacific Forum. It is republished with permission.

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Chinese firms to assemble EVs in Europe, duck tariffs – Asia Times

Chinese electric vehicle ( EV ) manufacturers are working ahead with their plans to expand production in Europe to fend off potential tariffs that the EU might impose.  

Yin Tongyue, president of Chéri Automobile, announced on Sunday that his business would soon buy an old factory in Barcelona, Spain, and convert it into its second European factory. He said the opening of the hospital, which stopped running in 2021, may produce 1,600 work.

He claimed that Chery is mulling collaborations with two German companies, with the goal of a soon-closed deal.   According to Chinese media, Chery is speaking with Stellantis, the European automaker that owns Fiat, Chrysler, and Peugeot.

An official agreement to start producing Chery in Spain will become formalized in the forthcoming days, according to the Spanish Industry Ministry.  

There have n’t been any updates on Chery’s progress in contacting the Italian government regarding the construction of a factory there.  

The number of the company’s exported vehicles increased by 40 in the first third of this year. 9 % year-on-year to 253,418 products. The business is currently concentrating on areas in Russia, the Middle East, and Spain, Italy, Poland, and the United Kingdom after this month.  

Important Chinese EV manufacturers have even got manufacturing ideas in Europe. Next December, the Shenzhen-based BYD said it will create a passenger car manufacturer in Szeged, Hungary. It stated that the center, which will have an innovative car production line, will be the first of its kind to be constructed in Europe by a Chinese automaker.  

In a statement released last year, Great Wall Motor stated that it was considering whether to set up its earliest Western grow in Germany, Hungary, or the Czech Republic.

Despite the fact that the UK has now left the European Union, SAIC Motor Corp said it was thinking about starting a grow there.

The Beijing-based China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCME), a business organization with a presence in Beijing, claimed that the 13-month research launched by the European Union next September against Chinese EV manufacturers is inconsequential and violates international trading regulations.  

CCCME Vice President Shi Yonghong expressed his concern that the conclusions of the EU investigation into Chinese EV exports had become distorted and unintended during a reading with the European Commission in Brussels on April 11.

According to Shi, the European Commission had deliberately focused on three Chinese-owned suppliers before reaching set findings of subsidy, instead of choosing the best Chinese EV manufacturers for study, such as BYD, Geely, and SAIC.  

He claimed that the whole investigation process has been ruined by the biased sample selection. He added that the investigation avoided pursuing action against the US$ 400 billion in incentives provided by the US government and the EU’s billions of dollars in grants provided to the EV and power areas.  

According to a spokesman for the European Commission, the research and its findings would abide by all international and International obligations. He said the EC will make sure this anti-subsidy research is complete, fair and fact-based.  

Effects of tariffs

Janet Yellen, the US Treasury Secretary, announced on Sunday that the US would no “anything off the board ” in response to China’s production ability, including the possibility of additional taxes to stop the influx of cheap Chinese goods into the US marketplace. She finished her six-day trip to China on April 9.  

We are concerned about potential spikes in Chinese imports to our industry in regions with a lot of overcapacity, She said.

She claimed she has informed Taiwanese authorities that the overcapacity issue in China poses a threat to both the US and other nations and regions, including Europe and Japan, as well as emerging markets like India, Mexico and Brazil.

Due to the addition of another 2 to the normal 2 tariffs, the Trump administration has added an additional 25 % to the Chinese market. Chinese battery and EV companies found it very challenging to develop their US markets due to a 5 % tariff in 2019.  

In an effort to avoid the additional 25 % price, they turned to Mexico, which signed a free trade agreement with the US and Canada in 2018. However, Donald Trump, the Republican nominee for president, stated last month that if he wins the election, he will establish a 100 % tax on Chinese vehicles made in Mexico.

In the event that the Union imposes additional tariffs on Vehicles made in China later this month, Chinese automakers are then accelerating their plans to isolate their manufacturing capacity in Europe.  

According to Transport &;, about one in five Vehicles sold in Europe last year were produced in China. Environment ( T& E), a Brussels-based non-profit firm. The percentage is anticipated to increase to about 25 % in 2024.

More than half of Taiwanese imports into Europe are also western companies, such as Tesla, Dacia and BMW, T& E says– but Chinese manufacturers, including SAIC’s MG, Geely’s Polestar and BYD, could accomplish 11 % of the German EV industry in 2024 and 20 % in 2027, up from about 7. 5 % last year.  

According to Julia Poliscanova, senior producer for cars and e-mobility supply chains at T&,” Tariffs may force carmakers to locate Automotive manufacturing in Europe,”” We want these work and skills,” she said. E. However, tariffs wo n’t protect traditional carmakers for long. ”

She suggested that in addition to the agreed 100 % clear car goal of 2035, a higher price should be accompanied by a regulatory push to boost local production of electric vehicles, including electricity targets for business car ships by 2039.  

No dumping

European Economic Minister Robert Habeck welcomed the decision after Western Commission President Ursula Von der Leyen made the announcement that an investigation into unfair Chinese rivals in the EV market was being conducted on September 13.

However, on September 28, German Chancellor Olaf Scholz stated that he was not convinced that Taiwanese electric vehicles had to be tariffed. He claimed that Germany may also opened its market to foreign companies because it wants to sell its cars everywhere in the world.

He told Foreign pupils in Shanghai that Germany wants open and fair car industry during a trip to China on Monday. If there is good competition, no dumping, overproduction, or copyright infringement, Taiwanese cars will still be available in Germany and Europe at some point, he said.  

According to the MarkLines Data Center, German manufacturers sold 462,720 cars in China next month, up 3. 8 % from 2022. About 17 people made up their part of the total. 8 % of the Chinese businesses.  

1 Chinese manufacturers sold 46 million domestic cars, or 56 percent. 2 % market share. In China, there were 382,900 cars sold under the Chinese brand, with a 14th. 7 % market share.

Read more: China blew off the engine sensor from an ill breeze.

Following Jeff Pao on Twitter :  @jeffpao3

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Iran-Israel explosion blows Asia’s Fed hopes asunder – Asia Times

Somebody laughing at Lawrence Summers for predicting that the US Federal Reserve’s next walk may be a tightening, more than weakening, is quite silent now.

Next month, the previous US Treasury Secretary made a very outlandish statement. Some Fed forecasts have probably been blown to pieces in the 48 time since Iran’s missiles struck Israel.

Additionally, the Organization of Petroleum Exporting Countries syndicate continues to impose a small cap on oil production, which has led Citigroup and others to anticipate US$ 100 per barrel oil on the horizon.

Together, all this suggests world inflation is likely to heat up as the year advances, dashing sure hope that prices may have peaked.

According to Citi scientist Max Layton, “what is not priced into the current market is a possible culmination of a strong conflict between Iran and Israel,” which we anticipate could see crude prices trade up to $ 100 per chamber, depending on the nature of the activities.”

That, in turn, reduces the odds of Fed rate cuts in ways that imperil Asia’s economic outlook in 2024.

“ In a worst-case scenario, a forceful retaliation by Israel could trigger a spiral of escalation, potentially leading to an unprecedented regional conflict, ” says Jorge Leon, senior vice president at Rystad Energy. “ Under such circumstances, geopolitical premiums would increase significantly. ”

This would quickly alter Southeast Asia’s economies, China, Japan, and South Korea’s calculus.

It’s not just crude oil, but also rising prices for other important commodities, including coffee and cocoa, from precious metals to precious metals. The price increases for copper, gold, and other products are particularly alarming in the context of asset markets.

Analysts at Goldman Sachs claim in a research note that any rise in oil prices that is based on higher geopolitical risks may be slowed down by oil producers choosing to hedge their price risks and sell forward their production.

As “significant input for many industries, ” Rebecca Babin, a top energy trader at CIBC Private Wealth, thinks “rising [commodity ] prices will start to hurt growth ” in corporate profits if higher prices are not able to be passed along to consumers.

At this point, though, no one really knows what they don’t know about decisions in Jerusalem or Tehran in the days ahead.

If the Israeli government follows the White House’s advice and forgoes retaliatory action, the war may escalate, says analyst Helima Croft at RBC Capital Markets.

Although Iranian action was “much more expansive than previous reprisals, ” it was still predetermined in advance. ”

There were indications that Fed Chairman Jerome Powell’s team would n’t be cutting rates several times in 2024 even before the weekend attack, which involved more than 300 missiles and drones.

In order to predict an Iran-Israel war, US Federal Reserve Chairman Jerome Powell has new inflation factors to consider. Image: Screengrab / NDTV

In March, the consumer price index rose at a faster-than-forecast 3. 5 % annual rate. It’s difficult to see Fed officials, who previously resisted ease a week ago, agreeing to cut rates right now.

That is especially true given the low US unemployment rate of just 3. 8 %. According to Nationwide Mutual economist Kathy Bostjancic, it wo n’t be lost on the Fed that signs of full employment abound.

Those indicators include average weekly hours worked ticking up to 34. 4 from 34. 3 in February, and a 62 percent increase in labor force participation. 7 % from 62. 5 %.

Even so, the stakes would have skyrocketed should oil prices go up.

One would assume that the group would look to recoup some of this surplus capacity if prices were to significantly rise on the back of supply losses, according to Warren Patterson, ING Bank’s head of commodities strategy. Given the possibility of destroying demand, OPEC will not want to see prices go too high. ”

But, Patterson notes, “there’s still plenty of uncertainty and it all depends on how Israel now responds. ”

By ING’s numbers, Iran produces over 3 million barrels of crude oil per day, making it OPEC’s No 4 producer.  

As such, Patterson notes, supply risks abound — from stringent oil sanctions and whether Israel’s response in the days ahead hits Iran’s energy infrastructure.

In Washington, US President Joe Biden’s team could try to deploy US strategic petroleum reserves once again. Even OPEC may be concerned about the consequences of allowing unabated oil prices rise.

Not everyone worries energy prices are about to explode, though. Stephen Innes, managing partner at SPI Asset Management, says “while the drone attack has grabbed headlines, its immediate impact on global markets, particularly oil prices and inflation concerns, may be subdued. ”

Innes adds that Iran’s response was executed with great precision and a limited lethal impact, suggesting a tactical strategy meant to minimize harm rather than exacerbate tensions. As a result, the ripple effects on the oil market, a key determinant of global inflation dynamics, are expected to be somewhat muted. ”

According to Innes, the bottom line is that” the situation is still fluid and likely to dominate for some time. ”

How Israel will react to Iran’s drone strikes is uncertain. Image: X Screengrab

Regardless, fresh turmoil in the Middle East means the Fed will “adopt a more cautious approach ” when it comes to cutting rates, notes Neil Shearing, group chief economist at Capital Economics.

“We expect the first move in September, ” Shearing says. We believe that the European Central Bank and the Bank of England will both reduce in June, assuming that energy prices do n’t go up over the next month or so. ”

Shearing claims that Iran’s actions represent a “new and potentially significantly more dangerous phase in troubles in the region.” The main concern for the moment is how an increase in Gulf tensions will impact energy prices. Higher costs, he adds, “would complicate success in reducing inflation. ”

Summers is concerned about the potential impact of the upcoming Fed action on the currency to hit the monetary brakes. You must consider the possibility that the next rate change will be upward rather than downward, ” Summers told Bloomberg.

Whatever the Fed decides, it seems the “higher-for-longer ” era for US yields, one Asia entered 2024 convinced was over, will live on indefinitely. That’s dreadful news for Asia’s export-driven economies.

For China, the Fed’s delay in or complete lack of rate cuts could result in a stronger US dollar. That, in turn, could further reduce the People’s Bank of China ’s latitude to cut interest rates for fear of a falling yuan.

The PBOC might not want the exchange rate to fall, for a variety of reasons. For one, it might make it more difficult for property developers to pay off their offshore debt, increasing the likelihood of default.

Additionally, it might waste progress in boosting global confidence in the yuan. A sluggish yuan could also put Beijing on a collision course in the wake of a contentious US election on November 5.

Here, too, there’s great uncertainty about the trajectory of China ’s economy and how that, in turn, might impact Asian trade and oil prices more broadly.

According to analyst Herbert Crowther of Eurasia Group,” China’s role as the primary driver for new oil consumption globally has come under scrutiny.” The second-largest economy in the world has emerged from the pandemic with significant short-term and structural challenges that will affect its fuel needs in 2024 and beyond. ”

According to Crowther, China’s enormous and expanding construction sector and rising auto sales were the single biggest contributors to the rise in global oil demand. Beijing’s policymakers have frequently turned to infrastructure and the real estate sector to fuel rapid oil demand growth, which is largely fueled by middle distillates like diesel. ”

Meanwhile, Crowther adds, “a fast-growing middle-income population segment purchased millions of new cars every month – virtually all running on gasoline before China ’s electric vehicle boom. ”

Japan’s export-driven economy is hampered by the notion that US yields will remain significantly higher for a longer.

Japan entered 2024 with a growth rate of just 0.1 % on average. 4 % in the fourth quarter of 2023 following a 3. 3 % contraction in the July-September period. The yen ’s plunge to 1990 lows, meanwhile, has the Bank of Japan mulling rate hikes.

Uncertainty will almost certainly halt Governor Kazuo Ueda’s upcoming effort to normalize Japanese monetary policy. Ueda’s task is exacerbated by concerns that the continued high US rates may increase the risk of a policy mistake.

One worry is that medium-size US banks might come under pressure, Silicon Valley Bank-style. Another is that a persistent lack of credit may only add to the issues the commercial industry faces. property  sector, post-Covid-19, sending financial shockwaves Asia’s way.

According to Desmond Lachman, an economist at the American Enterprise Institute think tank, the Fed is paying close attention to the “slow-motion train wreck ” that is currently occurring in the commercial real estate sector as more people work from home. Office prices are currently anticipated to drop by at least 40 % from their 2022 peak level as a result of this. ”

Along with high interest rates, Lachman points out that this raises questions about how property developers will be able to roll over the$ 930 billion in property loans that have fallen this year without undergoing significant debt restructuring. ”

“ Unfortunately, it would be an understatement to say that the banking system in general, and the regional banks in particular, are not in a good position to make large loan loss provisions for their real estate lending, ” he said.

Any unrest caused by the US banking system or credit markets in general could cause particular trouble for Southeast Asia‘s export-dependent economies.

In Indonesia, Malaysia, the Philippines, Thailand and Vietnam, continued tight US central bank policies that limit China ’s ability to stimulate growth are not what regional policymakers had in mind for 2024.

It suffices to say that the Fed rate-cut-driven year that Asia envisioned is shifting to a year in which US yields will remain steady, if not even higher. Consider one of the many possible ways things could turn around for a region at the forefront of unrealized policy expectations and US rate volatility.

Follow William Pesek on X, formerly Twitter, at @WilliamPesek

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The myth of Chinese overcapacity – Asia Times

Early in the morning, mill bell knocks

A person gets out of bed and gets dressed.

Male takes his breakfast, walks out in the morning light

It’s the job, the functioning, just the working life

– Bruce Springsteen

Except for the other tried economic models, the South Eastern trade design is the worst.

Although Winston Churchill was actually speaking about something else, we will use his quip in relation to development economics because the original has n’t been as well-aged.

While some may show at how Japan, South Korea, Taiwan and, of course, China exported their approach to treasures, it was, in fact, an exhausting, grueling and brutal method that has left lasting injuries. Financial growth is not really supposed to occur in this manner.

Graphic: Asia Times

The South Asian trade type is swimming inland, playing the video game on difficult function, running up the down escalator. What kind of creation strategy calls on poor nations to scrimp and save only to lend the money to wealthy clients so they can buy one’s goods?

East Asia had to fight the Lucas conundrum. East Asia triumphed not because the import business model worked so well; because East Asia is East Asia, it triumphed.

The study that money does not flow as predicted by classical economics from wealthy to bad is the Lucas conundrum. In principle, as investment experiences diminishing results in rich economies, it will move to poorer economies which also have low-hanging fruits.

In practice, however, wealthy countries have hoovered up money from developing markets, leaving much of the earth starved for expense.

East Asia, starting with Japan, was able to grow despite the Lucas dilemma. After WWII, Japan’s Ministry of International Trade and Industry ( MITI ) husbanded the nation’s meager resources to invest in strategic industries – steel, autos, electronics, semiconductors etc.

The nation gradually accumulated investment by reinvesting retained earnings into Treasurys with export earnings, bit by bit.

This demonstrated both the selfless and selfless actions of the Chinese people as well as the management skill of MITI. It also demonstrated the effectiveness of the export-driven development model.

In contrast, as post Japan grew up by its own bootlaces, Europe received Marshall Plan cash injections, which is how it is supposed to function.

Societal effects were undoubtedly affected by the two post ideologies. To pursue national rejuvenation through Kaizen ( continuous improvement ) for corporate Japan, two generations of salarymen gave their families, health, and private lives.

Germans, with access to American money, were able to get a more relaxed pace – enjoying shops, barefoot dining, the Beatles and Serge Gainsbourg’s dirty tunes. A line can certainly be drawn from Japan’s striking development model to its present afflictions – low birthrates, social anomie, otaku youths.  

The Asian Tigers followed suit, resulting in even more spectacular outcomes and paying the same amount of. Ultimately, the biggest player came on the scene running a version of the model that, because of China ’s size, is causing Western politicians to mash panic buttons.

The US had long since abandoned Japan’s export growth model and is now desperately trying to target China with its efforts, fair and foul.

Venture capitalist Eric Li recently remarked that China’s biggest economic issue is that it ca n’t go out and buy itself a lot of colonies. Another development strategy that has proven to be extremely successful is imperialism. However, it has left behind like the East Asian export model, as well as some lasting scars. Overall, overworked salarymen are probably less objectionable than colonial ills.

Economicists turn themselves into pretzels in an effort to discover the origin of the Lucas paradox. But is it all that mysterious?

C’mon, folks, America is a giant landmass with a temperate climate, coasts on both the Atlantic and the Pacific Oceans. America is stunning, with expansive skies, amber grain waves, and purple mountain majesties above the fruited plains.

America, America, God shed his grace on thee, it ’s a fat bird of a country from sea to shining sea! America has always exchanged assets for labor, whether through settler colonialism, slavery, immigration or trade.

When there is this America thing (you get Canada, Australia, and New Zealand ), which is hardly extant for a single Sinic dynasty, hoovering up people and capital from all over the world, classical economic theory will not work correctly.

The East Asia development model is the only one possible in this context, not only is it the least bad one available. And it works because East Asians ( insert racist theory here ) are able to pull it off, not because it is so simple to hump to lend to wealthy customers.

Capital would flow according to the laws of classical economics in a world where natural resource endowments are evenly distributed and giant landmasses had not just been opened up for economic exploitation.

Given the realities of history, the Lucas paradox arises because perfect laboratory conditions are not possible. However, we may be at a point where theoretical outcomes will start to take hold in the real world.

We are at a point where development economics can reshape traditional economic theory because the imperial development model has been abandoned in recent years and the export model has not ( insert racist justification here ) been transposed elsewhere.

Janet Yellen, the US Treasury Secretary, recently visited China, which sparked a round of controversy in the Anglo press over industrial overcapacity there.

Senator Sherrod Brown has already called for their ban, claiming that the Chinese electric vehicles ( EV ) are an existential threat to the US auto industry. ”

When Western progressives are presented with low-cost, made-in-China solar panels as the solution, they are mired in cognitive dissonance over long-trumpedeted climate commitments.

This entire overcapacity issue is yet another giddy example of Western solipsism. As Asia Times ’ David Goldman likes to say, “China’s just not that into you. ”

When the US imposed “voluntary ” export quotas on Japan in the 1990s, it constituted 40 % of the world’s car market. That has fallen to 13 % in 2023.

Given geopolitical realities, China does not export cars to the US, and it is likely to veer off in favor of building factories there for regional markets. Around 35 million cars were sold in developed markets ( North America, EU, Japan, South Korea, Australia ) in 2023, unchanged since 1990.

In developing nations sold 80 million cars in 2023, an increase of 80 million from 1990. China has been and will likely continue to direct its export capacity to developing economies – ASEAN, Gulf States, Russia, Central Asia, LATAM, the Indian Subcontinent and Africa.

China ’s car exports map larger trends. Exports to developed economies have doubled in the past five years, now surpassing exports to developed nations. Not only are China ’s exports not a threat to industries in the Global South, but “overcapacity ” in China is entirely necessary for their development.

Graphic: Asia Times

The Global South should not accumulate capital through the backbreaking East Asian export model and cannot do so through imperialism. They are in luck because China ’s “overcapacity ” is exactly how development should work under classical economics.

Excess capital in China should flow to developing economies in the form of loans and investments along with capital goods – 5G base stations, railroad equipment, electrical systems, commercial trucks and, yes, cars. This is the entire theoretical foundation of Belt and Road Initiative ( BRI ) by President Xi Jinping.

Without “overcapacity ” in China, the Global South would have access to neither capital nor capital goods. It is mathematically impossible for the West to provide development assistance to the Global South on an appreciable scale given its current account deficit and capital account surplus.

Because the US does not suffer from “overcapacity, ” long-forgotten initiatives like the Blue Dot Network and Build Back Better World ( B3W ) die on the vine. ”   

Is it conceited to think that China is inundating developing markets with manufactured goods? Development models based on capital inflows require definitional trade deficits from developing nations. The inflow will be used to purchase capital goods required for industrialization. This is the Lucas paradox resolved.

The Industrial Party faction appears to have embraced the Communist Party of China. The Industrial Party is a political identity that breaks with the cynical left-right divide and believes that China’s future will be determined by industry, science, and technology.

Industrial Party precepts, while not necessarily an economic ideology, are able to comprehend the necessity of China’s “overcapacity” and that China is tasked with reversing the Lucas paradox.

Wang Xiaodong, a vocal Industrial Party champion recognized the trends as far back as 2011, exhorting China to globalize its industrialization :     

We must leave and meet the world. Not only do we want our products to “go global, ” we also want our industrialization to go global, and our high-quality talent to go global. We have the power to cause industrialization everywhere. Many of our scientists and technicians will travel around the world to work, bringing with them civilization, a dignified existence, and relief from poverty. One thing that Westerners have been powerless to accomplish is this.

China ’s Commerce Minister Wang Wentao has dismissed Secretary Yellen’s accusations of overcapacity as groundless, insisting that China ’s industries are just more competitive. Because China appears unlikely to compromise, both the US and the EU are likely to erect trade barriers.

In the end, the conflict between China and developed economies is ultimately a sideshow. The flow of Chinese capital and goods to the global south will be what will actually happen.

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Taiwan Night Markets food court closed after 8 months

Speaking to 8days, a spokesman for Fei Siong Group said they closed Taiwan Night Markets due to “the escalation in cost of operations, especially in trying to rigorously adhere to our basic principle of ( selling ) everything authentically Taiwanese, a decline in [consumer ] spending, as well ( as the availability of ) a myriad of (other ) food choices available”. In this way, they decided that the project was no more financially viable and practical.  

Tigerlily Patisserie, who was well-loved, went through the same circumstances.

WHAT’S NEXT?

Although Fei Siong Group acknowledged that this is a “permanent closing at Cineleisure,” it appears that there is still a glimmer of hope for enthusiasts of the idea.  

The Taiwan Night Markets ‘ representative said,” Everything is still open for discussion,” adding that” we will not rule out the possibility of bringing them back.”  

The Fei Siong Group declined to comment on whether they would like to introduce a new Fei Siong idea. Malaysia Boleh!   in the industry ’ former place. When  8days  called Cineleisure’s front desk for details on who is taking over the space, we were told “there’s no tenant now”, and that they “do n’t know who will be taking over ( the unit )”.  

This tale was originally  published  in 8days.  

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Are EVs the future or merely a niche market? – Asia Times

The automotive industry is at a very challenging time in its history. How can it predict the future?

Digital technology ‘ technological miracles have occasionally become brand-new consumer goods and services. And what is most impressive is how fast they have come to be regarded as requirements.

Consider in the past few decades colour television, personal laptops, flat panel displays, wireless connections, digital photography and photo store, LED light sources, contact and internet-based services.

In each case, it took a few years for these innovations to become widely used, a state where record is immediately forgotten. Who remembers 35mm film cameras, light bulbs or Television devices with cathode ray tube? Or 78rpm files?

A world where such significant innovations are immediately accepted as normal also encourages the anticipation of fresh markets created by innovations and the anticipation that like markets may be immediately accepted to the point of establishing significant fresh industries.

If the business size advancements do not match expectations, investing in for future markets calls for significant amounts of capital and opportunities for great profit or loss. This funding issue is currently facing the automotive industry.

Planning is a significant challenge for market planners and investors because the more capital and architectural investment are needed, the bigger the expected market opportunity.

Industrial managers have been ruined by historical instances in which new electronic products eventually replace the outdated people 100 % of the time.

This essentially occurred with light, video displays, and digital cameras, where the rates of new devices dropped as sales volume increased to the point where older products became ineffective in a short period of time.

The success of the new products was based on outstanding performance, reliability, size and freedom.

However, it is too easy and dangerous to foresee that all new electronic devices will just completely replace older ones. This is not always a safe assumption, according to two recent examples: autonomous consumer vehicles and electronic vehicles ( EVs ).

Customer concerns persist over the safety of intelligent consumer vehicles in general traffic despite billions of dollars in investment.

Basic problems impede the mass deployment of self-driving cars, and until they are overcome, for vehicles will be niche machines used in controlled environments.

EVs that quickly found a market in the past few years saw a decrease in battery and production costs as well as improvements in technology and higher production rates. This opens up a bigger opportunity.

In the United States, EVs have quickly grown to account for 8 percent of all car sales in the last quarter of 2018, up from 2 % to 2 %. 1 % in the last quarter of 2023.

In the near future, in the next ten years or less, EVs will be largely replaced by internal combustion engines, according to this advancement.

Then, sales growth slowed, and this presumption is being tested. The Wall Street Journal published a feature article earlier this month that outlined the negative impact the EV industry leader had had on the company.

Is the decline in sales merely a temporary phenomenon or a result of consumer concerns? Did EV sales in 2024 decline as a result of consumers ‘ concerns about the inherent drawbacks of EVs, such as the need for battery chargers and the decline in performance at cold temperatures?

Many potential customers opted to buy conventional cars or new hybrid vehicles with some of the economic benefits of EVs without their handicaps, believing that their advantages were offset by handicaps that made them unattractive as family cars.

Are EVs a niche market or a complete replacement for conventional cars with combustion?    

The decline in sales may be a temporary blip or a result of growing consumer skepticism. Time will tell, but uncertainty will leave manufacturers making difficult and costly decisions.

Industrialists had to make difficult choices as a result of the pace of large-scale technological innovations. None of the above come to mind, though, considering the serious economic repercussions of making the wrong choice for automakers.

Dr Henry Kressel is a technologist, inventor with many pioneering contributions, author and long term private equity investor in technology companies.

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Thai Airways detours around Middle East

Thai Airways detours around Middle East
Iranians celebrate on a street, after the Islamic Revolutionary Guard Corps ( IRGC ) attack on Israel, in Tehran, Iran on Sunday. ( Majid Asgaripour/WANA ( West Asia News Agency ) via Reuters )

After Iran’s attacks on Israel, Thai Airways International ( THAI ) has directed its Europe-bound flights to make detours around the Middle East, despite the Foreign Ministry’s findings that Thailand’s citizens in Iran and Israel have not had an immediate impact.

Chai Eamsiri, president of THAI, stated on Sunday that the airline had temporarily changed its routes on some flights to avoid Middle Eastern airspace, but nevertheless service had not been impacted. &nbsp,

Travelers who had booked planes through the Middle East had no cancelled their trips, according to THAI’s chief commercial officer Korakot Chatasingha, and the aircraft was carefully monitoring the situation.

” Aircraft traveling within Europe typically pass through the airport of the Middle East. Thai Airways International today uses back routes that are not directly connected to Iranian skies, with no effect on the service, according to Mr. Korakot.

The Foreign Affairs Ministry also issued a warning to Indian citizens not to travel to Iran and Israel, citing the Thai consulate in Tel Aviv as claiming that Israel was being protected from the problems by numerous drones and missiles launched from different directions.

Israel announced a nationwide ban on groups from 11 p.m. on Saturday through 11 p.m. on Monday, according to the government.

There are about 28, 000 Thais in Israel and another 300 in Iran. There are no reports of any Thais being impacted by the Iran-Israel issue, the Foreign Ministry said, and the Thai offices in Tel Aviv and Tehran are contacting Thai areas in the nations.

Hua Seng Heng, a Thai gold investor, halted trading on Sunday because of the tensions ‘ sharp decline in the price of gold in world markets. It said it would continue its application- based gold investing &nbsp, on Monday.

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Denying Russia’s only strategy for success  – Asia Times

If the West mobilizes its resources to resist the Kremlin,Russia cannot defeat Ukraine or the West – and will likely lose.

The West’s existing and latent capability dwarfs that of Russia. The combined gross domestic product (GDP) of NATO countries, non-NATO European Union states and the United States’ Asian allies is over $63 trillion.

The Russian GDP is on the order of $1.9 trillion. Iran and North Korea add little in terms of materiel support. China is enabling Russia, but it has not mobilized on behalf of Russia and is unlikely to do so. If we lean in and surge, Russia loses. 

The notion that the war is unwinnable because of Russia’s dominance is a Russian information operation, which gives us a glimpse of the Kremlin’s real strategy and only real hope of success. The Kremlin must get the United States to the sidelines, allowing Russia to fight Ukraine in isolation and then proceed to Moscow’s next targets, which Russia will also seek to isolate.

The Kremlin needs the United States to choose inaction and embrace the false inevitability that Russia will prevail in Ukraine. Vladimir Putin’s center of gravity is his ability to shape the will and decisions of the West, Ukraine, and Russia itself.

The Russian strategy that matters most, therefore, is not Moscow’s warfighting strategy but, rather, the Kremlin’s strategy to cause us to see the world as it wishes us to see it and make decisions in that Kremlin-generated alternative reality that will allow Russia to win in the real world. 

Those whose perspective aligns with the Kremlin’s are not ipso facto Russian dupes. The Kremlin links genuine sentiment and even some legitimate arguments to Russia’s interests in public debate. The Kremlin is also an equal opportunity manipulator. It targets the full spectrum of those making or informing decisions.

It partially succeeds on every side of the political spectrum. Perception manipulation is one of the Kremlin’s core capabilities — now unleashed with full force onto the Western public as the Kremlin’s only strategy for winning in Ukraine. That is not a challenge most societies are equipped to contend with. 

The United States has the power to deny Russia its only strategy for success, nevertheless. The US has allowed Russia to play an outsized role in shaping American decision-making, but the United States has also made many sound choices regarding Russia’s war in Ukraine.

The key successes achieved by Ukraine and its partners in this war have resulted from strategic clarity. Lost opportunities on the battlefield, on the other hand, have resulted from the West’s failure to connect ground truths to our interests quickly enough to act.

Fortunately, the United States faces an easier task in overcoming the Kremlin’s manipulations than Russia does in closing the massive gap between Russia’s war aims and its capabilities.

The United States must surge its support to Ukraine, and it must do so in time. Delays come at the cost of Ukrainian lives, increased risk of failure in Ukraine, and the erosion of the US advantage over Russia, granting the Kremlin time to rebuild and develop capabilities that it intends to use against the West — likely on a shorter timeline than the West assesses.

The United States must defeat Russia’s efforts to alter American will and decision-making for reasons that transcend Ukraine. For the United States to deter, win or help win any future war, US decisions must be timely, connected to our interests, values and ground truth – but, above all, these decisions must be ours.

The US national security community theorizes a lot about the importance of US decision advantage over our adversaries, including timeliness. Russia presents an urgent and real-world requirement for America to do so in practice. 

The Kremlin’s strategy 

The Kremlin’s principal effort is to force the United States to accept and reason from Russian premises to decisions that advance Russia’s interests, not ours. The Kremlin is not arguing with us. It is trying to enforce assertions about Russia’s manufactured portrayal of reality as the basis for our own discussions, and then allow us to reason to conclusions pre-determined by the Kremlin.

Accepting Russia’s premises and reasoning from them may proceed in a formally logical way but is certainly not rational, since it is divorced from actual reality and from our interests. Soviet mathematician Vladimir Lefebvre defined this process as “reflexive control”– a way of transmitting bases for decision making to an opponent so that the opponent freely comes to a pre-determined decision.

A key example: Putin takes the false assertion that discussions of Ukraine’s NATO accession posed a clear and imminent danger to Russia along with the false assertion that Ukraine is not a real country and builds them into a false conclusion that he was justified in launching a war of conquest.

Another assertion: Russia has the right to a self-defined sphere of influence, and, therefore, a right to do whatever it wants to those within this sphere – including invading, killing, raping, and ethnic cleansing – with no repercussions.

The degree to which Western discourse includes serious consideration of these falsehoods marks the success of long-running Russian information operations. 

Some sincerely accept the Kremlin’s false predicates and resulting conclusions. Others may accept the predicates but stop short of leaping to conclusions that any of these arguments justify the Kremlin’s invasion and atrocities. Many can see past the Kremlin’s manipulations and recognize that Russia’s war is an unprovoked war of conquest, however. 

The Kremlin then targets this last category on a different level of reasoning – the predicates that inform our will to do something about Russia’s war and the lengths to which we are willing to go. The Kremlin targets our perceptions of costs, priorities, risks, upsides, alignment with our values and effects of our own actions.

Two main categories of false assertions that the Kremlin is trying to enforce in this respect are that:

  • (a) Ukraine cannot win this war, supporting Ukraine is a distraction from “real” US problems, Ukraine will be forced to settle, the United States is at risk of being stuck in another “forever” war and
  • (b) the risks in helping Ukraine defend itself, let alone win, are higher than the risks of failure in Ukraine for the United States – it is too costly, too risky, and Ukraine is not worth it.

The Institute for the Study of War and many others have thoroughly debunked these assertions, yet they remain pervasive in US discussions about opposing Russia. The Russian goal is to have us freely reason to a conclusion that Russia’s prevailing in Ukraine is inevitable and that we must stay on the sidelines – and Moscow is succeeding far too well in this effort. 

It is important to emphasize that by no means all who oppose continuing or expanding support for Ukraine are doing so as the result of Russian reflexive control measures.

The point, however, is that Americans must recognize the enormous effort the Kremlin is putting into these and other assertions in order to create a picture of reality that, taken in its totality, is false.

Russia had no right to invade Ukraine, has no rights to control Ukraine, was not provoked into such an invasion, will not inevitably win and will not inevitably escalate to fighting a full-scale war against NATO – and helping Ukraine liberate its strategic territories as the only viable path to a durable peace remains the most prudent course of action to secure US interests. 

The Kremlin is also flooding Western discourse with false and irrelevant narratives, forcing us to expend energy, time and decision bandwidth on irrelevancies rather than solutions.

It is not an accident that the Western debate often becomes impaled on arguing about basic well-established facts about this war. This phenomenon is not merely a function of Western knowledge gaps or short memory. It is also a result of the Kremlin’s effort to saturate the Western debate with its assertions.

A key example is a myth about Russia protecting Russian speakers in Ukraine. Russia has obliterated predominantly Russian-speaking cities in Ukraine, killing, torturing, forcefully deporting, and forcing to flee many Russian-speaking Ukrainians. Russia harmed the very people in the name of whom it waged the war.

A Russian propaganda rally in Sevastopol, April 2022, portraying the Russian invasion of Ukraine as a defense of the Donbas. The slogan reads: ‘For the President! For Russia! For Donbas!’ Photo: Wikipedia

Despite this well-documented reality, discussions about letting Putin keep “Russian-speaking provinces” to stop the war persist in Western debate. These discussions proceed from a false premise that Russia’s war aimed to protect Russian speakers to a false conclusion that ceding portions of Ukraine that have Russian speakers can resolve the war and is, furthermore, reasonable or justifiable.

Many other basic facts are in question daily as the Kremlin floods the Western debate with its narratives. Putin deliberately chose to focus his interview with American media personality Tucker Carlson on historical justifications for the war.

Putin is retroactively creating casus belli by twisting a historic narrative on the record. The history of Kievan Rus is as irrelevant to the current war as the history of the Roman Empire was to World War II. Every country in the world has a historical basis to claim rights to some or all of the territory of its neighbors.

The world avoids a Hobbesian war of all against all by rejecting the validity of such arguments. Yet the Kremlin’s constant driving of them continues to divert Western discussions about what to do now into these historical irrelevancies.

The Kremlin also forces the West to dedicate energy to an equally irrelevant discussion about whether Ukraine has the “right” to be a state or a nation.

No country with a seat in the United Nations and recognized by the overwhelming majority of states in the world has an obligation to prove its right to exist no matter how small or ethnically like another state it might be. This principle is central to the current world order, and its destruction would open the floodgates of war around the world as predators used such reasoning to justify attacks on would-be prey.

But the flood of false Russian narratives forces us to engage in such irrelevancies rather than focusing on war-winning strategies and our interests. 

Russia is hijacking and substituting key concepts of Western debate about this war, such as notions of peace and defense, contributing to Western category errors about both. 

Peace = surrender

The West naturally and understandably gravitates toward peace. Our default instinct is to seize the first opportunity in any conflict to “stop the fighting.” The Kremlin has mastered using the Western predisposition to peace as a lifeline for Russia’s wars – from Syria to Ukraine.

The Kremlin has not once supported its euphemism of “peace” with action in the context of Ukraine. The Kremlin has had continuous opportunities to choose peace, including a choice not to invade Ukraine – a country that Putin considered to be so militarily unthreatening that Putin assessed he could conquer it in a matter of days.

Allowing Russia to keep its gains in Ukraine in 2015 and having a peace framework in place for seven years did nothing to stop the Kremlin’s reinvasion in 2022. Every single version of the Kremlin’s euphemisms of “peace” since 2022 has included a demand that amounted to the destruction of Ukraine’s sovereignty.

Russian Security Council Deputy Chairperson Dmitry Medvedev’s recent “peace formula” explicitly called for the elimination of the Ukrainian state and its absorption into Russia. The Kremlin’s use of the term “peace” has been incompatible with its actions, including Russia’s campaign to eradicate Ukrainian identity in the occupied territories. 

The Kremlin’s exploitation of the Western argument for “stopping the bloodshed” conceals another critical nuance. Stopping the fighting does not stop the killing when it comes to Russia. The killing continues in Russian torture chambers on territory that Russia occupies – a process that is less visible to Western audiences and in a place where victims are stripped of the means to defend themselves. 

The Kremlin dangles the concept of “peace” to steer the West toward Ukraine’s surrender – the outcome that Russia seeks but cannot accomplish militarily on its own. When the Kremlin “signals peace,” it actually signals a demand for Ukrainian and Western surrender.

Western debate continues, nevertheless, to indulge the Kremlin’s false overtures for “peace,” despite the total lack of evidence to support any reasonable assessment that letting the Kremlin freeze the lines in Ukraine can lead to peace rather than more war. 

Resisting Russian aggression = escalation 

No one should be confused about verbs when it comes to Ukraine’s actions. Russia imposed its war on Ukraine. Ukraine chose to defend itself. Ukraine’s action is resisting death, occupation, and atrocities at the hands of Russian forces. Yet, the Western debate periodically accuses Ukraine (or the West itself) of “escalating” or “prolonging the war.”

The Kremlin has greatly invested in framing Ukraine – and anyone who dares to resist the Kremlin – as an aggressor (and Russia as a victim). The West’s legitimization of Russia, a belligerent in Ukraine since 2014, as a mediator in the Minsk agreements also gave the Kremlin eight years to falsely frame any Ukrainian self-defense action or unwillingness to bend to the Kremlin’s will as Ukrainian aggression. 

No one should be confused about verbs when it comes to Western actions regarding Russia. The West has been non-escalatory toward Russia for years to the point of self-deterrence and ceding its own interests. The West has consistently chosen a path of negotiations, resets, and concessions with Russia.

The United States, while focused on counterterrorism, did not prioritize Russia, largely until 2016 when the Kremlin openly interfered in US politics.

NATO has been self-deterring for years, discussions about Ukraine’s NATO accession have stalled, and Putin expected the Western response to his invasion of Ukraine to be so weak that he could conquer Ukraine in a matter of days.

Russia has been a self-declared adversary of the US and NATO, but neither the US nor NATO took meaningful steps to defend against Russia, let alone attack it, until after the full-scale Russian invasion of Ukraine in 2022.

The West nevertheless periodically views its actions regarding Russia as by default escalatory, conceding the Kremlin’s reasoning. This includes Western actions to defend itself or its partners against unprovoked Russian aggression or measures to limit Russia’s access to Western technologies and markets – neither of which Russia is entitled to and certainly not when it uses both to sustain its unjust war.

The Kremlin’s framing that any Western action to resist Russia is aggression does not make those actions aggression. But the Kremlin has conditioned the West to think that way, forcing us yet again to reason from the Kremlin’s assertions, not ones based in reality. The West also indulged Putin’s grievances and grudges and reasoned to a false conclusion that we are somehow responsible for the Russian crimes that the Kremlin voluntarily committed against other states and its own people. 

These Russian efforts benefit from and strengthen trends already strong in Western discourse, such as the belief on both sides of the political spectrum that US or Western interventions are the source of all or most problems in the world. People, again, are entitled to their own views on these matters – but all should be aware of the degree to which the Kremlin seeks to weaponize our own internal discussions and disagreements to advance the Kremlin’s own aggressions and protect itself from the consequences of its atrocities.

One can in principle condemn US or NATO policies and actions in the past and also condemn Russian aggression – but not in the Kremlin’s world, and not in the false reality the Kremlin seeks to impose on our internal discourse.

The Kremlin’s focus on degrading US decision making is not opportunistic, new or limited to Ukraine. Perception manipulation is a key element of Putin’s offset strategy – a way to achieve goals beyond the limits of Russia’s power.

In 2020 the Institute for the Study of War assessed that Putin’s center of gravity was increasingly his ability to shape perceptions of others and project the image of a powerful Russia based on limited real power. We wrote:

The Kremlin often generates gains based on perception without changing Russia’s capabilities. These gains emerge at the nexus of the Kremlin’s efforts to manipulate perceptions and the West’s inherent blind spots about Russia’s intent and capabilities. Minimizing the West’s perception of its own leverage over Russia is a core component of this effort. 

The Kremlin depends on this strategy in Ukraine. Russia does not have sufficient military capability to achieve its maximalist objectives if Ukraine’s will to fight persists alongside Western support. Degrading US decision-making is one of the few ways, possibly the only way, to narrow the gap between Russia’s goals and means in Ukraine.

Russia uses perception manipulation to advance its interests globally. Information operations have been a key part of the Kremlin’s toolkit for decades. Russia’s national security paradigm shifted heavily toward the information space after 2014, however, as a recognition of the increasingly vital requirement to shape global perceptions to advance Russia’s goals.

The Kremlin has been working to create an environment that would simply accept Russian premises. If the world accepts that Russia can do whatever it wants within its self-declared sphere of influence, Russia will need fewer sticks and carrots to impose its will on its neighbors. Or, for example, if the Kremlin succeeds in creating conditions in which NATO is forced to abandon its principles, such as Article 5 or the Open Door Policy, Putin would have succeeded at his goal of breaking NATO. 

The ability to control perceptions inside of Russia has been an existential requirement for Putin. In 2020 the Institute for the Study of War wrote that Putin’s rule depends on his ability to maintain the perception that an alternative to him in Russia is either worse or too costly to fight for.

The Kremlin has succeeded in instilling inaction as a default instinct within the Russian population through physical and informational means. Submission takes time to achieve but the self-deterrence it generates pays off. The submission of the Russian population is the reason Putin can afford to rule with a suppression apparatus short of Putin’s likely suppression needs – if his regime were ever to be tested again (with Wagner Group financier Yevgeny Prigozhin providing a glimpse of such a test during his June 2023 mutiny). 

Herein lies Putin’s core problem with Ukraine. Ukraine has demonstrated the capability to defy Putin’s center of gravity – his ability to shape the will and decisions of others. Ukraine is not immune to the Kremlin’s reflexive control, but it achieved strategic clarity in pivotal moments.

In 2014, barely-equipped Ukrainian volunteers saw past the Kremlin’s hybrid cover and rushed to the frontline to combat Russian aggression – even in the absence of Ukraine’s conventional military and Western willingness to counter Russia.

Ukraine did not fall prey to the Kremlin’s campaign in 2019 to force Kyiv into political concessions that would have compromised Ukraine’s sovereignty. Ukraine resisted Russia’s unprovoked full-scale invasion in 2022.

Growing antibodies to Russian manipulations within Ukraine’s civil society are among the key reasons Ukraine continues to exist as a state. The Ukrainian instinct to run to the sound of the guns whenever Russians invade to “protect” Ukrainians from themselves should be a clear indicator of the falsehood of many Kremlin premises for its aggression. The fact that those premises continue to persist in the Western discourse despite these obvious contradictions is a testament to Russia’s successful reflexive control techniques.

This article, with its extensive footnotes removed, is the first half of the original report by the Institute for the Study of War, republished with kind permission. Read the full article, including footnoted sourcing citations, here.

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The long wait for lower US interest rates – Asia Times

Notice farmers and other company borrowers: Interest rates will remain higher than anticipated for a while longer than anticipated.

Financial markets were betting that the Federal Reserve may lower interest rates six or seven days this year in late 2023. Fed policymakers were more cautious, but they did predict a drop in their benchmark interest rate from 5.4 % to 4.6 % by the end of 2024.

Markets were also betting that the first reductions would occur in June despite prices studies in January and February that came in hotter than expected. A majority of Fed leaders predicted there would be three reduces this year in March.

Expectations that the Federal Reserve would soon lower interest rates were soaring as a result of the rapid decline in US customer cost between mid-2022 and mid-2023. Recently, though, inflation has remained stubbornly higher than the Fed’s 2 % target. &nbsp,

Immediately, dark skies have obscured that beautiful price view. Businesses are now betting on a 5 % standard level for the year-end, along with one or two reduces this year. Some investors believe there wo n’t be any cuts this year. One Fed national recently stated in an interview that “it’s far too quickly to consider cutting interest rates.”

To realize the postpone, a little history is good. The Fed undermined its own legitimacy when prices started to rise in 2021 because it was slow to act.

When it was finally given the opportunity, it made up for its rudeness by raising its benchmark interest rate in 11 consecutive bimonthly sessions from nearly zero to a range of 5.25 to 5.5 %. That brought charges to a 40-year higher and the fastest rate of growth in 40 years.

In the summer of 2022, the rate of price increase dropped from just over 9 % to just over 3 % in 2023, with inflation finally starting to stabilize. The Fed’s preferred inflation measure was rising at a rate of well under 3 % by the end of the year.

Fed officials reiterated at their December meeting that price slashes will depend on the Fed’s greater assurance that prices will remain stable and meet its 2%-a-year objective.

What’s happened, then, is that the ensuing financial studies have not added to their assurance but, instead, appear to have shaken it. The consumer price index has experienced yearly raises of over 3 % for three consecutive months. The March increase was 3.5 %, up from February’s 3.2 %.

However, the labour market has been far more powerful than expected. In March the economy added 303, 000 jobs, the unemployment rate remained unchanged at only 3.8 % and average hourly earnings rose 0.3 % month on month.

The Fed may have ignored the robust labor market if inflation had continued to convenience. Low prices and lower employment are, in a way, the very definition of what the Fed wants to achieve, the legendary economical” soft landing”.

The Fed may keep rates where they are and wait for more monetary developments as inflation continues to remain stubbornly above goal while the labor market is strong. There is almost certainly not going to be a price cut in June. Another few weeks of faster price increases than the first, and the Fed might be considering a price improve.

There is still a possibility of one or two price reductions this year because the job market might be weak and inflationary pressures might comfortable, but it’s just a chance. Keep an eye on the information if you’re trying to figure out when prices will start to begin to drop. Fed officials often say their selections are “data dependent.”

Urban Lehner, a former Wall Street Journal Asia journalist and editor, is DTN/The Progressive Farmer’s writer emeritus. &nbsp, This&nbsp, content, initially published on April 12&nbsp, by the latter news business and then republished by Asia Times with authority, is © Copyright 2024 DTN, LLC. All rights reserved. &nbsp, &nbsp, Follow&nbsp, Urban Lehner&nbsp, on X @urbanize.

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