Recommended Weekend Reads
August 2 - 4, 2024
Please find below our recommended reads from reports and articles we read in the last week. We hope you find these useful and that you have a relaxing weekend. And let us know if you or someone you know wants to be added to our distribution list.
China
How is China’s domestic situation evolving? Brooking Institution
There is a lot of discussion in Washington about China’s social and economic challenges and the potential implications of these challenges for Chinese society, governance, and foreign policy. In the following collection of short essays, Brookings scholars offer their different perspectives drawing on decades of experience living and working in China to answer the question, “How is China’s domestic situation evolving?” They cover everything from gender right to economic challenges to domestic tourism to education to political and military changes and challenges.
Why the China model is failing Australian Strategic Policy Institute
The authoritarian China model under President Xi Jinping’s leadership is facing increasing failure. Its most critical flaw lies in the unconstrained power of the ruling Chinese Communist Party (CCP), arbitrarily intervening in market and social activities for the interest of itself or its leaders without robust mechanisms for accountability and self-correction. The China model is thought to have contributed to the country’s ‘economic miracle’ in more than four decades to the early 2010s. From 1978 to 2012, the Chinese economy grew at an average annual rate of 9.4 percent, rising from low-income status to become the world’s second largest. For many developing countries, this growth symbolizes the success of the CCP’s authoritarianism, which they seek to emulate.
China’s updated playbook for reviving growth risks more tensions with the world Peterson Institute for International Economics
China’s most senior leadership concluded a major political meeting in July with a communiqué correctly identifying a “grave and complex international environment” and “arduous tasks” at home. But as expected, there was limited indication of new policy approaches to revive its slowing economy and recover from a real estate crisis. Nor did the meeting portend a serious effort to defuse growing backlash in the United States, the European Union, Indonesia, Brazil, and others against China’s economic playbook, which emphasizes increased investments in manufacturing for exports to boost its sluggish growth.
Why is It So Hard for China to Boost Domestic Demand? Carnegie Endowment for International Peace
As most analysts expected, the Chinese Communist Party’s Third Plenum communiqué, released July 18, was much vaguer on demand-side measures designed to boost the role of consumption in driving the Chinese economy than it was on supply-side measures. This was the case even though over the past five to ten years, a near unanimous consensus has developed among both Chinese and foreign economists that consumption’s very weak role in driving the economy is the main constraint to sustainable growth in China. Despite this consensus, Beijing has been unable to shift the economy away from its overreliance on investment—and, more recently, on its trade surplus—to maintain high growth rates. In early June, American economist Paul Krugman publicly worried in a Bloomberg interview that China’s leaders were “bizarrely unwilling” to use more government spending to support consumer demand instead of production
The Global Drug Trade
We bought everything needed to make $3 million of fentanyl. All it took was $3,600 and a web browser Reuters
In this fascinating interactive report, Reuters investigative reporters showed that at the tap of a buyer’s smartphone, Chinese chemical sellers will air-ship fentanyl ingredients door-to-door to North America. Reuters purchased enough to make 3 million pills. Such deals are astonishingly easy – and reveal how drug traffickers are eluding efforts to halt the deadly trade behind the fentanyl crisis.
Sky High: The Ensuing Narcotics Crisis in the Middle East and the Role of the Assad Regime Observatory of Political and Economic Networks
The staggering scale of recent narcotics seizures in the Middle East—and Arab Asia in particular—and their ties to state and non-state actors in Syria is drawing the world’s attention. The United Kingdom, the United States, and the European Union have begun sanctioning Syrian and Lebanese suppliers as part of their response, with US legislators awaiting a holistic government response. Some countries in the region have recently considered the once-unthinkable: normalizing relations with the Assad regime, partly in the hope of cooperating directly with Damascus to curb the supply.
This research documents the seizure over the last three years of over a billion pills of amphetamine-type drugs commonly known as ‘captagon’. It offers the most comprehensive attempt, to date, to understand the breadth and nature of the ongoing narcotics crisis and the networks sustaining much of their supply in Syria and to a lesser extent in Lebanon. While all drug types are observed, special attention is given to captagon. Researchers constructed two databases specifically for this project. The first documents 1,251 drug seizures originating, transiting through, or reaching their destination in Arab Asian countries between 2016 and 2022. The richness of the data enables identification of how seizures vary by drug type, amount, countries of origin, countries of transit, and geolocation of seizures over time. The second is a network database that maps actors involved in the supply of narcotics from Syria and Lebanon. It contains 712 nodes (441 individuals and 271 non-individuals) and a narrative detailing their roles and relationships within the network. The database, compiled from primary and secondary sources, is the most expansive documentation effort on the subject to date.
Economics/Trade/Foreign Direct Investment
The Bretton Woods Moment – and Its Necessary Replacement Carnegie Endowment Working Group for Reimaging Global Economic Governance
Despite a concatenation of shocks—a China shock in trade, the global (or North Atlantic) financial crisis, surges in migration, a global pandemic—the current architecture of global economic governance has persisted and demonstrated remarkable resilience and adaptability. Trade has not collapsed; financial integration recovered from the global financial crisis; the cross-border movement of people has resumed post-pandemic. The interwar decades of disintegration, nationalist isolation, and great power war have yet to be replicated. Rather than “deglobalization” or the collapse of the existing global order, institutions and integration appear to have reached a stable plateau. Nevertheless, this plateau risks further descent into disorder, albeit less from a concerted attack on that order than out of discontent with its failure to confront such urgent challenges as climate change effectively. Conflict over the current distribution of costs and benefits poses another threat to the status quo.
Low US Economic Confidence Steady Gallup
Gallup’s Economic Confidence Index registers -35 in July, stable compared with the past two months and consistent with the longer trend of negative public sentiment about the current and future American economy. Gallup’s Economic Confidence Index did show improvement between November and March, gaining 20 points, but since then has slid back to where it was in December 2023. During President Joe Biden’s term, confidence has slumped to as low as -58 in June 2022 amid soaring inflation, the worst reading since the Great Recession in 2008 and early 2009.
Trends in Competition in the United States: What Does the Evidence Show? Carl Shapiro & Ali Yurukoglu/National Bureau of Economic Research
Has the United States economy become less competitive in recent decades? One might think so based on a body of research that has rapidly become influential for antitrust policy. We explain that the empirical evidence relating to concentration trends, markup trends, and the effects of mergers does not actually show a widespread decline in competition. Nor does it provide a basis for dramatic changes in antitrust policy. To the contrary, in many respects the evidence indicates that the observed changes in many industries are likely to reflect competition in action. We highlight research that points to targeted interventions that can enable antitrust enforcement policy to better promote and protect competition. Throughout the paper, we identify open questions and opportunities for future research in the cross-industry evidence-at-scale paradigm, the industry-specific study paradigm, and their intersection.
Energy Policy
Taking Stock 2024: US Energy and Emissions Outlook Rhodium Group
Every year, Rhodium Group provides an independent projection of future US greenhouse gas (GHG) emissions under current policy and expectations for economic growth, future fossil fuel prices, and clean energy cost and performance trends. In the ten years since we released our first Taking Stock report, the US has made progress on a path to decarbonization. In 2023, US GHG emissions were 18% lower than they were in 2005. In addition, policies enacted at all levels of government have never been stronger for achieving even deeper cuts to emissions, including the passage of the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA), adoption of a suite of federal regulations aimed at driving down emissions, and ambitious state action. With all federal and state policies on the books as of June 2024, we estimate the US is on track to reduce its GHG emissions by 38-56% below 2005 levels in 2035, representing at least a doubling—and potentially as much as a four-times increase—from the pace of annual emissions abatement from 2005 to 2023. On the way to 2035, we find the US could reduce its emissions by 32-43% below 2005 levels in 2030. These emissions reductions under current policy are a measurable acceleration in mitigation even compared to our Taking Stock 2022 edition from just before the passage of the IRA, in which we found the US on track for a 24-35% reduction below 2005 levels in 2030. But they are not enough for the US to achieve its 2030 climate commitment under the Paris Agreement of a 50-52% reduction by 2030, or deep decarbonization by mid-century.
Great Power Arctic Strategy
The High North – Important or Overlooked? Janes Defense Group Podcast
In this podcast, James Rands, senior Balkans and military capabilities analyst at Janes, joins Harry Kemsley and Sean Corbett to provide a deeper understanding of the High North, Arctic region. With climate change likely to expose a northern sea route in the next decade or so and the potential abundance of natural resources, many countries will want to stake claim on this previously impenetrable region. Rands highlights the military capabilities required to operate in this challenging environment. They also discuss the important role open-source intelligence plays in providing early-warning indicators of activity and any escalation in tensions in what is likely to become a key global strategic area.
Arctic Strategy 2024 US Department of Defense
In a new report, the US Defense Department lays out a strategy to defend the Arctic. In the introductory memo, Secretary of Defense Lloyd Austin states: “The United States is an arctic nation, and the region is critical to the defense of our homeland, the protection of the US national sovereignty, and our defense treaty commitments. I am issuing this 2024 Arctic Strategy to guide the US Department of Defense in a concerted approach to preserve the Arctic as a stable region in which the US homeland remains secure and vital national interests are safeguarded.”
