Tag Archives: China

The Race for Artificial Intelligence: China vs. America

My latest article on Impakter:

What is The Role of Europe in the AI Race?

Let’s be clear, Artificial Intelligence, in particular in its latest development, deep learning that mimics the way the human mind works, first emerged in America. This gave the U.S. a huge head start over the rest of the world – including China, putting the U.S. firmly in the lead of the race for AI.

In the photo: Electronics factory in Shenzhen. Note that the photo dates back to 2005: Chinese investment in electronics is nothing new. Source: Wikipedia

IWhat Americans didn’t develop at home, they bought from Europe. In this respect, two British firms stand out with groundbreaking contributions to AI development: ARM and DeepMind.

While all eyes are trained on the AI race between China and America, is there a role left for Europe?

From the start of the digital revolution, and in spite of America’s lead, Europe has always had a fundamental role in digital research, a role often overlooked and even downplayed by the media mesmerized by Silicon Valley fireworks.

But the fireworks are dying down and getting messy now while China is on the rise.

America’s AI Roots in Europe

Let’s take a closer look at ARM and DeepMind, the two British firms that played a fundamental role in sustaining America’s lead in electronics.

Read the rest on Impakter, click here.

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G20 Surprise Show

Just published on Impakter:

The big news from the G20 meeting that just closed in Buenos Aires is the 90-day truce in the U.S.-China trade war that has rattled financial markets and threatened global growth. The smaller news is that Trump did not pull the rug under this meeting the way he had done at the last G7 meeting in Canada.

The prospect of a no-statement Summit similar to the G7 debacle had looked very real. As it turned out, the show was very different from what everyone expected, largely thanks to the strong action of French diplomacy, spurred by Macron who wanted a G20 summit statement on his favorite issues, climate change, globalization and growth. But the G20 meeting confirmed the previous G20 in Germany (July 2017): American isolationism is back.

To understand what happened, it helps to take a step back and consider what the G20 is really all about – just like the G7, acting at the margin of the United Nations.

The G20, born of a G7 meeting of finance ministers and central bankers in 1999, is made up of the world’s 19 most important countries in terms of their GDP, plus the European Union. The two giant state members are the United States ($19.39 trillion) and China ($12.24 trillion). Since the G20 was founded, both superpowers have distanced themselves from the pack as most countries’ GDP flat-lined:

In the diagram: Evolution of G20 Member countries Gross Domestic Product since foundation of G20 (1999) SourceData from World Bank  Last updated: Jul 6, 2018  ©2014 Google

In spite of the limitations of GDP as an indicator (it doesn’t capture social progress),the diagram is a striking depiction of the varying impacts of globalization, with the U.S. and China the big winners, at the expense of the rest of the world. And it shows clearly how the U.S., contrary to what Trump says, has always been “great” with the 2008 Big Recession a mere blip on its growth rate.

And it didn’t help that Europe (as a region) showed up in disarray at the meeting: The UK struggling with Brexit and not getting the expected support from Trump; Russia embroiled in an escalating fight with Ukraine; Merkel on her way out and rumored to be aiming for the presidency of the European Council; Macron battling yellow vests protests that are now in their third week and devastated Paris last Saturday.

That leaves on the international scene the two superpowers, the US and China. Some even talk of the emergence of a G2. In a sense, when Trump dined with Xi and crafted a truce in their trade war, that was a G2 meeting.

But if one of the superpower – in this case, Trump’s America – chooses to isolate itself with trade wars and its America First agenda, then China is left free to interact with the rest of the world. Which is precisely what happened. Let’s take a closer look.

The US-China 90-Day Trade Truce

Read the rest on Impakter, click here.
 
Featured photo: G20 Gala dinner 30 November 2018  Source: Official photo G20 Secretariat 

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The Future: America vs. Eurasia

Europe and China could change the course of History as Trump’s America First policies move America to the sidelines…Here’s the opening of my new article, just published on Impakter:

Bosphorus Bridge (Turkey) linking Europe to Asia – PHOTO JORGE1767


How will the future play out? Will Europe follow America’s example and sink into nationalist populism that will inevitably tear apart the European Union and open the way to Trump’s divide-and-conquer America First strategy? Will America’s trade war with China escalate in a real war that could go global as Trump’s stranglehold on world trade tightens further? I believe there is hope that neither will happen. Instead, we might witness something utterly different and much more likely: the rise of Eurasia.

Two events these days are early signs of such a shift for anyone who cares to look. One just took place in Paris at the 100th anniversary of the end of World War I organized by French President Macron. The other, thousands of miles away in Singapore, is the ASEAN Summit, from 11 to 15 November where a major new trade deal, the Regional Comprehensive Economic Partnership (RCEP) that for the first time included China, was on the agenda.

The trip was a diplomatic disaster for Trump. He started on the wrong foot even before leaving for Paris. On 9 November, Trump, misunderstanding a Macron statement about the formation of a “true European army”, sent an insulting tweet:

The misunderstanding was soon clarified: Macron had referred to the announced U.S. withdrawal from the I.N.F. nuclear arms treaty with Russia as a reason for establishing an independent army, not that the U.S. was an enemy. Macron in a speech welcoming 84 world leaders to the celebration on November 11, made another statement that shook Trump who considers himself a nationalist:

“Patriotism is the exact opposite of nationalism. Nationalism is a betrayal of patriotism by saying: ‘Our interest first. Who cares about the others?’ I do defend my country. I do believe that we have a strong identity. But I’m a strong believer in cooperation between the different peoples, and I’m a strong believer of the fact that this cooperation is good for everybody.”

From the ashes of the two World Wars came hope, he said. “This hope is called the European Union, a union freely entered into, never before seen in history, a union that has freed us of our civil wars”. Trump appeared “grim” and clapped only tepidly afterward. Significantly he missed the opening of a 3-day conference, the Paris Peace Forum that followed the ceremony to discuss how to strengthen multilateralism.

The next day, on 13 November, Trump took again to Twitter in a series of five aggressive tweets, astonishingly rude and misinformed, including this one:

Not the way to treat the leader of an American allied country. He forgets (or doesn’t know) that his own approval rating in France is abysmal (around 9%).  Macron was forced to respond. France, a historic ally, is “not a vassal state” he said in an interview on French TV: “At every moment of our history, we were allies, so between allies, respect is due. I don’t think the French expect me to respond to tweets but to continue this important history.”

Now that Angela Merkel is on her way out and Brexit is wobbling to its pell-mell conclusion – barring a last-minute legal reversal or a political crisis – there is no doubt that Macron is emerging as the main defender of a United States of Europe. A Europe increasingly under assault by Trump’s America First policies.

Meanwhile, at the other end of the Euroasian continent, in Singapore, RCEP is the second major trade deal under discussion since Trump ditched the Trans-Pacific Partnership (TPP) in January 2017. A serious political blunder considering that the goal of the TPP in the Obama administration’s intention, had been to exclude China. In March 2018, the situation had been reversed and it was America that was isolated: the remaining TPP members (including Canada and Australia) signed the first major Pacific trade agreement, keeping the original TPP content largely intact but renaming it the Comprehensive Progressive Trans-Pacific Partnership (CPTPP) – to take effect soon, on 30 December 2018.

Brookings Institute experts see the new RCEP as something much bigger, “an optimistic answer to populist and protectionist trends around the globe”.

Massive, the new RCEP brings together 16 countries covering 3.6 billion people for a total GDP of some $25 trillion, exceeding that of the United States. The point is that it brings China in for the first time, together with India, Japan and South Korea. It builds on commitments already taken in the World Trade Organization (WTO). Not without difficulty of course. Of the 21 chapters of the treaty, so far agreement was obtained on only seven.

RCEP negotiations are expected to be completed only at the next ASEAN summit in Thailand in 2019. Predictably, problems range from India’s fear of being overrun with products from China, Korea and Japan to Trump’s trade wars, making some countries anxious of “losing” the American market.

How Likely is Eurasia to Replace America as World Leader?

Euroasia: A little used term for a vast continent that extends from Cape Dezhnev (Russia) in the East to the Monchique Islet (Portugal) in the West to Dana Island (Indonesia) in the South. A new geo-political entity that is not yet born. The road is rocky but if it emerges, it will be the largest ever, encompassing two-thirds of the world population.

Find out! Read the rest on Impakter, click here.

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Trump’s Hold on International Trade and Finance

Just published on Impakter:

The midterms handed the House to the Democrats but not the Senate, despite receiving some 12 million votes more than Republicans in Senate races. As a result, Trump’s ability to pursue his conservative agenda is largely crippled. But where he can count on the backing of the Senate, Trump retains full power, including the ability to nominate judges and pursue foreign policy. His hold on international trade and finance, notably through sanctions and tariffs, remains intact. With potentially devastating consequences.

The trade war on China is not about to stop but that is only the most visible part of the Trumpian iceberg. There are, as this article will show, other, more discreet elements buried under the surface, such as America’s grip over SWIFT, the payments transfer system universally used by banks everywhere.

Packing the Federal Court System with Conservative Judges

We all know how Trump packed the Supreme Court with two conservative judges, most recently with Brett Kavanaugh, a highly controversial figure. What is less well known is how Trump is also “packing” the Federal court system. As of 4 November, the Senate has confirmed 29 judges for the United States Courts of Appeals, 53 judges for the United States District Courts, all nominated by Trump. In fact, according to the Pew Research Center, Trump has successfully appointed more federal appeals court judges at the same point in his tenure than Barack Obama and George W. Bush combined:

Source: Pew Research Center. (Screenshot; note data stops at July 12, 2018 and does not include the second Supreme Court appointment made by Trump)

Expect many more nominations over the next two years. Here however I am taking a close look at foreign policy, and in particular the area that has traditionally underpinned American “soft power”: international trade and finance.

Bending World Trade and Finance to the America First Agenda

Trump has now carte blanche to reshape the rules-based world trade system to serve his America First agenda – and this is something that should deeply worry America’s allies and foes alike.

This week-end Trump is in Paris for a meeting of world leaders, invited by French President Macron to celebrate the centenary of the end of World War I. A meeting that includes Putin and that is poignantly far away from the trip taken 100 years ago by President Wilson, his idealistic predecessor, bent on rebuilding the world. The reverse of Trump’s goal which is to take it apart. And he will not stop there. Trump is scheduled to attend in November the G20 meeting (China will be there). Expect fireworks.

Will Trump change his confrontational approach to American allies, especially Europeans? Not likely. So far, he has loudly pulled out of numerous treaties (the Trans-Pacific Partnership with Asia and the equivalent treaty with Europe, the Paris Climate Agreement, the Iran nuclear agreement). Recently he has announced he will abandon the Intermediate-Range Nuclear Forces Treaty signed with Russia by Reagan; he threatens sanctions against the International Criminal Court and is pulling out of an 144 year-old postal treaty as part of his fight against China. He has repeatedly cheered Brexit, attacked NATO partners and declared that the “European Union is a foe”.

At the heart of Trump’s “art of the deal” are bullying tactics, plain and simple. And in a perverse way, they make sense.

The Strategy Behind Trump’s Bullying: Divide to Rule

Consider the world that we lived in until the 2016 U.S. presidential elections.

Read the rest on Impakter, click here. Do let me know what you think! 

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Trump’s Trade Wars: The End of American Supremacy?

Today Trump opened another battlefront in his trade wars, with duties slammed on Chinese goods worth $34 billion. Expect China to retaliate with counter tariffs on US imports. China’s commerce minister was quick to announce: “China promised to not fire the first shot, but to defend national core interests and the interests of the people, it has no choice but to strike back as necessary”. A few hours later, China filed a complaint with the World Trade Organization, its second one.

Conventional wisdom has it that nobody wins from a trade war. Is it wise to ignore it? Trump has no doubts, he is convinced his trade wars will Make America Great Again.

This reminds me of the Italian captain who sank his own boat out of bravado. Remember Captain Francesco Schettino who famously sank the Costa Concordia cruise ship off the Italian island of Giglio in January 2012? He did this serenading a pretty lady in the dead of night, showing off his ability to sail close to the rocks. The ship hit the shore, capsized and 32 passengers and crew died.

Think of that beautiful cruise ship as a metaphor for the international order that America built after World War II, ensuring peace and prosperity through, inter alia, global trade. Now, Trump, like Captain Schettino, is steering the world ship towards the rocks while serenading his base:

Extraordinary. Watch how Trump’s audience looks enraptured, captivated by his show. And the numbers Trump throws around are totally out of context. Consider what he says of Canada, referring in a tone of outrage to a 275% tariff barrier. As if US farmers don’t have access to Canada’s markets because of it.

Is that the case? The fact is that 275% tariff barrier (which is indeed outrageous) only concerns a very small section of the market, milk and milk products. On average, trade barriers with Canada, as with all other advanced countries, are very low, around 2% to 5%. Not really enough to drive imbalances in trade.

The Real Causes of US Trade Deficits

US trade deficits have other causes, and they are nothing new. They’ve been going on since the 1960s, arising mainly from:

The rest on Impakter, click here and let me know what you think!

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Trade War with China: Who Wins?

We are now facing an escalating trade war between the US and China – started by the US. The question is: can the US win? And what will it cost the world?

It is worth listening to Carlos Gutierrez, co-chairman at Albright Stonebridge Group, a major global corporation and former U.S. Commerce Secretary who spoke on 18 June on “Bloomberg Daybreak: Americas”:

He reminds us that the free-trade agreements that have been brokered since the 1980s are not as bad as Trump would have it: they have consistently given the US a surplus. The point is: There never was a similar agreement with China. And he doesn’t mince words in describing the dangers for the whole world. He urges restraint.

Clearly Trump is not listening. A few hours after Gutierrez talked to Bloomberg, Trump had threatened an additional 10% tariffs on another $200 billions worth of goods:

Trying to answer the question of “who wins a trade war”, Bloomberg has rounded some major experts asking them what they thought. While the answers are interesting, they all focus on the short term and unfortunately don’t go beyond are the framework of classical economic analysis which overlooks geo-political factors:

  • China has limited room to retaliate in a trade war escalation: It only buys $130 billion worth of American goods while the US deficit with China runs to $375 billion; this is a “high stakes game of poker” and “China will run out of U.S. imports that it can hit with tariff countermeasures long before the U.S. does” (Rajiv Biswas, IHS Markit Singapore);
  • China needs to open up to global innovation and investment: “both China and the U.S. and other countries can really benefit from this Made-in-China 2025 strategy” (William Zarit, chairman of American Chamber of Commerce in China);
  • This is creating a “perfect storm” for China’s export Industry: it’s not just Trump’s tariff war but also the probable US Senate ban on ZTE, the Chinese electronic producer that Trump wanted to save; such a ban would  stop it from importing the American chips it needs for its phones and other products, hitting at the very heart of Made-in-China 2025 strategy;
  • There will be winners and losers, for example, China will need to buy agricultural goods from other sources than the US and that will benefit countries like Australia and Brazil; many Asian countries that are part of the China value chain will be hit.

Instead, to evaluate the dangers from a trade war, we need to look at the longer term and more broadly to geo-political factors. And here, the picture is not so reassuring.

The trade war with the US is but a battle in a much larger war. A battle that surely hurts in the short run, but will leave China victorious in the long run. Because China has acquired the “soft power” weapons to win.

Forget the Trade War: China’s Soft Power is Poised to Conquer the World

What has been happening since Trump took over the White House is this: A political void has been created, a void in world leadership that China is eager to fill, and most likely will.

Consider the facts.

Read the rest on Impakter, click here.

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Trump Watch: Trade Wars to “Make America Great Again”

June 15 was a special day for Trump – good old television unexpectedly displaced his tweets. Two televised events gave him ample room to rant about fake news and push for his favorite justification for trade wars: resentment at “unfair treatment” of America by the rest of the world, allies included.

One was a surprise half-hour long  interview with Fox & Friends. A short video released by The Washington Post focuses on the main points he made:

The other was an 18 minute Q&A session with reporters outside the White House:

Significantly, Trump did not discuss trade at any point in either televised sessions, although on that same day he had just slapped steep (25%) new tariffs covering $50 billion in trade with China. Watching Trump make all his pet points, one is struck by the fact that he covered the same old topics. Those he’s been constantly and obsessively tweeting about.

First, Hillary Clinton and the possibility that his winning the presidency was never a clear-cut victory. He pretended to misunderstand the just released report from the FBI Inspector General – enabling him to claim the report “exonerates” him. The report does nothing of the sort, it reviews the FBI investigation into Hillary Clinton’s use of a private email server while she was secretary of state. It finds some faults with the then FBI Director James B. Comey for not adhering closely to protocol, along with others in his team, notably Peter Strzok and Lisa Page who were having an affair and exchanged over-the-top bragging emails.

Yet Trump calls the report a “horror show”, not because of what’s in it, he says, but because of the conclusion that there was no political bias in the FBI investigation.  Trump cannot accept that. For him, there was “total bias”; the FBI was a “den of thieves”; Comey is a “criminal”; the top FBI management is “scum”; if you “polled the FBI, the real FBI”, you’d find they all “love” him.

In short, there never was any collusion between his campaign and Russia. We’ve all heard that before, over and over.

Second point, on national security. America’s military, built up to the tune of $700 billion a year, will be bigger than ever. The wall is needed, borders must be secured, a “compromise immigration bill” cannot be supported. The separation of immigrant children from their parents at the border is regrettable but it’s the Dem’s fault.

Third point, the whole world and America’s closest allies especially, Europe, Japan and Canada, took “horrible”, “unfair” advantage of America both on trade and military aid. The only ally that got a nod of approval was Giuseppe Conte, the new Prime Minister of Italy, because they shared a common anti-immigration stand. This conveniently overlooks the massive differences in their stand: Italy, in spite of the recent spat with France over immigration – now resolved – is still receiving immigrants and does not separate children from parents.

For Trump, all will change now. We need to realize, he tells us, that President Obama “lost” Crimea, he “gave it away”. And that happened because Putin “had no respect for Obama”. With him at the helm, disrespect like that can never happen again. He is making friends with the right people, he can call up North Korea dictator Kim Jong-un anytime. And Putin, he feels, should be back in the G7.

What next: A Series of Trade Wars?

The mass of falsehoods was bewildering. Some American journalists wondered whether the Republican party would finally react, for example, Chuck Todd, NBC News political director tweeted:

Read the rest on Impakter, click here.

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TRUMP WATCH: Joining the Trade Pact Against China

This week more of my TRUMP WATCH articles were published on Impakter:

  •  TWEETS OF WAR warning the enemy – in this case Russia – of an impending missile strike in Syria (click here to read – updated with the news of the retaliatory attack on 14 April);  
  • HALF THE COUNTRY IS THE ENEMY: in this one Trump takes aim at California, reviling it as a “sanctuary state” overrun by hordes of criminal immigrants, ascribing the whole sorry situation to the “Dems” (see here);
  • CHEMICAL ATTACKS ON SYRIA: about Trump’s unprecedented tweets against Russia and the fact that, arguably, Trump’s own policies in Syria set the stage for “animal Assad’s” attacks (see here – also updated with the news of the retaliatory attack 14 April).

Here’s the latest one, JOINING THE TRADE PACT AGAINST CHINA, out on Friday 13 April:


Trump just woke up to the complexities of international trade. And how to push China into a corner. In the middle of his trade war with China, he has suddenly caught on to the TPP, the Trans-Pacific Trade Partnership: a clever way for the US to boost trade among Pacific-rim countries while excluding China.

In the middle of the night, this stunning mea culpa was tweeted out:

Well, only half a mea culpa. As usual, it’s Obama’s fault, and he “would only join TPP if the deal were substantially better than the deal offered to Pres. Obama.”

He may feel he has saved face, but in practice, this signals a major reversal in Trumpian trade policies. For once, he’d be joining an international treaty and not trying to pull it down.

And that is huge. Good for him to be able to backtrack.

I go on to analyze the damage done by the US pullout of the TPP and what might happen next now that the TPP has been signed by 11 Pacific rim countries, excluding the US.  

Just as the article was about to be published with a conclusion commending Trump for his wise decision to backtrack (never easy), he blew it, coming out with a seriously absurd blast against Comey and his tell-all book, calling him (among other things) a “slime ball”. 

Take a look, the article is here.

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TRUMP WATCH: Defying China on Trade

Just published on Impakter. Here’s the opening:


In a single tweet on 5 April, Trump gave a double whammy: against China, reminding everyone that he’s fighting China on trade, and against Amazon’s “chief lobbyist”, the hated “Fake News Washington Post”:

Not bad for a single tweet. To anyone wondering why the Washington Post’s headline is characterized as “phony” when the news about the levying of trade penalties is real enough, the answer is fairly simple.  Trump has recently engaged in an unprecedented flurry of tweets against Amazon, “ranting obsessively about it”. To the point where one is justified in wondering whether he has a personal grudge against Jeff Bezos, the founder of Amazon and owner of the Washington Post.

Maybe he does, but the truth is that the Washington Post has been very good at unearthing uncomfortable news about him. For example, they were the ones who discovered he had given highly classified information to the Russian Foreign Minister and Ambassador in the course of a visit to the White House back in May 2017.

Trade War or Trade Talks?

That’s the real question. Are Trump’s threats of trade penalties the opening salvo of a coming trade war? Or, more simply, trade talks?

Trump has just ordered the US Trade Representative to consider coming up with levies on $100 billion more of Chinese goods (that immediately sent US stock futures tumbling). This came on top of a Chinese announcement on Wednesday that China would levy a 25 percent tariff on about $50 billion of US goods (including soybeans, automobiles, chemicals and aircraft). But the US had started it all, issuing on Tuesday a list of tariffs on $50 billion of Chinese products.

Tit for tat – and a clever tit from China…

Read the rest on Impakter, click here.

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2017: The End of the American Century?

In this article, I try to figure out where we’re going, after the tsunami  brought about by Trump. I am not optimistic but I’m not as pessimistic as some, as you’ll see if you read the article to the end…Happy 2018, we need to continue the resistance, I’m convinced the pre-Trump world order can be revived and American leadership regained!

HOW AMERICA LOST WORLD LEADERSHIP

IN 2017, AMERICA ABRUPTLY CHANGED FACE. IT BECAME A DEEPLY DIVIDED COUNTRY NO LONGER INTERESTED IN WORLD LEADERSHIP. THE QUESTION IS: WHO WILL DOMINATE NEXT, CHINA, EUROPE, RUSSIA? OR IS AN AMERICAN RENAISSANCE POSSIBLE?

Trump’s inaugural speech with its America First message shook the world. And he has kept it up with alarming tweets, insulting and threatening people and countries, sowing confusion among America’s allies and foes. His emotional and erratic tweeting may not add up to a credible foreign policy, he is, in his first year, the least popular President in US history and has signed fewer laws than Obama, yet, with support from the Republican Congress, he has brought deep change: He has successfully turned America in on itself and ushered an age of small government and Big Business.

American institutions are now in the hands of the Republican party. Control over the Supreme Court was achieved with Trump’s appointment of Judge Gorsuch and federal district courts are now filling up with young judges wedded to conservative views. Federal environmental protection regulations are dismantled, the coal and fuel industries can do as they please, the environment and public health be damned.

The tax overhaul benefits primarily the Republican party’s backers, big corporations and multi-millionaires. It also comes with a provision to drill for oil in the Arctic National Wildlife Refuge. And this on top of huge rollbacks in natural reserves, opening up to private exploitation over 2 million acres in Utah.

The only area that has resisted the Trump-Republican onslaught is Obamacare, but not for long. As Trump said at the GOP tax bill celebration, “we peeled Obamacare because we got rid of the individual mandate which was terrible” which is, as he clarified, “a primary source of funding of Obamacare”.

Clever. One can only hope that the Republican party will come up with a solution for the millions of Americans slated to lose coverage. So far, there is none on offer. Foreign observers (myself included) marvel that America has still not accepted the principle of free universal access to healthcare, first launched in Germany in 1883.

Read the rest on Impakter, click here.

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