1. Eurointelligence:
We noted this week a rare European tech success story. Northvolt, a Swedish battery-maker, announced a major breakthrough in sodium-ion batteries. The technology Northvolt is developing doesn’t use lithium, nickel, or cobalt, all critical minerals which we are currently reliant on others for.
But the problem for sodium-ion has always been energy density. They usually cannot compete with lithium-ion batteries here. This has made them less viable for key transition needs, like electric cars or energy storage.
Northvolt’s discovery changes that. According to the firm, it has developed a sodium-ion battery with a similar energy density to the lithium-ion batteries used for home and grid energy storage. If Northvolt can scale this up, it’s great news for supply chain security in Europe. China corners the battery supply chain now, and this could make us less dependent on them.
China can’t monopolize the supply chain for an abundant resource like sodium. But the sodium-ion story does show an important element of the new geopolitical competition the west faces. We now face an adversary who is as advanced as us on the technologies of the future, if not more so in some areas. China is, on balance, ahead on electric cars and solar. It is advanced in AI, and catching up in semiconductors.
This is a big difference between this new Cold War, if you want to call it that, and the old one. By the 1980s, the gap between the US and the Soviet Union in that era’s technology of the future, IT, was yawning. In 1986, the US had 1.3m computers. The Soviets had around 10,000. At one stage, the USSR had the opportunity to develop a similar system to the US’s Darpanet, the predecessor of the internet. But the communist party freaked out and nixed the idea.
So far, China has managed to strike a better balance between maintaining control and allowing innovation. Its political leadership also has a keener eye for where the future is heading. This is a very different century from the last one. (Source: eurointelligence.com)
2. “Severely Insolvent”
Zhongzhi, one of the biggest groups in China’s vast shadow financing market, faces a shortfall of as much as $36.4 billion and has warned that it is “severely insolvent” in a letter to investors. The worsening situation at Zhongzhi has put the spotlight on liquidity issues in China’s nearly $3 trillion shadow financing market and its exposure to the country’s property sector crisis. Zhongzhi, a sprawling financial conglomerate, wrote in a letter viewed by the Financial Times that its total assets amounted to just Rmb200 billion ($28 billion) against obligations of up to Rmb460 billion. The company blamed the shortfall on the departure of “multiple senior executives and key personnel” and the 2021 death of founder Xie Zhikun, who “played a pivotal role in decision-making” at the group. The company said “internal management ran wild” as a result of these departures. “The group’s investment products have defaulted one after the other, and we deeply apologise to investors,” it said. Zhongzhi and its affiliate investment company Zhongrong missed payments on several products in August, prompting concerns of a brewing liquidity crisis. (Source: ft.com)
3. More Detail:
Founded in 1995, Zhongzhi is privately held and also involved in businesses like coal mining. It held a 32.99% stake in Zhongrong International Trust, a leading Chinese asset manager, as of the end of 2022.
Zhongrong has paused payments on a portion of its investment products. There is speculation on Zhongzhi's financial woes have played a role.
Zhongzhi also holds stakes in other financial institutions like Hengbang Property Insurance and Hengqin Life Insurance, stoking concern that its troubles could ripple further. (Source: asia.nikkei.com)
4. China is ramping up pressure on banks to support struggling real estate developers, signaling President Xi Jinping’s tolerance for property sector pain is nearing its limit. Developer stocks and bonds rallied in China this week on bets that authorities may introduce some of the most sweeping measures yet, creating a draft list of firms eligible for bank support while weighing a plan that would allow banks to offer them unsecured loans for the first time. The moves are aimed at easing the real estate industry’s cash crunch, people familiar with the matter said, underscoring the anxiety among China’s top leadership over the protracted crisis. Beijing also wants to ensure developers have enough cash to finish the millions of homes under construction, even if it means added risks for its banks. (Source: bloomberg.com)
5. Mycoplasma Pneumoniae:
China’s health-care system is once again in the spotlight as a wave of pneumonia cases sweeps through the country, hitting kids particularly hard. The sudden increase in sick children, and a report suggesting widespread clusters of undiagnosed respiratory illnesses, prompted the World Health Organization to ask for more details in order to allay concerns that a novel pathogen — something like Covid-19 — was the source of the outbreaks. So far, Chinese officials say, it’s simply a laundry list of known germs that’s causing the problem….
A. What do health experts say?
Doctors have been warning for weeks that a common bacterial infection would likely cause a spike in “walking pneumonia” cases. In response to the WHO’s request for more data, Chinese health authorities said the uptick in outpatient visits and hospitalizations has been due to the spread of mycoplasma pneumoniae, RSV, adenovirus and influenza. Importantly, they say they haven’t detected any new pathogens. In turn, the WHO said that while the level of illness is unusually high for this time of year, it’s not unusual for winter to bring respiratory diseases. The group advised people to take basic precautions to reduce their risk — wear masks, stay home when sick, wash their hands regularly — and said there’s no need for any travel restrictions based on the current situation.
B. Why is it hitting China so hard?
It’s unclear why China appears to be the only country facing a major mycoplasma outbreak, while the US and much of Europe have contended with flu and RSV. One study showed mycoplasma pneumoniae was subdued in China for almost two years by Covid countermeasures that have since been lifted. While Chinese health authorities have said the uptick in cases comes earlier than normal, they’ve also pointed out that other countries have experienced similar surges in respiratory disease after emerging from pandemic restrictions.
C. Will it spread overseas?
For those outside China, the reports of respiratory-illness outbreaks have brought back memories of the early days of the Covid pandemic, which first emerged as mysterious pneumonia cases in the city of Wuhan in 2019 and whose origin has never been definitely pinned down. But unlike Covid, mycoplasma is a well-known and common germ that tends to cause fresh outbreaks every few years. And other viruses are circulating too, particularly RSV, meaning it’s likely that this winter will see countries across the world face a variety of pathogens. (Source: bloomberg.com)
If my analysis is correct then ‘not losing’ on the basis of the current lines of contact is not tantamount to a win because it leaves the Russian grip on Ukraine tenuous and circumscribed. For Putin ‘not winning’ is better than losing but it is not enough. He may be prepared for the war to go on for years to get to a win but there is no reasons to suppose that he relishes years of gruelling positional battles without a major breakthrough any more than Zelensky.
And Russia, unlike Ukraine, has a choice. It has the option of withdrawing from the fight. While Putin might hope that time is on his side and that the West will lose interest there is an alternative possibility that support for Ukraine will continue and even strengthen, as ordnance production steps up, and that the Russian people and elite will become progressively more anxious as the war drags on. If so, he may see the coming months as a chance to make real gains in the war. Ukraine is tired and depleted, with insufficient ammunition and stressed air defences. This explains the effort and urgency apparent in Russia’s current operations. (Source: samf.substack.com)
7. China’s hopes for political turnover in Taiwan — to a government more favorable to Beijing — appear likely to be dashed, with the independence-leaning Democratic Progressive Party on course to secure an unprecedented third term. That is raising fears of even more Chinese military aggression around the democratic island, and the prospect of reignited U.S.-China tensions. Taiwan has never been ruled by the Chinese Communist Party, but Beijing claims it as its territory. The fate of Taiwan has long been the most volatile issue between Beijing and Washington, and a flare up over the results of voting Jan. 13 could derail efforts to stabilize relations. (Source: washingtonpost.com)
8. A last-minute effort by Taiwan’s opposition parties to combine forces in a coming presidential election has crumbled in spectacular fashion, increasing the likelihood that the island democracy will continue as a central flashpoint in ties between the U.S. and China. Taiwan’s main opposition Nationalist Party, also known as the Kuomintang, struck a surprise deal last week with the Taiwan People’s Party to unite in a coalition ticket favoring friendlier ties with China that political analysts said had a real shot of coming out on top in the island’s presidential contest in January. The agreement began to unravel almost immediately after it was announced and appeared to fully fall apart at a press conference on Thursday evening, during which the parties’ candidates traded veiled insults with each other and another opposition candidate, Foxconn founder Terry Gou, before walking out in front of several dozen reporters. (Source: wsj.com)
9. Terry Gou, the billionaire founder of major Apple supplier Foxconn withdrew from the race to be Taiwan's next president earlier today after the breakdown of opposition talks to mount a joint ticket against the ruling party. Gou announced his bid in August, saying he wanted to unite the opposition and ensure the island did not become "the next Ukraine", blaming the ruling Democratic Progressive Party (DPP) for taking Taiwan to the brink of war by antagonising China, which claims the island as its own territory. Gou, who only got the go-ahead from the election commission last week after collecting enough valid signatures to run as an independent, said in a statement he was "withdrawing his body but not his spirit". (Source: asia.nikkei.com)
10. Bringing broadband to under-served parts of rural America is one element of a giant infrastructure program that began two years ago when President Joe Biden signed it into law. It was hailed as a historic opportunity to repair America’s bridges, rebuild its roads for electric vehicles and update its power grid and communications technology. With headlines proclaiming its $1.2 trillion in investments, worth about 5% of GDP, it was easy to get caught up in the excitement. That makes the current state of the big dig all the more disappointing. Instead of the anticipated surge, total infrastructure spending has fallen by more than 10% in real terms since the passage of the law (see chart). (Source: economist.com)
11. Independent presidential hopeful Cornel West is taking aim at Michigan by courting voter groups that Joe Biden is struggling with — in a state where a single percentage point could make the difference for the president’s reelection bid. West will take his threadbare campaign to the state early next year to rally support among Arab American voters in Dearborn, “environmental justice advocates” in the majority Black city of Flint, university students and indigenous populations, according to plans shared with POLITICO. (Source: politico.com)
12. Gov. Ron DeSantis’s political orbit confronted fresh upheaval on the eve of Thanksgiving as the chief executive of the super PAC that has effectively taken over his presidential campaign resigned after days of infighting among DeSantis allies over strategy, financing and how to blunt the momentum of one of his rivals, Nikki Haley. That chief executive, Chris Jankowski, sent a resignation note on Wednesday to the board of Never Back Down, which has been the main pro-DeSantis super PAC. The resignation was effective immediately. In a statement from Mr. Jankowski issued by the group, he described his differences with them as “well beyond a difference of strategic opinion.” Never Back Down, which had amassed $130 million over the summer, has played a critical role in supporting Mr. DeSantis. Mr. Jankowski’s departure caps days of internal tensions within the group over the next steps in their Republican primary race against the front-runner, Donald J. Trump, and comes seven weeks before the pivotal Iowa caucuses in January. (Source: nytimes.com)
13. The Populist Right:
Nothing in the European political landscape is as diverse as the phenomenon known as the populist right. Marine Le Pen disagrees with the pro-Nato and pro-Ukraine policies of Giorgia Meloni. Both want to remain in the EU and the euro area. But not so Germany's AfD. Geert Wilders seems to be in a category of its own. He claims his brand of Islamophobia claims is libertarian, as Antonio Polito remarked in this morning's Corriere della Sera.
In the UK, Nigel Farage and Boris Johnson were the main representatives of a populism that resulted in Brexit. Yet neither is far-right. Farage, too, is in a category of his own. So is Javier Milei, the president-elect of Argentina. He is described in the Europe media as a right-wing populist, even though his central policy, the abolition of the currency and the central banks, falls into the extremist libertarian camp.
The right-wingers are the world's unhappy families. They are all different. But there is one thing they have in common: a disinterest in geopolitics, in globalization, and in multilateral institutions. In Europe, they are all eurosceptic. Antipathy to the EU is what unites them. (Source: eurointelligence.com)
14. The success of far-right leader Geert Wilders in Dutch elections on Wednesday is the latest triumph for nationalist, anti-establishment politicians who rail against liberal elites around the world. His victory will pile pressure on the EU to find ways to reduce immigration and builds momentum for hard-right parties ahead of European parliament elections in June. Wilders’ Freedom party is slated to win 37 seats, doubling its total, followed by a left-wing alliance of Labour and Greens led by the EU’s former climate chief Frans Timmermans with 25, and the Liberal VVD party with 23. The forecast by press agency ANP is based on 99 per cent of the votes counted. Following recent opinion polls predicting Donald Trump could return as US president, the Dutch vote again showed a gulf in a developed economy between better-off city dwellers and rural voters worried about rising immigration and declining public services. The Freedom party did best outside the cities, but also won narrowly in working-class Rotterdam and The Hague, gaining votes from the VVD. (Source: ft.com)
15. Nexit:
One line in Geert Wilders’ inflammatory pitch to Dutch voters will haunt Brussels more than any other: a referendum on leaving the EU.
Seven years after the British voted for Brexit, a so-called Nexit ballot was a core plank of the far-right leader’s ultimately successful offer in the Netherlands.
And while Wilders softened his anti-Islam rhetoric in recent weeks, there are no signs he wants to water down his Euro-skepticism after his shock election victory.
Even if Dutch voters are not persuaded to follow the Brits out of the EU — polling suggests it’s unlikely — there’s every indication that a Wilders-led government in The Hague will still be a nightmare for Brussels.
A seat for Wilders around the EU summit table would transform the dynamic, alongside other far-right and nationalist leaders already in post. Suddenly, policies ranging from climate action, to EU reform and weapons for Ukraine will be up for debate, and even reversal.
Since the exit polls were announced, potential center-right partners have not ruled out forming a coalition with Wilders, who emerged as the clear winner. That’s despite the fact that for the past 10 years, he’s been kept out by centrists. (Source: politico.eu, italics mine)
16. Geert Wilders’ attempt to form a government in the Netherlands has received a setback with the right leaning liberal VVD party announcing on Friday that it not would join a government with him. Dilan Yeşilgöz-Zegerius, the VVD leader, said she could support a centre-right cabinet from outside but after losing 10 seats in Wednesday’s election it was not appropriate for her party to continue in government. Wilders’ Freedom party won the election with 37 seats but needs a coalition that can amass 76 to win votes in the lower house of parliament. The centre-right NSC, with 20 MPs, has yet to decide whether to enter talks with him. (Source: ft.com)
17. Hungarian Prime Minister Viktor Orbán is threatening to block all European Union aid for Ukraine, as well as the country’s future accession to the bloc, unless EU leaders agree to review their entire strategy of support for Kyiv, according to a letter seen by POLITICO. In the letter, addressed to European Council chief Charles Michel, the Hungarian leader says that no decision on funding for Ukraine, the opening of accession talks to the EU, or further sanctions against Russia can be taken until this “strategic discussion” happens when leaders gather in Brussels in mid-December. “The European Council should take stock of the implementation and effectiveness of our current policies towards Ukraine including various assistance programs,” Orban writes in the letter, which is undated but bears the stamp of his office. (Source: politico.eu)
18. Syriza’s unravelling?
Nine members of parliament quit Greece’s leftwing opposition party Syriza on yesterday, signaling a possible break-up of the party whose meteoric rise amid the eurozone crisis sent shockwaves through Europe.
The lawmakers resigned in protest against party leader Stefanos Kasselakis, a 35-year-old political novice who previously worked for Goldman Sachs, made a shipping fortune, and until recently lived in Miami.
In a letter to the Syriza secretariat, the group criticised Kasselakis for “acting undemocratically” and said his message was “a jumble of contradictory opinions without any depth”.
The departures mark the second split within the party in recent weeks, after two other lawmakers, including former finance minister Euclid Tsakalotos, resigned from Syriza this month.
Syriza, which has roots in communist and anti-capitalist movements, was previously led by Alexis Tsipras, a former leftwing firebrand who served as a relatively centrist prime minister during Syriza’s sole stint in government from 2015 to 2019.
The rebellion is part of an identity crisis facing the party that rose to power in defiance against EU-imposed austerity. Greece, a former eurozone problem child, is now one of the best economic performers in the group. (Source: ft.com)
19. Obituary:
Charles Peters, the founding editor of The Washington Monthly, a small political journal that challenged liberal and conservative orthodoxies and for decades was avidly read in the White House, Congress and the city’s newsrooms, died on Thursday at his home in Washington. He was 96.
His death was confirmed by The Washington Monthly, which reported that Mr. Peters “had been in declining physical health for several years, mainly from congestive heart failure.”
Often called the “godfather of neoliberalism,” the core policy doctrine of the magazine, Mr. Peters was The Monthly’s editor from 1969 until his retirement in 2001. He also wrote five books on politics, government and history, and a column, “Tilting at Windmills,” offering pithy thoughts on politics and current events, from 1977 to 2014. (Source: nytimes.com)
20. Peggy Noonan on Taylor Swift.
Bloomberg Economics reports U.S. gross domestic product went up an estimated $4.3 billion as a result of (Taylor Swift’s) first 53 concerts.
The tour made her a billionaire, according to Forbes the first musician ever to make that rank solely based on her songs and performances.
When Ms. Swift made a film of the ongoing tour she reinvented how such things are financed and marketed, upending previous models, and when the film opened, on Oct. 13, it became the most successful concert film in history.
Foreign leaders have begged her to come. One said, “Thailand is back on track to be fully democratic after you had to cancel last time due to the coup.” (Source: wsj.com, italics mine)
Quick Links: What survey data reveal about antisemitism in America. Larry Summers: The cancer of antisemitism is spreading. Colleges must take the right stand. Violent protests in Dublin after woman and children injured in knife attack. The Crown: King Charles secretly profiting from the assets of dead citizens. From the rules on winning GOP delegates to the weighting of the Electoral College, Trump benefits—even as he claims the cards are stacked against him. Wall Street’s magical thinking. DeSantis gets some help in Iowa. Nearly half of Americans think the US is spending too much on Ukraine aid, an AP-NORC poll says. Russian women's groups protest against 'endless mobilization' of soldiers. China wielding ‘bargaining power’ with Russia over Power of Siberia 2 natural gas pipeline. New Zealand shifts to the right, but only slightly by global standards.