China: A Thorough Explanation of China’s Long-Term Strategy - War on the Rocks : by Rush Doshi

What are the Chinese Communist Party’s intentions? Does it seek to turn China into the hegemon of Asia and a global superpower? Or does it just aim to stay in power by whatever means necessary? Unfortunately, U.S. policymakers and analysts haven’t come to an agreement on how to answer these questions. That’s a problem, because China’s intentions ought to shape how the United States develops its strategy toward the Indo-Pacific.

Fortunately, Chinese Communist Party General Secretary Xi Jinping has made the answer to the first question much plainer for people inside and outside China. Xi marked the party’s centenary on July 1 with an hour-long speech about the party’s achievements and ambitions. Throughout the speech, Xi referenced the need to stay true to the party’s “original aspiration” and “founding mission” to bring about the “Great Rejuvenation of the Chinese Nation.” “To realize national rejuvenation,” Xi said, “the Party has united and led the Chinese people in pursuing a great struggle, a great project, a great cause, and a great dream.” Such language is a routine feature of leadership speeches, especially speeches Xi has given during his near decade in power. But what does it mean? What are the Chinese Communist Party’s ambitions? Should we understand Xi’s words as soaring rhetoric to mobilize the party faithful or as a plain statement of the party’s positions?

For all the talk in Washington about a new consensus on the China challenge, no consensus exists on the intentions of the Chinese Communist Party. Experienced and respected analysts still insist that the Chinese Communist Party just wants to stay in power or that its ambitions are regional rather than global. They believe Xi’s words — like those of every other party leader dating back to Mao Zedong — are formulaic tropes, signs of a moribund party trapped in its Leninist theory. The alternative view is that this formulaic language and the intellectual architecture built around national rejuvenation provides the basis for understanding the party’s ambitions. Debating the party’s ambitions may seem distant from the urgency of today’s problems in Sino-American relations. A clear answer to this question, however, is necessary to calibrate the U.S. response and to decide whether to revisit the goal of trying to preserve a liberally-biased international order or to pursue a more aggressive course, like containing or otherwise neutralizing the regime.

Read more at: A Thorough Explanation of China’s Long-Term Strategy - War on the Rocks

A time to celebrate … or worry? – by Branko Milanovic

Most of the world with some political influence seemed to have breathed a sigh of relief: Donald Trump had finally left the White House. Four years of chaotic policies, interspersed with racist invective, had come to an end.

United States liberals had fended off another existential challenge—this time from within their own nation. The current mood might be subdued by the ravages of the pandemic but, when this is over, would they not go back to the celebratory triumphalism of the early 1990s? There are indeed strong similarities between then and now.

Read more at: A time to celebrate … or worry? – Branko Milanovic

European Economic Outlook: 7 Reasons To Be Bullish On Emerging Europe-by Frank Holmes

For the month of March, the preliminary purchasing manager’s index (PMI) for the eurozone reached 56.7, its highest reading since April 2011. Significant gains were made in new work and backlogs of work, employment and service sector job creation.

For the month of February, the Economic Sentiment Indicator (ESI)—which measures industrial confidence, services confidence, consumer confidence, construction confidence and retail trade confidence—posted a score of 108, safely above its 26-year average of 100.

When Western Europe is performing well, Eastern Europe typically benefits by proxy, as the latter exports to the West. With a thriving manufacturing industry that’s attracted top international corporations such as Mercedes-Benz, GM, Audi, Bosch, Lego and Nestlé, just to name a few, Hungary led all others in February, posting a PMI of 59.5.

Mediterranean sea arrivals into Europe have fallen to 2,731 a month, from a high of 220,000 in October 2015. This is important because concerns of immigration and terrorism have largely driven recent secessionist and anti-European Union sentiment, most notably among far-right hopefuls such as the Netherlands’ Geert Wilders and France’s Marie Le Pen.

 To read the complete report click here: 7 Reasons To Be Bullish On Emerging Europe

US Economy: Economic growth expectations are quietly falling through the floor - by Jeff Cox

Those looking for a rapid uptick in the U.S. economy probably will have to tone down their expectations, at least for now.

In the near term, growth projections, at least by the top-line measurement of gross domestic product, are looking a whole lot more tepid than they did a few months ago.

GDP, which measures the sum of goods and services in the economy, is likely to have increased just 1.2 percent in the first quarter, according to the Atlanta Fed's closely watched GDPNow model. That's below the 1.5 percent projected by CNBC's Rapid Update forecast.

While much of the market has been focused on increased growth expectations under the Trump administration, GDP numbers have been sinking rapidly, in a precipitous though somewhat stealthy manner.

As recently as Feb. 3, the Atlanta Fed was projecting 2.7 percent growth for the first three months of 2017. But a steady flow of disappointing numbers, from production to construction spending to trade, has pulled down the estimate.

Those numbers have stood in stark contrast to sentiment surveys from businesses, investors and consumers, as well as purchasing managers and others at the corporate forefront. That in turn has produced some severe head-scratching from market professionals.

Read more: Economic growth expectations are quietly falling through the floor

Mexico - NAFTA: The "Three Caballeros" meet In Mexico: "Poor Results, No Deals and Many Promisses"

NAFTA Showtime: Stephen Harper, Enrique Peña Nieto, and Barrack Obama

The Canadian Broadcasting Corporation noted: "Jean Chretien famously pronounced his last G8 summit as prime minister a success. When asked why, he replied, "Because it could have been a disaster.'
'
That same logic could be applied to this past weeks meeting of the three North American leaders in Toluca, Mexico.

Even though the" three Caballeros" called NAFTA a great success - looking at the results - tells another story. .

The Financial Times wrote about NAFTA: "Treally wenty years into Nafta, Mexico has too many criminals and not enough policemen; too many workers earning low wages and not enough skilled jobs; too many false dawns and not enough economic growth.

NAFTA really is a big economic failure. From 1994 through 2003, the Mexican economy has grown by only 11 percent per person. This is less than one-fourth the rate of growth that Mexico experienced in the 1960s and 1970s. This is the relevant economic comparison for anyone who wants to evaluate Mexico's experience with NAFTA.

Of course, the reforms embodied in NAFTA did not begin in 1994 - they started in the early 1980s. But if we take the longer view, it looks even worse: From 1980 to the present, income per person in Mexico has grown by about 19 percent. This compares to 93 percent for the 1960-1979 (somewhat shorter) period. In other words, there is no economic evidence that the NAFTA model is a success at least not for the tax paying public.

U.S. economic winners and losers under NAFTA vary with company size, type of industry or sector, and geographical location. Sectors affected positively include planes, trains and automobiles, large agri-businesses, appliance makers and energy corporations. Clearly, large multi-national companies with investment capacities, world-market savvy and capital resources have benefited from protected investment and cheap labor. These companies enhanced management performance-based compensation while putting downward pressure on production-worker wages and benefits, collective bargaining clout and available jobs, especially in manufacturing. Many view their actions as a major contributor to compensation inequality.

According to one estimate, workers in Canada and Mexico have displaced 829,280 U.S. jobs, mostly high-wage positions in manufacturing. The heaviest U.S. manufacturing-job losses were in states such as Ohio, Michigan, Pennsylvania, New York, North Carolina, Texas, Connecticut, New Jersey, California, Indiana and Florida. 

Canada has so far experienced significant benefit from:

• U.S. investment in automotive production,
• Increases in oil exports to the U.S. and the rest of the world,
• Increases in shipment of beef, agricultural, wood and paper products to the U.S.
• Export of mineral and mining products, which have fared well in U.S. markets.

Canada has, however, also experienced some losses in narrow sectors such as specialty steel production and processed foods due to U.S. imports.

Overall the conclusion is that NAFTA has not lived up to the high expectations of its proponents. It has made many U.S. companies and investors rich - and their managements even richer. But it has also cost many U.S. manufacturing workers their livelihoods while failing to raise living standards for most Mexicans. Any major market changes not dictated by market forces usually lead to both opportunity and loss, and this has happened with NAFTA. 

EU-Digest