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Customers shop at a supermarket in Qingzhou, Shandong province, China.
China waiting for Mr. Stimulus
Chinese economic growth slowed down in May, with both industrial output and retail sales coming in below expectations. Does this mean the end of the economic rebound that China has enjoyed since ditching its draconian zero-COVID restrictions? Not so fast.
Pent-up spending on goods and travel will still help China hit its deliberately conservative 5% GDP growth target this year, says Eurasia Group analyst Lauren Gloudeman.
Still, China's central bank cut several policy rates in anticipation of the weaker data. The government also announced a bunch of pro-biz gimmicks to boost economic growth and encourage consumption — but it didn’t unveil the major stimulus plan many are waiting for.
Part of the problem is that China wasted vast sums of state funds for testing and quarantines during zero COVID. And that means Beijing has less cash to spare on stimulus amid mounting economic woes — young people can't find jobs, local governments and the property sector are drowning in debt, and private investment is drying up.
What’s more, hitting his growth target is the least of Xi Jinping’s economic woes. He knows that he needs to do something big fast to give China's economy a much-needed boost of confidence by getting Chinese people to spend again. The longer Xi waits, the higher the risk of economic stagnation and financial crisis.
Visitors attend a night market in Shanghai, China
Hard Numbers: China’s post-zero bump, diamonds for Hezbollah, Gershkovich bail bust, seafloor surprise
4.5: China’s economy grew at a 4.5% annual clip in the first quarter this year as the world’s second-largest economy dropped its “zero-Covid” restrictions and roared back to life. This beat analyst expectations but still fell short of President Xi Jinping’s 5% growth target for 2023. That rustling sound you hear is millions of Chinese bureaucrats and businesses scrambling to figure out how to close that half-point gap before December.
440 million: US prosecutors on Tuesday charged prominent Beirut-based art collector Nazem Ahmad -- who remains at large -- with exporting $440 million worth of art and diamonds in violation of US sanctions. Ahmad was sanctioned in 2019 for allegedly financing Hezbollah, the Iran-backed Lebanese political party and militia that Washington considers a terrorist group. The UK followed up on Tuesday by also sanctioning Ahmad and freezing his assets.
50 million: A Moscow court on Tuesday ruled that Evan Gershkovich, the Wall Street Journal reporter arrested in Russia on espionage charges last month, must remain in prison ahead of his upcoming trial. The newspaper’s parent company, Dow Jones, had offered to pay a bail of 50 million rubles (about $610,000) to release Gershkovich to house arrest in Moscow. In a real shocker, the court sided with prosecutors and said “nyet.”
1,970: Good news from 1,970 feet below the sea! Scientists descended to an unexplored section of Ecuador’s Galápagos marine reserve and found a coral reef “teeming with life.” The discovery gives hope that even as climate change alters the level and chemical composition of the sea, there are still bounties of underwater nature to enjoy and protect.
Xi Jinping's zero-COVID reversal |
If Xi Jinping had a theme song in China right now, for Eurasia Group analyst Anna Ashton it would be Canadian rapper Drake's "0 to 100." That's pretty much how fast he reversed course on zero-COVID.
And that explains why "Maximum Xi" — one man with total control over China — is Eurasia Group's No. 2 geopolitical risk for 2023.
The risk basically boils down to "maximum impunity and maximum potential mistakes," Ashton noted in a GZERO Live conversation about Eurasia Group's Top Risks 2023 report. In other words, China's leader is so powerful he won't be blamed for anything, even if he messes up badly.
Xi, she adds, is in a very strong position and Western media narratives that he was in trouble following protests over zero-COVID were overblown.
The US and China are moving into creating separate economic worlds for each other. And that won't be easy because the two economies are more closely linked than most people understand.
Read Eurasia Group's Top Risks 2023 report here.
Watch the full live conversation: Top Risks 2023: A rogue Russia and autocrats threatening the world
- The Graphic Truth: China's old vs. new zero-COVID ›
- Ian Bremmer: Zero COVID no longer works, and China will pay a price ›
- What We’re Watching: China's zero-COVID shift, Russia's fertilizer deal, Ramaphosa's corruption probe, EU's oil wrangling ›
- What We're Watching: China losing on zero-COVID, "winning" in Taiwan ›
President Joe Biden walks along the border fence during his visit to the US-Mexico border in El Paso, Texas.
What We’re Watching: Biden at the border, Three Amigos Summit, China’s reopening
Biden goes to El Paso
President Joe Biden on Sunday visited the US-Mexico border for the first time since taking office and at a time when he's getting flak from all sides for his immigration policies. Biden did the usual stuff: He toured a busy port of entry, walked along the border fence, and met with officials like Texas Gov. Greg Abbott, who chided the president for taking so long to show up — feeding into the Republican narrative that blames Biden for the surge of migrant arrivals in recent months. But the president has also upset the left wing of his Democratic Party after failing to deliver on many of his promises to undo the Trump administration's harshest immigration curbs — especially by being wishy-washy on ending Title 42, a Trump-era rule that allows US authorities to expel asylum-seekers on public health grounds that the Supreme Court is now sitting on. What's more, last week Biden announced that migrants from Haiti, Cuba, Nicaragua, and Venezuela would be required to apply from outside the US and be punished if they don't. While the president is otherwise benefiting from the GOP's civil war in Congress, his immigration headache won't go away anytime soon.
Biden, AMLO & Trudeau meet in Mexico City
After his border visit, Biden will travel to Mexico City on Monday for the annual meeting of North American leaders known as the "Three Amigos Summit." Of course, there’s an immigration angle: Biden hopes to get buy-in from Mexico's President Andrés Manuel López Obrador, known as AMLO, for his “safe third country” policy for asylum-seekers who enter the US through Mexico. Under the scheme, first floated by the Trump administration in 2019, the US would automatically deny asylum to migrants who haven't applied for the same status first in Mexico. That's a non-starter for AMLO because Mexico can hardly protect foreigners from gang violence while its own citizens are fleeing similar violence from drug cartels, as seen by the bloodbath following the arrest of Ovidio Guzmán, son of "El Chapo.” Biden and AMLO will also discuss the surge of fentanyl flowing into the US from Mexico, with the DEA having seized enough pills last year to kill every single American. Finally, Biden and AMLO, along with Canadian PM Justin Trudeau, will attempt to make progress on multiple USMCA trade disputes like GMO corn or rules of origin in the US auto industry.
China opens up, but zero-COVID recovery won’t be immediate
Zero-COVID is now effectively over in China. On Sunday, tens of thousands of people traveled in and out of the mainland as the country finally opened up to the world after almost three years of tough pandemic curbs. As a simple negative COVID test replaced the complicated quarantine requirements put in place by Beijing in early 2020, predictions rolled out for an economic revival in China as well as in those economies that depend on Chinese travelers. But that will take time: Airlines that have shifted their routes away from Beijing will have to pivot back, and certain countries that have put their own restrictions back in place for Chinese travelers over COVID fears will not roll back those policies overnight. Meanwhile, the future of Hong Kong, once Asia’s financial hub, also remains unclear. The megacity has been double-pummeled by COVID restrictions as well as Beijing’s tough national security laws, causing many expat and local talent alike to leave for competitors like Seoul, Singapore, or Tokyo. Now that it’s also open for business and travel, a “new” Hong Kong ruled from Beijing might have to reinvent itself in order to achieve the same economic vibrancy it was famous for.
2022's geopolitical twists and turns: Anne-Marie Slaughter & Tom Nichols discuss
From the rise and fall of the Roman Empire to the blink-of-an-eye tenure of British PM Liz Truss, political power is fleeting.
Just look at Vladimir Putin and Volodymyr Zelensky.
Putin, who started 2022 as one of the most powerful leaders in the world, in many ways has now become a global pariah. Zelensky, a former comedian few trusted with a crisis, is now TIME Magazine's Person of the Year.
On GZERO World, Ian Bremmer looks back at 2022 and forward to 2023 with frequent guests of the show: New America CEO Anne-Marie Slaughter and The Atlantic staff writer Tom Nichols.
Were fears about US democracy in peril overblown or justified? Did China's Xi Jinping gain more power, or was his regime "cut down to size" when the zero-COVID policy finally caused massive protests? Russia's invasion of Ukraine upended the geopolitical balance around the world, but where will the war lead - especially if Putin really has no endgame?
This interview was featured in a GZERO World episode: On Russia’s reckoning, China’s vulnerability & US democracy’s Dunkirk
- America’s “narcissism pandemic”: Tom Nichols, author of "Our Own Worst Enemy" ›
- Why it’s time to “be done with” anti-vaxxers: Tom Nichols ›
- "American exceptionalism" has outlived its usefulness: Anne-Marie Slaughter ›
- Podcast: Not infallible: Russia, China, and US democracy with Tom Nichols & Anne-Marie Slaughter ›
- Disinformation the “biggest threat” from Russia – Anne-Marie Slaughter ›
A woman in a protective suit walks past a shop as COVID outbreaks continue in Shanghai, China.
What We're Watching: China's COVID shenanigans, Oz olive branch, Peru vs. Mexico, Twitter succession
Counting China’s COVID deaths
In recent weeks, China has announced an abrupt about-face on its zero-COVID policy, which imposed tough (and economically costly) restrictions on freedom of movement inside China for the past three years. Despite predictions that a sudden end to existing COVID rules could contribute to one million deaths, the state has lifted lockdowns, ended many testing and quarantine requirements, and halted contact-tracing systems. For a government that works hard to persuade its people that it protected them from the COVID carnage in Western democracies, it’s a big risk. How to keep the number of COVID deaths down? Just redefine what counts as a COVID death. Going forward, only those with COVID who die of pneumonia or respiratory failure will be counted as COVID fatalities. (The US counts any death to which the virus contributed as a COVID death.) China’s change will make it much harder for Chinese health officials to properly allocate resources to respond to COVID spikes, and more infections will create mutations that generate new variants that cross borders. Officials in many countries, including the US, have argued over how to define a COVID death, but the question is especially sensitive in an under-vaccinated country of 1.4 billion people.
Australia tries to repair China trade ties
“Australia’s approach is to cooperate where we can, disagree where we must and engage in the national interest,” Australia’s Foreign Minister Penny Wong said before touching down in Beijing for a meeting on Wednesday with her Chinese counterpart Wang Yi. It’s the first time a high-ranking Australian official has visited the mainland since 2019 due to extremely tense bilateral relations. Wong reiterated that the meeting itself was a triumph given that diplomatic ties were all but frozen until new Aussie PM Anthony Albanese was elected in May, promising to reestablish dialogue with China. While no major public breakthroughs were announced on trade impediments, Beijing and Canberra vowed to establish a consistent high-level dialogue. Why has the mood been so grim? Well, President Xi Jinping is especially peeved at Canberra for joining US efforts to build a bulwark against China in the Asia Pacific by joining alliances including the Quad and AUKUS. Things got particularly bad in 2020 when Australia backed calls for an international investigation into the origins of COVID-19, prompting Beijing to impose devastating tariffs and bans on Australian exports. The Albanese government is keen to fix that, given that key Aussie exports – like wine – have plunged due to Chinese tariffs.
Peru clashes with Mexico as political crisis deepens
Peru has ordered the Mexican ambassador to leave the country after Mexico City granted asylum to the family of leftist President Pedro Castillo, who was recently arrested for trying to dissolve Congress and stage a coup. Simply put: Peru is a hot mess. Castillo, a former rural school teacher with no prior political experience, was accused of corruption and ineptitude and faced multiple impeachments since coming to office last year. Castillo's wife is also being investigated for partaking in alleged corrupt activities. Peru’s government, now led by Dina Boluarte, recently declared a state of emergency to manage mounting social unrest that’s led to at least 26 deaths. Crucially, Mexico isn’t the only state criticizing Lima. Fellow leftist regimes in Argentina, Colombia, and Bolivia released a joint statement expressing concern over Castillo’s “undemocratic harassment.” Meanwhile, Peruvians continue to protest, with some calling for new elections and others demanding Castillo be released. While Peru’s Congress is set to greenlight early elections, they wouldn’t take place until April 2024. That’s unlikely to placate the angry masses.
What We're Ignoring: Whoever becomes the new Twitter boss
After 57.5% of Twitter users voted for him to step down as CEO in an online poll, Elon Musk now says he'll do it ... once he finds the right person to replace him. Hmmm. But even if he does, any incoming Twitter boss won't have as much free rein over the social platform as its mega-rich owner, who still plans to run the tech side. More importantly, why drop $44 billion on buying Twitter to let someone else call the shots? The poll result likely gave Musk the perfect excuse to get out but still do whatever he wants by pulling the strings behind the scenes so he won't face so much blowback. The problem is that whoever steps into his shoes, none of the Twitter fights that Musk has started over hate speech moderation or who gets verified will likely be resolved anytime soon. Unless, of course, the new CEO is Snoop Dogg, who clearly wants the job and would certainly make Twitter anything but boring.
Argentina's Leo Messi lifts the World Cup trophy alongside teammates in Qatar.
What We’re Watching: Argentine soccer ecstasy, Chinese COVID cover-up, Brits on strike
World Cup victory brings Argentina much-needed good vibes
In arguably the best final in the tournament's history, Argentina won its third soccer World Cup in Qatar on Sunday, beating France on penalties after drawing 3-3. The nail-biter saw Les Bleus come back twice from behind against La Albiceleste, with GOAT Leo Messi finally lifting the trophy as captain. In a country where soccer is religion, Argentine fans erupted in joy — eager to have something to celebrate and take their minds off the deep economic crisis that has pushed their economy to the brink of collapse, with an annual inflation rate of 100% and poverty rate above 40%. For once, except for a brief controversy involving former President Mauricio Macri, Argentine politicians stopped bickering and united behind the national team. Still, and unlike French President Emmanuel Macron, who went nuts cheering in the stands, Argentina's President Alberto Fernández stayed away so as not to jinx it for Messi & Co. and watched from home instead. But don’t count on a World Cup bump that'll give Fernández a shot at reelection in 2023: His approval rating is now below 20%, and once the party is over, Argentines will return to complaining about the economy.
How many people are dying of COVID in China?
In a throwback to what the rest of the world went through in 2020-2021, COVID is now spreading like wildfire across Chinese cities barely two weeks after the government finally began to relax its zero-COVID policy. Hospitals full? Check. Medicine supplies running low? Check. Three looming COVID waves? Check. But there's a new twist in China: No one knows how bad the outbreaks really are because authorities are not documenting asymptomatic cases and have so far only reported two deaths. So, what's going on? Unofficial estimates suggest that almost 40% of Beijing's population is infected. Meanwhile, the ruling Communist Party has moved away from fiercely defending zero-COVID to almost pretending it never existed — the priority now is to breathe new life into China's economy, battered by pandemic curbs. State media claim that economic growth will accelerate next year thanks to stimulus policies to boost domestic consumption and support key sectors like the property market. The CCP's bargain with the Chinese people has always been economic prosperity in exchange for full political control. But what happens if a million people die?
Strikes galore in the UK
So much for keeping calm and carrying on ... Hundreds of thousands of transport providers, ambulance operators, immigration officials, postal workers, and even Britain’s revered nurses are striking at different dates across the country this holiday season. But the British government has refused to blink, despite there being a strike every day in December — from teachers to civil servants to solicitors. Indeed, PM Rishi Sunak remains dug in. He thinks further deals on wage hikes and other demands are unaffordable and has deployed the military to step in and fill crucial posts — getting pushback for it from senior defense officials. While the PM and his conservative allies are open to talking to the unions, Sunak senses a turnaround: Public support for the strikes seems to be receding. In fact, he’s promised new anti-strike legislation and lambasted a senior union leader as the “Grinch.” But if this carries on into 2023 — and comparisons continue to be made to the “Winter of Discontent” that derailed the Labour government in 1978-79 — Sunak might have to rethink his approach.
Podcast: Not infallible: Russia, China, and US democracy with Tom Nichols & Anne-Marie Slaughter
Listen: From the largest European land invasion since World War II in Ukraine to the essential “coronation” of the world’s most powerful person in Beijing, to one of the biggest political comebacks for Democrats in Washington, 2022 has been quite the year. Anne-Marie Slaughter, CEO of New America, and Tom Nichols, staff writer at The Atlantic, join Ian Bremmer on the GZERO World podcast to look back at the remarkable power shifts of 2022 and what it might mean for the year ahead.
Were fears about US democracy in peril overblown or justified? Did China's Xi Jinping gain more power, or was his regime "cut down to size" when the zero-COVID policy finally caused massive protests? Russia's invasion of Ukraine upended the geopolitical balance around the world, but where will the war lead - especially if Putin really has no endgame?
Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform, to receive new episodes as soon as they're published.- Podcast: Can the US get its act together? Susan Glasser & Peter Baker on "the world’s greatest geopolitical crisis" ›
- Podcast: What US midterms tell us about the state of US democracy ›
- Podcast: Examining Putin: his logic, mistakes, and hope for Ukraine ›
- Podcast: Tom Nichols on Biden’s “boring” presidency and a narcissistic nation ›
- Disinformation the “biggest threat” from Russia – Anne-Marie Slaughter ›
- Podcast: Russia's view of the Ukraine war: a Kremlin ally's perspective - GZERO Media ›
- America vs itself: Political scientist Francis Fukuyama on the state of democracy - GZERO Media ›
- In divided America, anything goes in the name of “protecting democracy" - GZERO Media ›