Xi Jinping Rises, and So Do Trade Blocs - Issue #27
The Big Picture
As snatches of time go, the past week has seemed particularly momentous.
Xi Jinping cemented his position in China, securing a third term at the country's helm. The move, which is a shift away from the ruling Chinese Communist Party's conventional two-term limit, could potentially signal trouble in the waters ahead.
On the one hand, as China watchers say, Xi wants to restore China to its "rightful place" as a global player and a peer of the US. At the same time, however, China is struggling on both social and economic fronts. Under Xi, China’s authoritarianism has deepened. One instance is the brutalisation of the Uighurs, many of them packed into labour camps and forced to recant Islam. The majority has suffered as well. Zero Covid has seen the state forcibly lock tens of thousands in their homes. In tandem, the country’s economy is slowing, and consumer demand is falling. The property market, a key driver of economic growth, is in crisis; the US’s recent sanctions on the Chinese semiconductor industry are likely to scupper a key growth sector for the country.
None of this bodes well. Leaders seeking to take their country back to a time of past mythical greatness often get blindsided by current events. As the BBC noted, Xi is not only encouraging a leadership cult around him, but he has also placed his loyalists in critical positions. Can Xi kickstart growth? Can he use instruments like Belt and Road to widen the regions where China is hegemonic? If not, will he stress harder on nationalist causes to retain his legitimacy?
Even as those questions play themselves out, a deeper (and related) shift might be taking place in the global economy. In a recent post, economist Branko Milanovic says the world might junk globalisation and go back to trade blocs and mercantilism. “The period of high globalization between 1988 and 2008, was good for Asian middle classes and the global top one-percenters, but not for the Western middle classes,” he writes. “Second, geopolitically, globalization helped the rise of China which is already now, but will be even more so in the future, the main military and political competitor of the United States.
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In an interview, historian Russell Napier concurs. “Just imagine what will happen when we decide to break free from our one-sided addiction of having pretty much everything we consume produced in China. This will mean a huge homeshoring or friendshoring boom, capital investment on a massive scale into the reindustrialisation of our own economies... A lot of production could move back to Europe, to Mexico, to the US, even to the UK.”
A lot hangs in the balance. There are questions about peace (global and regional). On the climate front, there are questions about the economics of decarbonisation in an age of trade blocs. There are questions, essentially, about the futures of countries.
News of the Week
Beyond these two trends, much of last week hewed to predictable lines.
Global Gas prices are moderating. One reason is that Europe has stocked up enough reserves for winter, with early signs suggesting that winter might not be as severe as feared. Finally able to shore up the requisite gas reserves, German chancellor Olaf Scholz has declared the failure of Putin’s gambit.
The global food shock, however, continues. Given the high dollar, countries struggle to pay for food imports. On the other hand, fertiliser prices have begun to show signs of weakness as farmers hold off on purchases.
In other news, the construction of Neom has begun. The jury is still out. Will this 170 km long and 200 metres wide city be a techno-utopia – or something straight out of a JG Ballard dystopia? Given what we know about Muhammad Bin Salman, smart money is on the latter.
Back home in India, too, news remained mostly predictable. Representatives from “potential polluters” occupy an impressive 53% of all board-positions at India’s state pollution control boards, reported Times of India. “Scientists, medical practitioners and academics constitute only 7% of the members,” it said. This is one more instance of India’s institutions succumbing to entropy – and capture.
There is happier news on the energy front. As CarbonCopy has been saying for a while, India is simultaneously pushing fossil fuels and renewables.
Take a closer look at Capex numbers, however, and you will see a couple of interesting trends. With waning private sector interest in gas and hydel, the state is now the biggest investor in those two sectors. On the whole, India’s investment in fresh solar and wind capacity is now much higher than fresh capacity addition in oil, coal and gas. The quantum of investment, however, is below what the country needs to meet its 2030 climate targets. Here is the article in Hindi as well.
Climate Long-Reads
1. Russia and China are leading the race to capture Bolivia’s Lithium reserves (Financial Times). In the past, the country has failed to regulate gold mining. One wonders what happens with Lithium.
2. India wants to create a national carbon market, Lou Del Bello writes for Energy Monitor.
3. More on India’s carbon market. (The Wire)
4. A critical look at Net Zero by us folks at CarbonCopy.
5. Climate change is becoming an all-out war, says novelist Amitav Ghosh. While on Ghosh, also read this essay by Vivek Menezes in Goa’s Herald, which muses on climate change’s implications for Goa – and state politicians’ indifference towards each.
6. On the struggle to phase out Coal in India’s National Capital Region (Morning Context)
7. Rebecca Solnit on why climate despair is a luxury.
8. A long-read on India’s plans to build a port-city on Great Nicobar (Frontline).
Book of the Week
Greta Thunberg has edited a book on climate change. The Climate Book
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It will be out soon. For now, see this thread describing the book.