China’s Crises: An Economy Under Water, But Don’t Call it Climate Change. The Over-looked Gas That’s BBQing Us. AI Chips With Everything – Plus More! #175
Grüezi! I’m Adrian Monck – welcome!
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1️⃣ China Crisis
When it rains it pours...
The US President hosts the leaders of Korea and Japan this week. Likely one of the topics for discussion, what’s happening in China – besides floods – right now.
Former NYT China reporter Peter Goodman sets the scene:
“For more than a quarter-century, China has been synonymous with relentless development and upward mobility.
“As its 1.4 billion people gained an appetite for the wares of the world ... the global economy was propelled by a seemingly inexhaustible engine.
“Now that engine is sputtering...”
Wealth managers and real estate giants wobble. Property market collapse?
“China’s housing market boom ... made excessive borrowing possible, and all players, including local governments, developers and households, accumulated debt at an astonishing rate.
“For many local governments, they are technically bankrupt.
“For households, debt repayment pressure will become heavier as the economy slows down and moves into deflationary territory.
“For developers, survival will be a struggle, even for the biggest ones, because of their debts.
Deflation alarm bells? If you’d been in a coma since the 1990s you’d think we were talking Japan.
Asks Paul Krugman – right on cue – who notes that that wouldn’t be so bad.
Except, he says, China has much higher youth unemployment (for which they just stopped releasing data), and much of its economy is ‘still well behind the technological frontier.’
Hawks like George Magnus argue that tough economic times might make China take more risks...
Most interesting China story this week was about food security and unintended consequences. The FT reports that a government directive to grow more grain resulted in a clumsy buy up of tourist parks, an end to mall developments, and fields full of weeds.
Remember: Apathy and incompetence are the feedback loops of bad management.
Understanding China would be much easier if the country was once again fully open to international reporting. It might even help the people who’re trying to run it...
⏭ Chinese innovation: goodbye gravestones, hello LED screens.
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2️⃣ Those China Floods
Worst in 140 years. Just don’t call them climate change.
Beijing helped clean up its air pollution problem. The country promised to be carbon neutral by 2060 – but the weather’s not waiting. As Reuters reports:
“Several residents in Beijing and flooded areas in surrounding Hebei province said that they were aware of changing climate trends, but were reluctant to say more.
‘Extreme weather, nowadays, is becoming more frequent,’ said a 53-year-old resident in the Hebei city of Zhuozhou...
‘We can’t comment on that. We’re not the authorities. The summers are hotter than before, the winters are not as cold as before.’
Net zero isn’t coming soon enough:
China has approved at least 50.4 gigawatts (GW) of new coal power in the first six months of this year. That is more than the entire coal-power capacity of Germany.
Ironically, poor rainfall had made China more dependent on coal power. At the same time it is upping its renewables and nukes, in Q1 of 2023:
Wind added over 10GW.
Nuclear has 57GW in operation and 27GW under construction.
At the same time, booming electric car production is seeing China replace Japan as the world’s number one automobile exporter.
China has a mixed story to tell. But, once again, telling it in a balanced way might help.
⏭ Not cool. China’s glaciers are disappearing.
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3️⃣ The Climate-Flipping Pain of Methane
Read the story then watch the video...
Professor Euan Nisbet writes about rising methane levels. CO2 cooks you slowly, but methane is the climate change’s deep-fat-fryer.
Nisbet thinks rising methane levels could trigger very fast changes in the earth’s climate:
“In glacial terminations, the entire climate system reorganises. In the past, this took Earth out of stable ice age climates and into warm inter-glacials. But we are already in a warm interglacial.
“What comes next is hard to imagine: loss of sea ice in the Arctic in summer, thinning or partial collapse of the ice caps in Greenland and West Antarctica, reorganisation of the Atlantic’s ocean currents and the poleward expansion of tropical weather circulation patterns.
“The consequences, both for the biosphere in general and food production in south and east Asia and parts of Africa in particular, would be very significant.”
You have to love the scientific understatement of ‘very significant.’
⏭ Here’s a global methane tracker.
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4️⃣ Chips With Everything
Who’s buying up the world’s chip supply?
The FT reveals somewhat breathlessly that Saudi Arabia and the UAE are racing to get high-powered computer chips to further their #AI ambitions.
The Middle East will spend $3 billion on AI this year, likely more than doubling by 2026.
UAE has the world’s only AI university – MBZUAI* – and some of these chips are going to be powering the kind of academic research that needs big budgets to match the big ambitions.
To see the economic benefits, Gulf countries are going to have to send AI grads back into their workforces, and empower them to put their ideas into practice. All of this takes time.
But the fact they’re investing money is attracting global research talent for projects that need processing power.
In case you wonder how big a dent is being made in the global chip market, TSMC will ship nearly 550,000 of its high-end chips this year. Saudi Arabia will buy 3,000.
⏭ It’s not chips that are in short supply. It’s people to make them.
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5️⃣ Put Down That Bacon Sandwich
There’s something you should know...
I’ve raised pigs. I’ve seen them in the slaughterhouse. I’ve eaten the great sausages they became.
But that’s not true of every sausage or slice of bacon, ham or piece of pulled pork I’ve ever eaten. Especially not the stuff that makes it into ‘industrial’ products.
If you don’t know where your meat came from, you don’t want to know.
Reasonably-priced pork comes that way courtesy of cruelty. Industrial scale cruelty that is hard to comprehend were it not so commonplace.
Nick Kristof had a piece in the NYT about it. Vox goes a little deeper in explaining what happens to smart animals kept in crates too small to turn around.
If you can swallow the cruelty, you might also be swallowing something else:
“Feeding pigs what amounts to a smoothie of feces and intestines reduces the spread of disease on farms when there isn’t an effective vaccine available (though some recommend using it in addition to vaccines). And disease is a big deal on farms.
“Around one-third of pigs die before they ever reach the slaughterhouse, leading to enormous suffering for animals and significant losses for the producers, as they breed more pigs to make up for the early deaths.”
⏭ Surprise. Pork farmers don’t want to stop keeping pigs in crates.
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6️⃣ The Crops Hardest Hit by Climate Change
Rice isn’t the only thing getting deep-fried.
⏭ Asia isn’t investing enough to meet the future food challenge.
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7️⃣ ‘Pay Up or the Rain Forest Gets it!’
The countries asking for cash for conservation.
⏭ Brazil is behind the new rainforest diplomacy.
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If you enjoy this newsletter – please recommend it!
Best,
Adrian
*Disclosure: I advise these folks.