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Westlake Legal Group > Posts tagged "G20"

Neil O’Brien: Like fax machines, pagers and your old macarena CD, it’s time to bin the 1990s

Neil O’Brien is MP for Harborough.

I’ll tell you what I want, what I really, really want. I want someone to drive a stake through the heart of the 1990s. Why, you ask, do we need to kill off a decade which technically ended twenty years ago? The problem is the ideas of that decade are still with us, staggering around like a zombie in a garish “Global Hypercolor” t-shirt.

In the aftermath of the fall of the Berlin Wall, the west collectively came to believe in some over-optimistic assumptions. Policies based on them are still kicking around, like a badly-chipped “Friends” coffee mug. During the 90s, we were told we’d reached the end of history, and could look forward to the “universalisation of Western liberal democracy as the final form of human government.”

Instead, we’re in a world where the rising superpower is a communist dictatorship. Rising wealth hasn’t led to democratisation in China. Instead, human rights are going backwards under China’s President-for-life Xi Jinping.

Yet amazingly, you still hear those complacent 90s arguments trotted out: “if we engage more, they’ll become more like us.” In reality, whether it’s firms like HSBC backing repressive new laws in Hong Kong; or episodes of western TV shows being censored for fear of China; or countless western firms grovelling to Beijing for supposed slights… it’s clear we got it the wrong way round: they’re making us more like them.

The rise of China exemplifies other zombie assumptions from the 90s. The idea that industrial policy can’t work, for example. During the 90s, our future was thought to be all about services. Financial engineering, not actual engineering.

That assumption is one reason Britain deindustrialised more than any other G20 country since 1990. People still trot out the line that “government can’t pick winners, losers pick governments” like it’s some great flash of insight.

So explain how Huawei went from an idea in 1987, to the world’s most powerful telecoms firm today? Answer: lucrative contracts from the People’s Liberation Army, massive state subsidies, a developmental state investing heavily in R&D, and a bit of industrial espionage.

More relevantly for us, other democracies have has successful industrial policies. In 1990 South Korea’s GDP per head was 41 per cent of the UK. It’s now 85 per cent. How did it catch up so fast? Industrial policy.

How did Taiwan, with no computer chip making industry in 1987, come to have the world’s leading chip maker, TSMC? Industrial Policy. The US may have the strongest industrial policies of all, with an incredible military/innovation complex teeing up the successes of silicon valley firms. The 90s consensus ignores all this.

Don’t get me wrong: Britain’s post-war industrial policies were awash with failures. But we ignore other countries successes. We don’t notice that, since 1997, manufacturing has provided 40-50 per cent of all productivity growth in places like the North West, West Midlands and Wales.

We don’t even remember our own successes. Saving Rolls Royce was a good investment. Margaret Thatcher’s interventions to promote microcomputers led to tech firms like ARM, plus a strong games industry  (and this fun video of her showing off the ZX spectrum to the then Japanese Prime Minister).

Her bungs to get Nissan to Sunderland transformed the car industry and more. She even set up set up a successful state-backed biotech firm, Celltech, to build a UK beachead in the industry. Yet think tanks in thrall to 90s thinking tell us these are things no Thatcherite should endorse.

In the 1990s, people thought things could be “designed in California, assembled in China” – as it still says on Apple products. We missed the importance of the industrial commons: the links between designing and making. So we made trade policy in the overconfident belief that the west would keep all the good jobs.

Bill Clinton said of letting China joining the WTO that: “Economically, this agreement is the equivalent of a one-way street.” He was right. He just got the direction of the traffic wrong. China was let into the club, but never obeyed the rules.

Many other 1990s legacy policies are also built on dated assumptions that the West dominates the world economy – the mental equivalent of still carrying a blockbuster video card in your wallet.

Take the Kyoto Protocol, signed in 1997. Under it, developed countries in Europe and North America would set targets to reduce their emissions. But other countries would not have such targets. It was vaguely assumed that they would be persuaded to follow by the force of our example. Or something.

In an east-shifted world it just didn’t work. That’s why world emissions are still rise with global growth. That’s why China is in the process of adding more coal power plants than currently exist in Europe.

As Greta Thunberg (born after the 90s) points out, progress in reducing emissions doesn’t look so good when you look at all the emissions (and industry) that have simply been offshored to dirtier economies.

Remember how the “Information superhighway” would be a force for liberty and international friendship? In reality, Twitter is a Hobbsian war of all against all, populated by armies of state-funded bots pumping out disinformation.

We worried about the Millennium Bug. We didn’t know about filter bubbles or “pile-ons” or aps for kids made addictive by design.

The “world wide web” was going to promote competition in business. Turns out, in a frictionless world, the forces tending towards giant monopolies are strong. During lockdown I rewatched late 90s classic, You’ve Got Mail, in which little bookshop owner Meg Ryan falls in love with big bookshop owner Tom Hanks over a succession of newly trendy takeaway coffees. Little do they realise that Amazon is about to stomp them both flat.

Years on, we’re still debating the right way for competition policy or the tax system to respond to these monopolising forces. Optimistic assumptions have held us back. In the 90s we thought the future belonged to young, globalised urban graduates, and that the future was post-national.

Take British Airways. In 1997, it replaced the Union Jack with funky new “Utopia / World Image” tailfins for its planes. In 2020, Britain has left the EU.

There’s been a populist backlash from disenfranchised blue collar workers across the west. British Airways Union Jack theme is back and it’s keen to “big up” (to use 90s speak) its “Britishness”.

The future isn’t what it used to be, but we’re still struggling to find an alternative way to reunite the nation. The protests, fights and statue-toppling of recent weeks, and the bafflement of many less urban voters about it, reveal a country in which large numbers of people are no longer even able to understand one another: no longer part of the same conversation.

Part of it is about the vast expansion of universities, believed in the 90s to be an unalloyed good, but today leaving too many young people feeling mis-sold, in debt, and cheesed off.

Part of the splintering is national. In the 1990s we were told “devolution will kill nationalism stone dead”. This has not proved to be the case.

Yet, sad as a dead Tamagotchi, the assumptions of the 1990s linger on somehow. Like fax machines, pagers and your old “macarena” CD, it’s time for them to go in the bin.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Hmm: Trump and Xi to have “extended meeting” at G-20

Westlake Legal Group xi-trump Hmm: Trump and Xi to have “extended meeting” at G-20 Xi Jinping The Blog North Korea Kim Jong-un G20 donald trump China

Will the trade war between the US and China come to an end next week? Donald Trump tweeted out this morning that a planned meeting at the upcoming G-20 summit next week will become an “extended meeting.” His description of preparations between then and now offered a strong hint of an agreement in the works:

That sounds like a traditional summit arrangement, as opposed to the summits Trump held with Kim Jong-un. Usually, summit meetings between presidents and other heads of states are held to nail down the final details of an agreement largely already worked out between two countries. This sounds as though a breakthrough has either been made with China on the trade war, or one is expected to happen in the next few days.

What if that’s not necessarily related to trade, at least not directly? Xi just happens to be visiting Trump’s pen pal in Pyongyang this week, the first such visit by a Chinese premier in 14 years:

Chinese president Xi Jinping will travel to North Korea on Thursday on a two-day visit, state media announced yesterday.

The Chinese leader will meet North Korean strongman Kim Jong-un to discuss the problems facing the Korean Peninsula. This will be the first visit to North Korea by a Chinese head of state in 14 years. …

According to some analysts, the Chinese leader is trying to use his influence in the North Korean nuclear issue as a leverage in trade negotiations with the US.

To back this view, observers note the current stalemate in talks over North Korea’s denuclearisation and the easing of the economic sanctions imposed by Washington.

It’s possible that Xi wants to get North Korea to make serious concessions towards denuclearization as a means to improve his bargaining position. It might also be that Trump is using his economic leverage to force Xi into cracking down on Kim. Either way, it’s going to be a tough sale with Kim, according to a document published by the Voice of America:

An official North Korean document shows Kim Jong Un has no intention of giving up his nuclear weapons but instead has told his military that he would use talks with the United States to solidify North Korea’s status as a nuclear power, according to a new report.

The document Voice of America says it obtained is described as “a teaching guide for instructing top military officials on Pyongyang’s official internal position” and was produced before Kim met President Trump in Hanoi for a second summit in February. “The document makes clear that Kim saw the meeting in Hanoi to strike ‘a final deal’ as a means to acceptance as a ‘global nuclear strategic state,’” VOA reports.

Kim is quoted as saying he would use the meeting “to further consolidate nuclear power that we have created.”

Things might have changed since then, especially Xi’s position. China is Kim’s guarantor, after all, and to at least some extent Xi calls the shots on Kim’s survival as Dear Leader. Xi’s own survival depends on his ability to strengthen and expand the Chinese economy, and Kim’s survival is a secondary consideration at best. If Xi needs some denuclearization as a means to end a damaging trade war and the isolation of Huawei in particular, then Xi might be in Pyongyang to explain the facts of life.

Of course, nothing may come of this tweet, but apparently Trump thinks something’s up. Why raise expectations otherwise? And unless one believes in coincidences, Xi’s extraordinary visit to North Korea the week before the G-20 certainly appears to hold some significance for his meeting with Trump a few days later.

The post Hmm: Trump and Xi to have “extended meeting” at G-20 appeared first on Hot Air.

Westlake Legal Group xi-trump-300x173 Hmm: Trump and Xi to have “extended meeting” at G-20 Xi Jinping The Blog North Korea Kim Jong-un G20 donald trump China  Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

China: Feel the power of our fully operational Tariff Star, or something

Westlake Legal Group xi-trump China: Feel the power of our fully operational Tariff Star, or something Xi Jinping Trade War The Blog Tariffs G20 donald trump China

It’s still on, at least for now — and at least for public consumption. As negotiations continue on trade with China, Beijing announced a new set of tariffs that will take effect when escalated US tariffs do the same. If this is a game of chicken, though, one side has a much bigger car:

The United States and China escalated their trade fight on Monday as Beijing moved to raise tariffs on $60 billion worth of American goods in retaliation for President Trump’s decision to punish China with higher tariffs on a slew of imports.

China’s finance ministry announced that it was raising tariffs on a wide range of American goods to 20 percent or 25 percent from 10 percent in response to Mr. Trump’s decision to raise tariffs to 25 percent on $200 billion worth of Chinese goods. China’s increase will impact the roughly $60 billion in American imports already being taxed as retaliation for Mr. Trump’s previous round of levies, including beer, wine, swimsuits, shirts and liquefied natural gas.

The S&P 500 fell more than 2 percent soon after trading began in New York, and shares of companies particularly dependent on trade with China, including Apple and Boeing, fared poorly. The benchmark index is now down more than 4 percent this month. Signs that investors are concerned about the economic impact of the escalating trade war also appeared in the corporate bond market and commodities markets.

In essence, China will tax the same goods they did before. The US has a wider range of goods to tariff, thanks to China’s protectionist policies at home, which has them at a disadvantage now. Furthermore, the US has more options for sourcing these items, as Donald Trump noted today on Twitter:

That’s true to some extent, but China has a lot more manufacturing capacity than, say, Vietnam. Companies have already used some of that capacity, and there may be a limit past which prices will have to rise and goods might not be as plentiful for consumers. Some of that manufacturing might shift back to the US, but the costs for that would run substantially higher. And even if it did shift back for a while, it might not last long. If China settles the trade issue with the US and reopens its manufacturing capacity, the costs would drop dramatically and the expanded jobs in the US would evaporate … exactly as they did before.

The delegation that arrived last week from China went home without any further progress being made after Beijing reneged on a number of commitments made in previous rounds. More negotiations will come, however, and that might include Trump himself:

Negotiations are expected to continue among high-level officials in the coming weeks. Chinese officials have invited U.S. Trade Representative Robert Lighthizer to Beijing, and probably Treasury Secretary Steven Mnuchin, but there are “no concrete, definite plans yet,” White House economic adviser Larry Kudlow said on Sunday.

There’s also a “strong possibility” that Trump and Xi could meet in Japan at the G-20 meeting next month to continue negotiations, Kudlow added.

Under normal circumstances, the heads of government would only handle the final strokes of an agreement. These aren’t normal circumstances, however. Trump sees himself as the ultimate dealmaker and might believe that he has to personally intervene to get Xi to budge. Xi, on the other hand, might believe that Trump is more personally malleable than his negotiators and could stall his side as well until the G-20 conference.

In the meantime, American consumers will pay the freight for tariffs on China’s goods, at least directly, despite Trump’s argument. Those costs get applied on arrival and passed along to consumers, just like any other tax. China’s manufacturers will get hit by lower demand, which is an indirect cost of tariffs, and of course China’s consumers will pay for their own government’s tariffs. The most acute losers in this scenario are the importers/distributors, who are now looking for waivers — and will get lots of them, according to Politico. That leads Axios reporter Jonathan Swan to ask the obvious question:

Fair point. Tariffs might be necessary at this point to force China into concessions, but they’re not a good thing for American consumers or distributors in the short run. And there’s not much point in pretending otherwise.

The post China: Feel the power of our fully operational Tariff Star, or something appeared first on Hot Air.

Westlake Legal Group xi-trump-300x173 China: Feel the power of our fully operational Tariff Star, or something Xi Jinping Trade War The Blog Tariffs G20 donald trump China  Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com