Signal: US-China Trade War, Italy on Fake News, and Camels on Botox

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A COMING US-CHINA TRADE WAR?

Donald Trump is set to deliver two of the most interesting speeches of his presidency. The first will be delivered today at Globalist Disneyland, aka the World Economic Forum in Davos, Switzerland. His audience will consist mainly of political, business, and media VIPs from around the world. He’ll be following globalist-friendly speeches from India’s Narendra Modi, Germany’s Angela Merkel, and France’s Emmanuel Macron, among others.

Next Tuesday, he’ll deliver his first official State of the Union address to Congress. On that occasion, his audience will consist mainly of Republican lawmakers, Democrats who choose not to boycott him, and an American TV audience made up mainly of his supporters, if past addresses from past presidents are any guide.

In both speeches, it will be important to watch what the president has to say about China. This is the central US foreign-policy question of 2018. During his first year in office, Trump slow-rolled trade action against China with the hope that Beijing could help neutralize the North Korean nuclear threat. He hasn’t given up on that strategy, but having made little progress, we’re starting to see the beginnings of a more confrontational posture toward China on trade. Chinese officials will parse both these speeches in search of risks and opportunities.

Trump has less at stake at Davos. He’ll benefit politically by showing his base back home that he tells truth to elites. On Capitol Hill, Trump won’t accuse China of “raping” the US economy, as he did on the campaign trail, but he will have a good story to tell on “unfair trade practices.” Some trade and investment actions against China have already been taken, and Trump looks set to roll out even more, as soon as Tuesday.

Are we headed for a trade war? That would be bad news for the US and worse news for China. Our bet is things won’t go that far, hostile rhetoric aside, because both sides know the other can inflict real economic and political pain, and no one wants a spiral that neither can fully control. But it seems clear now that US-Chinese relations are headed for a period of confrontation. We’ll be watching, especially during these two speeches, to measure the blast radius of Trump’s next move.

ABSORBING IMMIGRANTS

Last Friday, we noted that the number of asylum seekers entering Germany fell from 890,000 in 2015 to 186,000 in 2017. That’s still a big number, and absorbing all these new citizens won’t be easy. But consider that in 2015, the year it accepted nearly 900,000 migrants, Germany replaced Japan as the country with the world’s lowest birthrate. Migrants can do the work and pay the taxes that will help support pensions and benefits for older Germans in years to come. In short, countries with shrinking populations have a clear incentive to welcome new citizens.

What about other countries with shrinking populations, those where deaths outnumber births? The ten countries expected to lose the most citizens between now and 2050 are all in Eastern Europe, despite intense EU pressure on member states to accept a number that’s in keeping with their population size. Country #11 is Japan.

So how many immigrants have Poland, Hungary, and Japan admitted recently? As part of an EU relocation scheme, Poland and Hungary have welcomed exactly zero refugees who’ve entered Europe since 2015. Japan accepted 28 refugees in 2016 and three in the first half of 2017. Looks like the governments of these countries are worried more about cultural change and political pressure than about future economic challenges.

GZERO WORLD WITH IAN BREMMER: COVERING TRUMP

ITALY’S RED BUTTON

Great news for Signal readers in Italy. If you’re online and see a news story that looks fake, you can now use the “red button” system created by the government to have that story checked out. Just log on to the website of the Postal Police, the folks responsible for battling online crime, and let them know you’ve got a story for them to check out. They will then use special software to figure out the source of that story and report back on whether it’s fake. If this system works, it will come in especially handy during Italy’s upcoming election season.

At a moment when confidence in the reliability of information has already made news before and after elections in the US, South America, Europe, and Africa, is there anything similar in the works in other countries holding elections this year — places like Brazil, Mexico, Hungary, and the US?

WHAT WE’RE WATCHING

Padmaavat — A new film opened this week in India. Padmaavat, based on a 16th century epic poem, is the story of a fictional Hindu queen and legendary Muslim king. Spoiler alert: He kills her husband in battle, and she protects her honor by throwing herself on his funeral pyre. Rumors that an earlier version of the film included a dream sequence of romance between the Muslim king and Hindu queen, denied by the filmmaker, have provoked death threats against the cast and bomb threats against theaters showing the film. Courts have blocked attempts to ban the film. Riots followed the opening, and a group of 300 women has petitioned the Indian government for the right to kill themselves to protest the film. As we’ve noted before, the rise in Hindu extremism in India is a disturbing trend that deserves close watch in 2018.

Brazil Beyond Lula — On Wednesday, an appeals court in Brazil upheld a corruption conviction against former Brazilian president Luiz Inacio Lula da Silva, better known as Lula, that bars him from running for president again this year. This court won’t have the last word on that, but the smart people we talk to think Lula probably wouldn’t win even if he were allowed on the ballot, whatever this week’s polls say. Brazilians will likely vote for change this October. We’ll be watching in coming weeks to see what form that change might take.

WHAT WE’RE IGNORING

Iran’s Austerity — Iran’s parliament will soon approve a request from President Hassan Rouhani for a more-than-40 percent cut in the popular cash transfer program that triggered localized unrest earlier this month. This is part of Rouhani’s ongoing effort to get Iran’s financial house in order. Expect more protests around the country, some of them colorful, but public anger in unlikely to have any bigger impact on government this time around.

Saudi Arabia’s Camel Beauty Contest — At the King Abdulaziz Camel Festival, a traditional dromedary beauty contest now held outside Riyadh, camels are judged by, among other things, the size and shape of their lips, cheeks, heads, and knees. For many years, your Signal team has condemned the objectification of camel beauty. But no more protests. We’re ignoring this contest going forward because a dozen camels were disqualified this year for using Botox. Think this story is fake? It isn’t. Ask the Italian Postal Police.

The Academy Awards — Speaking of rigged contests, the Academy of Motion Picture Arts and Sciences announced nominees for this year’s Oscars on Tuesday, and for the 90th year in a row, not a single member of your Signal team was nominated. Wish I could say we’re surprised.

HARD NUMBERS

29,168: There were 29,168 murders in Mexico in 2017, the highest number since the government began collecting statistics in 1997. Public anger over rising violence will be front and center as the country elects a new president in July.

131: This week, eleven countries agreed to sign a revised version of the Trans-Pacific Partnership, a trade pact that initially included US participation and would have contributed $131 billion annually to US GDP, according to the Peterson Institute.

20: Nearly 20 percent of young people in Europe (aged 18–24) are still looking for work. #TheCrisisContinues

4: Doctors in Syria have reported four chemical weapons attacks by government forces since the start of this year. After missile strikes against the country last year, President Trump vowed Assad would again “pay a heavy price” for any additional use of such weapons.

2/3: Two-thirds of India’s 1.2 billion people are younger than 35. That’s much more than double the entire population of the US.

WORDS OF WISDOM

“Whoever controls data is the most powerful and can shape the world.”

— Indian Prime Minister Narendra Modi delivers a slightly dystopian message during his opening speech to the World Economic Forum in Davos.

This edition of Signal was prepared with editorial support from Kevin Allison (@KevinAllison), Gabe Lipton (@gflipton), and Leon Levy (@leonmlevy). Spiritual counsel from Alex Kliment. Give a friend the Signal here.