Global Street Smarts.
Happy Saturday.
Here’s today’s ITK Daily.
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Most Europeans agree with Macron on China and US, report shows: Europeans want the Continent to cut its dependence on American security guarantees and invest in its own defensive capabilities. Politico
+ Close to three-quarters of Europeans — 74 percent — think the Continent should cut its military dependence on the U.S. and invest in its own defensive capabilities, a new report released Wednesday by the European Council on Foreign Relations (ECFR) shows.
+ “The chief takeaway from our survey is that Europeans want to see the EU become more self-reliant in foreign policy and build up its own defensive capabilities,” Jana Puglierin, one of the report’s authors, said in a press release.
FT: Xi Jinping meets ‘old friend’ Bill Gates ahead of Antony Blinken’s China visit
As Blinken heads to China, a wall of suspicion awaits him: Even as Beijing prepares for a visit by the secretary of state, China’s leader has made clear his expectations of more hostile superpower competition. NYT
+ Secretary of State Antony J. Blinken makes his long-delayed visit to China beginning Sunday in the hope of slowing the downward spiral of relations between Beijing and Washington.
+ But China’s increasingly assertive, at times outright hostile, stance suggests that the visit will be as much about confrontation as détente.
+ In China’s telling, the United States is a declining, hegemonic power that is seeking to cling to its dominance in China’s backyard and provoke Beijing over its claim on Taiwan, the self-governed island democracy.
+ The country’s leader, Xi Jinping, accuses the United States of leading other countries in a joint campaign to contain China militarily, diplomatically and technologically.
+ Even as Beijing has agreed to talk, it has also signaled that it is braced for conflict, seeing little chance of — and potentially little use in — a real thaw.
+ “China has thrown away its illusions,” said Zhu Feng, a professor of international relations at Nanjing University. “It’s less and less confident in the idea that China-U.S. relations could improve because of Chinese efforts.”
+ Xi has been fixated on national security during his decade in power, emphasizing the need for self-reliance and suggesting that threats to the Chinese Communist Party’s rule are ubiquitous. Rising nationalist sentiment in China — often stoked by the authorities — cheers on Beijing’s hawkish foreign policy.
+ Washington faces its own domestic pressures not to appear soft; a tougher approach to China has become a rare area of bipartisan consensus.
+ Biden, even as he has declared his desire for dialogue, has described China as America’s greatest geopolitical challenge.
+ “It’s clear that Blinken’s visit is not a negotiating session,” said Drew Thompson, a visiting senior research fellow at the Lee Kuan Yew School of Public Policy in Singapore, who previously worked on China issues at the U.S. Department of Defense. “It’s going to be an exchange of views so that the two sides can better understand their respective positions and have a better appreciation for each country’s bottom line.”
+ Xi and Biden could also potentially meet in San Francisco in November, during a leaders’ summit of the Asia-Pacific Economic Cooperation group of nations.
Awaiting Antony Blinken in Beijing: Chinese blame-shifting: Since its balloon was shot down, China has painted the US as the global aggressor. WSJ
+ The strategy combines a pugnacious “wolf warrior” brand of diplomacy and spin on current events to position Xi’s China as a responsible world power against an irresponsible U.S. Selective censorship at home and an expanding media footprint abroad turbocharge the messaging, political analysts say.
Bloomberg: Rahm Emanuel slams Xi on economy ahead of Blinken’s China visit
US and its partners have strategic momentum in the Indo-Pacific: Blinken to arrive in Beijing with the wind at his back from re-energized alliances. Rahm Emanuel
+ Rapprochement between Japan and South Korea, our two strongest Indo-Pacific allies, has given an enormous lift to the entire network of US alliances. Our alliances work best when our allies display determination and work together to strengthen deterrence, counter coercion and create economic opportunity.
+ Sfter six years of Chinese attempts to woo the Philippines and displace the U.S. as Manila's top partner, President Ferdinand Marcos Jr. realized the reality that partnership with China means Beijing saying one thing and doing the opposite.
+ The fact that the Philippines granted greater US access to its military bases, expanded defense cooperation with Japan and just completed a trilateral coast guard exercise speaks to where Manila sees its future stability and security. Diplomacy and deterrence working in unison make for a powerful combination.
+ The recent announcement on cooperation under AUKUS, Indian Prime Minister Narendra Modi's official state visit to the U.S. later this month and National Security Adviser Sullivan's meetings this week with Japan, South Korea and the Philippines are further examples that show American diplomacy is working.
+ We must always stand up for an international system that unites nations with the purpose of defending democratic principles, not defying them. Whether sailing through the Taiwan Strait, flying over the South China Sea or putting the rule of law and transparency front and center in international trade and investment, our allies will work in unison.
+ The secret behind America's success is active diplomacy, increasing economic development and strengthening deterrence.
+ Our diplomacy treats allies as partners in common purpose, not as pawns to be coerced and punished into submission. Blinken will sit across from his Chinese counterparts with the political winds blowing our way.
US, Philippines, and Japan eye regular South China Sea exercises: Nikkei reports three-way cooperation seen as key to deterring China along 'first island chain.'
US grapples with potential threats from Chinese AI: Defining risky artificial intelligence poses a challenge as Washington moves to curb investment in Chinese tech. WSJ
+ The Biden administration is grappling with how to identify artificial intelligence that poses a threat to national security, a central challenge as the US moves to curb investment in advanced technology companies in China.
+ Biden administration officials have been preparing a new executive order for months that will restrict US investment into some geopolitical rivals, namely China. Their goal is to prevent U.S. private equity and venture capital from contributing to China’s development of cutting-edge technology that could aid Beijing’s military.
+ “AI is in many ways a meaningless category. It encompasses everything from Netflix recommendation algorithms to autonomous weapon systems and a bunch of stuff in between,” said Martin Chorzempa, who studies capital and technology controls at the Peterson Institute for International Economics. “It’s extremely hard to define.”
Why the war in Ukraine may not deter China: US strategists hope that Russia’s failures and the strong response from the West will give Beijing second thoughts about attacking Taiwan. But Xi Jinping could be drawing different lessons. WSJ
+ “Russia’s military image and credibility have crumbled,” said Zhou Bo, a recently retired senior colonel in the People’s Liberation Army (PLA) who serves as a senior fellow at Tsinghua University in Beijing. “This has become a war they did not expect.”
+ If deterrence fails, this would be America’s first war in generations against a near-peer adversary, likely resulting in staggering losses.
+ Taiwan also plays a much more central role in the global economy, with a GDP nearly four times the size of Ukraine’s and a near-monopoly on manufacturing advanced semiconductors that are indispensable for modern technologies.
+ “Of course the war in Ukraine should stop as soon as possible, but whatever happens there should not hinder our reunification efforts,” said Cui Tiankai, a former Chinese ambassador to Washington and deputy foreign minister who remains influential in Beijing’s establishment.
+ “For us in China, national reunification is the goal, whatever international environment we might have.” Chinese leader Xi Jinping has set a 2027 deadline for making the PLA ready to invade Taiwan, according to U.S. officials.
+ The Ukrainian war has focused minds in Beijing on the inherent unpredictability of a military conflict.
+ Russia has sustained more than 100,000 casualties in the past six months alone, according to U.S. estimates.
+ Despite the PLA’s modernization and sophisticated new equipment, nobody knows how it would perform on the battlefield, given that none of its current soldiers have combat experience.
+ Though Taiwan is Beijing’s key objective, the Chinese Communist Party’s overriding priority remains the survival of its rule, according to Valerie Niquet, head of the Asia department at the Foundation for Strategic Research, a Paris think tank that advises the French government, among others.
+ “The road to that survival doesn’t pass through a collapse of the Chinese economy, an eventual military defeat and a humiliation should they fail to take possession of Taiwan,” she said.
+ “We should not kid ourselves that by leaving Europe on its own we will somehow strengthen deterrence in the Western Pacific.”
+ According to a wargame carried out by the Center for Strategic and International Studies this year, the U.S. would lose many thousands of troops, between 200 and 484 aircraft, and between 8 and 17 ships, likely including aircraft carriers, in the first weeks of the conflict, depending on different scenarios.
+ China’s economy and military would also be devastated, much of Taiwan would lie in ruins, and Japan—which would almost certainly be dragged into the war—could also suffer serious damage.
+ In most of these exercises, China ultimately suffers defeat, though not when Taiwan is left to fend for itself.
+ Given the historic similarities in Chinese and Russian military equipment and doctrine, down to rank insignia, it’s no surprise that Chinese commanders are carefully analyzing the war in Ukraine.
+ China’s military lesson, they warn, is that Beijing would need to go after Taiwan with a massive shock-and-awe strike, mounting a far larger force and possibly leveraging the nuclear threat from the get-go.
‘Misguided’ Taiwan fuelling China’s aggression, says ex-president Ma: The Times reports war is not inevitable as long as relations are maintained, says the former leader.
Is Bangladesh edging closer to China and Russia? DW reports PM Sheikh Hasina has downplayed Washington's importance and suggested making friends on other continents. Her comments may not help ease Western pressure over rights violations and Bangladesh's poor democracy record.
Counteroffensive is grueling and costly, but promising, Ukraine and US say: NYT reports American and Ukrainian defense officials said the fight to dislodge dug-in Russian forces occupying southeastern Ukraine was expected to be brutal.
Zelensky rules out talks with Russia as he meets African leaders in Kyiv: Le Monde reports the delegation, including leaders of Senegal, Egypt, Zambia, South Africa, and Comoros, was expected to meet with Russian President Vladimir Putin on Saturday.
BBC: Putin confirms first nuclear weapons moved to Belarus
Russia’s latest space agency mission: raising a militia for the war in Ukraine: FT reports Roscosmos has helped recruit a battalion to fight while sending cosmonauts into space alongside NASA.
FRA-KSA: President Macron hosted Crown Prince Mohammed bin Salman for talks in Paris as part of a charm offensive to attract investment from oil-rich Saudi Arabia despite its human rights record.
Britain’s economic malaise: With inflation stubbornly high, interest rates are likely to go up even further. Some investors fear long-term stagnation. FT
+ Adam Posen, head of the Peterson Institute think-tank in Washington, goes even further, saying that in comparison to the US and eurozone, the UK is suffering the additional problems of Brexit, a loss of credibility of economic governance and the legacy of under-investment in public health and transport services.
+ “The mystery to me is not so much the UK economy doing worse than the eurozone or the US, but why it’s not doing even worse and why sterling remains as strong as it is.”
+ One theory is that it has suffered the worst of all worlds on both sides of the Atlantic. It has had the sort of strong demand seen in the US that has led to labour shortages while also experiencing the blow from high energy prices that the rest of Europe has faced from the Ukraine war.
BBC: Greece boat disaster: Up to 500 people still missing says UN
Finland's conservatives to form coalition with far-right: DW reports Prime Minister-designate Petteri Orpo announced that he struck a deal with other right-wing parties. His incoming government will include the far-right Finns Party.
As productivity plunges, Ontario and Alabama now have the same per capita GDP: Simply put: lower productivity almost always means lower living standards. Trevor Tombe
Mexico City mayor to step down to pursue historic bid for presidency: Reuters reports Mexico City Mayor Claudia Sheinbaum said she will step down on Friday to pursue the ruling party's candidacy for the 2024 presidential election, bidding to become the country's first female leader. President Andres Manuel Lopez Obrador's leftist National Regeneration Movement (MORENA) on Sunday agreed that on Sept. 6, it would announce the winner of its internal selection process. Sheinbaum is one of the two favorites.
AP: Biden is returning to his union roots as his 2024 campaign gears up
DeSantis allies set up a school to train a $100 million door-knocking army: WSJ reports at a classroom called Fort Benning, after the Army base once named for a Confederate general, hundreds have been training for an eight-month barrage of Republican voters.
He’s deeply religious and a Democrat. He might be the next big thing in Texas politics. James Talarico confounds Fox News hosts, fights the culture wars by quoting scripture, and has fellow Democrats talking about his statewide future. Politico
+ A magnet reading "Less Honkin' More Tonkin'" on Talarico’s truck. Religion and politics have always been intertwined for Talarico. He grew up the son of a single mother going to St. Andrew’s Presbyterian, a church that the Rev. Jim Rigby had turned into something of a refuge for progressive Christians in Austin.
+ In 2018, at just 29, Talarico flipped his suburban Austin district blue, winning it by 2 points, one of only a handful of Texas Democrats to do so that year.
Americans are staying right where they are: Longer and more difficult searches for affordable housing are hampering mobility — even within local areas. Sam Learner
Biden team takes aim at TikTok with Commerce Department move: WSJ reports the administration likely would need legislation from Congress to further strengthen its position against foreign-based apps that could threaten the US.
When a Huawei bid turned into a hunt for a corporate mole: At TDC in Copenhagen, senior managers were potential suspects. The company’s offices were compromised, people were getting tailed. And then there were the drones...Bloomberg
+ In 2015 a Danish government investigation determined that the nation’s Defense Intelligence Service had been allowing the US National Security Agency to access data from fiber-optic cables transiting the country to spy on political leaders in France, Germany, Norway and Sweden.
+ According to a statement Aalose gave to his security team, there was “a threat about how the wrong decision would affect other Danish companies in their future cooperation with China.”
+ A sweep of the company boardroom turned up multiple long-range microphones that, while compatible with the existing audio conferencing equipment, were not part of the original system–no one knew who’d installed them or why.
+ There were now more than a dozen investigators, including digital forensics experts from the international firm FTI Consulting, and multiple attorneys from Plesner. Most of their work entailed inspecting phones and laptops for signs of tampering.
+ Every evening they boxed up the equipment in black military-style security crates, drove them to a Danske Bank branch downtown and wheeled them into a vault.
+ At 12:20 a.m. on March 20, a security guard patrolling the Plesner offices noticed lights floating outside the 15th-floor room where TDC’s team had been working. Peering into the glare, he saw a large drone
+ For 10 minutes it remained there, flying up, down and sideways. Then it descended out of sight.
+ The drone hovered in the air for a few minutes, and a team member took a picture of Kirkby pointing at it.
+ Everyone got up and watched the drone descend to the street, where it was picked up by men in a white van, who then drove away.
FT: Italy approves restrictions for China’s Sinochem on tyremaker Pirelli
Chinese EV giant BYD overtakes Tesla, but can it crack the US market? WP
“The Seagull was the shot heard around the world when it comes to affordability of electric vehicles,” said Bill Russo, founder and chief executive of the Shanghai-based advisory firm Automobility.
+ China exported 1.07 million cars in the first quarter of this year, according to China’s Association of Automobile Manufacturers — overtaking Japan to become the world’s top auto exporter.
+ “If Tesla decides to enter a market in Latin America or Southeast Asia, guess who they’re going to have to compete against in every single one of those markets?” said Tu Le, founder of the Beijing-based consultancy Sino Auto Insights. “That’s an advantage to BYD.”
+ By 2018, the Chinese government had spent nearly $60 billion on achieving the transition to “new-energy vehicles,” according to the Center for Strategic and International Studies in Washington.
+ As China became the dominant processor for the essential minerals that go into EV batteries — 95 percent of the manganese and over 60 percent of the cobalt and lithium is processed in China — Chinese EV and battery makers like BYD benefited from government grants, subsidies and tax credits.
+ “BYD has an $11,000 electric vehicle, and it will be available this year. If anyone is democratizing the EV, it’s Wang Chuanfu, and he’s the one who should be called the Henry Ford of the 21st century.”
+ At Tesla, Musk focused on making EVs into a flashy aspirational purchase. But at BYD, Wang doubled down on the company’s battery technology.
+ He insisted that BYD’s batteries had become so efficient that if the cars didn’t work out, the company could make batteries for competitors. Today, BYD sells its batteries to both Tesla and Ford.
+ “From the beginning, the Chinese automakers all wanted to go to the US, but they found it was difficult,” said Steven Dyer, a former Ford executive and managing director at the Shanghai-based consultancy AlixPartners. “Eventually, you’ll see a lot of Chinese-brand vehicles in the U.S., it’s just a matter of time — but they’ll go where it’s easier first.”
Buttigieg seeks closer Asian supply chain ties for EV batteries: Nikkei reports the US transport chief calls Japan 'strong partner' as China tensions mount.
Intel is set to reap $11 billion in subsidies to build a new chip plant in Germany.
FT: Micron to invest $600mn in Chinese factory despite Beijing chip ban
Apple is no longer a design-led company: The launch of the Vision Pro AR headset comes at an inflection point for Apple. FC
+ After nearly 20 years of work, Apple has revealed its AR/VR headset, the $3,500 Vision Pro.
+ . The product we’re seeing today is not the best it could have been, I’m hearing, as it suffered from infighting between Apple executives and its own design leadership.
+ Many in the know are in a state of mourning for design at Apple.
+ Even as Apple continues to employ an unparalleled roster of design talent, those talents have less and less say in company strategy, which is eroding its design dominance. As one person put it to me, bluntly: “Apple is no longer a design-led company.”
+ Apple became the company it is today because it made products that people fundamentally desired—things people felt like they needed, even if they couldn’t afford them. That was the result of a crystal-clear product strategy that reimagined what was possible when design and technology fused into a single entity, not what other companies were doing or what Wall Street wanted next.
+ The Vision Pro is a bellwether for a new era at Apple, one led more by engineering and operations than design.
+ Apple’s design descent aren’t difficult to follow. It’s something of an open secret that Tim Cook and Jony Ive clashed, leading Ive to leave Apple in 2019.
+ Under Cook, Apple has been operating with a different strategy than it did under Jobs: To leverage the sheer size of Apple to launch perhaps not half-baked products, but certainly products with a gooey center that will require years of more design iteration and technical achievement to solidify.
+ The rollout of Vision Pro feels more similar to the Apple Watch, a product launched with sluggish sales and without a cemented purpose.
+ After watching a 2-hour presentation revealing “Apple’s first spatial computer,” as execs called it, I’m still not sure why Apple had to make this computer, and I’m still not sure why anyone needs to buy it.
+ Apple is at its best when it presents a product that feels impossible to be made any other way, enabling life to be lived in a new way, through a design that’s refined, that is completely obvious in retrospect.
+ Apple has traditionally been a design-led company, in true competition with a single entity only: itself.
French AI fundraising sensation shows Europe’s got talent: Money is flowing into regional tech start-ups, but regulators have a difficult balancing act not to kill AI in its infancy. Anne-Sylvaine Chassany
+ Europe’s largest-ever seed round — values the one-month-old business, Mistral, at more than €240mn on not much more than hope: that the company, which is aiming to build an open-sourced language model with B2B applications, will become a European AI champion and give the bloc a strategic stake in how the industry is shaped and regulated globally.
+ Regulators, meanwhile, don’t want to be caught out by a technology with revolutionary potential: what could hurt these start-ups and their investors is the Artificial Intelligence Act being cooked up in Brussels.
+ Regulation did need to happen, he said, but not without collaboration with Washington and London, a reference to the need to align western partners in the context of tensions and rivalry with China. The French president received a polite answer from Mensch: “These are good first steps.”
UPS union, representing 340,000 workers, approves nationwide strike: WP reports the strike vote brings the country a step closer to the largest work stoppage in 26 years as soon as Aug. 1.
Everyone knows that work is miserable. A new book suggests Thoreau can help fix it. In ‘Henry at Work,’ John Kaag and Jonathan van Belle argue that the man who once retreated to Walden Pond can help us rethink life in the modern office. WP
+ They argue that Thoreau helps us to see, for example, a mismatch between “the tides and seasons of our energies” and the rigidity of the office clock; to find the pleasure and meaning of manual labor; to know when and why to quit.
+ The authors patiently explain the concept of “theodicy” — an account of “why life (including work) sucks if there is [a] God who cares about us” — and explore how we might compare Thoreau’s views of work with the models of theodicy offered by ancient Greek and Roman writers.
+ Zoom meetings, flex hours, and company retreats are hailed as opportunities for “workers [to] find meaning and growth” of which Thoreau would approve.
+ This illustrates the greatest flaw of “Henry at Work”: It tends to regard the problem of work as one of attitude rather than one of material conditions.
+ It is true that the question of why we work so hard has invited consideration of ideological forces at least since Max Weber’s “The Protestant Ethic and the Spirit of Capitalism” from the early 1900s.
+ It’s true that Thoreau, a Transcendentalist, inherited idealist tendencies from Ralph Waldo Emerson, who saw great power in changing one’s perspective.
+ But Thoreau departed from his mentor by linking new ways of thinking more directly to new ways of living and acting.
+ Thoreau’s move to Walden was one such shift: an attempt to escape the cycle of debt that lay beneath the veneer of prosperity coating Concord, Mass.
WSJ: Gregg Berhalter reappointed to coach US Men’s National Team
Michael Jordan agrees to sell majority stake in Charlotte Hornets: WSJ reports the sale to Gabe Plotkin and Rick Schnall values the team at a reported $3 billion. Jordan is currently the league’s only Black majority owner.
The Glazers: ‘slow decision makers’ controlling Man Utd’s future: Billionaire family must decide on whether to end their almost two-decade ownership of the English club. FT
Conserving snow, artificial or natural, has become a science: Preserving snow on the slopes has become an essential skill for ski resorts. The scientific processes behind snow grooming and the prediction of weather effects are getting more sophisticated. Le Monde
Enjoy the ride + plan accordingly.
-Marc
Marc A. Ross | Chief Communications Strategist @ Caracal
Caracal produces ITK Daily.
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