False Spring? | EconVue Spotlight

Spring has been a bit tardy this year in the US, and I hear many other places, but not in Asia.  The title of a recent Brookings meeting at Northwestern University was “Japan, the United States, and the Future of Asia”  but the topic was Korea.  I posed the question of whether or not we are experiencing a false spring. Talks between the two Koreas, the US and China are certainly a hopeful development, but do they mask fundamental and growing divisions between the major powers in the Pacific? Together, these countries comprise half of global GDP.

Alicia GarciaHerrero,  an economist who works from Hong Kong, recently commented that tensions could be shifting from North Korea to the Taiwan Strait.  A number of actions by the Trump Administration point to increasing support for Taiwan, certain to roil Chinese policymakers.  Countering this is piquant analysis by Michael Turton, author of  The View From Taiwan who says that fears are overblown by the media and that Taiwan-China relations are better than they seem.  Making the point that no one really knows what is going on in Beijing, a pithy must-read for all China watchers is James Palmer’s piece in Foreign Policy.  There are far too many articles to cite that say the same about Washington. And now even Tokyo.

Wishing everyone a Happy Holiday this weekend.  

RESEARCH BY ECONVUE EXPERTS

FMI April 2018 Economic & Investment Outlook
Michael Lewis

As 18Q1 ends, recent data have been mixed, but the economy’s continuing momentum is clear; After moderating to slightly below +2.5% for 18Q1, real GDP growth should firm to +2.75% for the rest of 2018 (and continue at healthy pace in 2019); Core PCE inflation, which spiked in 18Q1, will continue to trend up, it should breach the +2% target this summer; After one rate hike in March, Powell Is headed for three more rate hikes this year (and another four in 2019).

The U.S. Surplus in Trade in Services Reflects its Comparative Advantage
Karim Pakravan 

The Trump administration should keep these points in mind before it unilaterally expands the scope of its trade moves on the imports of goods.The U.S trade deficit is structural, resulting from the chronic gap between country’s savings and investment. Therefore, protectionist measures cannot reduce significantly the goods trade deficit.

Institutional Crypto Terms
Collin Canright

The dramas of volatility in the price of bitcoin and scams in "coin"-offering fundraising schemes overshadow legitimate cryptofinance developments.

For nearly the last year, crypto-coins have been developing into an asset class and investment ecosystem. From two conferences I attended this year, one in Chicago and the other in Singapore, it seems to me that the Chicago firms see the opportunities for developing trading infrastructure while the Asian investors and regulators see real possibilities for financial innovation.

Relationship-Based Care: “Different Spokes (Care Models) for Different Folks”
David W. Johnson 

The best, most cost-effective health outcomes occur when providers build long-term, trusting relationships with patients and pro-actively treat disease through real engagement, frequent dialogue and shared decision-making. At its best, primary care helps prevent, mitigate and manage chronic disease and other serious conditions.

STORIES IN OUR SPOTLIGHT

China

Nobody knows anything about China
James Palmer 3/21/2018 Foreign Policy

Outside analysts rue lack of access to good Chinese economic statistics. But that does not mean that we can't understand the bigger picture. Within China, massive amounts of individual-level digital data is being collected every day. Someone is analyzing that.

Some economic consequences of China’s recent institutional reform
Alicia Garcia-Herrero 3/26/2018 LinkedIn

Long term these are extremely positive moves. Especially the focus on China’s aging population, a demographic time bomb.

The Strangest Taiwan-China Divide of All
The News Lens International  3/30/18

Meanwhile, on the Taiwan side, everyone is kicking back and downing margaritas. We don't look at events using the conventional interpretive frameworks that focus on promoting China as a serious participant in the international system and marginalizing Taiwan. We don't have to sell papers or drive clicks to our websites. And we've seen this happen a hundred times before.

Xi Jinping is making sweeping changes to how China is run
Ben Westcott and Serenitie Wang 3/17/2018 CNN

“Resistance and confusion” - change always exacts a price, at least in the short term. Expect a go-slow period in China as historic levels of reorganization take hold.

President Trump signs the Taiwan Travel Act
Duncan DeAeth 3/17/2018 Taiwan News

Observations on Section 301
Derek Scissors 3/22/2018 AEI

Analysis of the impact of new China tariffs and the case for imposing them.

Can Central Asia’s poorest states pay back their debts to China?
Dirk van der Kley 12/1/2017 The Diplomat

Highlights a key concern about China’s lending to poorer countries. If there is a downturn in the world economy, or interest rates increase, will they be able to repay their debt? Negative conditions could hit all of these countries simultaneously.

Property tax missing from legislative plan
Wang Xiaoxia and Pan Che 3/16/2018 Caixin Global

This is an important surprise. Are plans to institute property taxes in China on a permanent hold?

Blockchain & Internet

Newly appointed PBOC governor once called Bitcoin ‘inspiring’, praised its accessibility
Helen Partz 3/19/2018 Cointelegraph

Yi Gang received his doctorate from the U of Illinois at Champaign in 1986, one of the world's foremost innovation hubs.

Blockchain, Internet 3.0 and national security governance of China
Zheng Yongnian China Development Forum 2018 Background Paper

Key white paper on the opportunities and hazards of blockchain for China presented at the China Development Forum in Beijing. Overall bullish with Chinese characteristics.

The new ways to save Crypto from Quantum
Alyssa Hertig 3/17/2018

The real threat to cryptocurrencies is not regulation, but another technology.

The biggest headache in machine learning? Cleaning dirty data off the spreadsheets
James Vincent 11/1/2017 The Verge

The unglamorous side of AI.

World

Russia’s nuclear policy: Worrying for the wrong reasons
Bruno Tertrais 3/20/2018 Taylor & Francis Online

The Russian nuclear problem is real and serious – but it is political more than it is military.

Why Canada and Mexico may be big winners from steel tariffs
Benn Steil and Benjamin Della Rocca 3/20/2018 Council on Foreign Relations

Inside the steel fence.

Chicago leads U.S. in underwater homes
Dennis Rodkin 3/16/2018 Crain's Chicago Business

Chicago home values have not risen as fast as LA or NY- still, underwater mortgages are now 10% vs 33% at their height in 2012.

Asia is growing rich, but it is also becoming unhealthier
Asit K. Biswas & Kris Hartley 12/8/2017 World Economic Forum

Asia is facing huge demographic challenges, accompanied by significant health threats due to behavioral changes, the environment, and simply, old age.