1 Mexico overtakes China as top US import partner but cartel violence increasing
2 China economic model sputters
3 US semiconductor sanctions on China failing
4 US drone kills militia leader in Iraq but OPINION what’s the endgame?
5 Hamas proposal to end war and release hostages rejected by Israel
2/8/1971 Nasdaq stock market index debuts
see ad astra on x @greg_loving
1 Mexico overtakes China as top US import partner but cartel violence increasing
New data released on Wednesday showed that Mexico outpaced China for the first time in 20 years to become America’s top source of official imports — a significant shift that highlights how increased tensions between Washington and Beijing are altering trade flows. The United States’ trade deficit with China narrowed significantly last year, with goods imports from the country dropping 20 percent to $427.2 billion, the data shows. American consumers and businesses turned to Mexico, Europe, South Korea, India, Canada and Vietnam for auto parts, shoes, toys and raw materials.
NYT
The office of Juarez Mayor Cruz Perez Cuellar has confirmed the arrival of 300 Mexican soldiers and 100 National Guard members to a city experiencing a spike in violence. The troops will patrol the streets in military vehicles, support the municipal police in crime prevention operations and back up police agencies that come under fire from criminals, city officials said. The soldiers’ arrival comes as Juarez recorded 124 homicides in January, the highest total in more than a year and a double-digit increase over December, which recorded 96 murders.
Border Report
2 China economic model sputters
Most emerging economies struggle to live within their means; China struggles to live up to them. Even in the best of times, the combined spending of its households, firms and government is not enough to buy all that it can produce, leaving a surplus that must be exported: the country has run a trade surplus for 34 of the past 40 years. And these are not the best of times. China is enduring its longest spell of deflation since the Asian crisis over a quarter-century ago. An epic stockmarket rout since late 2022 has seen investors lose $2trn.
Behind that panic lies a deeper fear among investors and officials, namely that China no longer has a reliable driver of growth. The property boom is over. Cash-strapped developers are afraid to build flats and households are afraid to buy them. The infrastructure mania has run out of road: indebted local governments lack the funds. Exporting goods to the rest of the world, which China relied on for decades to escape poverty, is getting harder as protectionism rises and Western countries become wary of relying on authoritarian states.
Much therefore rests on one remaining source of growth: boosting the spending of China’s 1.4bn people. “The Chinese market, with its vast space and growing depth, will play an important role in boosting aggregate global demand,” Li Qiang, China’s prime minister, told the World Economic Forum in Davos last month. A new imf review of China’s prospects published on February 2nd contains 61 references to the word “consumption”.
Economist
https://www.economist.com/china/2024/02/06/can-consumers-rescue-chinas-economy
3 US semiconductor sanctions on China failing
China’s national chip champions expect to make next-generation smartphone processors as early as this year, despite US efforts to restrict their development of advanced technologies. The country’s biggest chipmaker SMIC has put together new semiconductor production lines in Shanghai, according to two people familiar with the move, to mass produce the chips designed by technology giant Huawei. That plan supports Beijing’s goals of chip self-sufficiency, with President Joe Biden’s administration tightening export restrictions for advanced chipmaking equipment in October, citing national security concerns. The US has also been working with the Netherlands and Japan to block China’s access to the latest chip tools, such as machines from the Dutch maker ASML
FT
4 US drone kills militia leader in Iraq but OPINION what’s the endgame?
A U.S. drone strike in Baghdad killed a commander of the Iran-backed Iraqi militia blamed for a deadly strike at a U.S. base in Jordan last week, part of a sharpened effort by the Pentagon to deter attacks on its forces.
WSJ
Starting on February 2nd, Washington struck back over several days against Iran’s Islamic Revolutionary Guard Corps and its allied militias in Iraq and Syria. The first round, which included B-1 bombers flown all the way from Texas, hit more than eighty-five targets across seven sites—command-and-control facilities, intelligence and logistics installations, and weapons depots. It sounds forceful, but only in the context of recent weeks, not four decades. “Our response began today,” President Biden said in a statement just hours after overseeing the “dignified return” of the killed soldiers in flag-draped coffins. “The United States does not seek conflict in the Middle East or anywhere else in the world,” he added. “But let all those who might seek to do us harm know this: if you harm an American, we will respond.” The U.S. retaliation will continue “at times and places of our choosing,” he warned. In separate operations, the U.S. and Britain bombed dozens of targets at thirteen sites in Yemen, where the Houthis—another militia backed by Iran—have been targeting naval and international commercial ships in the Red Sea. Roughly a third of all international shipping bound for or coming from the Suez Canal goes through the strategic waterway. The Houthis claimed that the attacks, by drones and missiles, were in sympathy with Hamas in its war against Israel, which has reportedly killed some twenty-seven thousand Palestinians. Again, Washington suggested an open-ended military commitment. “We will not hesitate to defend lives and the free flow of commerce in one of the world’s most critical waterways,” the Defense Secretary, Lloyd Austin III, said in a statement. On Sunday, Biden stepped off Air Force One in Las Vegas, where a pool reporter asked whether the President thought the strikes were working. “Yes,” he replied curtly, then got in his armored limousine, the Beast. Yet the Middle East is in a state of disruption that dwarfs the chaos and uncertainty of many past wars. Perhaps most frustrating right now is that eight Administrations—both Democratic and Republican, from Carter and Reagan to Trump and Biden—have not figured out how to deal with Iran, at least with any consistency. Air strikes alone may degrade the militias’ capabilities and lead Iran’s Islamic Revolutionary Guard Corps to take a step back. But only in the short term. Air strikes won’t defeat a network of adversaries with hundreds of thousands of fighters, tens of thousands of missiles or drones, and, most of all, the drive to continue.
Over the weekend, Jake Sullivan, the national-security adviser, said that Washington was prepared to “deal with anything that any group or country tries to come at us with”—and that Iran should expect a “swift and forceful response” if its military struck Americans. The U.S. air strikes on targets in Syria, Iraq, and Yemen seem certain to continue. “We intend to take additional strikes, and additional action, to continue to send a clear message that the United States will respond when our forces are attacked, when our people are killed,” Sullivan said on “Meet the Press.” But for how long? What is the endgame? What is the U.S. planning for the future to deal with a flash point that dates back decades? And does it have the resolve, when the foreign-policy goal of multiple Administrations has been to pivot to the Indo-Pacific, namely China? As Crocker noted, Iran has been closely watching what Washington is doing for Ukraine—and not doing now in providing arms to fight the Russian invasion. “If the U.S. won’t buckle down on an existential issue for Europe, then the Iranians think they have nothing to worry about,” he told me.
New Yorker
5 Hamas proposal to end war and release hostages rejected by Israel
Israel’s Prime Minister Benjamin Netanyahu has rejected a proposal by Hamas to end the war and release captives in exchange for withdrawing Israeli forces, releasing prisoners and accepting the armed group’s governance of Gaza.
Al Jazeera
https://www.aljazeera.com/news/2024/1/22/netanyahu-rejects-hamas-deal-to-end-war-release-captives
2/8/1971 Tech-focused Nasdaq Composite stock market index debuts with 50 companies and a starting value of 100. Today it’s 15,777.
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