Japan’s military: a growing force
Plus: Germany imports hydrogen, Slovenians go to the polls, and Indonesia considers another metal export ban.
Hi there Intriguer. In light of Rishi Sunak’s appointment as the next UK Prime Minister, we’d like to offer a revision to this list of the world’s worst jobs. With record inflation and a crumbling currency, Mr Sunak will hope to outperform his predecessor (who lasted only 44 days in office) and her predecessor (who is under investigation for misleading Parliament). Perhaps “whale snot collector” or “road kill removal specialist” aren’t so bad after all?
Today’s briefing is a ~5.1 min read:
- 🇯🇵 Japan’s military: a growing force.
- ➕ Plus: Germany imports hydrogen, Slovenians go to the polls, and Indonesia considers another metal export ban.
📰 GLOBAL HEADLINES
🤿 DEEP DIVE
🇯🇵 Japan’s military is back
- Japan is doubling its military budget over the next five years in an effort to deter Chinese expansionism in North Asia.
- The move is the clearest signal yet that Japanese officials are pivoting from the country’s pacifist chapter.
Japan plans to increase its defence budget from 1% to 2% of GDP between now and 2027, matching the standard set by its NATO allies.
- The plan bolsters the Self-Defence Force’s counter-strike and expeditionary capabilities and, if successful, would make Japan the world’s third-highest defence spender.
Why now? Japan sees threats all over the region. The world’s two largest militaries (guess who!) are jockeying for influence in the Pacific.
- But the real problem is that Japan is worried the United States is losing its ability to project power in Asia.
Filling the void
Despite Joe Biden’s planned pivot to Asia, he’s spent most of his tenure focused on the Middle East and Europe.
- Biden’s predecessor, Donald Trump, had destabilised security collaboration with Asian allies by threatening to withdraw American troops from the region and urging Japan to develop its own nuclear arsenal to deter North Korea.
So, Japanese officials wonder if they’ll need to go it alone. According to Tokyo-based journalist William Sposato:
Forget it, Jake. It’s Chinatown
Xi Jinping’s speech at the Chinese Communist Party Congress last week made clear (if it wasn’t already) that China’s foreign policy is laser-focused on ‘reunifying’ Taiwan with the mainland.
- Despite Xi’s repeated warnings against foreign interference, a war between China and Taiwan would likely draw other countries into the conflict.
In such a crowded neighbourhood, Japan might feel it has no choice but to get involved.
- Disputes with China over the Senkaku/Diaoyu Islands, some of which are ~100 kilometres from Taiwan, have grown more serious in recent years.
Why it matters
While Japan’s changed military posture doesn’t necessarily increase the likelihood of war, it does make it more likely that a future war in Asia would be catastrophic.
The plan is also a major break from Japan’s pacifist tradition.
- Its 1947 Constitution outlawed the establishment of a standing army and “forever renounce[d] war as a sovereign right of the nation.”
Never say forever: in 2014, the late Prime Minister Shinzo Abe amended the constitution to permit Japan to remilitarise, and hawks in the ruling Liberal Democratic Party are determined to use the power to counter growing threats in the region.
By the time the next CCP National Congress rolls around in 2027, Japan’s military might be a significant force in a region that’s already full of them.
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🔦 REGIONAL SPOTLIGHT
🇪🇺 European Union
The European Union recorded its highest-ever trade deficit this year.
- The EU’s trade deficit clocked in at $50.9B for August; last year, it had registered a trade surplus of nearly $3B.
- Experts say that the combination of higher energy import prices and sanctions on European exports to Russia account for the record figures.
The first shipments of ‘green hydrogen’ from the United Arab Emirates arrived in Hamburg, Germany on Friday.
- Germany has taken an all-hands-on-deck approach to its energy crisis, bringing nuclear reactors back online and extending the lifecycle of coal-fired power plants.
- Chancellor Olaf Scholz is betting big on green hydrogen, having already signed a major hydrogen import deal with his Canadian counterpart in August.
Giorgia Meloni was officially sworn in as the Italian Prime Minister after her party, Brothers of Italy, won the most votes in last month’s election.
- Meloni has billed herself as staunchly pro-business and pro-Western, promising that support for Ukraine would be a pre-requisite to joining her right-wing coalition.
- But rifts have already emerged: former Prime Minister Silvio Berlusconi (and now coalition partner) has recently publicly boasted about his close friendship with Putin.
Western leaders have rejected Russia’s claims that Ukraine is developing a ‘dirty bomb.’
- Russian Defence Minister Sergei Shoigu made the allegations during phone calls to his British, French, and Turkish counterparts on Sunday.
- Western security officials fear Russia may use the allegations as a pretext to escalate the conflict.
Slovenia’s first-round Presidential election ended in a stalemate on Sunday, forcing a second-round run-off in November.
- Anže Logar, a conservative who served as foreign minister from 2020-2022, is expected to defeat his centre-left rival, Natasa Pirc Musar.
- A victory for Logar would represent a significant rebound for his Slovenian Democratic Party, which lost big in April’s parliamentary elections.
🗞 IN OTHER NEWS…
Indonesia keeps its tin to itself
Indonesia’s protectionism is back: Authorities have warned manufacturers to prepare for a possible export ban on tin.
- The government has yet to make a final decision, but Indonesia took a similar measure with nickel exports in 2019, so consider this a warning of tins to come (sorry).
A journey of self-development: Indonesia is the world’s largest tin exporter, but the business of exporting tin ore isn’t especially profitable.
- The government hopes the export restrictions will promote growth and investment in downstream metal processing.
Penny, nickel, dime. Jakarta’s experience with nickel gives it good reason to believe this strategy will work.
- Only a few years after imposing a similar measure on nickel shipments, investment in one of the country’s biggest industrial nickel parks is set to triple.
Testing your metal: This time around, though, analysts believe that tin prices will remain low in the short run.
- A worsening global economic outlook and aggressive interest rate hikes from central banks have caused tin prices to halve since their March peak.
According to commodity trader Sucden Financial’s Quarterly Metals Report:
📊 INTRIGUE x CHARTR
China is the skyscraper capital of the world, with ~3,000 buildings taller than 150 metres. Shenzhen, a fishing-village-turned-tech-hub adjacent to Hong Kong, has 47 more skyscrapers than the iconic skyline of New York City.
- But China’s real estate financing crisis and concerns over liveability have pushed Chinese development regulators to clamp down on building heights.
- New York residents in super-tall apartment buildings have also complained, saying that “[the] metal partitions between walls groan as buildings sway, and [one can hear] the ghostly whistle of rushing air in doorways and elevator shafts”😱.
Has the world reached ‘peak’ skyscraper?
🏙 What do you think?