🌍 China’s exports tank with recovery in peril

🗺️ AROUND THE WORLD

1. 🇲🇳 Mongolia: Tesla (et al) CEO Elon Musk met with Mongolia’s prime minister earlier this week (5 June) to discuss a potential battery factory. Mongolia has among the world’s largest reserves of critical minerals used in EV batteries.

2. 🇸🇮 Slovenia: Slovenia will be a non-permanent member of the UN Security Council after defeating Belarus in a vote on Tuesday (6 June). Guyana, Sierra Leone, Algeria, and South Korea will also join the council.

3. 🇫🇲 Federated States of Micronesia: Japan will help fund a 2,250km undersea comms cable connecting Micronesia to islands in Kiribati and Nauru. The US and Australia will also help fund the $95M project.

4. 🇧🇸 Bahamas: The government is proposing a tax hike for the millions of cruise ship passengers that visit each year. The higher visiting fees could raise up to $145M in revenues compared to $50M now.

5. 🇧🇮 Burundi: Authorities have suspended Burundi’s top opposition party for legislative “irregularities”. Critics say Burundi’s ruling party is paving the way for uncontested parliamentary elections in 2025.

🇨🇳 CHINA | GEO-ECONOMICS

China’s exports plunge

Briefly: China’s exports fell by 7.5% in May compared to the same period last year, a much larger decline than the 1.8% contraction expected by economists.

On the other hand, imports only fell by 4.5% instead of the projected 8%. Taken together, these signals suggest:

• 🇨🇳 China is still recovering, and hoovering up what the world sells, but

• 🌏 The shaky global economic outlook may be tapping its brakes.

And given China’s export sector accounts for ~20% of its GDP, this risks being more of a handbrake than a lil’ tap.

The broader data coming out of China is pretty mixed, too:

• 🏭 Manufacturing contracted in May

• 🏠 Home sales are still rising but at a slower pace than earlier this year

• 🧳 Dining and travel spending is up, but still at pre-COVID levels, and

• 🧢 Urban unemployment fell overall, but rose among 16-24 year-olds

So there are real questions around the strength of China’s recovery.

Intrigue’s take: Context is key, particularly when looking at monthly data.

First, look at the timeframe: this latest data compares to last year, so… what was happening then? China was bouncing out of COVID, and its trade stats were notably higher.

Second, look at prices: sure, the data says imports are down, but that may be because China is paying less for many key imports (like commodities and chips).

And third, look around: exports also fell in South Korea (15.2%), Vietnam (6%) and elsewhere, reflecting a broader global slowdown.

So the big picture here may be better for China than it seems. And yet… with China’s system being so opaque, few things are ever as they seem.

Also worth noting:

• China’s stats bureau will release more data on June 15. The Politburo, the Communist Party’s top body, is expected to meet in late July and announce any policy responses to this latest data.

• China’s car exports hit a new record in May, as the country overtook Japan to become the world’s largest exporter. Around 60% of China’s EV exports to Europe are deliveries for Western brands.

Today’s briefing is sponsored by Patent Drop

🇫🇯 FIJI | GEOPOLITICS

Fiji is rethinking its friends

Briefly: Fijian Prime Minister Sitiveni Rabuka said yesterday (Wednesday) he’s reconsidering his country’s long-standing security arrangements with China.

Fiji’s partnership with China kicked off in 2011 under Rabuka’s predecessor, who had initially taken power in a 2006 coup. Among other things, the arrangement offers training in China for Fijian police officers.

But Rabuka (a two-time coup leader himself) is now asking, “if our systems and our values differ, what cooperation can we get from them?”

Intrigue’s take: A year since China signed a security pact with Solomon Islands:

• 🇳🇿 New Zealand is now finalising a defence agreement with Fiji

• 🇺🇸 The US is inking or renewing pacts with PNG, Micronesia, Palau and the Marshall Islands, opening new embassies in Solomon Islands, Tonga and Vanuatu, and new bases in the nearby Philippines, and

• 🇦🇺 Australia is finalising security pacts with PNG and Vanuatu

By diplomacy’s standards, this is lightning fast. But folks in the Pacific have increasingly bristled at being treated like a geopolitical football. So yes, speed and scale is key. So is sensitivity.

Also worth noting:

• China has previously said the security agreements benefit Fiji, and it hopes to continue the collaboration.

• Rabuka won a tense election in December, ending his predecessor’s 16 years in office.

👀 EXTRA INTRIGUE

Here’s what we’re reading about Saudi investments in golf, football, and F1 racing.

• LIV Golf-PGA Tour merger is all about money

• Saudi Arabia could upend the sports world

• The Saudi soccer bonanza

• Crown Prince Mohammed bin Salman wins again ($)

📸 PHOTO OF THE DAY

All that anyone in the northeast corridor is thinking about today is the smoke in the air. It's oppressive – New York has the worst air quality on the planet.

In a day or two, though, the jet stream will shift and the center of world power will be back more or less in the clear. Whereas climate change – and the fossil fuel burning that causes it – is the stuff of daily life for most of the planet. So it's probably useful to have New Yorkers and Washingtonians breathing bad air for a few days.

Wildfires are on the rise because of climate change – but really, it's combustion that's the problem. Mostly we burn not forests but ancient forests, in the form of coal and gas and oil. And that's what kills nine million humans a year – one death in five on this planet. So this week those of us who inhabit the eastern megalopolis also get to inhabit the rest of the planet.

Intrigue’s take: Bill is one of the world’s leading writers and thinkers on climate change. He’s had so much impact, biologists even named a woodland gnat after him! (Megophthalmidia mckibbeni). So we’re chuffed he shared the above with us.

Bill goes into further detail on the current wildfires over at his brilliant (and free) newsletter, The Crucial Years. It’s a must-read. Be sure to check it out here.

🗳️ POLL TIME!

Yesterday’s poll: Do you think augmented / virtual reality will become part of our daily tech diet?

🟨🟨🟨⬜️⬜️⬜️ 🕶️ Yes, and I can't wait! (33%)

🟩🟩🟩🟩🟩🟩 🙅 No, it's just a gimmick (56%)

🟨⬜️⬜️⬜️⬜️⬜️ 🖋️ Other (write in!) (11%)

Your two cents:

• 🙅 K.C: “As it stands now and for the foreseeable future, the tech is too unwieldy to be anything more than an occasional indulgence on the side.”

• 🖋️ C.M: “Bundling AR and VR together muddles the technology. AR shows enormous promise in medicine, education, simulation, entertainment and other sectors. VR is a solution desperate to find a problem, and has no sustainable business model”