🌍 Evergrande’s woes get worse

Hi there Intriguer. Outta the way, geopolitical analysts! A Washington DC-based pizzeria owner once claimed he was able to predict US military action by the fluctuations in late-night deliveries to the Pentagon. More pizza, later at night? Action, imminent.

Today’s briefing is a 4 min read:

• 🇨🇳 China’s real estate woes are dizzying.

• 🚰 Water is shaping politics in the Middle East.

• ➕ Plus: A parrot on a flag, how the papers are covering a potential US government shutdown, and why Chileans are googling ‘río atmosférico’.

1. 🇰🇵 North Korea: Travis King, a US soldier who crossed into North Korea in July, is back in US custody. It’s unclear why Pyongyang agreed to the transfer, which was facilitated by Sweden and China.

2. 🇪🇦 Spain: Opposition leader Alberto Núñez Feijóo failed by just four votes in his first bid to become prime minister during a parliamentary vote yesterday (Wednesday). If he or another candidate can’t secure a parliamentary majority within two months, Spaniards will head back to the polls in January.

3. 🇮🇩 Indonesia: Jakarta is banning transactions via social media platforms, arguing an influx of foreign goods is harming local small businesses. The policy undercuts the e-commerce ambitions of TikTok, which counts Indonesia as its second-largest market.

4. 🇨🇷 Costa Rica: President Rodrigo Chaves said Tuesday (26 September) he would declare a state of emergency to address the influx of migrants transiting through the country. Over 60,000 migrants have entered Costa Rica so far in September.

5. 🇰🇪 Kenya: The US and Kenya signed a defence agreement earlier this week (25 September) ahead of a planned deployment of Kenyan forces to Haiti. Under the five-year deal, the US will provide $100M in funding to support the mission.

🇨🇳 China | Geo-economics

China’s real estate woes worsen

The Hong Kong Stock Exchange today (Thursday) announced the suspension of trade for shares in China Evergrande Group, the world’s most indebted property developer.

What’s going on? The real estate sector makes up 24% of China’s GDP, and it’s been in trouble for a while now.

For years, developers there were pre-selling homes, leveraging the cash from one project to start building others. But Beijing tapped the brakes on excess borrowing in 2020, and the music stopped: buying slowed, prices stalled, and Evergrande started defaulting on its $300B+ debt the next year.

• 📉 Condo prices have since been dropping

• 🚜 Excavator sales (which track construction) are down 42% on the year, and

• 💸 Property stocks in China have hit their lowest since 2011.

So, what’s Beijing doing about it?

• It launched a 16-point program to help ailing firms last year

• It’s relaxed mortgage rules for first-time homeowners, and

• It even arrested several Evergrande employees this month, and placed the founder under police surveillance this weekend.

Meanwhile, Evergrande and others are still missing debt repayments, and the world continues to wonder if there’s a “Lehman moment” on the horizon.

Intrigue's take: Folks in China (like everywhere else) have a chunk of their savings tied to their homes. And construction in China (like almost every other sector there) hoovers up global inputs. So trouble there can mean trouble everywhere.

German economist Isabella Weber made waves with her 2021 book on China’s unique (if imperfect) history of navigating economic challenges. But this latest challenge feels unique in its complexity, and the most promising solutions (like direct cash transfers to households) have political implications.

That’s partly what’s tying Beijing’s hands right now.

Also worth noting:

• Evergrande faces a hearing in a Hong Kong court next month that could potentially result in its liquidation.

📰 How newspapers covered…

A possible US government shutdown

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🚰 Israel – UAE – Jordan | Energy & climate

Israel’s got what Jordan needs

Israel’s energy ministry announced on Tuesday (26 September) it’s finalising a trilateral energy-for-water deal with the UAE and Jordan.

The plan (‘Project Prosperity’) emerged out of COP26 in 2021, and has two parts:

• 🟢 Prosperity Green: Israel will receive clean energy from a UAE-funded solar facility in Jordan, and

• 🔵 Prosperity Blue: Jordan will receive 200 billion litres of desalinated water from Israel each year.

Intrigue’s take: Sometimes geopolitics is complicated. In this case, it’s kinda simple: people need water. Jordan doesn’t have much (it’s the second most water-scarce country on Earth); and Israel produces 20% more water than it needs.

So no matter how frustrated Jordan is with this Israeli government, and no matter how frustrated Jordanians are with this deal, Jordan is pushing ahead. It needs to.

Sometimes water drives conflict. For Israel and its neighbours, it seems to be driving cooperation right now.

Also worth noting:

• The energy ministry said it expects to formally sign the agreement at COP28 in Dubai in November.

• Jordan is currently moving to build a major desalination plant at its only port city, Aqaba, that’s expected to be operational by 2028.

➕ Extra Intrigue

Here’s what folks around the world googled yesterday, Wednesday 27 September:

• 🇦🇺 Australians looked up ‘Google's 25th birthday’ as the tech giant racked up its quarter century.

• 🇨🇱 People in Chile googled ‘Río atmosférico’ (atmospheric river), the weather phenomenon that’s been swamping central Chile.

• 🇵🇱 And Poles searched for ‘kidult’ (kid adult), a term that appeared in a question on the local version of TV’s Who Wants to Be a Millionaire.

🗳️ Poll time!

🏁 Flag of the day

The Caribbean island nation of Dominica is proud of its luscious forests, represented in the green background above. But while several flags feature birds, Dominica’s banner is the only one rocking a parrot. And you can never have too many parrots.

Intrigue rating: 9.8/10

Yesterday’s poll: What do you think of carbon trading schemes?

⬜️⬜️⬜️⬜️⬜️⬜️ 🎯 They're critical to the world hitting net zero (8%)

🟨🟨🟨🟨⬜️⬜️ 💡 They're good in theory, but so messy in practice (37%)

🟩🟩🟩🟩🟩🟩 💸 They're just wealth transfer by another name (54%)

⬜️⬜️⬜️⬜️⬜️⬜️ ✍️ Other (write in!) (2%)

Your two cents:

•  🎯 E: “They help internalize externalities so in theory they're key to fixing climate change. I'm unsure if the reality is the same but I still champion carbon credits as an important part of the green energy transition.”

• 💸 S.M: “Without actually doing something to lower the emissions, this is pointless. It’s just one rich company that is doing less damage selling their additional credits to gain more money and allow the big offenders (who probably have millions to spend anyway) to keep destroying our planet.”