Plus: Running Africa coast to coast
IN TODAY’S EDITION
1️⃣ Five quotes from Janet Yellen’s China trip |
2️⃣ Running the length of Africa |
3️⃣ Nicaragua takes Germany to the ICJ |
Hi Intriguer. I had a blast a few weeks ago hosting an Intrigue event in my hometown (Sydney, Australia) and meeting the local Intrigue community. I thought, why not do it again?
So we're kicking off our new events agenda with International Intrigue IRL 💡 in DC on Wednesday, 24 April! And guess who’s joining me? Fan-favourite, ‘Jack Beaumont’. You know, the spy-turned-author we interviewed last month? The evening will be a great chance to meet the DC Intrigue community, spill the tea over a drink or two, and hear what we’ve got in store for 2024.
The team and I can’t wait to welcome you there, so please let us know if you can make it!
PS – Would you like to sponsor an Intrigue event? Hit reply and let us know!
Ceasefire negotiations continue
CIA Director Bill Burns reportedly presented a new proposal for a ceasefire and hostage release deal as the Israel-Hamas mediation resumed in Cairo over the weekend. The new proposal included exchanging 40 Israeli hostages for a higher number of imprisoned Palestinians, though Hamas officials say no progress was made. Meanwhile, Israeli Prime Minister Benjamin Netanyahu says he’s set a date for the planned ground invasion of Rafah, though he hasn’t elaborated.
AUKUS to become JAUKUS?
In a joint statement released yesterday (Monday), Australia, the UK, and the US declared they were “considering cooperation with Japan” on Pillar II of the trio’s AUKUS defence pact. Pillar II focuses on developing advanced capabilities in areas such as AI and quantum. The statement stops short of inviting Tokyo to join the whole initiative, which aims to furnish Australia with nuclear-powered submarines under Pillar I.
Turkey restricts exports to Israel
Turkey has announced it’ll restrict a wide range of exports to Israel – including cement, steel, and jet fuel – until a ceasefire is declared. The move came after Israel rejected Turkish plans to participate in an aid airdrop over Gaza, plus mounting domestic pressure on Prime Minister Erdoğan to cut commercial ties with Israel.
Taiwan’s TSMC announces third Arizona plant
The world’s leading advanced chipmaker has announced plans to build a third advanced semiconductor plant in Arizona. The Biden Administration, which is looking to boost domestic chip production, will support the company’s local expansion with $6.6B in grants from the CHIPS Act.
When Cameron met Trump
UK Foreign Secretary David Cameron has met Donald Trump to urge Republicans to drop their opposition to further aid for Ukraine. Cameron is also scheduled to meet officials from the Biden Administration during his trip to the US.
TOP STORY
Janet Yellen’s China trip in five quotes
US Treasury Secretary Janet Yellen sinks a beer at Beijing’s Jing-A brewery, the popular hipster spot famous for using Chinese ingredients in its brewing.
US Treasury Secretary Janet Yellen just wrapped her six-day trip to China after meeting top Chinese officials and US business leaders on the ground there. It’s her second visit to China in less than a year, as part of Washington’s push to keep lines of communication open with Beijing.
Here are five key quotes from the treasury secretary’s visit you should know:
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“China is now simply too large for the rest of the world to absorb this enormous capacity”
China’s ‘overcapacity’ has long been a worry for Yellen, and she raised it with both Premier Li Qiang and Vice Premier He Lifeng. Her basic argument is that China’s massive state support enables – indeed, encourages – China’s firms to make more products than are needed, and then sell them at artificially low prices.
The resulting excess production gets offloaded onto global markets, replacing other firms (and jobs) in the process. It happened with steel a decade ago, and Yellen worries it could happen again with EVs, batteries, solar panels, and chips.
For its part, China actually acknowledged its overcapacity in December, though it’s pushed back on Yellen this week. Its argument is essentially that a) overcapacity is a natural part of the business cycle; b) the US is just snowflaking because it can’t compete; and c) the US is showing double standards by boosting its own industry support through moves like the Inflation Reduction Act.
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“Our concern about overcapacity is not animated by anti-China sentiment or a desire to decouple”
This was a consistent theme for Yellen, though her hosts will have had one eye on other recent US comments that probably came across less conciliatory.
In rejecting claims of anti-China sentiment, Yellen also argues that addressing China’s overcapacity is simply “good for China’s long-term productivity and growth”. Yellen is basically implying here that an economic model built on overcapacity (first in property, now shifting to industry) really isn’t sustainable.
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“The work of diplomacy is not easy”
Okay, it’s not the spiciest line, but Yellen did have a tricky gig: to strike a tone tough enough to signal that the US means business, but not so uncompromising that it derails Washington’s broader efforts to stabilise US-China ties.
So the interesting thing about this line is really the fact that it’s coming from the treasury secretary herself, who’s become a key player in US diplomacy towards China. This is partly because Yellen is pretty highly regarded in China, where she’s treated more as a wise scholar than an ideological warrior.
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“Companies, including those in China, must not provide material support for Russia’s war”
China’s relative regard for Yellen means she can probably also get away with dropping these kinds of tougher lines, going on to warn that any companies aiding Russia’s war machine will be hit with US sanctions.
The US, EU, and UK have already blacklisted Chinese firms for breaching Western sanctions against Russia. And Yellen’s latest comments came just as reports emerged that Beijing is now providing Moscow with satellite imagery, chips, and machine tools for military use.
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“As we proceed, we must remember that its trajectory is not predestined”
The ‘it’ here is the US-China relationship, with Yellen going on to say that its future “depends on the choices that each of our countries make”. As obvious as that may sound, history is littered with nations sleepwalking into catastrophe, with individual characters and egos often making all the difference in retrospect.
So as US-China ties continue to wobble on, it’s a point that still bears repeating.
INTRIGUE’S TAKE
The big topic of Yellen’s trip was really ‘overcapacity’, and it’s a doozy. There are reasons some may welcome another flood of low-cost goods from China. For a start, many of those goods will be key to the world’s energy transition, just like they were once key to, say, lifting the world’s living standards.
Plus, for the majority of countries not making EVs, batteries, or solar panels… cheaper is presumably better. Those countries – like the environment – don’t really care whether these things are made in Shenzhen or San Diego.
As for China, addressing its overcapacity means shifting support from industry to households. And that means decentralising money, which means decentralising power. But President Xi has long devoted himself to pursuing the opposite.
And yet abroad, China’s resulting dominance in more key sectors will keep spooking key players like the US and the EU, who’ll keep pushing back on China in new ways, while guarding key supply chains, industries, and workforces.
So that means Xi’s choice here is arguably between more risks at home, or more risks abroad. He’s shown some tactical flexibility in recent months, but when push comes to shove, he’ll do what it takes to avoid trouble at home.
Also worth noting:
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Rhodium published a study last week finding that China’s silicon wafer capacity has recently dropped from 78% to 57%. Anything less than 75% for a sustained period is typically regarded as evidence of overcapacity.
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Bloomberg also published data last week suggesting overcapacity is only an issue in certain sectors of China’s economy, like solar and batteries.
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Local media outlets have been particularly interested in documenting Yellen’s culinary endeavours in China, given her last trip involved inadvertently eating hallucinogenic mushrooms.
A MESSAGE FROM FRIENDS OF INTRIGUE
Meet Face-Off: US vs China, a podcast about how the two nations, once friends, are now foes
Hear why things are so complicated now. Host Jane Perlez, former New York Times Beijing bureau chief, talks with diplomats, spies, cultural superstars like Yo Yo Ma, and more, to understand why the dangers are so high, and why relations went awry.
MEANWHILE, ELSEWHERE…
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🇰🇿 Kazakhstan: Local authorities say tens of thousands of people have been evacuated from Kazakhstan’s northern regions due to “the worst flooding in decades”. Across the border in Russia, an oil refinery in Orsk has also stopped operations due to the floods.
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🇵🇱 Poland: The nationalist opposition Law and Justice (PiS) party has come first in Poland’s local elections over the weekend, in a setback for Prime Minister Donald Tusk. PiS was still well behind the combined results of the three groups currently in Poland’s ruling coalition.
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🇨🇳 China: Swedish authorities have ordered the expulsion of an un-named Chinese journalist on national security grounds. The details are confidential, though a public broadcaster says the woman had received payments from China’s embassy, linked to her articles.
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🇳🇮 Nicaragua: In hearings at the International Court of Justice (ICJ) yesterday (Monday), Nicaragua argued Germany is facilitating genocide in Gaza by providing military aid to Israel. Germany rejects Nicaragua’s accusations and is expected to address the ICJ today.
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🇪🇬 Egypt: Economists are forecasting March data will show another spike in inflation, as prices adjust to a currency devaluation and fuel price hike. Egypt’s central bank raised its rates by 600 basis points to stabilise the economy last month, while the IMF approved an $8B support package.
EXTRA INTRIGUE
Here’s what folks around the world googled yesterday
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🇲🇦 Moroccans googled ‘Eid 2024’ to check when Ramadan ends and Eid al-Fitr begins.
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🇸🇪 Swedish netizens searched for ‘Spotify’ after the home-grown music streaming giant announced users can create AI-powered playlists.
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🌎 And Google apparently reported a surge in searches for “why do my eyes hurt” after yesterday’s spectacular total solar eclipse. Thanks to Vanessa for sharing this incredible pic of the moment.
TWEET/X OF THE DAY
Extreme athlete Russell Cook, aka ‘Hardest Geezer’, has crossed the finish line on his 352-day run from South Africa all the way to Tunisia. Although the British athlete was kidnapped by armed gangs in the Congo, his biggest hurdle was apparently… visa delays. Not the excruciating pain, nor the existential dread. Just that most universal of foes: bureaucracy.
DAILY POLL
Do you think artificially cheap goods like EVs and solar panels are positive on balance? |
Yesterday’s poll: Do you think anything can justify breaching a foreign embassy?
🟩🟩🟩🟩🟩🟩 🕊️ No, if we start weakening diplomatic immunity, we'll devolve into (more) chaos (78%)
🟨⬜️⬜️⬜️⬜️⬜️ ⚔️ Yes, if you're using an embassy to plot an attack or harbour a criminal, then fair game (21%)
⬜️⬜️⬜️⬜️⬜️⬜️ ✍️ Other (write in!) (1%)
Your two cents:
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🕊️ I: “No. The answer is no. Saying, ‘Well yeah except for’ is a Teflon level of slippery slope.”
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⚔️ M.K.D: “I’m reminded of Julian Assange who “overstayed his welcome” in Ecuador’s own Embassy in London.”
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⚔️ J.J: “Diplomatic immunity cannot be allowed to be used to impede criminal justice.”
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✍️ S.M: “It’s a fine line to walk between yes and no. No leaves the embassies as ways to hide internationally questionable people but saying yes opens up a floodgate of excuses. I do not think there is a good answer here.”
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