Dec. 16, 2016 China has been working on a plan to modernize the legendary Silk Road. The two-part initiative called One Belt, One Road includes both land and sea routes and the opening of multiple economic corridors, spanning an area that covers almost two-thirds of the world’s population and a third of global GDP. Linking Eurasia together will require the construction of roads, railways, ports and other elements across vast distances in some of the harshest terrain and least populated areas in the world.
Dec. 9, 2016 The sheer number of products for which the United States depends on imports from China is striking, as shown in the chart below. In 2015, 21.8 percent of U.S. imports came from China. The U.S. pushed for China to join the World Trade Organization in 2001, the year U.S. imports of Chinese goods took off in earnest. Through trade with China, U.S. consumers gained access to cheaper goods because it cost less to make them in China than in the U.S. China became a convenient one-stop shop for building and selling products of all sorts, and an especially strong electronics supply chain emerged in Asia, centered around China.
China also is exposed to the U.S. markets. With the exception of 2013, the U.S. has been the top destination for Chinese exports for over 15 years (in 2013 the U.S. was a close second to Hong Kong). In that period, the size of the Chinese economy, measured in terms of GDP, has increased by a factor of 10, from $1.3 trillion in 2001 to $10.9 trillion in 2015. Last year, 18 percent of China’s exports went to the U.S., a percentage three times bigger than the percentage of exports received by China’s second-largest importer by country, Japan.
Dec. 2, 2016 Saudi Arabia is a deeply conservative Muslim country that has been dependent on oil exports for the bulk of its existence. It now faces the need to change the nature of how it manages its political economy due to falling oil prices. Riyadh has blown through 27 percent of its foreign exchange reserves, which stood at $737 billion in late 2014. In October 2016, they were at $535.9 billion. The kingdom has engaged in a number of measures towards adjusting political economy to accommodate low oil prices.
Nov. 25, 2016 Iraqi and coalition forces started their campaign on Oct. 17 to retake Mosul from the Islamic State. They began the assault from Gwer, a town southeast of Mosul. In the first two weeks of battle, Iraqi forces covered a distance of 25 miles. In the past three weeks, however, the offensive has become extremely slow and Iraqi forces remain tied down in the districts just inside the city limits.
In recent days, U.S. airstrikes destroyed two bridges over the Tigris River in Mosul. The city now has only one remaining crossing that connects the eastern and western parts. The offensive forces have established the districts on the eastern periphery of the city as the front line and IS fighters are expected to retreat towards the west in the direction of their core turf. The west also remains the main supply route to ferry fighters and material. For this reason, the Iraqis have dedicated a special group to prevent IS from getting supplies and cut off IS’ escape route.
Nov. 18, 2016 Sub-Sahara Africa’s natural resource deposits are a key feature that tie the region into mainstream geopolitics. Countries in the region have historically depended highly on export of raw materials, which fueled economic growth in industrialized economies.
This strong dependence on the sale of natural resources has also made many Sub-Sahara African countries very susceptible to the exporters’ crisis – both in terms of falling commodity prices and lower demand from major customers like China. Nigeria’s oil and gas sector accounts for about 35 percent of GDP, while hydrocarbons account for about 45 percent of Angola’s GDP. Oil and petrol account for 90-95 percent of exports in both countries. The price of other commodities, including gold, iron ore, platinum and copper, has remained low. Production of these materials figure prominently in the GDPs of South Africa, the Democratic Republic of the Congo (DRC), Zimbabwe, Zambia and Mozambique.
Nov. 11, 2016 The Russian economy, which is heavily dependent on revenue from hydrocarbon exports, has suffered since oil prices began to drop in 2014. This chart shows Russian wage growth, interest rates and inflation from August 2015 to July 2016.
GDP per capita in Russia is down from an all-time high of $11,615 in 2013 to $11,038 in 2015. More than 2 million people fell into poverty in 2015 as wages fell by 9 percent. Inflation, which fell from 12.9 percent in December 2015 to 7.4 percent in March 2016, has been the most worrying indicator. As inflation dropped, the central bank resisted calls to cut the interest rate as nominal rages rose more than 5 percent in the first quarter, exceeding the rate of inflation for the first time since 2014.
Nov. 4, 2016 Over the past six weeks, an unmistakable escalation has occurred between Indian and Pakistani forces – largely in the disputed region of Kashmir. Occasional cease-fire violations have occurred since 2003, when both sides walked away from the brink of full-scale war that could have assumed a nuclear dimension. Control of Kashmir has been a bone of contention between India and Pakistan since both countries were created in 1947.
Oct. 28, 2016 The coalition participating in the invasion of Mosul is made up of mostly the Iraqi Security Forces (ISF) and the Kurdish peshmerga, with support from the United States. While the offensive has been underway for a few days now, neither the ISF nor the peshmerga have reached the city of Mosul proper yet. Coalition forces have encountered IS resistance at a number of locations, including Bashiqa, Bartella, Tall Kayf, al-Hamdaniya and Shura. Additionally, the coalition has left the west open to tempt IS to retreat from the city rather than fight.
Oct. 21, 2016 For months, the media has been filled with news of the impending offensive by Iraqi Security Forces – supported by a coalition of Kurdish peshmerga, Sunni tribal militias, Iran-backed Shiite militias and the U.S. – to retake Mosul from the Islamic State. The overture to this battle has finally begun. Offensive forces have started advancing on their battle positions and are now encountering resistance. This resistance will increase exponentially once the fighting moves into purely urban warfare.
Oct. 14, 2016 Yemen’s civil war has made its way back in to the headlines when two missiles were launched at U.S. warships in the Red Sea followed by U.S. retaliation that involved destroying three radar sites in Houthi and Saleh-loyalist areas in Yemen. Yemen doesn’t get nearly as much media coverage as Syria, largely due to the fact that the country is of no real strategic importance to anyone except for Saudi Arabia. That will quickly change if militants can reliably get their hands on anti-ship missiles and make crossing the maritime chokepoint at the Bab el-Mandeb difficult.
Oct. 8, 2016 Following Moody’s lead, credit rating agency Standard & Poor’s recently lowered Mexico’s long-term outlook from stable to negative due to its growing public debt. The warning bells surrounding the debt were sounded not so much because of the size of Mexico’s public debt but because of the speed at which that debt accumulated in recent years.
This week’s graphic shows different economic regions or groups with which Mexico is associated. When we look at Mexico’s debt as a percent of GDP, we see that it ranks on the lower end compared to its peers. This chart looks at three main peer groups. First, from a geographic perspective, Mexico belongs in North America, which is reflected in its membership in the North American Free Trade Agreement. Second, Mexico is often included in the group of “emerging” economies by mainstream media. Third, a number of major European economies are close in size to Mexico’s economy. From multiple angles, Mexico’s situation is comparatively positive.
Oct. 1, 2016 On Oct. 3, Germany will celebrate its 26th Unity Day, marking the reunification of former East and West Germany. While the country’s national border remains uncontested, internally the east has not yet completely integrated with the west. Rather, it continues to experience the growing pains that come with the transition from communism to capitalism.