Italy stands down. The government in Rome announced a budget deficit target of 2.4 percent of gross domestic product for 2019 – well above the previous government’s target of 0.8 percent but well below the EU-mandated target of 3 percent. The announcement is a monument to compromise among the factions of Italy’s fragile governing coalition. At least one Italian newspaper reported that the economy minister had reached an understanding with Brussels for a figure of 1.6 percent and had insisted, under threat of resignation, he would go no higher than 1.9 percent. Notably, the announcement stipulated that the deficit figure would cover 2019 only, though the justice minister said it would cover 2020 and 2021, raising questions over how much more fighting we can expect to see in Italy and how much the European Union will chastise Italy for issuing a figure it didn’t want, albeit one that abides by its directives. These questions are far less controversial than the ones that would have been raised had Italy exceeded the 3 percent mark.

Bad news for China’s economy. New data from the Asset Management Association of China indicates that growth in China’s private funds industry has slowed to its lowest rate in three years. This suggests the Chinese people either have less money to invest or are disinclined to invest what money they have. Early reports suggest the former is the likely explanation. Indeed, an article from the People’s Daily noted record-low growth rates for bank deposits in yuan. Meanwhile, a Chinese government plan released yesterday said Beijing would ease some of its environmental regulations to allow steel plants to continue production, rather than halting it altogether, and to lower emission level benchmarks. (China declared war against pollution less than a year ago, making this reorientation of priorities particularly conspicuous.) This week, President Xi Jinping has championed China’s “self-reliance” in the face of slowed economic growth and the trade war with the U.S. The translation: China should prepare for the worst.

NAFTA’s nine lives. According to The Wall Street Journal, the Trump administration doubts it will be able to reach a trade agreement with Canada ahead of its self-imposed Sept. 30 deadline. It also said it may publish a draft of a bilateral trade deal with Mexico as early as today. Personal animosities aside, it’s unclear whether Trump can legally proceed with the Mexico deal and, more important, whether there is bipartisan support for a Canada deal. The Sept. 30 deadline, of course, was mostly for show. As far as we can tell, the only thing that has really changed is that the prospect of getting a new deal done before the end of the year has become less likely. More interesting are the rumors that the publication of a draft of the Mexico deal will be accompanied by a broader strategic initiative to include Japan, Europe, the United Kingdom and the Philippines.

Talk is cheap in the Middle East. A commander for Iran’s Islamic Revolutionary Guard Corps threatened to retaliate if the United Arab Emirates and Saudi Arabia crossed any of Iran’s red lines. He neglected to say what those red lines were. Farther west, Israel accused Hezbollah of manufacturing precision-guided missiles outside Beirut and said Iran has a secret atomic facility in Tehran. As to Hezbollah, Israel tends to strike its targets without comment. It usually doesn’t publish maps to their locations. As to the secret facility, a U.S. official has already downplayed the threat, saying the building is “full of file cabinets and paper, not aluminum tubes and centrifuges.” More notable is the fact that another U.S. official walked back President Donald Trump’s statement from early September in which he said the U.S. would maintain a permanent military presence in Syria. The Middle East is highly volatile right now – when is it not? – but these most recent headlines are much ado about nothing.

Honorable Mentions

  • The U.S. and Australia are working on a proposal to build a domestic internet cable network in Papua New Guinea. The goal is to push out China.
  • Moldova’s president said he would visit Russia at the end of October for deliberations with Russian President Vladimir Putin.
  • One of the main jihadist groups in northwest Syria, Hayat Tahrir al-Sham, the artists formerly known as al-Qaida, increasingly looks like it will capitulate to Turkish demands to stop fighting.
  • India raised tariffs on $11.84 billion worth of imports, according to the Ministry of Finance.
  • India’s finance minister says the U.S.-China trade war has created instability but has also opened up a major opportunity for India to emerge as a trading and manufacturing base.