Sino-Canadian trade. China and Canada said they were committed to expanding their trade relationship despite the U.S. trade war, especially in energy and agriculture. At a meeting yesterday, Chinese Premier Li Keqiang told Canadian Prime Minister Justin Trudeau their economies complemented each other, while Trudeau said that outside powers would not influence Canada’s position. The context for this meeting is the next G-20 summit, which will take place at the end of November, during which U.S. President Donald Trump and Chinese President Xi Jinping may or may not discuss ways to resolve their trade dispute – it all depends on whom you believe. Also at the summit, the United States, Canada and Mexico will sign their new trilateral trade agreement, which placed restrictions on subsequent trade agreements with non-market economies (read: China). Votes in the legislatures of the signatories won’t take place until next year.
U.S. military on the decline? Two reports from the U.S. Congress have called into question the continued dominance of the U.S. military. The first one, produced by the U.S.-China Economic and Security Review Commission, said that within 16 years, China’s military will be able to contest the U.S. in the Indo-Pacific region and on the second island chain – Bonin Islands, Japan’s Volcano Islands, the Mariana Islands and Palau. The second report, produced by the National Defense Strategy Commission, concluded that the U.S. needed to quickly commit more money to upgrading the military lest it lose ground to China and Russia. Relatedly, a former U.S. naval commander recently wrote an article for The National Interest in which he argued that Russia and China were already gaining ground, metaphorically, in the Mediterranean Sea. He also noted the importance of NATO allies to contain threats in the region. This isn’t the first time the power of the U.S. military has been questioned – considering how active the military has been since 9/11, such questions are inevitable. Developing and maintaining military capabilities is a long-term project. The U.S. isn’t losing its spot at the top anytime soon, but reports such as these are a timely reminder of what the U.S. might do if and when it disengages from its current military commitments.
Russia’s economy is stable. Earlier this week, reports showed that net capital flight from Russia had reached $42.2 billion so far this year, up from $14 billion in 2017. The main component in that outflow was the repayment of foreign debts and transactions related to acquiring financial assets abroad, but sanctions and oil earnings also played a role. An official from President Vladimir Putin’s office said Russia’s financial and economic situation was stable, while Putin himself remarked that the country would be fine if oil prices hit $70 per barrel – not too far from current prices. To prove its confidence in its macroeconomic stability, Russia reduced oil production for the first time since the spring. The country’s economy does indeed seem to be stable and under the government’s control. But things are still looking grim for the average Russian. The problem is growth and development. As the Russian government raises taxes – including on housing and the self-employed – wages are staying flat. That means less purchasing power for Russian consumers. The Ministry of Economic Development predicts that annual inflation will pick up this month and next to reach 3.7-3.8 percent. In response, bakeries in Russia’s Far East have frozen wholesale bread prices for the next two months.
- British Prime Minister Theresa May’s Cabinet has approved the latest Brexit deal. The Tories are expected to submit a letter for a no-confidence vote sometime today.
- South Korean intelligence confirmed that North Korea continues to develop a miniaturized nuclear warhead.
- Israeli Prime Minister Benjamin Netanyahu met with various coalition partners to discuss the possibility of holding snap elections.
- Both branches of Argentina’s legislature have approved the government’s 2019 budget, a necessary step for maintaining funding from the International Monetary Fund.
- Belarusian Prime Minister Sergei Rumas met with an IMF delegation to discuss debt reduction and structural economic reform.
- The U.S. Congress will study proposed legislation that could give Washington the option of punishing China for its human rights abuses against the Uighurs, a Turkic-minority population in western Xinjiang province.