WPR Daily Review

"Trump's foreign policy is still shrouded in uncertainty."

Views expressed in this geopolitical news and analysis are those of the reporters and correspondents.  Accessed on 08 November 2024, 1950 UTC.

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Russ Roberts (https://trendsingeopolitics.blogspot.com).

 

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November 8, 2024

Hello, everyone. Today at WPR, we’re covering the questions surrounding Donald Trump’s second-term foreign policy and post-election protests in Mozambique.

But first, here’s our take on today’s top story:

China: Beijing has approved an $840 billion plan to help local governments refinance their debt over the next three years, as well as an additional $540 billion to use for the same purpose over the next five years. The plan comes in response to a debt crisis that has saddled local governments in recent years. (New York Times)

Our Take: At this point, it is well known that China’s economy is facing significant headwinds, with growth lagging and consumers reluctant to spend following the COVID-19 pandemic and the property sector crisis. How Beijing would respond to these issues has been the focus of global attention for more than a year now.

Initially, the Chinese government’s response was to double down on President Xi Jinping’s priorities—like export-led growth in strategic sectors—regardless of the consequences for global trade imbalances. More recently, in September, Beijing announced a slew of monetary policies throwing a lifeline to banks, property owners and equity investors, measures meant to spur economic growth and boost confidence in the long-term viability of China’s growth model.

The plan to address local government debt is in line with those measures and essentially amounts to a debt swap. Local governments have taken on massive amounts of debt—including “hidden debt,” which is made through private channels and often at high interest—in recent years, straining their finances. The $1.4 trillion plan announced today will theoretically free up cash for local governments by swapping hidden debt for official, lower-interest debt.

But if the refinancing plan is in line with these other recent measures, it is also in line with Xi’s hostility to taking more decisive action to reform the structural aspects of China’s economy that create these problems in the first place—namely redistributive policies that would boost domestic consumer demand. After all, much of the reason local governments are saddled with debt is because they were incentivized to rely for financing on the booming property sector that eventually burst. Rather than address local governments’ funding shortages, this plan delays resolution of the problem while reinforcing the negative feedback loops created by bailouts and stimulus.

As a result, this plan is likely to be met with the same lackluster reaction that the measures announced in September received. That is particularly a problem for Beijing, because the need to boost confidence in China’s economy has only grown more urgent since Donald Trump’s victory in the U.S. presidential election Tuesday.

Trump has promised stiff across-the-board tariffs on Chinese goods, even as the trend among developed economies is moving toward protectionism. And even if Trump doesn’t follow through on the worst of his threats, bilateral relations with the U.S. are almost certain to grow tenser over the next four years, amid a global landscape of heightened crisis and conflict. All of these developments represent serious threats to the sustainability of China’s export-driven growth model.

Fundamentally, the measures announced in recent months fail to meaningfully address the structural imbalances ailing China’s economy. And while they may buy time to do so, Beijing could still be staring at a hard landing for China’s economy, with massive implications for the global economy.

For more: Read about China’s local government debt crisis in this column by Mary Gallagher.

While the U.S. continues to digest the results of Tuesday’s presidential election, attention naturally turns to its implications. Those are uncertain, especially for U.S. foreign policy. Indeed, the predictably unpredictable nature of Donald Trump’s policy positions during his first term as president is a key reason why people were concerned about him being reelected.

Trump clearly recognizes the power that comes with being president and how it allows him to shape international politics. But how will Trump wield that power during a second term? The lack of clear answers to that question is what worries so many leaders and observers of global affairs around the world, Paul Poast writes.

Trump’s Second-Term Foreign Policy Is Still Shrouded in Uncertainty By Paul Poast Trump’s election victory has major implications for U.S. foreign policy, but just what they are remains hard to predict.

*****

At least three people were killed and more than 60 injured yesterday in Mozambique’s capital, Maputo, during clashes between police and demonstrators protesting against what they consider to be the country’s fraudulent elections on Oct. 9.

In the weeks of protests since the election, at least 20 people have died and hundreds have been injured and arrested, as wide swaths of the population have defied government repression in order to protest what they see as a failed electoral process.

As Emilia Columbo writes, the election and its aftermath suggest that Mozambique’s political landscape is changing.

Mozambique’s Post-Election Protests Signal a New Political Landscape By Emilia Columbo Post-election protests in Mozambique signify a significant, potentially long-term shift for the country’s political landscape.

Former U.S. President Donald Trump won re-election Tuesday on a platform that included promises to expand the U.S. trade war with China through aggressive tariffs and trade protectionism. At the same time, he has also often expressed admiration for Chinese President Xi Jinping and questioned the U.S. commitment to Taiwan’s security, which has been a major source of bilateral tension in recent years.

This week, we asked: Do you expect U.S.-China relations to improve or worsen under the second Trump administration?

The results? 77% of respondents said “worsen,” compared to 23% who said “improve.”

Taiwan Semiconductor Manufacturing Company, or TSMC, has notified Chinese chip design companies that it will no longer manufacture their most advanced AI chips, a move reportedly made in anticipation of another wave of U.S. export controls on cutting-edge semiconductors. The company is also reportedly concerned with being perceived as uncooperative by the incoming Trump administration.

After decades of neoliberal economic policies, the U.S. under the Biden administration has turned toward interventionist policies in the semiconductor industry in an effort to decouple the sector from China. Beijing has followed suit in response, but as Lizzi Lee wrote in July, in their efforts to beat each other to “chip self-sufficiency,” the U.S. and China may both end up losing.

The U.S. and China May Both End Up Losing the Semiconductor War By Lizzi Lee July 18, 2024 | Washington and Beijing have adopted radically different strategies to win the battle over the semiconductor industry. Both have significant flaws.

*****

A federally funded sex education and birth control program in Argentina that helped significantly reduce the rate of teen pregnancy in the country has now been largely dismantled by President Javier Milei’s government. A far-right libertarian who has railed against feminism, Milei has cut a number of programs and policies aimed at promoting women’s rights and well-being since taking office last year.

Argentina had built a reputation as one of Latin America’s most socially progressive countries, in part because of a series of feminist victories. Since Milei took office, that wave of victories has come to a halt. But as Cora Fernández Anderson wrote in June, Milei’s anti-feminist rhetoric and policies have in turn mobilized Argentina’s feminist movement to take the lead in fighting back against his government.

Argentina’s Milei Has Declared War on Women’s Rights By Cora Fernández Anderson June 24, 2024 | President Javier Milei is leading an all-out attack on women’s rights and gender equality in Argentina. The country’s feminists are fighting back.

*****

Housing activists in Lisbon, Portugal, are presenting a petition today calling on city officials to hold a binding referendum on banning short-term rentals for tourists in residential apartment complexes. The petition comes in response to the rapid rise in housing prices in the city, making Lisbon just the latest vacation hot spot to see a growing anti-tourist backlash. As John Boyce wrote yesterday, that movement is putting policymakers in popular tourist destinations in a bind.

*****

Today, an Italian navy ship carrying eight migrants who were intercepted in international waters docked in Albania, where the migrants will be processed. This marks the second time a group of migrants has been brought by Italy to Albania for processing under a new deal that outsources the asylum-seeking process.

The agreement is one of a number of Italy’s migration policies that have drawn praise from other EU member states. Yet, as Alberto Tagliapietra wrote recently, embracing Italy’s strategy as a model to be replicated elsewhere is a mistake.

More from WPR

Jonathan Fenton-Harvey on Oman’s growing diplomatic role. Judah Grunstein on Donald Trump’s victory. Alexander Clarkson on baseball’s unifying power. Mie Dahl on the women who protect Colombia’s Amazon.

Read all of our latest coverage here.

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