Top Links: Holiday Art, China-West Tensions, Russia's Military Budget Rise, and Yemen's Trade Impact.
"The Hunters in the Snow" (1565) by Pieter Bruegel, the Elder, a pivotal figure in the Northern Renaissance, is a masterful depiction of rural winter life in the 16th century. Bruegel, known for his landscapes and peasant scenes, captures a moment of quiet introspection mixed with the stark beauty of winter. In this scene, weary hunters and their dogs return from an unsuccessful hunt, trudging through snow towards a village. The vast, white landscape, dotted with ice skaters on a frozen pond, contrasts with the dark figures of the hunters, illustrating both the harshness and serenity of winter. Bruegel's work, rich in detail and atmosphere, invites viewers to ponder the rhythms of rural life and the enduring cycle of seasons, resonating with a sense of nostalgia and the universal human experience of returning home.
Vanishing Act: The Shrinking Footprint of Chinese Companies in the US
Chinese investment in the U.S. has plummeted from $46 billion in 2016 to less than $5 billion in 2022.
Stricter U.S. policies and distancing from China contribute to this decline.
Chinese investments are more successful in countries outside the U.S.
Europe receives more Chinese investment in electric vehicles than the U.S.
The United States is experiencing a post-pandemic boom in foreign direct investment (FDI), driven by the resilience of the US economy as well as new industrial policies that incentivize US manufacturing investment such as the CHIPS Act and the Inflation Reduction Act (IRA). Chinese companies are notably missing from the party. This note uses a proprietary Rhodium dataset as well as new US government data to analyze latest patterns of China’s FDI in the US. The findings are:
New investment has slowed to a trickle: Both official and alternative data show a sustained slowdown of Chinese FDI in the US since 2017. Annual investment has dropped from $46 billion in 2016 to less than $5 billion in 2022. In the past seven years, China has gone from one of the top five US investors to a second-tier player surpassed by countries such as Qatar, Spain, and Norway.
The US footprint of Chinese firms is shrinking: Not only has investment slowed, but assets, revenues, and employment at Chinese companies in the US have all declined in recent years. The retrenchment is more severe and prolonged than the temporary slowdown in business that other multinational corporations (MNCs) experienced during the pandemic, suggesting that the retreat of Chinese companies from the US market was driven by restrictive economic policies fueling US-China economic decoupling over the past five years.
Declining local job creation is further undermining political support for US-China economic engagement: As the prospects of Chinese firms serving as major local employers in the US dwindle, fewer local officials and businesses are willing to stand up against more restrictive US economic and national security policies towards China.
Source: The Rhodium Group
Why NATO may have to stop a Russian invasion - without the US
Russian President Vladimir Putin approved a substantial increase of around 30% in Russia’s 2024 military spending, bringing the total to 36.6 trillion rubles (€376.7 billion). This budget allocation, nearly 70% higher than in 2023, represents around 39% of all federal spending, signalling Russia's continued commitment to its military objectives, particularly in the ongoing conflict in Ukraine. This decision comes amidst economic challenges, including a projected budget deficit and the potential need for increased business taxes to meet revenue goals.
What if the US dials down its commitments to NATO further? The above video is worth a watch.
Tensions in Yemen and its Impact on Global Shipping
Conflict Background:
Who: The Houthis, a Shia rebel group in Yemen, conflict with a Saudi-led coalition.
Since When: This conflict has been ongoing since 2015.
Current Shift: Despite past alignment, Saudi Arabia now urges caution as America considers confronting the Houthis.
Recent Developments:
Houthi Attacks: The Houthis have attacked several vessels in the Red Sea using missiles, drones, and hijacking attempts.
Targets and Randomness: Initially targeting ships linked to Israel, their attacks appear increasingly indiscriminate.
Global Shipping Impact:
Avoiding the Red Sea: Major shipping companies and oil and gas giants are diverting from the Red Sea, affecting global trade routes.
Economic Consequences: Higher insurance costs and changes in shipping routes impact the global economy and specific regions like Egypt.
Diplomatic Concerns:
Saudi Arabia's Stance: Saudi Arabia seeks to end its involvement in the Yemen conflict and is working toward peace.
US Involvement: The U.S. is forming a coalition to counter Houthi attacks but faces a complex diplomatic landscape.
Iran’s Influence: Iran's support of the Houthis is noted, though direct control over attacks is uncertain.
Peace Efforts:
Ceasefire and Roadmap: A temporary truce has been put in place, and efforts are underway to finalize a peace deal.
Economic Measures: Key aspects of the peace plan include economic considerations, like salary payments in Houthi-controlled areas.
Consequences for Yemen:
Blockade Effects: The Houthi attacks could unintentionally blockade Yemen, exacerbating food shortages and economic struggles.
The Houthis hope that their attacks on shipping will give them more leverage in talks with Saudi Arabia, and that fighting on behalf of the Palestinians will boost their popularity in Yemen. They may be right about the former—but the latter could prove a miscalculation. Their campaign has undeniably had an impact on Israel. Revenue at the Israeli port of Eilat is down 80%, and the cost of shipping goods to Israel is rising. But Eilat handles only around 5% of Israel’s seaborne trade; most of it goes through Ashdod and Haifa on the Mediterranean. The Houthis will raise costs for Israeli consumers, but they are far from placing the country under siege.
See The Economist for more.
"Ai Weiwei's 'Sunflower Seeds,' part of the Tate Modern's Unilever Series, is an expansive installation of millions of porcelain seeds, hand-crafted and painted in Jingdezhen, China. This vast, unique landscape within the Turbine Hall invites reflection on 'Made in China' and global cultural-economic exchange.