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The World
COP28 Director-General Majid Al-Suwaidi says the global economy can keep using fossil fuels and still get back on track with the goals of the Paris Agreement. Al-Suwaidi, a veteran climate negotiator for the United Arab Emirates, said, “The UAE is an oil and gas-producing country, we built our country off of that. But many people don’t know we had a zero flaring policy since 1978. … Fundamentally the Paris Agreement is about global temperatures, so let’s focus on that. That’s why we’ve set a challenge to the oil and gas industry to step up and show us clearly how you’re going to be part of the solution.” (Semafor)
China experienced an outflow of $49 billion in capital in August, the largest exodus since December 2015. It comes as China runs the risk of missing its economic growth target of around five percent for the year. The yuan “has been hammered from all fronts as money leaves its financial markets, global companies look for China alternatives and a revival in overseas travel hits services trade.” Natixis SA senior economist Gary Ng said, “Due to the divergence in monetary policies and the current macro environment, it is unlikely that China has reached the turning point with enough incentives to attract capital back.” (Bloomberg)
China has slashed holdings of U.S. Treasury bills for the fourth straight month, offloading “$13.6 billion worth of US debt in July, bringing China’s holdings to US$821.8 billion, according to the latest data from the US Department of the Treasury. China’s overall holding of US debt remains at a 14-year low, after reaching that level in June.” (South China Morning Post)
China on Tuesday urged increased cross-border connectivity with Russia and deeper mutual trade and investment cooperation, as both allies vowed ever closer economic ties despite disapproval from the West after Russian forces invaded Ukraine last year. The Russian minister of economic development held "in-depth" discussions on economic cooperation with the Chinese commerce minister in Beijing on Tuesday, coinciding with a trip by China's top diplomat, Wang Yi, to Moscow for strategic talks that led to the confirmation of Russian President Vladimir Putin's visit to Beijing next month. (Reuters)
A Huawei Technologies unit is shipping new Chinese-made chips for surveillance cameras in a fresh sign the Chinese tech giant is finding ways around four years of U.S. export controls, two sources briefed on the unit's efforts said. The shipments to surveillance camera manufacturers from the company's HiSilicon chip design unit started this year, according to one of the sources, and a third source familiar with the industry supply chain. One of the sources briefed on the unit said at least some of the customers were Chinese. (Reuters)
Britain could become an “associate member” of the EU under a plan drafted by France and Germany. French President Emmanuel Macron “is known to be a strong supporter of the associate membership proposal, which a diplomatic source said is crafted to appeal to a future Labour government.” Labour leader Keir Starmer is in Paris to meet with Macron “for talks on Labour’s plan to bring Britain closer to the EU if he wins the next election.” (Financial Times)
Ukraine is filing a WTO complaint against Hungary, Poland, and Slovakia over food import bans. In a break with the rest of the EU, the three nations and Croatia announced bans on Ukrainian food imports to local markets this week, but will continue to allow the transport of those products through their borders to other destinations. The four countries say the bans are needed to protect their farmers. (Associated Press)
Thought the U.S. Office Market Was Bad? Try China. China is facing a more basic real-estate problem than the U.S.’s shift toward hybrid work: Developers simply built too much supply, and now the economy is too weak to absorb. (Wall Street Journal)
Economy
Even though the economy seems strong right now, “most Wall Street economists still expect a recession over the next year. Forecasters surveyed by Bloomberg pegged the odds at around 60%.” The excess savings that Americans built up during the pandemic could run out soon, and “the escalating costs of crude oil, now above $90 a barrel, could become another issue for the economy.” (Axios)
The Organization for Economic Cooperation and Development cut its global growth forecast for 2024 from 2.9% to 2.7% and “predicted that inflation would remain above the goals set by central banks around the world that have gone on a campaign of interest rate hikes in an attempt to tame rising costs. At the same time, the OECD revised its global growth expectations for 2023 up to 3.0%, from the previous forecast of 2.7%.” The OECD said, “After a stronger-than-expected start to 2023, helped by lower energy prices and the reopening of China, global growth is expected to moderate. The impact of tighter monetary policy is becoming increasingly visible, business and consumer confidence have turned down, and the rebound in China has faded.” (DW)
President Biden’s close relationship with General Motors CEO Mary Barra could impact how the White House handles the UAW strike. Barra has visited the White House eight times since Biden became president and is one of Biden’s closest corporate allies. The strike “could force the president, who regularly touts his kinship with labor unions, to balance the interests of a high-rolling auto executive who accelerated the shift to electric cars with the workers of her company who want higher pay to build those vehicles.” (Politico)
Labor unions have made significant inroads in recent years, but the UAW strike offers “a true gut-check moment on a national scale.” (New York Times)
Five reasons the UAW strike is in uncharted territory (Politico)
Workers at Ford Motor Co.’s Canadian unit avoided a strike, reaching a tentative agreement late Tuesday after extending negotiations by 24 hours from a previous deadline. Unifor, the Canadian autoworkers’ union, pushed for improved pension benefits, higher wages and support for workers during the electric-vehicle transition. (Bloomberg)
Wall Street is worried about a fight between the White House and Congress over U.S. investments in China that could lead to stricter limits. Last month, “the White House issued an executive order restricting money flowing to China in semiconductors, quantum computing, and artificial intelligence — all key for the country’s military and intelligence agencies.” Rep. Mike Gallagher (R-WI), who heads the House select committee on China, backs “legislation, not just the kind of agency rule-writing that is a common Republican punching bag — that goes farther than the Biden administration’s efforts.” (Semafor)
Amazon will hire 250,000 full- and part-time employees this holiday shopping season, 100,000 more than last year. The hires will receive hourly rates ranging from $17 to $28 per hour depending on location. Some new hires will also be eligible for bonuses ranging from $1,000 to $3,000. (Bloomberg)
Target announced will add “nearly 100,000 seasonal roles during the holidays, the same number as it did last year.” (Associated Press)
Disney will spend about $60 billion on expanding theme parks, cruise lines, and similar ventures over the next decade. Disney “said it would give priority to spending on projects that could generate strong returns, including for its U.S. and international parks and cruises.” The company pointed to more than 1,000 acres of land it owns that could be developed into theme park space. Disney also plans to roll out more cruise ships and establish a new home port in Singapore. (Wall Street Journal)
Technology
Elon Musk plans to start charging all X users a monthly fee. Musk said the move is needed to combat bots on the service formerly known as Twitter. Musk “said adding a subscription would make it much more difficult for bots to create accounts, because each bot would need to register a new credit card. He added that the company plans to come out with ‘a lower tier pricing,’ than what it currently charges for its X Premium subscribers, which is around $8 monthly.” (Axios)
DARPA is researching the use of AI in strategic battlefield decisions. The Defense Advanced Research Projects Agency hopes that the Strategic Chaos Engine for Planning, Tactics, Experimentation and Resiliency (SCEPTER) project “will simplify the complexities of modern warfare, pick out key details from a background of irrelevant information, and ultimately speed up real-time combat decisions.” University of Toronto AI expert Avi Goldfarb said, “A tool to help fill in missing information is useful in many aspects of the military, including in the heat of battle. The key challenge is to recognize the limitations of the prediction machines. AI does not provide judgment, nor does it make decisions. Instead, it provides information to guide decision-making.” (Live Science)
An unprecedented leak of Microsoft’s Xbox plans revealed estimates that major game publishers “may want $100 million to $300 million to put their games on Game Pass on the day they also go on sale.” In a leaked May 16 email, “Xbox corporate vice president Sarah Bond broke down 18 possible third-party games to pursue for Game Pass, noting the expected cost for getting them.” (Axios)
Instacart shares surged as much as 43% in their trading debut. Shares “opened trading Tuesday at $42 each after selling for $30 at the top of a marketed range to raise $660 million for the year’s fourth-biggest US IPO.” (Bloomberg)
Deepfake clones of popular Chinese influencers are marketing products around the clock. Since 2022, “a swarm of Chinese startups and major tech companies have been offering the service of creating deepfake avatars for e-commerce livestreaming. With just a few minutes of sample video and $1,000 in costs, brands can clone a human streamer to work 24/7.” (MIT Technology Review)
Smart Links
UK inflation falls to 6.7%. (Financial Times)
Fed Set to Pause Rate Hikes, But Don’t Count Out Another Increase. (Bloomberg)
Google’s Bard AI assistant can now be integrated with Google apps and double-check its answers for accuracy. (Ars Technica)
Parents of children who bought virtual Fortnite gear without their knowledge could soon be able to get a refund. (Associated Press)
Can Europe go green without China’s critical minerals? (Financial Times)