Nov 11, 2019

Axios World

Welcome back to Axios World for tonight's 1,453-word journey. Seven global stops in about 6 minutes.

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1 big thing: The U.S.-China "decoupling" dilemma

Trump decouples from Xi in Beijing. Photo: Artyom Ivanov\TASS via Getty Images

The U.S. and China may be on course for a “phase one” deal to prevent further trade war escalation — but a hardening between the world's two biggest economies could last far beyond the tariffs and truces of the Trump era.

Why it matters: Kevin Rudd, the former Australian prime minister and current president of the Asia Society Policy Institute, fears talk of “decoupling” — in which the U.S. and China disentangle their economies and erect new barriers — will become a “self-fulfilling prophecy,” with drastic consequences.

"A fully ‘decoupled world’ would be a deeply destabilizing place, undermining the global economic growth assumptions of the last 40 years, heralding the return of an iron curtain between East and West and the beginning of a new conventional and nuclear arms race with all its attendant strategic instability and risk."
— Kevin Rudd

Where things stand: In a speech delivered at the University of California San Diego and shared with Axios, Rudd notes that there are already some signs of decoupling, even if a complete severing of economic ties is unlikely.

  • Technology: China has made eliminating its reliance on U.S. tech a top national priority, the U.S. is attempting to block Huawei's global 5G rollout and each country is racing to defeat the other in artificial intelligence.
  • "Human talent": Rudd fears we are "entering a new McCarthyism" in which Chinese students, experts and others are blocked from visiting the U.S. (and vice versa), while even Chinese Americans could face "a veil of suspicion."
  • Currencies: China is deeply concerned about its dependence on the dollar and "senses a serious opportunity" to reduce it via digital currencies, Rudd writes.
  • Investment: Chinese investment in the U.S. is declining, and many believe "the investment door to the United States is closing."
  • In other areas, like capital markets, decoupling seems a more remote possibility.

The Chinese view: Facing slowing economic growth, Rudd says, Chinese President Xi Jinping is willing to offer some concessions in the short-term to limit the trade war damage. But he's also "rapidly diversifying Chinese export markets" and focusing more on domestic consumption.

"[W]hereas the Trump administration may indeed be genuine when it says it doesn’t want to embark on economic decoupling with China, it may well be Xi Jinping’s administration that initiates and accelerates the process in the name of national self-reliance."
— Kevin Rudd

What to watch: "After an 18 month-long trade war, it appears that both sides have stopped, stared into the abyss, concluded that its a very long way down there and a lot people on both sides could get seriously hurt — and without any real lasting benefit to anybody," Rudd writes.

  • "Resolving or reducing the scope the trade war is one thing," he continues. "But that will not of itself mean the end of the technology war, the 'talent' war, the declining flows of foreign direct investment or the new, emerging uncertainties on currency."
2. Asia: Violence in Hong Kong

Riot police mass today in Hong Kong. Photo: Ivan Cheung/SOPA Images/LightRocket via Getty Images

Hong Kong endured one of the most violent days in five months of protests today, with police shooting a protestor at close range, protestors lighting a man on fire, and Beijing-backed leader Carrie Lam denouncing "enemies of the people."

  • The latest: More than 60 people were wounded, according to Lam, and tear gas filled the air in the Central business district in the middle of the work day.

The big picture: Chris Johnson, a former top CIA China analyst now at the Center for Strategic and International Studies, told Michael Morell on the Intelligence Matters podcast that protest leaders realize violence by more "hardcore" elements risks sapping western support.

More takeaways:

1. There's a narrative in Beijing that to send in the troops would play "into a U.S. trap" to isolate China "just as our rise is hitting its stride," Johnson says.

  • "Hong Kong actually has many more things within their domestic emergency powers that they can use and would use before there was a violent crackdown [from the mainland]."

2. Chinese leaders reluctantly concede that the situation in Hong Kong will strengthen nationalists in Taiwan and virtually guarantee the re-election of President Tsai Ing-wen in January.

3. Chinese elites know what's happening in Hong Kong, but many mainlanders only know the party line and buy the idea of Hong Kongers as "spoiled children who don’t understand the beneficence of China."

4. Chinese overreach isn't the only factor here. Johnson also cites a property crisis driven by "the greed of Hong Kong's tycoons."

3. Latin America: Evo Morales flees Bolivia for Mexico

Photo: Alexis Demarco/APG/Getty Images

Mexico will grant asylum to Evo Morales, who stepped down as Bolivia's president yesterday after 14 years in power, Foreign Secretary Marcelo Ebrard announced this evening.

Why it matters: Bolivia has been engulfed in violent protests since an Oct. 20 election which Morales claimed to have won by a large enough margin to avoid a runoff, but which observers said was marred by irregularities.

  • After stepping down, Morales claimed to be the victim of a coup.

The big picture: Morales is a giant of recent Bolivian history. The country's first indigenous president, he's been credited with reducing poverty and overseeing strong economic growth.

  • But he also consolidated power over institutions and the media, and sought the presidency this year despite losing a referendum on whether he could do so.

Driving the news: Pressure on Morales increased after the Organization of American States reported widespread electoral fraud. He promised a new vote, but Williams Kaliman, commander of the armed forces, urged him to resign in a televised address.

  • That hasn't ended the chaos. "Morales’s supporters burnt houses, businesses and buses in the streets of La Paz, and in the neighbouring city of El Alto," per the Economist.
  • "Several television stations and newspapers closed down to protect their employees. There are also reports that pro-opposition rioters ransacked Mr Morales’s house."

What to watch: The next three officials in the line of succession have resigned, leaving the country without a president.

  • As a power vacuum emerges in Bolivia, Morales is seeking the protection of a fellow leftist, Mexico's Andrés Manuel López Obrador.
4. Europe: Far-right rising in Spain

Prime Minister Pedro Sanchez casts his ballot. Photo: Juan Carlos/Xinhua via Getty

Spain's fourth general election in as many years solved little, with the ruling center-left Socialists finishing first but falling well short of a majority — a repeat of their performance from April.

Meanwhile the far-right Vox Party surged in Sunday's vote, doubling its parliamentary representation and jumping from fifth-largest party to third.

  • Vox railed during the campaign against the independence movement in Catalonia, capitalizing on that issue's rise to the top of the national conversation.

What to watch: "In the short term, parliamentary gridlock will characterize the months to come, as forming any government will be a feat in this fragmented landscape," emails Gustavo Flores-Macías of Cornell University.

  • "In the longer run, the previously marginalized agenda of Spain’s most conservative sectors will take center stage. The election gets Spain closer to the polarized political climate that has been prevalent globally."
5. Data du jour: Not all veterans are citizens
Expand chart
Adapted from Migration Policy Institute; Chart: Axios Visuals

Immigrants have helped protect America through U.S. military service throughout most of the nation's history. But it's becoming harder for non-citizens to enlist — and to gain citizenship after their service, Axios' Stef Kight reports.

  • Military members were denied citizenship at a higher rate than civilians this year, according to McClatchy. The number of service members who have applied for citizenship also fell.
  • Even after serving in the military, some immigrant service members can be subject to deportation if convicted of crimes.

Go deeper

6. What I'm reading: Capturing a mammoth

He's seen better millenia. Photo: Andrew Hasson/Getty Images

Some 15,000 years ago, prehistoric humans dug at least two large pits in what is now Tultepec, Mexico. Their aim: to capture and kill woolly mammoths.

Flash forward: The pits were discovered, along with the bones of about 14 mammoths, on the site of a planned landfill.

More, from the NY Times:

  • "Previously, there was little evidence that hunters intentionally attacked mammoths, an archaeologist with [Mexico’s National Institute of Anthropology], Luis Córdoba Barradas," told reporters.
  • "Mr. Córdoba said hunters may have traveled in groups of about 20 to 30, and used torches and branches to force animals into the traps."
  • "Woolly mammoths, elephant-like creatures that once inhabited nearly every continent, went extinct about 4,000 years ago. Several competing theories explain their demise, but it was likely a combination of climate change... as well as the birth of humans that sought their skin and meat."

"Recently, scientists have discussed plans to revive the elephant-like animals through genetic engineering. One scientist even dreamed of creating 'Pleistocene Park,' a preserve in Siberia where they could roam. So far, no births have been reported."

7. Stories we're watching

An autumn's day on on the Stever River in Haltern am See, Germany. Marcel Kusch/dpa/AFP via Getty Images

  1. Founder of Syria’s White Helmets found dead in Turkey
  2. Indian Supreme Court allows Hindu temple at disputed site
  3. Expert Voices: Global response to Venezuelan refugee crisis falling short
  4. Deadly cyclone displaces 2 million in Bangladesh and India
  5. U.S., UN urge Iraq to call early elections amid violence
  6. China's mainland stock market outpaces the world
  7. Top immigration officials defend Trump's remain in Mexico plan


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— Uber CEO Dara Khosrowshahi on the murder of Jamal Khashoggi by agents of Saudi Arabia (a major Uber investor), in an interview with Axios on HBO. Khosrowshahi expressed regret for the remark soon after the interview.