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The first upgraded Apple store is opening in Shanghai, China, on June 25, 2024.
Why Apple’s having a rotten time in China
Apple isn’t synonymous with artificial intelligence — at least not yet. In the West, Apple has lain in wait while OpenAI, Anthropic, Microsoft, and Meta jump forward with powerful generative AI models. That’s about to change when Apple adds its recently announced Apple Intelligence system to iPhones, but the company is also struggling to make a dent in another global market: China.
Apple is losing market share in the Chinese smartphone market — where it formerly held a dominant position — because it hasn’t yet incorporated artificial intelligence into its phones. Chinese brands, such as Vivo and Honor, which took the top two spots, have AI built into their systems.
One challenge may be that companies need government approval before introducing AI — and Apple is already out of favor in the eyes of Beijing, which has largely banned its devices from government use. “As of March, Beijing’s internet watchdog, the Cyberspace Administration of China, had approved 117 generative AI products, none of which is foreign-developed,” the Wall Street Journal notes.
We’re watching how Apple tries to get the Middle Kingdom to take another bite.
The logo of Huawei's global flagship store is being displayed on the pedestrian street of Nanjing Road in the Huangpu district of Shanghai, China, on May 8, 2024. The Oriental Pearl Tower in Lujiazui is visible in the background to the left.
US revokes permission to sell chips to Huawei
The US Commerce Department revoked licenses for US chipmakers to sell to Chinese tech giant Huawei on Tuesday, in the latest pressure tactics on Beijing’s tech sector.
US firms like Intel and Qualcomm had been selling their processors to Huawei through special exemptions to sanctions meant to rein in China’s semiconductor industry. Until this week, they sold chips to power phones and computers for China’s lucrative consumer market — which was hardly a threat to US national security, says Eurasia Group Geotechnology Director Alexis Serfaty.
“It's pretty obvious that what the US wants to do is stifle Chinese technological advancement and one way of doing that is to hit Huawei directly,” he says, even at the cost of some pain to US companies.
China’s commerce ministry called it a “clear case” of economic coercion, but Eurasia Group’s Xiaomeng Lu called Beijing’s reaction “more bark than bite,” because it lacks clear ways to clap back.
Chinese President Xi Jinping, wrapping up a European trip, isn’t likely to make a big issue out of it with US President Joe Biden as the two pursue stability in US-China relations.
“They've been able to compartmentalize it whereby they can have a floor in the deterioration of the relationship and still tolerate the US doing pretty unprecedented things from a technology standpoint,” says Serfaty.
US-China tech tensions: the impact on the global digital landscape
As the digital world continues to grow and evolve, there still exists a digital divide between the US and China. Alexis Serfaty, director of geotechnology at Eurasia Group, in a GZERO livestream presented by Visa, says that has long as US-China relations continue to be involved in a “tech cold war,” other countries, especially in developed regions, may find themselves compelled to take sides when it comes to adopting new technology infrastructure and standards. Global data divergencies and disparities in regulation of data would eventually fall on to the consumer, as their own experiences and standards would diverge, says Serfaty.
Serfaty goes on to say this alignment with either the US or China could also impact tech-related supply chains and global partnerships. An example lies in Europe, where despite some nations still utilizing Huawei equipment in their 5G networks, the European Union and several member states are progressively banning Chinese-made equipment. In parallel, the United States is poised not only to enhance its lead over China in advanced technologies but also to maintain that lead indefinitely.
The geopolitical tensions between the US and China in shaping the future of digitization is posing challenges and opportunities for nations striving to navigate this evolving digital landscape, highlights Serfaty.
To hear more about the challenges and opportunities that nation-states face when it comes to digitization, and how it could shape a more inclusive and resilient future, watch the full livestream here:
What Ukraine's digital revolution teaches the world
A CPU semiconductor chip is displayed among flags of China and the US.
US-China tech “Cold War” is on
The best fallacies stem from kernels of truth. In the case of what is being framed by some as the US-China “Cold War,” that kernel lies in the tech sector, where competition between the world’s two largest economies is fierce. The Biden administration has been increasingly clear that it is intent on slowing down China’s technological rise, and has centered its efforts toward decoupling — a low-grade form of economic warfare.
The rivalry has been bubbling for years, as US national security officials worried that Chinese tech firms were stealing intellectual property from American companies and data from US citizens. It spans from crucial sectors like software and semiconductors, where the US is fighting to maintain its competitive advantage, to industries like electric vehicles, smartphones, and drones, where China has the edge (maybe AI too).
China’s technological rise can be attributed to its skilled and lower-cost workforce and its ability to subsidize domestic companies and push out Western rivals. As a result, Chinese companies lead the world in smartphone sales, especially in Asia and Africa, and Huawei dominates the (non-Western) telecommunications sector.
Alarmed by the mounting competition, the Biden administration’s decoupling strategy has taken the form of tariffs, export controls, investment blocks, and visa limits. It has also put pressure on its allies to ban Huawei from the 5G networks. Washington has dramatically expanded its control over tech flowing to Beijing and imposed aggressive sanctions on China’s chip and semiconductor industry.
Yet, the costs of decoupling may outweigh the gains. It won’t cripple China’s tech sector, but merely “slows down China at the cost of hurting US companies at the same time,” says Eurasia Group expert Xiaomeng Lu.
One way the US-China tech race could acquire Cold War vibes is by creating a bipolar world where Chinese technology reigns supreme in Asian and African nations but is blocked from the West. The US weighing a TikTok ban is a step in this direction, and US tech giants like Twitter, Google, and Facebook are already unavailable in China.
What’s more, social media is likely only the first step of the US-China decoupling. In 2020, the State Department launched a plan to block out any connection to China, including telecommunications networks, mobile apps, cloud services, and even the undersea cables that carry web data between nations.
Rishi Sunak vs UK economic crisis
Ian Bremmer shares his insights on global politics this week on World In 60 Seconds.
Can new Prime Minister Rishi Sunak fix the United Kingdom?
No. Fix is aggressive. Right? But can he stabilize it? I think he can move in that direction, certainly not in the next few months because you know the economic crisis is real. The hole is deep. Energy prices are massive, and the UK's not prepared for it. But the orientation of UK fiscal policy is going to be very much more in line with what the markets want. They have been punishing the UK and Liz Truss dramatically from all of these. The giveaways that were being planned, many to the rich, and none of which were going to be funded. A more constrained fiscal environment is what Rishi is going to be putting in place. Of course, the UK population may not be happy about that at all. What he can do for his own future and the Conservative Party is a much bigger hole, frankly, than where the UK is going.
With the DOJ charging Chinese operatives with espionage, what signal is the US sending Xi Jinping?
The signal is that on the technology front, the Americans are going to play hardball, whether it's Huawei or 5G or semiconductors or robotics. Any area that is considered to be contiguous with or overlapping national security, the Americans are going to promote national champions in the US and among allies, and are going to decouple aggressively from the Chinese. We saw some of this under Donald Trump. We're seeing more of it under Joe Biden. On balance, you'd have to say that the Biden foreign policy towards China is a little bit more hawkish than the Trump foreign policy towards China. A lot of people wouldn't have expected that. It is true that Biden has tried to take some of the Trump era tariffs off because they're inflationary, but he's actually failed in getting that done because politically it's seen as inexpedient with the midterms looking tight.
Will the presidential election in Brazil be contested no matter the result?
Well, I wouldn't say no matter the result, because of course Bolsonaro could win and Lula will accept the outcome if Bolsonaro wins the election. He's accepted three losses before. He can accept a fourth. The question is, will Bolsonaro accept if Lula wins? And of course, that's more likely. Lula's ahead by three to four points right now. The answer is probably not, but I don't think it matters very much. You could easily have violence, of course, in some regional capitals. You could have the truckers, you could have bikers and others come out into the streets, and I suspect Bolsonaro will call on some of that. The fact that the judiciary in Brazil is not particularly independent, putting their finger on the scale in favor of Lula doesn't help in this regard. But ultimately, the military, Congress, I mean all the major institutions in Brazil have no interest in moving down an undoing and unwinding of their democracy. So if Bolsonaro goes in that direction, he will have his base, but basically nobody else, and we'll move on to a transition, a Democratic transition in Brazil. Always nice to see those.
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What We're Watching: Australia-China tension rising
For Beijing, there is thunder Down Under. Tensions between Australia and China just keep rising. After China responded to Aussie requests for a COVID investigation by imposing devastating tariffs and unofficial bans on Australian exports in 2020, Oz is pushing back hard now. Canberra on Friday accused China of “economic coercion,” while cybersecurity officials publicly confirmed malicious attacks against Australia by Chinese spy services working with Chinese telecom giant Huawei. The Aussies also say Chinese intelligence vessels are snooping around in Australia’s Exclusive Economic Zone. These accompany several clearly pro-American moves this year: the Aussies have signed on to AUKUS, an exclusive military club with Washington and London that gives them access to unprecedented weapons tech, are allowing the buildup of US military infrastructure (read, bases) on its soil, and joined America in a diplomatic boycott of the 2022 Beijing Winter Olympics. But the Australians are taking the tensions directly to China’s neighborhood, too. Canberra just signed a $770 million weapons deal with South Korea, including tech to build Howitzers — really, really big artillery guns. And even though the spat between the two continues, there is evidence that Australia, though heavily dependent on trade with China, is successfully pushing for diversity in trade partnerships.
Chile's President-elect Gabriel Boric celebrates with supporters after winning the presidential election in Santiago, Chile, December 19, 2021.
What We’re Watching: Chile’s new prez, Manchin sinks Biden’s agenda, Russian NATO wishlist, Australia vs China, Afghan trust fund
Boric wins in Chile. In the end, it wasn’t even close. Faced with two diametrically opposed choices for president in Sunday’s presidential runoff, more than 55 percent of Chilean voters went with leftwinger Gabriel Boric instead of his far-right opponent José Antonio Kast. The ten-point gap was so wide that Kast conceded before the count was even done. Boric, 35, now becomes the youngest president of any major nation in the world. Elected just two years after mass protests over inequality shook what was one of Latin America’s most reliably boring and prosperous countries, Boric has promised to raise taxes in order to boost social spending, nationalize the pension system, and expand the rights of indigenous Chileans. But with the country’s legislature evenly split between parties of the left and the center-right, the new president will likely have to compromise on his sweeping pledge to make Chile the land where neoliberalism “goes to its grave.”
Joe sinks Joe. It looks like US President Joe Biden has come to the end of the road with his $1.75 trillion Build Back Better Plan, now that Sen. Joe Manchin (D-WV) has announced flatly he’ll vote “no.” With the Senate split 50-50, Biden needs every Democrat vote in the chamber. The White House haggled with Manchin for months — “dancin’ for Manchin”, you might say. Biden even cut the proposed spending in half. But the moderate Manchin said he still “couldn’t get there” because of concerns about the deficit, and further stoking already high inflation. Republicans, of course, are ecstatic, because passing BBB is Biden's key pitch for Americans to vote for Democrats in next year's midterms and re-elect him (or another Democrat in his place) in 2024. It's not too late to reach a fresh compromise on the bill, but the longer the Dems keep squabbling, the longer their odds of retaining control of Congress next November.
Russia makes its demands. With 100,000 Russian troops at the Ukrainian border, Moscow released a bombshell list of demands for the “West” on Friday. Among other things, NATO must relinquish any right ever to expand further eastward, and must stop sending its troops or ships anywhere that could conceivably threaten Russia. What’s more, the Russians are impatient: they want the US to discuss these proposals right now. The US is happy to talk, but won’t give the Kremlin a veto over the choices that sovereign nations want to make about their own security alliances. The Ukrainians, naturally, agree, and on Monday President Volodymyr Zelenskiy will meet with his counterparts from Poland and Lithuania to emphasize the point. We’re watching to see what the US comes back with — one version of a maximalist response would look like this — and what, precisely, Russia is prepared to do if it doesn't like what it sees.
For Beijing, there is thunder Down Under. Tensions between Australia and China just keep rising. After China responded to Aussie requests for a COVID investigation by imposing devastating tariffs and unofficial bans on Australian exports in 2020, Oz is pushing back hard now. Canberra on Friday accused China of “economic coercion,” while cybersecurity officials publicly confirmed malicious attacks against Australia by Chinese spy services working with Chinese telecom giant Huawei. The Aussies also say Chinese intelligence vessels are snooping around in Australia’s Exclusive Economic Zone. These accompany several clearly pro-American moves this year: the Aussies have signed on to AUKUS, an exclusive military club with Washington and London that gives them access to unprecedented weapons tech, are allowing the buildup of US military infrastructure (read, bases) on its soil, and joined America in a diplomatic boycott of the 2022 Beijing Winter Olympics. But the Australians are taking the tensions directly to China’s neighborhood, too. Canberra just signed a $770 million weapons deal with South Korea, including tech to build Howitzers — really, really big artillery guns. And even though the spat between the two continues, there is evidence that Australia, while heavily dependent on trade with China, is successfully pushing for diversity in trade partnerships.
An Islamic trust fund for Afghanistan. They didn’t officially recognize the Taliban government. They didn’t even allow the Taliban’s foreign minister to appear in the official group photograph. But foreign ministers from the 57-member Organization of Islamic Cooperation, the second-largest intergovernmental organization after the UN, met in Islamabad on Sunday and pledged to set up a trust fund to address the worsening humanitarian crisis in Afghanistan. Neither the exact amount of the fund nor the contributions by member countries was released, but may not match the $4.5 billion that the UN has appealed for aid to Afghanistan amid warnings that the Afghan economy is in a free-fall, with 23 million facing starvation. The lead organization of the fund will be the Islamic Development Bank, the OIC’s in-house global lender.A man reacts during a rally to support the National Defense Force and to condemn the expansion of the Tigray People Liberation Front fighters into Amhara and Afar regional territories at the Meskel Square in Addis Ababa, Ethiopia August 8, 2021.
What We're Watching: Everyone vs Ethiopian PM, Brazil ditches Huawei, (more) trouble in Sudan, Argentina's midterms, Iraqi powder keg
Opposition forces unite in Ethiopia's civil war. The Tigray People's Liberation Front, which has been locked in a brutal year-long civil war against Ethiopian government forces, has now teamed up with another powerful militant outfit that wants to oust Prime Minister Abiy Ahmed. The TPLF, now in alliance with the Oromo Liberation Army — which claims to represent Ethiopia's largest ethnic group — have swept towards the capital Addis Ababa in recent days, prompting the embattled Abiy to call on civilians to take up arms in defense of the city. The Tigray-Oromo alliance, called the United Front of Ethiopian Federalist Forces, has called for Abiy's immediate ouster, either by negotiation or by force, and for the prosecution of government officials for war crimes. The UN says all sides in the conflict have committed abuses. The US, which has threatened to suspend Ethiopia's trade preferences over the government's alleged war crimes, is currently trying to broker a cease-fire. When Abiy came to power after popular protests in 2018, he was hailed for liberalizing what was formerly an extremely repressive government (controlled, as it happens, by the TPLF). Now it's looking like he may have unleashed the very forces that could tear the country apart and drive him from office — or worse.
Is China shut out of Brazil's 5G comp? Earlier this year, Brazil's President Jair Bolsonaro set an ambitious deadline to roll out 5G broadband – which provides much faster internet connections — by July 2022. In recent days, telecom firms have been vying to get a piece of the pie as the tender process heats up. Indeed, it's a lucrative prospect for telecom companies in a country where more than three-quarters of the population (or roughly 190 million people) are connected to the World Wide Web. But the process has not been smooth sailing because, well: China. Bolsonaro has been under a lot of pressure from China skeptics within his own government, and Washington, to exclude tech giant Huawei from the bidding wars. Bolsonaro ultimately caved, as Beijing has evidently been locked out of the process for now. Claro, a Mexican-Brazilian venture, and Spain's Telefonica seem to have walked away big winners from the 5G auction after putting up the most cash for spectrum rights. But this is all very awkward because Huawei has been a major tech provider in Brazil for decades, and local cell phone operators also rely on Huawei's tech. What's more, excluding Huawei, by far the most cost-effective supplier of 5G equipment in the country, will increase the project's overall cost, which is now expected to exceed $7 billion. Many remain skeptical that this massive task can be pulled off in just nine months. But whenever it does happen, it will be great news for Brazilians, many of whom live in remote areas with shoddy internet access.
Sudan on the brink. Two weeks after a military coup in Sudan, the country's security situation continues to deteriorate. On Sunday, soldiers responded to pro-democracy protests in Khartoum by tear-gassing and arresting more than 100 teachers who refuse to return to work until the transitional civilian-military government is restored. (The intervention drew comparisons to the harsh crackdown against protesters that eventually led to the ousting of longtime despot Omar al-Bashir in 2019.) Meanwhile, civilian PM Abdalla Hamdok remains under house arrest, and the internet is still shut down. Arab League mediators have arrived in the capital to try to mediate between junta leader Gen. Abdel-Fattah Burhan and the pro-civilian forces, but Burhan refuses to even call the power grab a coup. The country's largest union, which played a pivotal role in the 2019 protest movement, has called a two-day national strike — the opening salvo of a campaign of civil disobedience to force the military back to the negotiating table. Since the generals show no signs of backing down, the odds of more bloodshed are growing by the day.
Argentina votes, ruling party in trouble. Argentines go to the polls this coming Sunday to vote in the country's midterm legislative elections, with the ruling leftwing coalition of President Alberto Fernández bracing for heavy losses in both houses of parliament. The result will likely reflect the outcome of last September's primary elections, where the president's allies got clobbered by the center-right opposition. Since then, Fernández has caved to pressure from his powerful VP, former president Cristina Fernández de Kirchner (no relation), to double down on social spending and government intervention in the economy to curb skyrocketing inflation. But it hasn't worked: Fernández has capped prices on a whopping 1,432 products, yet annual inflation remains over 50 percent. Without a senate majority, it'll be very hard for the president to get much done in the second half of his term at the worst possible time: economists fear Argentina may stiff the IMF on part of the $45 billion it owes early next year. Another default could lead to a run on banks like in 2001, when the country suffered one of its worst financial crises ever. With presidential elections not on the horizon for another two years, buckle up for a lot of political instability until then.
Iraqi PM's narrow escape. Iraq's PM Mustafa al-Kadhimi is lucky to be alive after a barrage of explosives was fired at his compound inside a high-security zone, injuring several security personnel. The brazen attack was carried out by pro-Iran militias, who have been violently calling for a recount since their parties did poorly in the recent parliamentary elections. On Friday, the militias tried to breach the fortified area known as the "Green Zone," which includes the PM's compound and Western embassies. Pro-Iran factions are particularly worried that Shia Muslim cleric Muqtada al-Sadr — whose party won the biggest share of votes and is trying to form a government — will try to temper Tehran's growing influence over the oil-rich country. (Al-Sadr has called for way less foreign interference in Iraq from Iran and the West). Even before the recent unrest, things weren't going well in Iraq, where power supplies are scarce and the economy is in shambles. What's more, Iraqis have little faith in the political elite's ability to fix things, as was reflected in the record-low election turnout. We're watching to see if this latest round of violence begets… more violence.