What We're Watching: Dwindling Hopes of a Big US-China Deal

Dwindling hopes of a big US-China deal – China's Vice Premier Liu He will be in Washington tomorrow for the latest round of US-China trade talks – but things don't look great. For one thing, Bloomberg reports that Chinese officials have privately made clear that while they'll talk tariffs, they aren't willing to negotiate core aspects of China's economic model, including Beijing's massive subsidies and protections for its state-owned companies. But omitting those things – which are critical for the US side –would mean there's no shot of the "100%" deal that the Trump administration seeks. What's more, on Monday night the US slapped fresh sanctions on 28 of China's top tech companies for their role in China's repression of Muslims in Xinjiang province. Without a deal this week, China may in fact be willing to stand pat and see how the impeachment, and the election, play out for Trump.


Disillusionment in Tunisia – The moderate Islamists of the Ennahda Party came out on top in a highly fragmented vote for Parliament over the weekend, but turnout was low (41 percent) and forming a government will prove tricky, as the party won only about 40 of 217 seats. After the last general election, in 2014, Ennahda governed in an unwieldy and largely ineffective coalition that left many voters disillusioned. Eight years on from the only successful democratic revolution of the Arab Spring, some 70 percent of Tunisians say they don't trust any political parties at all, and they are increasingly turning to outsiders: the leading candidates in this Friday's presidential election are a jailed populist media tycoon and a constitutional law professor with an uncommonly decent approach to politics.

A bulbous challenge in India – One of the biggest political challenges facing the world's most populous democracy at the moment has to do with… onions. The humble bulb vegetable is a staple food for hundreds of millions of Indians, and a hardy cash crop for millions of the country's farmers as well. So when floods caused onion prices to triple between August and October, the national government immediately banned onion exports in order to boost supplies and bring down prices. It worked. But that, in turn, prompted protests by onion farmers and exporters, particularly in the populous northern Maharashtra state which, as it happens, is about to hold local elections. As the BBC explains, onions have a long political history in India, and have played a starring role in major political campaigns over the years. Forgive us for calling this an eye-wateringly multi-layered problem.

What We're Ignoring

A Stupid Blame Game – After an apparently "frank" conversation about Brexit between British PM Boris Johnson and German Chancellor Angela Merkel Tuesday morning, accusations flew fast. A 10 Downing Street source said the call had forever buried prospects for a deal. European Council President Donald Tusk accused Johnson of playing "some stupid blame game." Amusing as all this noise is, we're ignoring it because the raw situation is still this: 31 October is the deadline for the UK to leave the EU. Johnson says he'd do that with or without a deal, but an Act of Parliament requires him to seek an extension if he can't strike one. After his latest proposal for a Brexit deal failed to fly either with Brussels or with Ireland – whose border with Northern Ireland is the key sticking point – it looks like Johnson will make a big stink but end up asking for that extension. The EU will reluctantly grant it and then Johnson will look to hold elections in order to bolster his position ahead of fresh negotiations with Brussels. That, at least, seems like the obvious path – but nothing about Brexit has been obvious.

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As the coronavirus pandemic has plunged much of the world economy into turmoil, you've probably heard a lot about what might happen to "supply chains," the vast networks of manufacturing and shipping that help create and deliver all those plastic toys, iPhones, cars, pills, pants, yogurt, and N95 face-masks you've been waiting on.

The future of global supply chains is an especially important question for China, the world's manufacturing powerhouse. Some countries and companies now worry about relying too much on any single supplier for consumer and medical goods, let alone one where the government hid the first evidence of what became a global pandemic and sometimes enforces trade and investment rules in seemingly arbitrary ways. The US-China trade war — and the vulnerabilities it reveals for manufacturers — certainly don't help.

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Ian Bremmer's Quick Take:

Got through the Fourth of July. Pretty rough one for 2020 here in the United States. Still in the thick of it as we see caseload exploding in the United States. But really, the virus is all about developing markets right now. Poor countries around the world very soon, with the exception of the US and the UK, all of the top 10 countries around the world in terms of coronavirus caseload will be poorer countries. Let's keep in mind, these are countries that test a lot less, which means the actual numbers, in the United States the experts are saying probable likelihood of total cases is about 10x what we've actually seen in the US, in emerging markets and most of them, it's more like between 20 and 100. In other words, this is really where the virus now is.

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Many countries around the world — mostly democracies in the Americas, Asia, and Europe — have condemned China's recent move to implement a draconian new security law for Hong Kong that in effect ends the autonomy granted to the territory when it reverted from British control to Chinese rule in 1997. However, last week 52 countries expressed support for China's decision at the UN Human Rights Commission in Geneva. Most of these countries either owe China a lot of money or are relatively authoritarian regimes themselves — but not all of them. Here's a look at the China-debt exposure and freedom rankings of the countries that took Beijing's side on the new Hong Kong law.

0: The trial in the 2018 killing of Saudi journalist Jamal Khashoggi opened in a Turkish court on Friday, but 0 of the 20 Saudi agents accused of the gruesome murder were actually in the courtroom. Saudi Arabia says its own closed-door trial over the slaying was sufficient, and has so far refused to extradite the suspects to Turkey, where Khashoggi was killed.

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