3 September 2020

China Attempts to Shift Its Boundary With India in Ladakh – Again

By Abhijnan Rej

The India-China military crisis in eastern Ladakh entered a new phase over the weekend when the Indian army pushed back an attempt by the People’s Liberation Army (PLA) to alter the Line of Actual Control (LAC) between the two countries in a new area on the southern bank of Pangong Lake, in the Chushul/Spangpur gap, according to defense journalist Nitin Gokhale. An Indian government statement issued earlier today notes that on the intervening night of August 29 and 30, the PLA “carried out provocative military movements” there.

It added that “Indian troops pre-empted this PLA activity… [and] undertook measures to strengthen our positions and thwart Chinese intentions to unilaterally change facts on ground.” No casualties – or other details – are available at this moment.

Beijing has refuted the Indian statement. Reacting to a question, Chinese Foreign Ministry spokesperson Zhao Lijian claimed that “Chinese border troops always strictly abide by the LAC. They never cross the line.”

Three things are striking about this latest development.

India And The Deepening Sino-Pak Alliance – Analysis

By Chilamkuri Raja Mohan*

As China and Pakistan deepen their strategic alliance and intensify their coordination on the Kashmir question and other regional issues, India’s relations with its two most important neighbours are likely to become more challenging now than before. The larger geopolitical churn among the major powers and the regional environment further complicates this challenge.


The second round of the strategic dialogue between China and Pakistan, led by foreign ministers Wang Yi and Shah Mahmood Qureshi in August 2020 in the Hainan province, did not produce any significant new initiatives. The focus was on the further consolidation of the all-weather partnership between Islamabad and Beijing across a broadening range of issues.

What makes this round of Sino-Pak strategic dialogue significant is the rapid deterioration of the India-China ties amidst the unresolved military standoff in eastern Ladakh. Coupled with the turbulence in the Middle East and the Indian Ocean, where China’s stakes are rapidly rising, and the sharpening contradictions between Beijing and Washington, the subcontinent’s geopolitical environment has arrived at a moment of discontinuity.

India has had to cope with the consequences of China-Pak partnership that can be traced back to the mid-1950s. Yet, Delhi has continuously underestimated the deepest sources animating it and possibilities for an ever-wider collaboration between Islamabad and Beijing. To make matters worse, Delhi has always over-determined the prospects for its own partnership with China and its ability to transcend the Sino-Pak alliance. However, the new dynamic of collaboration between its two troublesome neighbours makes it harder for Delhi to downplay it.

India-Pakistan: Turbulence At The Punjab Border – Analysis

By Indrajit Sharma*

On August 22, 2020, Border Security Force (BSF) personnel shot dead five unidentified armed Pakistani intruders in the Tarn Taran District of Punjab. A BSF spokesperson said that after suspicious activity was noticed near the India-Pakistan International Border (IB) in the region, the troopers “cordoned the area and challenged the intruders to stop and surrender. The Pakistani armed intruders did not pay any heed to the challenge and opened fire on the BSF troops resulting in a gun-battle.” Later, the troopers recovered dead bodies of five slain intruders along with nine packets containing 9.92 kilograms heroin, an AK-47 rifle, four 9mm Beretta pistols, and some ammunition.

This was the most violent incident, in terms of the number of fatalities, recorded along the India-Pakistan International Border in Punjab, since 2000, according to data compiled by the Institute for Conflict Management (ICM).

The worst previous incident was recorded on January 21, 2014, when BSF troops deployed in the area of Border Out Post (BOP) Naushera Dhalla in Amritsar District, shot dead three Pakistani intruders and recovered 20 kilograms of narcotics and ammunition.

Other prominent incidents of violence include:

The limits of Zoom diplomacy in Asia


Say it quietly, lest the wrath of the pandemic gods be triggered. But the wheels of in-person diplomacy are starting to turn again across Asia. The smiling handshakes are gone, replaced by awkward elbow bumps and socially distanced photo opportunities. The negotiating tables have been moved further apart. And there are face masks and hand-sanitiser all round.

While some countries have their first pandemic waves under control others are still struggling to control Covid-19. Yet, from Japan and China to Indonesia and Singapore, Asia’s leading diplomats have re-commenced regular manoeuvres in the last few weeks. It is a sign that when it comes to high-level foreign policy, Zoom just does not cut it.

After receiving his counterparts from Indonesia, Pakistan and Hungary last week, China’s foreign minister Wang Yi headed off on a grand tour of Europe, taking in France, Germany, Italy, the Netherlands, and Norway. Meanwhile, Yang Jiechi, the head of foreign affairs for China’s Communist Party and a Politburo member, has been in Singapore and South Korea.

It is revealing who is seeing who, and who has been left out.

Decoupling: Separation or Divorce?

William Alan Reinsch

A new term has penetrated the trade wonkosphere recently: decoupling. The term refers to the process of separating the Chinese and U.S. economies, but, of course, as with most things in economics it is more complicated than that. It is hard to tell what is going on, because what people say and what they do are not always the same, and it is hard to predict whether actions taken will be temporary or permanent—separation or divorce. It is also hard to allocate blame, or credit, depending on your point of view.

It does seem clear that the leaders of both countries are embracing decoupling. Xi Jinping has pronounced the United States an unreliable supplier, but even before that he was planning for China to develop global champions in 10 critical technologies with the explicit aim of competing against and ultimately displacing Western leaders in those sectors. This is reflected in the “Made in China 2025” initiative and will likely be a key element of the 14th five-year plan currently being drafted. His goal appears to be to make China independent of Western technology to the extent he can.

Meanwhile, the Trump administration has been encouraging U.S. companies to leave China and remove Chinese products from their supply chains and has been blocking Chinese investment in the United States, which has dropped dramatically anyway because of Covid-19 and Chinese efforts to limit outbound investment. Much of the administration’s argument is national security-based, as in the Huawei case, which is an easier sell to Congress and the public than more abstruse arguments. Both presidential candidates have advocated reshoring—bringing U.S. companies home—in varying degrees of detail. This is not exclusively aimed at China, but China is clearly a primary target.

Chinese AI companies speed global expansion despite US hindrance

SINGAPORE -- China's government struck a confident note after some of its leading artificial intelligence startups were placed on the U.S. commerce department's entity list in October last year.

The so-called blacklisting barred eight mainland companies from buying components from American suppliers over their alleged involvement in human rights abuses against Uighurs and other predominantly Muslim minorities in Xinjiang Province.

The move was a shock to many of the AI startups, all of which constituted some of the largest and most successful AI companies in the world, according to the Center for Strategic and International Studies, which added that the U.S. decision aligned with the Trump administration's broader goal of protecting American interests in AI.

But a defiant Beijing said the move could not "hurt the fundamentals of China's technological development."

Just over ten months later, as Sino-U.S. tensions ratchet up ever further, that conviction appears justified as the companies raise money, win overseas business, and see their share prices rise.

Hacking group has hit Taiwan's prized semiconductor industry, Taiwanese firm says

by Sean Lyngaas

Taiwan’s semiconductor industry, a centerpiece of the global supply chain for smartphones and computing equipment, was the focus of a hacking campaign targeting corporate data over the last two years, Taiwan-based security firm CyCraft Technology claimed Thursday.

The hackers went after at least seven vendors in the semiconductor industry in 2018 and 2019, quietly scouring networks for source code and chip-related software, CyCraft said. Analysts say the campaign, which reportedly hit a sprawling campus of computing firms in northwest Taiwan, shows how the tech sector’s most prized data is sought out by well-resourced hacking groups.

“They’re choosing the victims very precisely,” C.K. Chen, senior researcher at CyCraft, said of the hackers. “They attack the top vendor in a market segment, and then attack their subsidiaries, their competitors, their partners and their supply chain vendors.”

It was unclear which companies were targeted; CyCraft declined to name them. It was also unclear who was responsible for the hacking. CyCraft said there were signs the group of attackers was based in China, including their familiarity with simplified Chinese characters and the breaks they took during Chinese national holidays. CyberScoop could not independently confirm that a Chinese group was responsible for the hacking.

A coronavirus vaccine: China’s got one, Russia does, too. Will Trump rush one out?

By Matt Field

Scientists say the Trump administration on Sunday authorized a COVID-19 treatment that hasn't been shown to have the benefits the administration is claiming. Experts are growing increasingly concerned the Trump administration is putting its political interest ahead of science as it pushes through COVID-19 medical products. Credit: White House. 

Even as the squiggly red line of coronavirus cases has begun trending down again following a summer of record high case numbers in several US states, the pandemic situation still remains largely grim—schools facing outbreaks, fears of a second wave. There is, however, one bright spot amid the gloom: the prospect that a vaccine gets distributed, in record time. The question experts have begun to ask, though, is, will an inoculation arrive too soon, before it’s been properly tested?

There are reasons to worry the Trump administration may push through a vaccine before it’s undergone complete clinical testing. Rival nations like China and Russia have already announced they’ve got vaccines. The number of COVID-19 deaths in the United States keeps rising. And the presidential election is just two months away. Health experts worry these factors put pressure on the administration to prematurely roll out a vaccine.

Tibet Was China’s First Laboratory of Repression

In the early 2000s, the Free Tibet movement galvanized the world. From celebrity endorsements to Simpsons cameos, the media launched the plight of Tibet into the Western imagination; the suffering of Tibetans under a foreign regime became well known. But today, with atrocities in Xinjiang and Hong Kong dominating the narrative and Tibet now more sealed off than ever, news about the Himalayan region has been reduced to stray sentences in coverage on Chinese aggression.

Yet oppression in Tibet has only gotten worse. On Aug. 29, Chinese President Xi Jinping announced plans to “strengthen unity and socialism” in Tibet by building an “impregnable fortress” to ward off splittism. The Chinese Communist Party (CCP) views Tibetan disobedience, violent or nonviolent, as separatism, which, in Beijing’s eyes, threatens national security and expansionism. So when the 2008 Tibet protests erupted, fomented by discontent with decades-long repression, the CCP ruthlessly responded by killing and arbitrarily arresting protesters. But these immediate measures were not enough. The CCP began to plan a long-term policy of forced assimilation.

Upgrade air defenses to stave off PLA attack

By Chang Feng

According to a report published on Aug. 21 in the Liberty Times (the sister paper of the Taipei Times), NT$100 million (US$3.4 million) of next year’s NT$366.8 billion defense budget has been set aside to upgrade six US-made E-2K Hawkeye early-warning aircraft. Once completed, the aircraft would be of an equivalent specification to the E-2D Advanced Hawkeye planes in service on US Navy carriers.

The primary difference between E-2D Advanced Hawkeyes and the older E-2K Hawkeyes is the new AN/APY-9 radar, which can scan a much wider range of frequencies. This should mean that the Chinese People’s Liberation Army’s (PLA) much-vaunted J-20 stealth fighter would have nowhere to hide.

There is also a need for jet-powered long-range early warning aircraft. This is because Taiwan’s air force does not possess any refueling aircraft.

In the event of a surprise attack by China, the initial wave would target ground radar stations and the runways at all the nation’s airbases and airports.

Although Taiwan has repair teams armed with quick-drying concrete to repair bombed airstrips within about two hours, E-2 series Hawkeye aircraft have an endurance of only four-and-a-half hours; that is not long enough.

Once Taiwan’s ground radar stations are paralyzed, if the air force is unable to keep its E-2 early warning aircraft in the skies, it would be deprived of its over-the-horizon radar and its ability to dispatch aircraft would be critically impaired.

Why is TikTok So Popular?

by Kevin Munger

Despite its superficially frivolous nature, young people have been using the platform to send political messages, coordinate political actions and hang out in an online space largely free of adults.

TikTok, a social media platform targeted at young mobile phone users, was the second-most downloaded app in the world in 2019. It was the most downloaded app in July 2020.

It’s also become a geopolitical football. Owned by Chinese company ByteDance, TikTok has been banned by India along with 58 other Chinese-owned apps in July in response to escalating border tensions between the two countries. The Trump administration issued an executive order banning TikTok and Chinese-owned messaging platform WeChat from engaging in transactions in the United States beginning on Sept. 15. The company sued the Trump administration in August in response to the ban.

As a political scientist who studies social media, I’ve looked at what makes TikTok unique and why young people have flocked to it. In short, the phone-only app lets users record themselves dancing or goofing around to a music or spoken-word clip and then alter the videos using a wide array of effects. Despite its superficially frivolous nature, young people have been using the platform to send political messages, coordinate political actions and hang out in an online space largely free of adults.

It Isn't Too Late For America To Deter China (Here's How Japan Can Help)

by Wallace C. Gregson

U.S. Defense Secretary Mark Esper is slated to visit Guam on Aug. 29 and meet with Japan’s Defense Minister Kono, who is flying in for the occasion aboard a Japan Air Self Defense Force airplane. According to Military Times, Secretary Esper will also visit the Republic of Palau, and Hawaii. 

According to Japan’s Jiji Press, citing Japanese government sources, the officials will discuss Japan’s new missile defense program to replace the abandoned Aegis Ashore plan. Jiji says they will “… exchange opinions on China's expansion of military activities in the South China Sea and the East China Sea” and “confirm the policy that Japan and the United States will promote cooperation with countries that support the vision for a free and open Indo-Pacific region.” 

These are worthy subjects, certainly, but this is a long way to travel for both officials and their staffs to discuss something that could be done – and most certainly has been often done – over the military equivalent of Zoom. What else might they discuss, from the top of their respective defense establishments, to make this worthwhile?

Why China Will Support Russia in Belarus

By Brian G. Carlson
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The political crisis in Belarus that erupted following the August 9 presidential election continues to evolve unpredictably, posing a daunting challenge for Russia in fashioning a response. President Alexander Lukashenko faces mass demonstrations by protesters alleging that the official election results, which showed the president winning a landslide re-election victory, were fraudulent. The outcome of the crisis remains uncertain. As Russia observes the volatile situation, weighing its options for shaping the future of the country, it can expect to receive support from China, which has rapidly expanded its own interests in Belarus.

In recent years, as their relations with the West have deteriorated, China and Russia have strengthened bilateral relations. The relationship falls short of a full political-military alliance, largely because both countries seek to avoid being drawn into the other’s regional conflicts. Nevertheless, both countries have been generally supportive of the other’s position in such disputes. This pattern is likely to hold in Belarus, where China’s interests are largely compatible with those of Russia.

Will the UK Send Its Aircraft Carrier to the South China Sea?

By Niall M. Gray

It is no secret that relations between the United Kingdom and China have soured in recent months. Already strained over issues such as Hong Kong, the countries’ links have suffered greatly during the fallout from the COVID-19 pandemic. Such issues have prompted London to reassess its relationship with Beijing, with the decision to deny Huawei an active role in Britain’s 5G network heralding a more confrontational approach to bilateral affairs. Despite this, silence over recent months has raised questions as to the Johnson administration’s long-term commitment to this change.

In light of this uncertainty, imminent decisions regarding the Asia-Pacific deployment of the U.K.’s new aircraft carrier, HMS Queen Elizabeth, have taken on new significance. Set to embark on its first mission next year, the warship’s potential visit to the disputed South China Sea may prove revealing as to whether Anglo-Chinese relations have indeed entered a “new era” of competition.

Of course, it is important to remember that such a move would by no means signify the return of a previously absent player. A British military presence remains notable throughout regional security infrastructure, with a Royal Navy “party” in Singapore complementing a more conventional base in Brunei. The United Kingdom also remains a member of the Five Power Defense Arrangements with Malaysia and Singapore and has even recently sailed frigates through the South China Sea. This activity reflects the continued importance of local sea lanes for the British economy, as 12 percent of the country’s maritime trade passes through the area.

Chinese Hydroelectric Investments In Central Asia: A Snapshot

By Yau Tsz Yan*
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(Eurasianet) — Any investor wishing to stay friendly with all five Central Asian republics knows to steer clear of major hydropower projects.

When the five countries were part of the Soviet Union, interdependence worked: Moscow built some of the world’s tallest dams in upstream Kyrgyzstan and Tajikistan; downstream Kazakhstan, Turkmenistan and Uzbekistan shared their abundant oil and gas when the rivers froze in winter.

Since the Soviet collapse in 1991, water has been a stubborn source of disquiet in the land-locked region. Uzbekistan’s former president even threatened war over a dam project upstream in Tajikistan.

While Moscow has made and broken many a promise to fund major hydropower projects in the independent countries (a new cascade in Kyrgyzstan, a Guinness Book-worthy dam in Tajikistan), Beijing has invested with caution, focusing instead on helping downstream Kazakhstan and Uzbekistan develop their hydro potential. This strategy is acceptable to all, while not overtly aiding Washington’s efforts to link Central Asian energy to development in South Asia.

Has the Dollar Started Its Long Decline?

Jim O'Neill

One of the features of financial markets since early summer has been a decline in the value of the dollar against many currencies, and with it, an especially interesting acceleration in the price of gold. In addition to the usual professional market analysis about the dollar’s movement, this has led to speculation that it might be the beginning of the end of the dollar’s pre-eminence.

Having spent far too much of my professional life as a supposed currency expert, I reiterate something I learnt early on: the foreign exchange business sometimes grants an analyst their 15 minutes of fame, but no expert is a match for the millions who participate in this huge global market all day long. But I spent over 30 years in the financial markets, the vast majority in the hubbub of the forex market. And along the journey, I think I learnt a few tricks of the trade.

Op-Ed: The U.S. faces new kinds of threats around the globe, but we have failed to adapt

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It has now been more than five months since a U.S. intelligence assessment included in President Trump’s Daily Brief suggested that Russia was paying bounties to Taliban fighters for attacking U.S. and other foreign forces in Afghanistan. And it has been more than a month since news of the intelligence reports became public.

Yet the president and his administration still have not adequately denounced Russian activity or outlined a strategy to counter this type of hybrid warfare.

It’s possible, of course, that countermeasures unknown to the public are underway, but silence from Washington on the matter is a bad idea. It emboldens U.S. adversaries, who are increasingly using irregular means to undermine U.S. interests.

U.S. national security remains bound by static orthodoxies that don’t fully recognize the blend of unlikely bedfellows and state and non-state actors that have become the norm on today’s national security stage.

The Trump administration’s National Security Strategy and National Defense Strategy took important steps in recognizing the direct and broad challenges from China and Russia. But at the same time, the U.S. government’s response has swung like a pendulum — from an intense focus on counterterrorism to more conventional state-based confrontation. U.S. defense planning scenarios, war games, weapons programs, and budget priorities remain largely devoted to preparing for conventional war.

Three major nuclear accidents, as seen by young American and Russian professionals

By Siegfried S. Hecker, Alla A. Kassianova

Young professionals on a night out in Red Square (left to right): Elliot Serbin, Center for International Security and Cooperation (CISAC), Stanford University; Maxime Polleri, CISAC, Stanford, Elizaveta Likhacheva, Moscow Engineering Physics Institute (MEPhI); William Heerdt, Monterey Institute for International Studies; Anna Kudriavtseva, MEPhI; Daine Danielson, University of Chicago; James McKeon, Nuclear Threat Initiative; Ksenia Pirnavskaya, MEPhI; Gabriela Levikow, CISAC, Stanford; and Katie McKinney, CISAC, Stanford.

In a series of Bulletin articles in June 2019, young American and Russian professionals examined the future of global nuclear power. They made their case for nuclear power, driven by their concern about global climate change, and also identified the principal challenges that must be overcome. Safety of nuclear power was judged to be the major risk, followed by the risks of nuclear proliferation, security, and nuclear waste disposal, and the economic challenges to increased use of nuclear power, especially in the United States.

We asked the group of young professionals to do a deeper dive on the issue of nuclear safety after last summer’s airing of the popular HBO miniseries Chernobyl. The miniseries took a lot of liberties with the technical facts, but it captured the personal hardships and suffering of the nuclear disaster. We expanded the problem to include the nuclear accidents at Three Mile Island in the United States and Fukushima in Japan, so as to cover the effects of the world’s three major nuclear accidents on the future of nuclear power.

COVID-19 and climate change expose dangers of unstable supply chains

By Kevin Sneader and Susan Lund
When a high-rise goes up, it is designed to withstand everything from gale-force winds to earthquakes and fires. But few multinational companies have applied the same kind of preemptive stress-testing to their supply chains. Manufacturers have built intricate production networks to deliver efficiency but have left little margin for error. The COVID-19 pandemic has revealed how fragile lengthy, complex supply chains can be—and how much society has riding on their continued smooth functioning.

In recent decades, global supply chains have evolved in ways that leave them more exposed to shocks. Some industries, including communication equipment, computers, and textiles, have grown two to three times more geographically concentrated since 2000. Some 80 percent of world trade now flows through countries with declining political-stability scores, as measured by the World Bank. More global production happens in areas that are highly vulnerable to climate change. And the world has grown more interconnected: when disaster strikes in one region, flows of goods, finance, people, and data quickly transmit ripple effects far and wide.

Even before the pandemic, companies were facing mounting losses from periodic supply-chain bottlenecks and shutdowns. Those costs aren’t “unforeseeable” anymore. In fact, our research found that shutdowns lasting a month or more occur every 3.7 years, on average. Manufacturers in some industries can expect unexpected events to erase the majority of a year’s profits over the course of a decade—and that’s just the baseline, accounting for probabilities like recurring storms and shipping snafus. Extreme one-off events can be far more damaging for companies and societies at large.

Deadly Restraints Are a Stain on the EU

Blurry security camera footage showed the guards carrying the teenager into a cramped room, with his hands bound behind his back. Thirteen minutes later, he was dead.

Iliass Tahiri was just 18 years old when he was strapped face down to a bed by six security staff in a center for juvenile offenders in Andalusia, Spain. Two of the men knelt on his back until he stopped breathing. Tahiri’s death in July 2019 was declared accidental by a judge in January, but the footage of his last moments—released by the Spanish newspaper El País in June—has called that decision into question.

Tahiri’s family is now calling for homicide charges against the guards, and the use of straps will likely be used as a legal defense to argue that his death was not deliberate. But more broadly, the physical restraints that contributed to his death remain widely used in law enforcement and mental health settings throughout the European Union.

Can Putin Change Russia’s Role From Spoiler to Global Power?

Russia occupies an unusual position on the world stage. Under President Vladimir Putin, Moscow has repeatedly demonstrated that it has the capacity to destabilize the international order, but not the capacity to fill the vacuum it is creating. While Russia lacks the military strength to challenge U.S. supremacy, no one—particularly not the NATO alliance—is ignoring its capabilities. Moscow’s use of arms sales and military engagements to build ties to countries in Asia, Africa, Latin America and especially the Middle East has also attracted attention. And its massive, and growing, exports of fossil fuels to Europe offers Russia additional leverage.

Even as Moscow maintains an outsized influence on the global stage, discontent is brewing at home. Putin has dominated the Russian political scene for more than two decades, but his popularity is waning amid a slowing economy and following a deeply unpopular pension reform effort. That didn’t stop him from engineering a way to hold onto power after his current presidential term ends in 2024, despite a constitutional term limit. But it may open space for Putin’s long-suffering political opponents to call attention to the corruption and violence that have marked his tenure.

In Algeria, Protests Pause for COVID-19 as the Regime Steps Up Repression

Francisco Serrano 

The coronavirus pandemic is challenging Algeria’s aging health care system, as the number of confirmed cases of COVID-19 approach 45,000, with some 1,500 deaths. Yet rather than the virus itself, it is the Algerian regime’s use of the pandemic to quell popular dissent that is pushing the country deeper into crisis. The authorities have seized on the public health emergency to arrest activists and clamp down on the flow of information, actions that will likely only worsen Algeria’s long-running political stalemate.

Anti-government demonstrators calling themselves Hirak, or “movement” in Arabic, had been taking to the streets on a weekly basis since February 2019—initially to protest ailing, octogenarian President Abdelaziz Bouteflika’s attempt to run for a fifth term, and, following Bouteflika’s resignation months later, to demand reforms to the entire entrenched political system. But due to the pandemic, they have not held a protest since March 13. A few days after that final demonstration, the regime sealed Algeria’s borders, closed down schools, mosques and cafes, and banned social gatherings. Stricter measures, such as temporary lockdowns and curfews, were later implemented in the worst-affected parts of the country. These moves mirrored the actions taken by governments across the globe.

The World Is Becoming More Equal

By Branko Milanovic
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Opponents of economic globalization often point to the ways it has widened inequality within nations in recent decades. In the United States, for instance, wages have remained fairly stagnant since 1980 while the wealthiest Americans have taken home an ever greater share of income. But globalization has had another important effect: it has reduced overall global inequality. Hundreds of millions of people have been lifted out of poverty in recent decades. The world became more equal between the end of the Cold War and the 2008 global financial crisis—a period often referred to as “high globalization.”

The economist Christoph Lakner and I distilled this trend in a diagram released in 2013. The diagram showed per capita income growth rates between 1988 and 2008 across the global distribution of income. (The horizontal axis has the poorest people on the left and the richest on the right.) The graph attracted a lot of attention because it summarized the basic features of recent decades of globalization, and it earned the moniker “the elephant graph” because its shape looked like that of an elephant with a raised trunk.

Winners and Losers of the Pandemic Economy


MILAN – Much economic commentary nowadays focuses on “divergence”: while broad equity-market indices are at or near all-time highs, much of the wider economy struggles to recover from one of the most severe downturns ever. Whereas the Russell 2000 is still down 5.4% year to date, the S&P 500 and the Russell 3000 have fully recovered to their pre-pandemic levels, and the Nasdaq, which tilts toward digital and technology companies, is up some 26%. 

Many have concluded that the market is unmoored from economic reality. But, viewed another way, today’s equity markets may be partly reflecting powerful underlying trends amplified by the “pandemic economy.” Equity prices and market indices are measures of value creation for the owners of capital, which is not the same thing as value creation in the economy more broadly, where labor and tangible and intangible capital all play a role.

Moreover, markets reflect the future expected real returns to capital. When it comes to measuring the present value of labor income, there simply is no comparable forward-looking index. In principal, then, if there is a significant anticipated economic rebound, the outlooks for capital and labor income could be similar, but only capital’s expected future would be reflected in the present.

What Is the World Doing to Create a COVID-19 Vaccine?

Claire Felter

Vaccines go through rigorous testing for safety and effectiveness before they are approved for public use, a process that often takes years.

Governments, multilateral organizations, and private firms are spending billions of dollars to achieve an effective vaccine for the new coronavirus by 2021.

Tens of vaccine candidates, across more than a dozen countries, are undergoing clinical trials.


A global effort is underway to develop and mass-produce an effective vaccine to counter the new, deadly, and highly infectious coronavirus disease, COVID-19. Many governments have warned that daily life cannot return to normal until their populations have built up antibodies to fend off the virus. Accelerated clinical trials are already underway, but vaccine development often takes years.

Developing a successful vaccine is not enough. Many countries also face the looming challenge of producing quantities necessary to provide immunity to all their citizens, and competition is growing over who will have access once a vaccine is ready.

What is the status of a COVID-19 vaccine?

Can Australia Force Google and Facebook to Pay for News?

AUSTRALIANS VISITING GOOGLE.COM last week found, hovering below the search bar, an exclamation point encased in a yellow triangle. A warning: “The way Aussies search every day on Google is at risk from new government regulation.”

The warning links to an open letter from Google Australia and New Zealand managing director Mel Silva. Google’s and YouTube’s offering in Australia could become “dramatically worse,” she warns. The services themselves are “at risk.” All Australians users could be affected.

Silva’s warning stems from a proposed law that would require Google and Facebook to negotiate with news outlets and pay for news content featured on their platforms. Australian regulators say the tech giants benefit from publishing news generated by others, but Google and Facebook are so dominant in search and social, respectively, that publishers can’t make them pay for it.

It’s not the first time a country has tried to force Google and Facebook to pay media companies for republishing their news. A 2014 Spanish law required publishers to charge Google for the headlines and snippets of their stories that appeared on Google News. In response, the company removed the Google News service from Spain and took Spanish publishers off its news service globally. Readership of news stories dropped, particularly at smaller, less-well-known outlets, according to one study.

Peace for Warplanes?

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TEL AVIV, Israel—The Trump administration wants to push through within months an arms deal with the United Arab Emirates that includes the world’s most advanced warplane, the F-35, an ambitious timetable that could well be thwarted by the U.S. Congress, depending largely on Israeli Prime Minister Benjamin Netanyahu’s position on the sale.

Publicly, Netanyahu has said he opposes the deal, insisting that Israel’s position on Middle Eastern states acquiring such high-end weapons had not changed. But the Trump administration and Emirati officials have suggested that the F-35 sale was one of the understandings that led the UAE to normalize relations with Israel this month—in a watershed agreement brokered by Washington.

The arms deal is important enough to the UAE that Emirati diplomats canceled a trilateral meeting with Israel and the United States recently as a sign of displeasure over Netanyahu’s vocal opposition to the sale, according to a report in Axios. And defense officials were removed at the last minute from an Israeli ministerial delegation that traveled to Abu Dhabi on Monday for talks with U.S. and Emirati counterparts.