Search results for: “rare earth metals”

  • SCSI + more things

    SCSI

    SCSI was a huge part of my early computer life. It was the way my Mac connected to external hard drives, printers, optical scanners and early optical drives.

    Hotness
    Sun Microsystems computers used SCSI to and powered the dot com boom.

    SCSI still lives on as a software layer in enterprise computer systems connecting storage together. It even exists within the USB mass storage device class.

    SCSI is a reminder that technology is often build of layers of older technologies.

    Consumer behaviour

    Meet the Psychedelic Boom’s First Responders | WIRED – this is likely to end very badly for some people. Having known people who had bad experiences growing up, I am leery of the trend towards psychedelics

    Economics

    The slow death of downtown San Francisco | U.S. | EL PAÍS English – San Francisco’s problem is now as much reputational as it is economics now with the city labeled as being in a ‘doom loop’. Much of the blame seems to sit with the city administration under Mayor London Breed.

    Mayor London Breed
    San Francisco mayor London Breed

    Energy

    Saudi Arabia and Russia are trying to make oil more expensive | Quartz – KSA’s biggest problem had been that Russia hadn’t honoured its rate cuts to date. We’ll see if they do so

    Finance

    Don’t lose the exponential benefits of fractional share trading | Financial Times

    Gadgets

    Apple forced to make major cuts to Vision Pro headset production plans | Financial Times – not terribly surprising. I suspect that the problem is sourcing some of the components such as the screens. I imagine that there are challenges with manufacturing yields and throughput.

    Start-ups: smart clothes have been wearing experience for investors | Financial Times – smart fabrics didn’t win out over wearables

    Hong Kong

    Hong Kong national security law: who are the 8 targeted with HK$1 million bounties? Calls for sanctions, links to 2019 protests among alleged offences | South China Morning Post 

    How to

    How to Use FiveFilters to Create RSS Feeds for Any Web Page

    Japan

    Radio Taisō: A Nuanced History of a Nearly 100-Year-Old Tradition – Unseen Japan

    Materials

    Great summary of the current state of rare earth metals processing. China appreciated the strategic nature of these materials before everyone else did and has been prepared to tolerate a high degrees of pollution in processing to build a monopoly.

    Online

    Skype was a thing in the early 2000s. I knew companies that used it in a similar way to FaceTime now. I used it for conference calls and video calls with friends around the world. I had completely forgot that eBay had bought Skype, I could only remember Silverlake acquired it and then sold it on to Microsoft.

    Google Says It’ll Scrape Everything You Post Online for AI | Gizmodo 

    Twitter says users must be verified to access TweetDeck | Reuters 

    Quality

    57 ‘Buy It for Life’ Products: Cast-Iron, Tools, Speakers, Chairs, and More | WIRED

    Security

    Another Stumble: German Intelligence Criticized for Slow Handling of Russian Coup Attempt – DER SPIEGEL 

  • China evacuation

    China evac‘ or China evacuation is something that I have been hearing more about from my network. Its less dramatic in it sounds in some respects. It isn’t an immediate bailout like the fall of Saigon in 1975.

    China evacuation in this case is about businesses moving processes and supply chains out of the country to more stable and friendly environments. This has resulted in net capital outflows from China.

    US Embassy April 29, 1975

    China’s policy of lockdowns and Ukraine have brought a ‘China evac’ to the fore in terms of public discussions, but its actually been on the the minds of business people and think tanks for far longer. The reality of a china evacuation for businesses is more like apocryphal tale of a slow boiled frog.

    The China of Xi Jingping isn’t the China of 20 years ago when it ascended to joining the WTO. China has an unusual concentration of direct and indirect government funding in business. The state uses this funding to direct industry. In some respects this is similar to the development model deployed by Taiwan, South Korea and Japan. The difference is that the Chinese industry has kept up this investment for both military and economic purposes – what’s known as military civil fusion.

    A second aspect was forced technology transfer that happened. And ongoing industrial espionage on a scale that has been unprecedented in world history to date. China now leads in certain technological areas that it intends to use for diplomatic coercion and military advantage.

    Xi Jingping is looking to direct the economy more under the government and looking to remove any dependencies on western countries – including foreign companies doing business in China.

    Why China evac now?

    In order to understand the forces driving the consideration of China evacuation, one has to go back to the Initial incentives to invest in China.

    Initial incentives

    Stability

    The government was literally prepared to crush dissenting voices. The government controls the labour unions and isn’t afraid to use force. Home markets and stakeholders shamefully ignored June 4th, but the Hong Kong protests and Xinjiang have brought the dark side of stability to the fore. Many brands are having to choose between China, or their western stakeholders and customers – they have straddled both sides but a China evacuation is only a matter of time.

    China’s market size

    The size of the local Chinese market. However this is better for some markets than others. KFC benefited for a while. As have luxury goods manufacturers. FMCG and technology brands have seen them ‘make a market’ for local brands to then come in and fill, pushing the pioneering multinationals to the sidelines. In the meantime their western market middle class customer base was declining due to globalisation.

    Secondly, the spending power of a Chinese middle class on a per person basis is way lower than in the west. Just because there is an increase in middle class, doesn’t mean that there will be a like-for-like spending boost like one would get in the west. In absolute terms, incomes and tax are both lower than the UK, but then there isn’t much of a social welfare safety net and no health insurance.

    China’s regulatory environment

    China is skilled in the use of non-tariff barriers to punish businesses and countries. This skill was used previously to ‘compel’ foreign direct investment in order to sell within the Chinese market.

    Changing macro-environment

    COVID-19 demonstrated the fragility of global supply chains with China at the centre of them. China’s foreign policy stance has forced companies and governments to ask what would happen when they get into the kind of conflict with China that is currently happening with Russia.

    China like Russia has maximised its actions in the grey zone so far. It is only a matter of time when open conflict happens. Whether its over North Korea, a Chinese invasion of Taiwan, military action against the Philippines, Australia or Japan.

    Policy thinkers are also conscious of the way China wilfully acts against western aligned countries with less and less regard to the mutually beneficial relationship that they currently have.

    What are the limitations of leaving China?

    China’s rise has led to a catastrophic wilful destruction of capability by multinational companies in other countries. What made sense from a short term shareholder value perspective, was strategically deadly for their home countries. (The only bigger bit of corporate criminality would be Lee Raymond’s time at Exxon which excessively aggregated climate change, despite the early work on alternative energy done under the likes of previous CEO John Kenneth Jamieson.)

    So China is the single source for a lot of products, and the more one relies on it, the worse things get in terms of doing a China evacuation:

    • 20 percent of American cars by value are now Chinese components
    • Much of the world’s vitamin C production and most of the world’s precursors for drugs manufacturing come from China
    • 90 percent of the world’s rare earth metals that are key for everything from wireless chips to battery technology comes from China
    • We could rebuild the plants, but rebuilding the expertise base will be harder and take longer. Its so hard that policy experts are looking at friend shoring; working with partners to move production where it makes the most sense from an economic competitive advantage perspective

    One of the reasons why this all happened is that businesses believed you could design products without having to understand deeply how the products are made. But the situation has now moved from CEOs being misguided, to being willing agents of the Chinese state. In foreign countries from the UK to Australia political and business elites have been willing participants against their countries own interests.

    Businesses often don’t realise when the gap that they are trying to straddle has become too wide. Examples of this include law firms in Hong Kong and clothing brands Nike and H&M. Professional services firms have actively looked to profit from the deteriorating relationship between China and the west.

    Finally executives that have built their careers on saying that China is the future are emotionally, intellectually and personally invested in staying put rather than doing a China evacuation. Examples of this would be companies like Apple, Swire and HSBC.

    Policy implications of a China evacuation

    Dealing with the enemies within

    China’s state capture of a country’s elite is the single most problematic aspect of preparing for, and dealing with a widespread China evacuation of business functions and processes. The UK and Australia have made baby steps in this regard. The challenge will be realigning the incentives of the business elites away from short term stakeholder value to a longer term view that takes into account stakeholders and national expectations. (There is a certain irony in this when you realise that it was the short termist shareholder value crowd who bankrolled Sir David Sterling’s efforts to cling on to the British empire by his fingertips.) It will mean unwinding long tentacles sown by the United Work Front and Chinese state media without alienating Asian minority communities, including effective policing actions against operators as diverse as social media influencers and organised criminals.

    Understanding the limitations

    Policy makers will have to understand the difference between what’s possible, all be it painful and what can’t be done at the present time. This means navigating between the nay-saying short-termist interests of business elites and reality of operations. Certain things will take decades to reshore as part of a China evacuation of business precesses. Expertise and knowledge will need to be learned, plants built on the rubble of bankrupt retail parks

    Building effective defences

    Any sign of concerted China evacuation will see a dramatic Chinese response. Countries would need to learn lessons from the experiences of Norway, Lithuania and Australia who have incurred responses from China in the past. At the present time the European Union is failing its members in this regard.

    Long term planning

    Maintaining secure supply lines and economic growth requires long term planning. The financialisation of western economies rewards short term opportunism and there lies a fundamental tension in how things are done. There could have been no China without the asset strippers of the 1960s onwards and a narrow interpretation of ‘shareholder value as god‘ mantra.

  • LIHKG forum + more news

    LIHKG forum

    LIHKG forum became famous beyond Hong Kong when it was at the centre of the leaderless protest movement during the 2019 Hong Kong protests. Hong Kong’s local internet has a history of Reddit like forums since the late 1990s.

    HKGolden

    Prior to 2016, there was the HKGolden Forum named after the Golden Computer shopping centre in Sham Shui Po. Golden Computer shopping centre considered one of the cheapest places in Hong Kong to purchase a computer. Products on sale range from complete PC systems, smartphones and peripherals. Unlike purely consumer-oriented IT shopping centres, Golden features several stores specialising in professional grade networking equipment as well.

    The HKGolden forum fell out of a site put up in the late 1990s by stall owners at the Golden Computer centre to show people what were the typical prices for computer parts. The HKGolden Forum served as a creator and distributor of memetic ideas in Hong Kong including new slang terms of the local Cantonese vernacular and promoting discussions of societal topics.

    LIHKG

    LIHKG forum seemed rise in prominence once it was launched in 2016, quickly eclipsing HKGolden. It is restricted to contributors having an email address from a Hong Kong ISP (like Netvigator) or a local higher education institution. The LIHKG forum pig icon became a familiar motif on 2019 Hong Kong protest posters and artwork.

    Since the national security law in Hong Kong it has has been a source of some anti-vaccination / public health programme discussions. Today the LIHKG forum app has been taken down from the Android and iOS app store.

    Most Hong Kong political discussions have already moved on to various Telegram channels.

    China

    Is China Uninvestable? Complaints from Foreigners Won’t Sway Xi Jinping – Bloomberg and Is China uninvestable, redux | Financial Times – this is going to make it harder for China’s friends on Wall Street

    China has a fateful choice to make – by Noah SmithAn angry, chauvinistic nationalism has become a deeply rooted force in China’s society. Even as China’s government has wavered on whether to support Putin, there has been a massive outpouring of support for the invasion on Chinese social media. Of course that nationalistic sentiment isn’t unanimous, and it’s hard to tell what percent holds it, but for now they seem to have the upper hand. In fact, at this point it’s not clear that China’s top leadership could stop the nationalist tide even if they wanted to; like the generals of Imperial Japan, they could end up getting pushed into aggressive action by a populace that had no idea of the risks. – interesting that we’re starting to see this kind of rhetoric beyond reactionary elements

    Volkswagen and China: the risks of relying on authoritarian states | Financial Times – I think China is going to have problems from a business point of view, when even its most ardent fans are getting pressure from their China association

    China takes wait-and-see stance on Pakistan’s political turmoil – Nikkei Asia 

    On China’s Internet, Rare Flash of Anger at Beijing’s Position on Ukraine 

    China Inc unconvinced Xi Jinping’s regulatory storm is over | Financial Times

    Ukraine gives Europe a key swing vote in the US-China rivalry | Financial Times and Lithuania wants EU to cancel summit with China – media – LRT 

    Chinese market rally disguises concerns over deglobalisation | Financial Times 

    Consumer behaviour

    Can the State Make you More Religious? Evidence from Turkish Experience – Çokgezen – – Journal for the Scientific Study of Religion – Wiley Online Library – apparently not, but that doesn’t mean that we won’t see more religiosity amongst young people as they become adults

    Culture

    Why We Use “lol” So Much 

    Park Island. (For Peter Moss, May 2018) | by Aidyn F | Medium – my friend Aidyn’s poetry. We were introduced by a former colleague of mine from Yahoo! who had worked in Hong Kong as a TV presenter before the handover. Aidyn introduced me to the Foreign Correspondents Club and gave me a different perspective on Hong Kong

    Design

    Inside Vitsoe, the British company with a very long shelf life | Financial Times

    Ethics

    It’s not Cancel Culture, it’s Cancel Technology 

    Finance

    The Western elite is preventing us from going after the assets of Russia’s hyper-rich | Thomas Piketty | The Guardian 

    CVC plans Amsterdam listing in blow to London market | Financial Times 

    FMCG

    Big Tobacco’s future in Russia goes up in smoke | Financial Timesa classic case of consumer globalisation: they made sophisticated products, marketed them expertly and raised quality standards. It would be fine apart from one problem: the product was cigarettes and the World Health Organization estimates that more than 19m Russian smokers will die prematurely. Hence the global pivot that companies have been trying to make towards vaping and heat-treated tobacco devices, including Philip Morris’s IQOS and BAT’s Glo. Russia has been vital to the “smoke-free future” that Philip Morris now promises and one executive last year hailed its “truly very spectacular progress” there. It is not clear how much safer heat-treating tobacco is to produce a nicotine vapour rather than smoking it in cigarettes. One analysis concluded that users of the devices inhale “substantially fewer” toxicants, but the results were mixed and most studies are done by tobacco companies. Nor is the purpose of heat-treated tobacco devices obvious. Philip Morris says that 72 per cent of IQOS users switched entirely from cigarettes in 2020, but it leaves many who carry on using both. There is an echo of the past transition from Belomorkanals to Marlboro Golds: better, but not good

    Gadgets

    Sound On Sound Issues (Active) – Amazing archive of the early issues from Sound on Sound magazine including amazing Japanese synthesisers like the Roland D-50

    Does Apple (AAPL) Sell a Wireless Router? What Happened to the Apple AirPort? – Bloomberg – agree with Mark Gurman’s assertion

    Why is Apple’s Studio Display basically a giant iPad? | The Next Web

    Hong Kong

    Singapore’s expat numbers lowest since 2010 suggesting no boost from Hong Kong’s exodus | South China Morning Post – so where are they going then or is this part of a retrenchment of staff from Asia? Hong Kong expats drive unprecedented demand for Singapore school places | Financial Times – this article is odd, given that Singapore apparently has had historically low migration to the city

    Shenzhen overtakes New York as home for billionaires – Nikkei Asia 

    MTR sees Covid tester in action | The Standard – LIHKG forum users shared candid photos of Hong Kong people testing themselves for COVID in public including on the MTR and while out having a meal

    Ireland

    Land values up by a third in 2 years – Farmers Journal 

    Luxury

    Phillips to Dedicate Entire Auction to the Audemars Piguet Royal Oak – Robb Report

    How Putin’s Oligarchs Bought London | ArticleDate 

    Wash | No Mercy / No Malice 

    Why the Chechen Warlord Wears Designer Boots | GQAs Russia invades Ukraine, murderous Chechen leader and Putin ally Ramzan Kadyrov is using designer pieces to demonstrate his power. I don’t think Prada really wants Ramzan Kadyrov as a brand ambassador

    Materials

    Trafigura and Blackstone discussed investment of up to $3bn | Financial Times 

    Nickel Trading to Resume in London After Historic Squeeze – Caixin Global 

    Australia’s rare earths projects get US$360 million funding boost to counter China dominance | South China Morning Post more on rare earth metals here

    Online

    Google to terminate Universal Analytics on 01 July 2023 | Fresh Egg 

    Vimeo is telling creators to suddenly pay thousands of dollars — or leave the platform – The Verge

    Meta sued by Australian regulator for allegedly ‘misleading’ crypto ads | Financial Times 

    The internet forgot about Clubhouse. Anti-war Russians didn’t. 

    Google’s John Mueller: “It’s Impossible To Crawl The Whole Web” | Search Engine Journal – Google never crawled all the web anyway

    Retailing

    Judge denies Amazon’s motion to dismiss antitrust case – Protocol – may face a case over fair pricing

    Security

    Yoon’s pledge to boost THAAD missile system risks China reprisal – Nikkei Asia 

    300,000 Volunteer “Hackers” Are Attacking Russian Computer Systems | Futurism

    Dissidents targeted on behalf of China’s secret police, US prosecutors allege | Financial Times

    Safe as houses: the KGB proof mansion | The Sunday Times 

    The cyber warfare predicted in Ukraine may be yet to come | Financial Times

    Here’s why Putin won’t use nukes in Ukraine — Pass it on. | I, Cringely 

    Behold, a password phishing site that can trick even savvy users | Ars Technica 

    Technology

    China takes a key step toward chip self-sufficiency | Financial Times – Luxshare are moving into chip packaging and Apple is a key enabler

    The vibe shift in Silicon Valley – by Casey Newton 

    Web of no web

    Japanese start-up wants to cause real-life pain in the metaverse | Financial Times 

    Wireless

    Bill Gates leads $84M funding round for Kymeta – GeekWire 

  • Ukraine

    Its really hard to get your head around the situation playing out in Ukraine. One of the best set of videos that I have seen to try and make sense of what’s going on in Ukraine is done by Chris Cappy. He admits in the last video that his jocular tone is a way of dealing with the horror of it all and his analysis seems to be on point. I have embedded his Ukraine related videos here:

    Beyond the horror playing out with Russia’s invasion of Ukraine; what will be some of the global impact of the Russian invasion of Ukraine?

    I have put down some thoughts on the effects of Russia’s invasion of Ukraine into three buckets:

    • Short term effects
    • Medium term effects
    • Long term effects
    Ukraine

    Short term effects

    Bread riots and inflation

    The invasion of Ukraine will disrupt the country’s wheat harvest. Ukraine is responsible for 10% of all global wheat production and is a major exporter.

    Developing world consumers are already suffering from the rise in food prices. This might be felt especially hard in the Middle East, where the price of bread is often subsidised by the government to help prevent riots. It was one of the factors that drove the ousting of former Egyptian president President Hosni Murbarak as part of the Arab spring series of movements.

    There have been past bread riots in other countries like Algeria and Jordan at a time of massive civil disturbances. One of the first impacts of Russian actions in Ukraine may play out with disturbances in the developing world.

    Russia is also a wheat exporter, but ironically won’t benefit from the price rise due to long term contracts that it has with China. China previously leased land responsible for 5 percent of wheat production in Ukraine. China had also invested in Ukrainian pork farms.

    Oil and gas

    The impact on global oil and gas prices has been immediate. Oil prices had been high anyway as the oil industry ramped up and tried to match post-COVID shock supply chains struggle to get back in sync. Sanctions on Russian oil have been implemented by oil traders faster than western governments have implemented them. Taking Russia out as a supplier is likely to drive western customers in a number of directions in the medium and long term. In the short term we may have power and heating shortages. Russia currently doesn’t have pipeline capacity to ship oil and gas to China in the kind of volumes that would compensate for reduced Western demand. So you might see some of that oil being shipped in sanctions busting tankers, again the challenge would be finding ‘ghost boats’ that have capacity.

    Western inflation versus China inflation

    China has probably worked out the calculus of products that it loses in the short term, versus long term products from Russia as a pariah state at below global prices as Russia won’t have a choice. So we can expect China to benefit from lower inflation inputs than other countries in the short to medium term. It will be inputs from oil and gas to wheat or titanium foam. This gives some Chinese businesses a comparative advantage versus their competitors, particularly western countries.

    Western European concerns about energy, particularly running into winter are acute and energy transformation to lower carbon options will take time.

    Russian inflation

    The rouble has dropped in value by 30 percent as soon as sanctions went in. So one would think that the effect on inflation would be immediate. But you also have multinational companies withdrawing from Russia. In the short term, many products from fast moving consumer goods to clothing and home furnishings will quickly no longer be available. Even smartphone sales of Chinese brand smartphones have plummeted, which gives you and idea of what western sanctions don’t do, the plummeting rouble will do instead.

    Many of these multinational companies will no longer be manufacturing in Russia either, which will create a decrease in both supply and demand. So the impact on short term inflation may take a while to become clear. It is likely to impact unemployment as well.

    Russian banks and the central bank are extremely capital constrained which will not only affect monetary policy but providing sufficient credit to keep businesses going. What you will see is a brain drain of the educated and the talented as they don’t really have a future at home. Which is why Russian’s have been paying €9,000 for a railway ticket from St Petersburg to Helsinki. Talented Ukrainians are either engaged fighting the Russian army in Ukraine, are internally displaced in western Ukraine or have already left the country.

    If Russia goes to martial law then all bets are off in terms of financial damage because that would likely be the least of government’s concerns in terms of maintaining other aspects of control.

    Medium term effects

    CHIPS Act & strategic capability

    The US has looked to promote domestic semiconductor manufacturing through government investment. However inert neon and krypton gas, which is used in the semiconductor manufacturing process is supplied by Ukraine. Russia and the Ukraine were responsible for half of all global production of these gases. This will impact US national security and development of semiconductor manufacturing as a strategic capability.

    Neon mirrors shortages of critical materials for western countries that will impact high technologies and engineering using performance materials. Western countries will have to think about how they update their own strategic capacity to make these materials. This covers a wide swathe of materials including:

    • Lithium – something that Ukraine has large deposits of
    • Industrial and jewellery grade diamonds.
    • Uranium
    • Titanium foam. Titanium foam is the raw material that titanium alloys are made from. Currently two out of the top three producers are China and Russia. Given what has happened with Russia, the risk calculus will change around China.

    There has been a steady tempo of voices on the need to have strategic capability in critical areas like lithium and rare earth metals. This will likely be mirrored by China with its five year plans. The degrees of will to achieve strategic independence will dictate the amount of time that it takes to implement.

    Innovation

    Being cut off from western capability will place two problems on Russian innovation:

    • Access has been cut off to critical resources. Yandex has already expressed concern on how this will affect their business.
    • Over time, access will be reestablished through extraordinary means, but will incur additional costs. So Russian innovators might be able to acquire foreign critical materials with enough money. These will have to be funnelled through front companies in third countries in places like China and the Middle East. This is effectively a tax on Russian innovation.

    Russia has some semiconductor capability, but it is way behind modern manufacturing, so it relies on foreign manufacture.

    This all means Russia will be an ideal market for Chinese vendors. Huawei has already been helping Russia with their networking and information security needs. Other Chinese vendors will end up dominating other aspects of Russian technology from automation to smartphone apps. Over time Russia will fall behind and end up being a supplier of raw materials and source of skilled labour for Chinese enterprises. Having a Russian version of WeChat and Weibo with similar censorship would be attractive to the Russian government.

    Russia is already behind in semiconductor manufacture, but it might be helped by China’s similarly sanctioned semiconductor companies. Russia has been trying to get self sufficient in products like computer servers, but Chinese chips will be seriously behind the chips that they’ve already had made in Taiwan.

    Russia will probably do everything that it can to shield its defence industry from impact. Not only in support of its policy aims, but its one of the few value add sectors where Russia is a peer with China. Otherwise post-Ukraine, Russia’s negotiating position with China would be more akin to China’s relationship with sub-Saharan African countries or Sri Lanka.

    Maintenance

    Most of the civilian Russian aircraft fleet is of Boeing and or Airbus aircraft. The only access to maintenance parts will be the ones that they have on the shelves. Over time Russia might be able to reverse engineer and manufacture at least some parts. Electronics may prove harder. However Russian aircraft no longer have the amount of destinations that they can fly to with passengers or air freight, so they can likely cannibalise much of the fleet for spare parts. And since the majority of the aircraft are leased from Irish companies, there will be little blow-back that the Russian government would be bothered about at the moment.

    Maintenance will also need to be done on trains and the railway network, oil and gas extraction equipment, manufacturing production lines and even hospital medical equipment. A similar mend and make do approach will likely be needed for all these sectors, which will slow down economic activity and make it harder to climb out of recession.

    Rebuilding

    If the second Chechen war is anything to go by, rebuilding Ukraine will be a very costly endeavour that will need to be bankrolled by either Russia or the west. As the west found out in Iraq, winning the war is the easiest and cheapest part. Rebuilding and trying to a puppet government in power with an insurgency funded by western citizen direct contributions and government funding could be a real challenge. As would trying to integrate Ukraine into Russia. Even the most draconian of measures have a high financial cost as well as societal and moral related issues.

    Footage has also indicated that Russia will need to rebuild its military apparatus. The tyres were rotting off Russian and Belorussian vehicles for the want to proper care and maintenance programmes. In preparation of a future conflict with NATO, or further down the line China, Russia couldn’t afford to take those kind of losses. Wars are a shop window for the defence industries and this won’t be doing any favours for foreign sales of Russian armed vehicles, anti-aircraft systems or aircraft.

    The performance of equipment in Ukraine is in sharp contrast to the veneer of professionalism and technical excellence shown by Russian forces operating in support of, and on the ground in Syria.

    Russia will need to replenish ammunition supplies, maintain or replace artillery barrels and replenish field rations. Word will get around about the poor state of field rations. It will need to revamp its approach to logistics and supply chain management because everything that I listed was entirely preventable. All of this rebuilding will be challenging if Russia faces a sustained insurgency. China spends more on internal security than it spends on external facing military. NATO estimates that Russia would need to have a minimum 400,000 soldiers to maintain control of Ukraine. If Russia followed the same density of soldiers to population that it had in Chechnya, it would need 4 million soldiers.

    There are some terrible options to consider:

    Cull a proportion of the population, Russia is already a pariah state after all. Ignoring for morality of this for a moment which would be a huge issue in Russia, we know that this would represent tremendous logistical challenges as it did for Nazi Germany. But former Russian leaders, notably Josef Stalin killed a lot of Ukrainians including starving many of them to death and Mr Putin has proved himself to be a student of history

    • Internal exile. Stalin exiled the Cossack community of Crimea to Siberia. It decimated social cohesion and the ramifications of this exile is still felt by the Cossacks. Russia could do this to portions of the Ukrainian people. This would present a logistical challenge and an economic burden on Russia. If Russia thinks that sanctions are bad now, either of these two options would make current economic decline sound like paradise.
    • Paying for rebuilding will be challenging, if Russia manages to hold Ukraine, it might be able to exploit its rich natural resources like lithium deposits. But these will be sold at a considerable discount to the likes of China or India. We are unlikely to see Russia as a serious player in the lithium ion battery market.

    Russian recession

    When you take jobs, economic activity and capital flow out of an economy a recession will be inevitable. Many of the jobs that Russia will lose will be in middle class sectors including management, banking, the professions and business services. No matter what these companies do to try and mitigate the impact on their former staff, the impact will be felt economically in Russia.

    Add to that the obliterated economy in Ukraine that might be dragging Russia down even further.

    Over the longer term Russia will be selling their export products at a discount due to fewer customers and a more expensive route to market. So it will be harder for Russia to climb out of recession.

    Reshaping of supply chains

    Russian oil and gas has previously focused predominantly on selling oil and gas to Europe and Turkey and will be covered with sanctions. It will take a while to make alternative pipeline capacity to go east to China. Previously Russia has made use of foreign LPG terminals. Presumably these will cut access to transport by sea for Russia. Liquified natural gas tankers are expensive and Russia’s largest domestic LPG terminal is on the wrong side of the world, just down from St Petersburg on the Gulf of Finland. This would be the equivalent of drinking a venti mug of coffee with a teaspoon.

    Russia has been experimenting with shipping some LPG by train to Northeastern China. In terms of helping finance future projects, China isn’t likely to fund LPG projects that would give Russia to foreign markets other than itself. This would be one of the first areas where we see Russia clearly as the junior geopolitical partner beholden to China. So a gas pipeline to China is likely to be the preferred route to market.

    Russia is in a slightly better position with oil. its easier to ship by sea and for the right price, Russia could find customers beyond China.

    Consumer sanctions busting

    Russia will have already started thinking about sanctions busting, but doing this in a big way will take time, money and planning. At a consumer level, Russians will be looking to safeguard wealth through portable assets that are liquid, or can be easily made liquid. This means foreign currency, crypto-wallets, luxury watches, diamonds and precious stones. There has already been a run on the rouble at Russian banks as citizens look to obtain foreign currency and Russia has implemented capital controls on people leaving the country.

    Cybercrime

    It’s only a matter of time for Russia to tap its cyber criminal community and state hackers to come up with a source of foreign currency to help the Kremlin. These will be more capable than what North Korean state hackers have historically being doing. Ransomware payments will likely come over cryptocurrency. The problem with cryptocurrency is that the exchanges are becoming increasingly centralised, so criminals will be playing cat and mouse with the likes of Binance. The cryptocurrency sector in Hong Kong may be more fruitful. The COVID quarantine situation and regulatory uncertainty in Hong Kong won’t deter Russians keen to launder crypto into foreign currency and access to the global financial system.

    Finance

    Russia will try to get around foreign payments through a number of ways. Asianometry have done a really good exploration of this topic and I figure that you could do with a video break in this dystopian discussion of Russia and Ukraine. We have seen Russian banking systems sign up with Union Pay, which has limited acceptance in the west (usually big department stores that rely on the Chinese tourist trade like Selfridges in London and Brown Thomas in Dublin).

    Long term effects

    At the moment there isn’t a clear off-ramp for sanctions against Russia. One might see softening of sanctions in the developing world, for Russian products at the right price. The longer that sanctions remain, the harder it will be for Russia to regain its global economic standing once they are lifted. Russia hasn’t been a trusted partner at the best of times due to systemic corruption. Systemic corruption will be further fuelled as the country falls under Chinese influence, there won’t be a need to meet ESG driven checks and balances. It will face sustained cynicism in the west with regards its motives and will increasingly become less relevant.

    In addition it will be locked into draconian financial deals with China which would make it harder to kick start the Russian economy. Globalisation will have created alternatives for its higher value goods, so will need to rely its commodities. It will be a third line supplier for strategic materials like industrial diamonds, uranium or titanium because of the trust deficit.

    Russia declining, China rising

    Russia is already struggling for relevance in the Russian Far East. The economic gravity is moving away from Russia towards China. Chinese companies are leasing farm land and forestry. Russian financial distress will encourage this trend much faster. The Russian Far East is part of an ‘unfair treaty’ between Russia and China during the 19th century. While China tries to keep a lid on the discussion about this, it is on the radar of Chinese nationalists. The question of Russian sovereignty will come up at some point and Russia won’t be able to secure any foreign support.

    China will be Russia’s banker of last resort and given that the yuan isn’t transferrable, Russia won’t be able too disconnect at a later date. China will use favourable pricing to get hold of Russian resources, Russian expertise and privileged market access. All of this will come at the expense of Russian businesses, entrepreneurs and the Russian taxpayer.

    Russia will have been cleared off the map for sporting events, an area that China attaches great importance to for national pride.

    The fall against China will transform the China-Russia relationship in a coercive way, similar to what we have seen China do with African countries.

    Sanctions busting

    Taking apartheid era South Africa as an example. South Africa was able to buy arms from East Germany, despite the communist state’s support of the ANC. Chinese arms were purchased by South Africa and used to equip their allies fighting in Angola. If the price is right, Russian arms will still be sold abroad. We know that North Korea has serviced and refurbished Soviet-era equipment like T-55 tanks for a long time and Iranian arms pop up across the developing world including medium range missiles and drones. So there will be customers there for Russia, at the right price. What we might end up seeing is that Chinese arms are seen as ‘more premium’ due to superior technology. Russian private military contractors will be used to earn foreign currency, wherever there is money on the table.

    We can expect Russia to be able to obtain at least some material that it considers to be vital to its needs and there will be some strange bedfellows involved. This might be through convoluted and more expensive means. Countries that fully supported Russia in the UN are pariah states anyway, so they would be of limited use as conduits. But they are likely to be customers for Russian exports. For instance, North Korea could be enjoying more oil at a lower price, if the rail link across the Russian border would be able to handle a long tanker train. Or if Russian ‘ghost tankers’ manage to do transhipment.

    So they may use third parties countries that abstained from the UN motion

    • Algeria, Equatorial Guinea and Iraq. Russia presents an arbitrage opportunity for these countries. If Russia is desperate for foreign currency reserves, these countries could buy Russian oil at less than their own cost of production. Perform an offshore ship-to-ship transfer or fake paperwork for a full tanker and sell Russian oil as their own. Russia would be losing money this way but it offers an opportunity to get hold of foreign currency.
    • China is going to be Russia’s leading economic and development partner. This is likely the key conduit for foreign products into Russia. However, where China is restricted in key areas such as technology, Russia will need to look further afield.
    • Bangladesh and Pakistan. Pakistan has a lot of experience in sanctions busting and used to build their nuclear weapons programme over the past number of decades. It also has an ambivalent relationship with western countries, although its tight relationship with China might make its willingness to help Russia have limits.
    • Bangladesh and Pakistan are the number two and number three countries in ship breaking. When Russia needs ‘ghost tankers’, being able to buy ships that are due to be scrapped will be the easiest way of doing this. Having ships pirated in the straits of Malacca by corrupt Indonesian military or Filipino Islamic terrorist groups would be a higher risk, less reliable source of ‘ghost tankers’. If Russia wants to sell oil or arms, it will need access to shipping. Ghost ships are already estimated to represent about 10 percent of global oil tanker capacity. Prices have already been rising for older ships due to be scrapped prior to the Ukraine invasion as the demand for ‘ghost ships’ had increased.
    • South Africa and India. India and South Africa are long-time partners of Russia in the diamond trade and would be likely called upon to help Russia get its diamonds on the global market. India is responsible for most of the diamonds cut globally. Its diamond businesses also have a crisis of credit. Both South Africa and India are part of the Kimberley Process. Both of these factors make them ideal countries to launder Russian diamonds through if the price is right.

    The United Arab Emirates is in a unique position. It is an established Russian trading partner with an established Russian community and the kind of financial sector infrastructure to help build an offshore shell game to hide Russian sanctions busting. It has many of the benefits of London in terms of expertise, but none of the ESG related problems that ‘Londongrad‘ now has due to the invasion of Ukraine.

    Cultural impact

    Russia feels that it is linked culturally much more closely to the west in terms of music, literature and even sports. This will be unprecedented, even during the cold war, there were cultural and sports exchanges. Being cut off from these exchanges had a huge impact on apartheid-era South Africa. It is likely to impact how Russia sees itself, the sense of isolation due to its pariah status will be palpable. I can’t see Russia pivoting to China in those areas, they have too little in common from a cultural perspective.

    The rich and powerful who enjoy a global cosmopolitan lifestyle will feel this impact in a very acute way, the middle classes will also feel the impact but will be equally concerned with their reduced financial status.

  • Supply chain disruption + more news

    Supply chain disruption

    Is there an end in sight to supply chain disruption? | Financial Times -There are major barriers to ending supply chain disruption by decoupling from China. Japan is trying to reduce supply chain disruption by replicating Chinese factories in other countries like Thailand and Indonesia. Here are some of things stopping multinational corporations from making that happen. In order to end supply chain disruption, I would imagine that a higher degree of automation is key, which will require corresponding improvements in automation technology. This doesn’t just mean software but also in mechanical engineering. The main issue for fine motor control in robots is the design and price of harmonic drives. This doesn’t operate on a Moore’s Law speed and scale of innovation. Increased automation also likely means major changes in approach to product design. Back in the golden era of consumer electronics just prior to the consumer adoption of the internet, circuit boards were less dense because they were designed for automated ‘pick-and-place’ machines. Nokia had a similar approach to its phones prior to the pivot to Windows and Qualcomm chips. The reason why Apple needs iPhones made in China is because a lot of the final assembly is closer to the work of a watchmaker servicing a mechanical watch than you would credit. So lots of cheap, (younger, smaller, delicate, usually female) hands are required. Our financial system’s obsessive, narrow focus on shareholder value will curtail these movements. Look at how Apple crows about how green they are and yet makes the virtually unrecyclable Air Pods by the million. Until that changes and the computers are assembled from modular boards, closer to their home market the supply chain won’t change despite the political, economic, national security and moral imperatives otherwise. Which is why Apple amongst others point out that they have an inability to move production out of China. This will get even harder as China moves up the semiconductor value chain. Once they are building memory modules and modern silicon fab processes, its game over for manufacturing elsewhere in the electronics sector. China is also the sole provider for many of the ingredients in multi-vitamins and pharmaceutical products. They process and mine just under 90 percent of the world’s rare earth metals – key for a large swathe of technologies from magnets to chips and batteries. They have a similar position in solar cell polysilicon and lithium ion battery ingredients. 

    JAXPORT achieves strong cargo volumes through first three quarters of Fiscal Year 2021
    JAXPORT promises less supply disruption

    So ending supply chain disruption would mean replicating whole ingredient manufacturing chains and industry knowhow that multinationals had migrated to China decades ago. All of these actions to reduce supply chain disruption may not be received very well by China itself. China has bought key infrastructure around the world: power generation, ports, water supply, rail networks and more. All of which means that they get a greater say in how the world’s supply chain works. Xi Jingping has been straight forward in saying that he wants the world to rely on China more, and China to rely on the rest of the world less. Decoupling from Chinese supply chain disruption has taken on even more importance with the rise of Chinese secondary sanctions. More on nearshoring to avoid Chinese supply chain disruptions here: China’s economic woes: An opportunity for U.S. manufacturing? 

    China

    Scientists believed Covid leaked from Wuhan lab – but feared debate could hurt ‘international harmony’An email from Dr Ron Fouchier to Sir Jeremy said: “Further debate about such accusations would unnecessarily distract top researchers from their active duties and do unnecessary harm to science in general and science in China in particular.” Dr Collins, former director of the NIH, replied to Sir Jeremy stating: “I share your view that a swift convening of experts in a confidence-inspiring framework is needed or the voices of conspiracy will quickly dominate, doing great potential harm to science and international harmony.” Institutions which held the emails have repeatedly resisted efforts to publish their content. The University of Edinburgh recently turned down an Freedom of Information request from The Telegraph asking to see Prof Rambaut’s replies, claiming “disclosure would be likely to endanger the physical or mental health and safety of individuals”. – this is going to turn into a dumpster fire

    Beijing’s South China Sea claims ‘gravely undermine’ rule of law | Al Jazeera 

    Half of international students did not feel completely ready for courses – poll | Evening Standard – Nearly three in four (72%) international applicants wanted more information about what their year would look like.- and this is probably deliberate by the institutions

    Dutch university gives up Chinese funding due to impartiality concerns | Netherlands | The GuardianAmsterdam’s Vrije Universiteit (VU), the fourth largest university in the Netherlands, has said it will accept no further money from the Southwest University of Political Science and Law in Chongqing and repay sums it recently received. The announcement came after an investigation by the Dutch public broadcaster NOS last week revealed VU’s Cross Cultural Human Rights Center (CCHRC) had received between €250,000 (£210,000) and €300,000 annually from Southwest over the past few years. According to NOS, the CCHRC used Southwest’s money to fund a regular newsletter, organise seminars and maintain its website – which has published several posts rejecting western criticism of China’s human rights policy

    Economics

    Buy Things, Not Experiences — harold lee – long term benefit

    Did macroeconomics fail us on inflation? – by Noah Smith 

    Ethics

    The soft bigotry of America’s cultural left | Financial Times 

    Why is it still considered OK to be ageist? | Financial TimesA study by academics at Yale found that people with a negative approach to ageing deal with it worse mentally and physically and die seven and a half years younger. To put this in context, mild obesity shortens life by three years, extreme obesity by 10. Hardly surprisingly, this has prompted a great deal of fuss at government level. Policymakers and health professionals obsess over obesity. But what about the damage done by poor attitudes to ageing? Until I read about the survey I had no idea it was even a thing: the fact that ageism can actually kill you is a well-kept secret. It is also a costly one. According to the WHO report, the resulting ill health places an additional annual burden on the US healthcare of $63bn. I realise that health policymakers have been busy since the report came out last March, but still there hasn’t been a peep out of them

    FMCG

    Short sellers tuck into Beyond Meat | Financial Times 

    Spilling the Beans on Political Consumerism: Do Social Media Boycotts and Buycotts Translate to Real Sales Impact? by Jura Liaukonyte, Anna Tuchman, Xinrong Zhu :: SSRN – on the contrary, they create a short term sales bump and your customers stick with your brand, so long as you keep your advertising spend up

    Hong Kong

    Xinjiang anti-terror general to lead China’s Hong Kong garrison | Hong Kong | The Guardian – things are going only one way like a ratchet. This especially interesting as the Hong Kong government’s national security apparatus has been making steady progress despite high profile government failures in other areas such as COVID social distancing that further undermined trust with citizenry, more here Hong Kong leader Carrie Lam vows to bring in new security laws | The Guardian 

    The Big Pigture: Life Lessons from the World of Mcdull | Sotheby’s – interesting that Sotheby’s is auctioning off McDull artwork.

    Hong Kong democracy activist Edward Leung released from prison | Reuters – Edward Leung was involved in the ‘fishball revolution’ where police took action against food stalls, he was the person that made ‘Liberate Hong Kong, revolution of our time’ popular as a slogan

    Britain’s newest immigrants are showing a flair for protest | The Economist 

    Innovation

    Why is the Nuclear Power Industry Stagnant? – Austin Vernon’s Blog – interesting discussion on the economics and need for innovation

    America needs more basic research – by Noah Smith 

    I love this 60 Minutes Australia film about an Australian inventor

    Equations built giants like Google. Who’ll find the next billion-dollar bit of maths? | David Sumpter | The GuardianThe PageRank story is neither the first nor the most recent example of a little-known piece of mathematics transforming tech. In 2015, three engineers used the idea of gradient descent, dating back to the French mathematician Augustin-Louis Cauchy in the mid-19th century, to increase the time viewers spent watching YouTube by 2,000%. Their equation transformed the service from a place we went to for a few funny clips to a major consumer of our viewing time.

    Japan

    ‘Society was volatile. That spirit was in our music’: how Japan created its own jazz | Jazz | The Guardian

    Murata’s Thailand move heralds Japan tech shift from China | Financial Times“The most populous country today may be China, but in 2030 that will be India, and further down the road it will be Africa,” Nakajima said. “Will those economies be aligned with China or the US? We don’t know. We should be able to respond to both scenarios.”

    Hong Kong: how colonial-era laws are being used to shut down independent journalismpolice recently told reporters that opinion articles aren’t the only ones that can be regarded as seditious. Media interviews with exiled activists and features on clashes between protesters and riot police can also be considered seditious if the content is deemed by the government to be “fake news” or inciting hatred towards the government and endangering national security

    Hong Kong independence activist Edward Leung released from jail, told to stay silent — Radio Free AsiaHong Kong barrister and former lawmaker Siu Tsz-man said supervision orders are sometimes issued to released prisoners involved in violent crimes, including murder and manslaughter, and require the former prisoner to maintain contact with supervision officers and remain at a stable residence. But Siu said the order to stay away from the spotlight was unprecedented. “I have never heard of this happening before,” Siu said. “My staff have never heard of a supervision order under which the person isn’t allowed to give interviews to the media.” Siu declined to comment on whether the order was appropriate without knowing the details of the case. “The point of a supervision order isn’t to confine someone at a certain location and not let them leave,” he said. Some drew parallels between Leung’s release and the continuing controls on released political prisoners in mainland China – similar in nature to an ASBO but inherently political in nature

    Korea

    Young Koreans Lose Interest in Chinese Studies | Chosun – this Korean example shows a wider decline in Chinese soft power

    Media

    ‘Industry Challenges’ Blamed For DriveTribe’s Demise 

    Brand collaborations with TikTok content creators drive big results | TikTok For Business Blog – social media platform claims that marketing on their social media platform delivers business results, honest….

    Facebook’s Vast Wasteland 

    Retailing

    Gen Z and Millennial Shoppers Are Less Likely to Return Unwanted Online Purchases

    Shein adds US listing plans to its cart – that the founder is looking to change citizenship is very interesting and I am sure won’t go down well with the Chinese government

    Security

    Chinese Police Hunt Overseas Critics With Advanced Tech – The New York Times

    Virginia burglaries work of ‘crime tourists,’ authorities say – The Washington Post  – Authorities call them “crime tourists.” Law enforcement experts say cells of professional South American burglars, particularly from Colombia and Chile, are entering the country illegally or exploiting a visa waiver program meant to expedite tourism from dozens of trusted foreign countries. Once here, they travel from state to state carrying out scores of burglaries, jewelry heists and other crimes, pilfering tens or hundreds of millions of dollars’ worth of goods each year, the FBI estimates. Experts said the groups often operate with impunity because they have found a kind of criminal sweet spot. Bail for nonviolent property offenses is often low, so an arrested burglar often quickly gets bond and skips town for the next job, experts said. The crimes often don’t meet the threshold for the involvement of federal authorities. And they attract less attention at a time when U.S. authorities are contending with a rise in homicides. Dan Heath, a supervisory special agent with the FBI’s criminal investigations division, said “South American theft groups,” as the agency calls them, are a growing problem across the United States — and in countries including India, Britain and Australia, where they often employ similar tactics. “They represent an enormous threat right now in our country,” Heath said. “They are tending to thread the needle in avoiding both state and federal prosecution.”

    Hacker Claims to Have Seized Control of Teslas Around the World

    Dutch athletes warned to keep phones and laptops out of China -media | Reuters

    Team GB athletes offered temporary phones over China spying fears | The Guardian

    Video Appears to Show Drug Cartel Using Drone to Bomb Enemies | Futurism

    FedEx Asks Permission to Install Anti-Missile Lasers on Its Cargo Jet | Futurism

    Revealed: UK Gov’t Plans Publicity Blitz to Undermine Chat Privacy – Rolling Stone and more here: The United Kingdom authorities launch a new campaign against the social media apps encryption / Digital Information World 

    WhatsApp ordered to help out U.S agencies to spy on Chinese phones / Digital Information World – tracking metadata, US agencies looking to carry out supply chain disruption of fentanyl

    VW fired senior employee after they raised cyber security concerns | Financial TimesA senior Volkswagen employee was dismissed weeks after raising the alarm about alleged cyber security vulnerabilities at the carmakers’ payments arm, which is soon to be majority-owned by JPMorgan. The manager alerted bosses in September 2021 to concerns that VW’s system in the region was “open to fraud” following an attempted cyber attack, and maintained that $2.6m sitting in the company’s accounts could be stolen, according to documents seen by the Financial Times. The staff member, who also told superiors that VW could face regulatory action if the vulnerabilities were not addressed, was then fired in October. – not terribly surprising

    Software

    After ruining Android messaging, Google says iMessage is too powerful | Ars Technica“Google clearly views iMessage’s popularity as a problem, and the company is hoping this public-shaming campaign will get Apple to change its mind on RCS,” writes Amadeo in closing. “But Google giving other companies advice on a messaging strategy is a laughable idea since Google probably has the least credibility of any tech company when it comes to messaging services. If the company really wants to do something about iMessage, it should try competing with it.” – if this wasn’t an admission of failure by Google I don’t know what is. Google has a history of failed or closed communication services Google Talk (GTalk) (which was retired when Google decided to move away from an open messaging standard , Google Hangouts (which was spun out of Google+ messaging functionality), Google Allo and Google Wave

    Once billed as a revolution, IBM’s Watson Health is sold off in parts 

    Taiwan

    Christine Lee and Foreign Interference: what the UK can learn from Taiwan | China DialoguesAs part of the transition from authoritarianism to democracy, Taiwan retooled its political commissar system (zheng wei 政委) – formerly responsible for policing political loyalty toward the regime – into an institution that safeguards democracy by working to identify Chinese influence at all levels of Taiwanese politics and society. Political commissars (PCs) not only receive extensive military training but also develop a deep understanding of the Chinese Communist Party’s political warfare tactics. Most major government departments and private sector organisations in Taiwan will have PCs operating within their ranks, monitoring and reporting evidence of foreign interference. As many democracies facing Chinese influence and interference do not have such well-established systems in place, Taiwan’s zheng wei system may provide a starting point for how anti-foreign influence institutions can work effectively within democratic societies

    Technology

    EETimes – Arm Predicts Stagnation if Nvidia Deal Failswithout investment from Nvidia, Arm would be seriously disadvantaged in its bid to grow in data center markets and compete against Intel Corp. and x86 incumbents. The filing also explains why an Arm stock offering is a non-starter while noting that Arm faces stiff competition from emerging RISC-V competitors – interesting that they don’t mention ARM China crisis at all. Nvidia have now walked away from it and Softbank is supposed to be preparing a public offering for ARM

    Web of no web

    How Shopify is moving closer to bricks-and-mortar retail – Latest Retail Technology News From Across The Globe – Charged – retail shop automation software a la China’s automated convenience stores

    Connected Health Station | Body Scan – Withings