THE STRATEGY & TECH WEEKLY
Summaries and Links to This Week’s Curated Articles
June 17 – 23, 2024
THE BIG PICTURE
International Political Landscape
The U.S.-China relations discussion, "What Does America Want From China?" (Foreign Affairs), highlights various perspectives on the U.S. strategy towards China, debating whether to adopt an aggressive stance or a balanced approach combining competition and diplomacy. The article underscores the complexities of managing U.S.-China relations without escalating tensions unnecessarily. In other significant news, "Putin and Kim Jong-un Sign Pact in North Korea" (The New York Times) reports on the revived mutual defense agreement between Russia and North Korea, signifying a deepening military and political alliance amidst ongoing conflicts in Ukraine. Meanwhile, "NATO Members Increase Defense Spending to Record Levels" (Foreign Policy) discusses the significant rise in defense budgets among NATO countries, driven by security concerns following Russia's invasion of Ukraine, and its implications for global security dynamics.
Technological Innovations
"Nvidia’s Ascent to Most Valuable Company Has Echoes of Dot-Com Boom" (The Wall Street Journal) details Nvidia's rise to become the world's most valuable company, driven by the booming demand for AI chips, highlighting the pivotal role of AI in today's tech landscape. Another key development is explored in "How Large Language Models Are Changing My Job" (IEEE Spectrum), which examines the impact of AI and large language models on various professions, showcasing the transformative potential and challenges of AI integration across industries. Additionally, "Discovery highlights 'critical oversight' in perceived security of wireless networks" (Tech Xplore) uncovers a vulnerability in high-frequency and high-speed wireless backhaul links, crucial for 5G and financial trading, emphasizing the need for enhanced security measures.
Economic Developments
Recent data indicates tepid U.S. retail sales, suggesting financial strain on consumers despite broader economic recovery efforts. This highlights potential challenges in sustaining economic growth. The ongoing AI frenzy has driven record inflows into tech funds, with Nvidia's market valuation reaching unprecedented levels, reflecting robust investor confidence in AI's transformative potential. Additionally, significant investments in Indonesia are turning islands like Sulawesi into global hubs for nickel mining and processing, essential for electric vehicle batteries, while raising environmental and social concerns.
ECONOMICS
Nvidia is now the world’s most valuable company.
Tepid US retail sales suggest strain on consumers.
The AI frenzy is still going strong. According to BofA, it drove a record $8.7 billion inflow into tech funds in the week through June 19 as “all roads lead to Nvidia.”
Sheinbaum Aide Sees ‘Gigantic’ Capital Needs for Mexican Energy
Odd Lots: Why Freight Brokers Are Betting on Mexico (Podcast)
Multinationals Are Seeking Protection Against the ‘Super Peso’
The Biggest US Trading Partner Is No Longer China, It’s Mexico
In Indonesia, tens of billions of dollars of investments are turning islands like Sulawesi into crucial global hubs for mining and processing nickel, a metal essential to producing many types of electric vehicle batteries. Read Bloomberg’s Big Take to understand the transformation's dark side.
A vessel hit by a sea drone in the Red Sea last week has sunk, the UK Navy said, the second confirmed to go down since Yemen’s Houthi rebels began attacks on shipping.
US industrial production increased in May, helped by a broad-based pickup in factory output. Separately, Japan’s exports grew at the fastest clip since late 2022, while Indonesia’s exports rose by the most in a year.
In this Talking Transports podcast, Robert Sanchez, Ryder System’s chairman and CEO, discusses some key takeaways from its recent investor day and how tech investments optimize transportation networks and provide better client interactions. Sanchez also talks about the company’s sustainability initiatives, autonomous trucking, and recent acquisitions.
A senior American official is set to visit Japan and the Netherlands to ask the two countries to add fresh restrictions on China’s semiconductor sector. Meanwhile, US lawmakers want to prevent companies that win federal chipmaking funds from using Chinese-made equipment at government-backed factories.
TECH WATCH
"Nvidia’s Ascent to Most Valuable Company Has Echoes of Dot-Com Boom" by Asa Fitch, published by The Wall Street Journal, details Nvidia's rise to become the world's most valuable listed company, driven by the demand for its AI chips. This surge, reminiscent of the dot-com era when Cisco reached similar heights, underscores the pivotal role of AI in today's technology landscape. Nvidia's valuation hit $3.335 trillion, surpassing Microsoft, and highlights the company's dominance and the broader tech industry's rapid evolution. [Read more](https://www.wsj.com/articles/nvidias-ascent-to-most-valuable-company-has-echoes-of-dot-com-boom-dd836c90).
· The US is asking its allies to help restrict China’s AI chip progress
· Elon Musk’s X is planning to introduce a Venmo-like payment feature
· Amazon was fined $5.9 million over warehouse productivity quotas
How Large Language Models Are Changing My Job: The AI revolution as seen by a dean, a semiconductor VP, and a government regulator. | |
Stretchy Displays Sport Better Resolution Ultrathin: OLEDs still shine when stretched. | |
Errors in Navigational Models Could Have an Easy Answer: Lingering issues in magnetic field models may be from oversampling data. | |
This Japanese Aircraft Became a 5G Base Station: A test demonstrated the viability of cellular backhaul in the stratosphere. | |
NASA’s X-59 Quesst: Overturning the 50-Year-Old Supersonic Speed Limit. NASA is addressing the longstanding ban on civilian supersonic flights over land by developing the X-59 aircraft, which aims to minimize sonic booms to mere “thumps.” | |
Just Three Atoms Thick – Scientists Have Developed the World’s Thinnest Lens: The thinnest lens on Earth, made of concentric rings of tungsten disulphide (WS2), uses excitons to efficiently focus light. | |
Revolutionary Night Vision: Ultra-Thin Filters Transform Everyday Eyewear. Researchers have created a lightweight infrared filter for eyewear that enables vision in both infrared and visible light, enhancing night-time safety and convenience. | |
15 Years in the Making – Scientists Invent “Living Bioelectronics” That Can Heal Skin: Scientists develop flexible, adaptable, and storable patch that combines bacteria and sensors to interface with the body. | |
Meta's AI can translate dozens of under-resourced languages: The technology behind Meta's artificial intelligence model, which can translate 200 different languages, is described in a paper published in Nature. | |
Discovery highlights 'critical oversight' in perceived security of wireless networks: A research team has uncovered an eavesdropping security vulnerability in high-frequency and high-speed wireless backhaul links, widely employed in critical applications such as 5G wireless cell phone signals and low-latency financial trading on Wall Street. |
NATIONS MAKING HEADLINES
THE USA
“What Does America Want From China?” Authors: Rush Doshi; Jessica Chen Weiss and James B. Steinberg; Paul Heer; Matt Pottinger and Mike Gallagher. Foreign Affairs, May 30, 2024. The article comprises multiple perspectives on the United States' strategic approach toward China. Rush Doshi critiques Pottinger and Gallagher’s call for an aggressive stance, arguing it risks escalation and loss of allied support. Instead, Doshi advocates for Biden’s strategy of intense competition balanced with diplomacy to manage risks. Jessica Chen Weiss and James Steinberg warn against a Cold War-like approach, suggesting it will alienate allies and embolden authoritarianism in China. Paul Heer contends that China’s ambitions are overstated and calls for nuanced engagement. The debate highlights differing views on the best path forward in U.S.-China relations.
[Read more](https://www.foreignaffairs.com)
“For Apple’s AI Push, China Is a Missing Piece” Authors: Raffaele Huang and Jiyoung Sohn. The Wall Street Journal, June 20, 2024. Apple's efforts to expand its artificial intelligence (AI) services face significant challenges in China, where Western AI models like OpenAI's ChatGPT are unavailable. This gap has forced Apple to seek local partners to integrate AI into its offerings, yet no agreements have been finalized. Competing with local brands that already incorporate AI, Apple has seen its market share decline. Regulatory barriers further complicate Apple's strategy, as Chinese authorities rigorously vet AI products to ensure they align with government standards. Despite these hurdles, Apple remains optimistic about its position in the Chinese market.
[Read more](https://www.wsj.com)
“Congress Debates Expanded Draft Amid Military Recruitment Challenges,” by Robert Jimison, published by The New York Times, discusses the ongoing congressional debate over proposals to update mandatory conscription in the United States. These proposals include expanding the draft to include women for the first time and making registration automatic for eligible individuals. Despite bipartisan support, the proposals face significant opposition and a slim chance of becoming law. This debate arises as the military faces recruitment challenges and declining volunteer numbers, highlighting the need for updated conscription policies. [Read more] (https://www.nytimes.com/2024/06/19/us/politics/congress-debates-expanded-draft.html).
"Morality and Foreign Policy," curated by Chloe Hadavas and published by Foreign Policy, examines the evolving perspectives on peace and conflict resolution in the context of recent global tensions. The article features insights from experts like Stephen M. Walt and Chester Crocker, discussing the necessity of pragmatic peace deals in conflicts such as Gaza and Ukraine, and the changing role of democracies in peacemaking. It highlights the importance of inclusive peace processes, emphasizing the roles of women and continued U.S. engagement in international diplomacy. [Read more] (https://foreignpolicy.com/2024/06/16/morality-and-foreign-policy).
"Boeing Sent Two Astronauts Into Space. Now It Needs to Get Them Home" by Micah Maidenberg, published by The Wall Street Journal, reports on the technical issues faced by Boeing's Starliner spacecraft during its mission to return NASA astronauts Barry Wilmore and Sunita Williams to Earth. The mission, originally planned for eight days, has been extended due to helium leaks and thruster problems, prompting NASA and Boeing to delay the return to June 26. These challenges are a significant setback for Boeing, which aims to secure certification for future crewed flights. [Read more] (https://www.wsj.com/articles/boeing-sent-two-astronauts-into-space-now-it-needs-to-get-them-home-99d96633).
RUSSIA
"Putin and Kim Jong-un Sign Pact in North Korea" by Choe Sang-Hun and Paul Sonne, published by The New York Times, reports on the recent agreement between Russia and North Korea, reviving a Cold War-era mutual defense pledge. This pact, signed by President Vladimir Putin and North Korean leader Kim Jong-un, commits both nations to assist each other in the event of aggression, reflecting Russia's growing reliance on North Korean munitions amidst the ongoing conflict in Ukraine. The agreement, which raises concerns in the West, signifies a deeper military and political alliance between the two countries. [Read more](https://www.nytimes.com/2024/06/19/world/asia/putin-kim-jong-un-pact.html).
"What Russia’s Embrace of North Korea Means for America" by Jamie Kwong and Ankit Panda, published by Foreign Affairs, explores the strategic implications of the growing relationship between Russia and North Korea for U.S. foreign policy. The article argues that the alignment between Moscow and Pyongyang, particularly in the context of North Korea's advanced nuclear capabilities, necessitates a reassessment of Washington's approach. Rather than prioritizing denuclearization, the authors suggest a pragmatic focus on risk reduction and conventional deterrence to manage the nuclear threat effectively. [Read more](https://www.foreignaffairs.com/articles/north-korea/2023-11-15/what-russias-embrace-north-korea-means-america).
“Opinion: Russia is Punching Back at NATO in the Shadows” by David Ignatius, The Washington Post. The article discusses the Biden administration's warning to NATO allies about Russia's intensified covert campaign of sabotage and hybrid warfare against Ukraine supporters. U.S. intelligence is actively sharing information with European partners to disrupt these Russian efforts, which have included arson attacks on Ukrainian-linked warehouses and facilities across Europe. The Russian strategy aims to interrupt weapons deliveries, divide NATO, and deter further support for Ukraine, all while avoiding direct military confrontation. The U.S. and its allies are focused on intelligence sharing to counter these threats and maintain support for Ukraine. [Read more] (https://www.washingtonpost.com/opinions/2024/06/21/russia-nato-ukraine-sabotage-attacks/).
“The Russian Spies Next Door” by Georgi Kantchev, Joe Parkinson, and Silvina Frydlewsky, The Wall Street Journal. The article reveals how a seemingly ordinary Argentine couple living in Slovenia were actually Russian spies involved in Vladimir Putin’s extensive espionage network. Posing as an online art gallery owner and an IT startup operator, the couple was discovered to be elite officers of Russia’s foreign intelligence service, SVR, using Slovenia as a base for operations across Europe. Their arrest in 2022 unveiled a broader network of deep-cover Russian operatives, highlighting Russia's covert efforts to gather intelligence and influence Western policies. [Read more] (https://www.wsj.com/articles/the-russian-spies-next-door-bd7c7312).
"Russia Sets Hearing as It Moves Toward Secret Trial of Falsely Accused WSJ Reporter Evan Gershkovich" by Ann M. Simmons and Georgi Kantchev, The Wall Street Journal.
The article reports on the upcoming secret trial of Wall Street Journal reporter Evan Gershkovich in Russia, scheduled to begin on June 26. Gershkovich, a U.S. citizen detained for over a year, has been falsely accused of espionage. Held in Moscow’s Lefortovo prison, his case has sparked international outrage, with U.S. officials designating him as wrongfully detained and working towards his release. The trial will be conducted in secret, and the Russian government has shown interest in a potential prisoner exchange involving Gershkovich. [Read more](https://www.wsj.com/articles/russia-sets-hearing-as-it-moves-toward-trial-of-falsely-accused-wsj-reporter-evan-gershkovich-d579e708).
"The Arsenal of Autocracy: How North Korean Weapons Fuel Conflict—and How to Stop the Flow" by Jonathan Corrado and Markus Garlauskas, Foreign Affairs. The article examines North Korea's extensive and illicit arms trade, which fuels conflicts globally and benefits the Kim regime financially and strategically. Despite international sanctions, North Korean weapons have been found in conflicts from Ukraine to the Middle East. The authors argue for urgent action, including stronger international coalitions, improved sanctions compliance, and increased global awareness to curb Pyongyang's destabilizing arms sales. [Read more](https://www.foreignaffairs.com/north-korea/arsenal-autocracy).
EUROPE
"NATO Members Increase Defense Spending to Record Levels" by Amy Mackinnon and Jack Detsch, Foreign Policy. The article discusses the significant rise in defense spending among NATO member nations, with over 20 countries now meeting the alliance’s 2 percent GDP target, a substantial increase from just three nations a decade ago. This surge is attributed to heightened security concerns following Russia's invasion of Ukraine. The increased spending has benefited U.S. defense industries, with European allies spending over $140 billion on American defense contracts. The upcoming NATO summit will address further military support for Ukraine and global security partnerships, particularly focusing on the Indo-Pacific region. [Read more](https://foreignpolicy.com).
"Mark Rutte Was Planning to Become NATO Chief the Whole Time" by Caroline de Gruyter, Foreign Policy. The article profiles Dutch Prime Minister Mark Rutte's strategic maneuvers to become NATO's secretary-general, revealing how he meticulously planned and executed his path to the top of the trans-Atlantic alliance. Rutte's methodical approach, characterized by his control-oriented and routine-driven nature, helped him secure endorsements and navigate political challenges. As he prepares to take on this pivotal role, questions arise about how his management style and pragmatic approach will influence NATO's future amid global security tensions. [Read more](https://foreignpolicy.com).
"Fewer Explosives Experts Hamper Europe's Post-Ukraine Rearmament" by Elisabeth Braw, Foreign Policy. The article addresses the critical shortage of explosives experts in Europe, which threatens the continent's ability to rearm effectively in the wake of Russia's invasion of Ukraine. Despite a surge in defense spending and the urgent need for advanced military equipment, there is a significant lack of skilled workers capable of producing the necessary munitions. The author highlights the challenges in training new explosives experts and the urgent need for government intervention to ensure a sustainable future for Europe's defense capabilities. [Read more](https://foreignpolicy.com).
"Why the Far Right Is No Longer an Existential Threat to Europe" by Greg Ip, The Wall Street Journal. The article examines the diminishing existential threat posed by far-right parties in Europe due to their acceptance of the euro and shift towards reforming the EU from within rather than leaving it. While political fears remain, the far-right's evolving stance has reduced the likelihood of financial crises similar to those feared in the past. This shift is exemplified by Marine Le Pen’s National Rally in France, which now focuses on winning within the EU framework, reflecting broader changes across Europe’s far-right movements. [Read more](https://www.wsj.com/articles/why-the-far-right-is-no-longer-an-existential-threat-to-europe-23359da4).
CHINA
"The South China Sea Dog that Hasn’t Barked … Yet" by Zack Cooper and Gregory Poling, War on the Rocks. The article explores why China has allowed Vietnam to expand its presence in the Spratly Islands unchallenged while simultaneously blocking the Philippines' resupply efforts at Second Thomas Shoal. The authors suggest multiple reasons for this discrepancy, including China's strategic priorities, its perception of Vietnam's resolve, and the differing relationships with the two countries. Understanding China's selective assertiveness in the South China Sea is crucial for anticipating future regional dynamics and potential conflicts. [Read more](https://warontherocks.com).
"How Powerful Are China's Sovereign Funds?" by Bob Davis, Foreign Policy. The article delves into the immense influence and operational complexity of China's sovereign wealth funds (SWFs), which manage over $2 trillion in assets. These funds play a crucial role in bolstering China's domestic economy and extending its financial reach globally. While their international investments often seem politically motivated, they also suffer from inefficiencies and ill-timed decisions. The article argues that understanding these funds is essential for grasping China's economic strategies and their implications for global financial markets. [Read more](https://foreignpolicy.com).
"Can China Turn Its Property Glut Into Affordable Housing?" by James Palmer, Foreign Policy. The article examines China's emerging plan to repurpose its vast unsold housing inventory, resulting from a collapsed property bubble, into affordable housing. This initiative aims to increase the affordable housing stock from 5 percent to 30 percent nationwide. However, past efforts were marred by corruption and inefficiency, casting doubt on the feasibility of this new strategy. The plan faces significant challenges, including financial constraints, the need for hukou system reforms, and resistance from urban stakeholders whose wealth is tied to property values. [Read more] (https://foreignpolicy.com).
"Beijing’s Crackdown on Islam Is Coming for Kids" by Ruslan Yusupov, Foreign Policy. The article explores China's intensifying crackdown on Islam, now extending to children, particularly among the Hui Muslim minority in Yunnan. Techniques first used on Uyghurs in Xinjiang, such as surveillance and prohibitions on religious practices, are being implemented to enforce the separation of religion and education. This includes monitoring fasting during Ramadan and restricting religious education. The broader campaign aims to assimilate ethnic minorities into Han Chinese culture, reflecting President Xi Jinping’s vision of national rejuvenation devoid of cultural particularism. [Read more] (https://foreignpolicy.com).
ISRAEL & THE MIDDLE EAST
"Hamas Is Winning: Why Israel’s Failing Strategy Makes Its Enemy Stronger" by Robert A. Pape, Foreign Affairs. The article analyzes how Israel's nine-month offensive in Gaza has inadvertently strengthened Hamas rather than weakening it. Despite massive military operations, including extensive bombings and ground invasions, Hamas remains resilient and enjoys increasing support among Palestinians. The author argues that Israel's strategy, focused on body counts and material destruction, fails to address the root causes of Hamas's power, primarily its deep-rooted community support. This miscalculation is reminiscent of failed counterinsurgency efforts in other conflicts, suggesting that military solutions alone cannot defeat Hamas. [Read more](https://www.foreignaffairs.com).
"Benjamin Netanyahu Dissolves Israel’s War Cabinet" by Anat Peled, The Wall Street Journal. The article reports on Israeli Prime Minister Benjamin Netanyahu's decision to dismantle the war cabinet, established to ensure a unified approach in the fight against Hamas. This move follows the resignation of war cabinet member Benny Gantz, who protested Netanyahu’s handling of the Gaza conflict. The dissolution allows Netanyahu to avoid including other politicians, particularly far-right coalition members, in the decision-making process. The larger security cabinet will now oversee war matters as the U.S. and France continue diplomatic efforts to prevent further escalation with Hezbollah on the Lebanese border. [Read more](https://www.wsj.com).
"The War Crimes of Hamas" by Amanda Taub, The New York Times. The article examines the war crimes committed by Hamas during the October 7 attacks on Israel, including killing civilians, torture, and hostage-taking. International legal experts and the U.N. have confirmed these actions as war crimes, with the International Criminal Court seeking arrest warrants for Hamas leaders. Despite being bound by international law, Hamas continues its violations, and the lack of immediate enforcement raises questions about the effectiveness of international legal frameworks. The article emphasizes the importance of holding all parties accountable to protect civilians, regardless of the conflict's context. [Read more](https://www.nytimes.com).
"In Gaza and Ukraine, Morality Is the Enemy of Peace" by Stephen M. Walt, Foreign Policy. The article argues that framing conflicts in Gaza and Ukraine in moralistic terms impedes the path to peace. Walt asserts that moral language turns potentially negotiable disputes into zero-sum conflicts, making compromises harder to achieve. This moral rigidity leads to prolonged conflicts, as seen in the current wars where both sides present their causes as righteous, leaving little room for practical solutions. The author suggests that only by tempering moral zeal can meaningful peace negotiations and conflict resolution be achieved. [Read more](https://foreignpolicy.com).
