Lame Duck Detente

Insight: US National Security Advisor Jake Sullivan met Chinese Foreign Minister Wang Yi in Beijing this week to help defuse geopolitical tensions between the two nations and to set up a potential meeting between Presidents Xi Jinping and Joe Biden. Their last face-to-face in November 2023 helped stabilize ties. Talks between senior military and climate policy officials are also being arranged. 

Impact: It is reassuring that despite all the inflammatory talks (and actions) around tariffs, technology, Taiwan and the South China Sea, the US and China are still willing to hold high-level discussions. There is much to talk about, from climate to military exchanges to shared concerns over North Korea and the Middle East. However, holding another potential Heads of State meeting now seems a little odd since President Biden is effectively a lame duck with only months left in office. If Xi appears willing to meet him nonetheless, is that an early sign that Beijing thinks Kamala Harris might win the US election and wants to get a few pointers about her – and her China policy - from her erstwhile boss?

7x

New Zealand experienced a 7-fold spike in electricity prices during August (from $100 per megawatt hour in 2021 to $700/MWh this month) as unfavourable weather has hit wind, solar and hydroelectric generation. To defuse the energy supply crisis, the new Conservative government is proposing new oil & gas exploration and the resumption of LNG imports. 

Insight: Japanese students, boosted by better part-time job pay, are spending as much on leisure as their bubble era counterparts. While students face increased financial stress from higher housing costs, they’re increasingly opening their wallets to spend on experiences. 

Impact: Back in the bubble era, cars, cosmetics, food and luxury goods dented the wallets of consumers as they chased status purchases, but today’s young folks, engaged as they are in social media arms races to show their friends how much fun they’re having, are choosing concerts and hobbies instead. Always an influential demographic, these college students could have the potential to change Japan’s marketing landscape as flaunting life experiences becomes the new status marker. 

Insight: “Black Myth: Wukong” is the latest craze in the gaming world. Produced by China’s Tencent and developer Game Science, the game sold 10 million copies in three days and earned more than US$ 450 million in gross revenue. Based on China’s classical novel “Journey to the West” with its protagonist Monkey King, the game has won plaudits for its historical details and was even praised by China’s state TV for enabling overseas gamers to “understand Chinese traditional culture”. 

Impact: Despite its success at home -- where the game appears to be boosting domestic spending on electronics and even tourism in various provinces -- there are signs it may be less successful internationally. Black Myth has already sparked overseas controversy, after its publishers told video streamers to avoid topics including “feminist propaganda” and “politics”, causing a small portion of livestreamers to boycott the game. By distancing themselves from what is seen as politically incorrect inside China, the publishers have thus alienated part of their international audience. The lesson is that if China wants to build soft power through its gaming industry, pretty graphics are not enough -- a much deeper understanding of the cultural sensitivities of global markets is needed. 

A new analysis warns of China’s global dominance of critical technologies

Insight: China is doing more and better research in advanced technologies according to the Australian Strategic Policy Institute. The think tank’s Critical Technology Tracker measures citations of academic papers in 64 technology categories and China is in the top spot in 57 of these – or 90% for papers released between 2019 and 2023. 

Impact: The ASPI warns that China is becoming a science and technology superpower by pouring money into researching not only AI, defense and space but also advanced materials, quantum computing, genetic engineering and vaccines. It seems especially keen on dual-use tech such as radar, drones and satellite positioning. The think tank warns that western nations must respond by collaborating more, setting more explicit industrial policies and stepping up funding, say, using sovereign wealth fund money for basic R&D. Otherwise, China may establish impregnable ecosystems as it has in so many sectors, such as renewable energy and electric vehicles. 

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