TLDR: China’s angry reaction to Nancy Pelosi’s visit to Taiwan has yet to provoke actual conflict or disruptions to trade. We may have dodged a bullet, for now. Elsewhere, National has laid out a carrot and a stick approach to get up to 39,000 young unemployed people back to work.
Paid subscribers can see more detail and analysis below the paywall fold and in the podcast above. You’re also welcome to comment below. Later today I’ll be covering the weekly post-Cabinet news conference.
Missiles dodged for now
Nancy Pelosi’s hair-raising visit to Taiwan last week appears to have passed without starting World War Three, although it’s too early to breathe a big sigh of relief. Taiwanese and Chinese warships will play out a fourth and final day of ‘cat and mouse’ shadowing exercises in the Taiwan Straits today.
China’s war gaming follows the firing of ballistic missiles over Taiwan for the first time last week and the suspension of military links between the United States and China. (Reuters)
So what? - This could have gone much worse and there could still be accidental conflict and escalation. There also remains the risk of a much more serious naval or air blockade by China, which would trigger much deeper consequences for global trade and the economy.
It’s worth noting that half of the world’s container fleet and 88% of the world’s largest ships by tonnage passed through the Taiwan Strait in the last year. RAND Corp has estimated a war in the Strait lasting a year would reduce US GDP by 5-10% and China’s GDP by 25-30%. China is our largest trading partner, and our second-largest partner, Australia, also has China as its largest trading partner. Bloomberg-$$$
Quote of the day
‘Here’s the stick’
"If you're a young person and you don't want to work, I'm sorry, there are consequences for that and there'll be sanctions around that as well.” National Leader Christopher Luxon talking to media after his speech on Sunday to National’s annual conference in Christchurch via Newshub.
So what? - Luxon embraced the ‘social investment’ approach advocated by former PM Bill English in his speech to the National conference. He also included the ‘carrots’ of a $1,000 bonus for an unemployed person under the age of 25 (who had been on the jobseeker benefit for a year or longer) who stays in work for 12 months. He has also promised a ‘job coach’ provided by a community provider.
The carrot and stick approach allows Luxon to ‘frame’ the issue in a way that both National’s base can embrace (the stick) and ‘floatier’ voters (especially urban women in their 30s to 50s) can embrace (the carrot).
The unanswered questions:
Did social investment actually work under English?
Or was it a convenient cover for ramping up sanctions in a way that drove already-poor young people even deeper into poverty?
Why has there been a 49% rise in the number of under-25s on jobseeker benefits to 39,000 since Labour’s election in late 2017?
Charts of the day
US ‘gas’ prices heading for US$4/gallon
NZ regular prices well under NZ$3/litre
So what? - Prices for petrol are now well down from their highs as oil prices fall back to their pre-war levels. There hasn’t been the same political ‘noise’ around these falls as there was when they rose through their key ‘thresholds’ of US$5/gallon and NZ$3/litre. But it’s one of the features signalling inflation has peaked and these numbers are also correlated with consumer confidence and political support (or opposition) for Governments.
Some fun things
Ka kite ano
Bernard
Carrots, sticks and missile tests