In April 2022, both the IMF and S&P Global forecasted an 8.5% annual decline in Russia's GDP.
Biden administration officials predicted that, due to the sanctions, Russia would go back to "Soviet style living standards from the 1980s."
This has obviously not happened.
2/n
Instead, Russia has become a rare live experiment in whether a major country can replace its reliance on the industrial bases of the U.S.-aligned world of North America, Europe, Japan, and South Korea with the industrial base of China.
So far, the answer seems to be yes.
3/n
Russian imports of Chinese goods have risen across nearly every category, including advanced manufactured goods, and Chinese companies have become market leaders in Russia.
Chinese exports to Russia are up 121% since 2021, compared to 29% with the rest of the world.
4/n
Specific categories show a stark picture:
Chinese car imports grew 8x, tractors 50x, trucks 9x. Household appliances are up 50% or more.
Chinese cars are now 55% of the Russian market, up from 8% in 2021. Chinese smartphone brands are now 70-95% of the Russian market.
5/n
Exports of chemicals, plastics, rubber, even footwear and clothing—all have grown, some by nearly half.
Exports of goods and components needed in military manufacturing, like ball bearings, optics, ceramics, drones, computer chips, and alumina have also all grown.
6/n
Russian trade with both China and the U.S.-aligned world continues to be underestimated due to vast sanctions evasion.
Global trade statistics are now replete with comically suspicious figures, such as that Kyrgyzstan has increased ball bearing imports from China by 2500%.
7/n
Russia's technocrats underestimated the severity of sanctions, but had been preparing for them for years.
Russia has rolled out its own domestic replacements for Visa/Mastercard and SWIFT. Financial engineering has blunted the impact of financial sanctions.
8/n
But at the end of the day, technocratic preparation or sanctions evasion would not have saved the Russian economy and war effort if there was no way to acquire key manufactured goods and components for both consumer and military uses.
China made the difference.
9/n
China offers a vast, increasingly sophisticated, full-stack alternative manufacturing base.
Because of this Western sanctions cannot collapse an economy by denying it modern goods and technology, but only increase its dependence on China, so long as China is willing.
10/n
Such an alternative did not exist as recently as 2008. But it exists enough now, apparently, to stabilize a wartime economy with 150 million people.
In aerospace or high-end chips, China is not yet a perfect substitute. But its sophistication will only grow in the future.
11/n
To read the full analysis of sanctions on Russia and Chinese manufacturing, subscribe to Bismarck Brief here:
In-Q-Tel is both an intelligence outpost in Silicon Valley and a software outpost in Northern Virginia.
Its most high-profile investment is probably Palantir. But it also invested in what would become Google Earth, as well as GitLab, MongoDB, Wickr, and Databricks.
2/n
In-Q-Tel was not founded to be like DARPA, which has a budget an order of magnitude larger and which focuses on blue-sky research over decades.
Instead, it just acts like a normal venture capital firm, mainly for software, seeking tools the CIA or government would like.
This isn't the case because Romans employed Hellenistic Greek experts they employed made use of exact mathematical models to describe the natural world.
Heron isn't the contemporary of Plato or Aristotle, rather he stands on the shoulders of Archimedes and Eratosthenes.
Ctesibius of Alexandria invented the force-pump that makes use of pistons in the 3rd century BC. Classical scholars also attribute to him the discovery of the elasticity of air.
Formally, the Japanese constitution forbids a Japanese military, the states's "right of belligerency," and "other war potential."
Yet Japan has nearly 250,000 uniformed "self-defense force" service members with jet planes, warships, missiles, and a defense industrial base.
2/n
This large military is maintained through a consensus between Japan's conservative political elite, often-absurd language games regarding military terminology, and U.S. foreign policy that desires Japan to be a military counterweight to China (and previously, the USSR).
Japan has no oil or gas reserves, so it needs nuclear power for its industry.
The elite coalition behind Japan’s nuclear industry consists of the economy ministry, the industrial conglomerates, and the Liberal Democratic Party, through which Japan is a near one-party state
2/n
It is easy to mistake Japan’s nuclear pause in the wake of Fukushima for a degrowth environmentalist nuclear phaseout like Germany’s.
But Japan is now building new reactors and planning for 20% of electricity to come from nuclear by 2030.
Visa is the middleman between thousands of banks, millions of merchants, billions of credit/debit cards, and $12 trillion of payments in 2022.
But the company is a dead player subservient to U.S. banks.
Read the new @bismarckanlys Brief here:
1/n
Visa and its competitors are like tech companies that rely on network effects. The more merchants and consumers on a card network, the more valuable that network is to them.
But since banks store the money of merchants and consumers, Visa also needs to appease banks.
2/n
It is not Visa that levies most card transaction fees, though it collects them. It is rather the banks, who are effectively taxing consumers, with tax returns in the form of card rewards.
What Visa does could arguably also be done by a government agency or utility.