For a spirited discussion with Jake Sullivan about his view of the most pressing challenges the US faces today, what the Biden Administration accomplished, and what could have been done better, see the video of yesterday’s IOP Forum. iop.harvard.edu/events/america… Jake has joined HKS as the Inaugural Henry Kissinger Professor of Statecraft and World Order. For Harvard students, he offered thoughtful clues about how to grow up to play a role in national security policymaking in a democracy—and the centrality of politics in policymaking.

1/ Could the Tariff War Become a Real Hot War? 2/ Could President Trump’s unprecedented tariff war against China stumble into a hot war with bombs exploding on American and Chinese soil? The good news is that most tariff or economic wars have not become hot wars. The bad news is that some have.

1/ Are the tariffs President Trump announced last week on China more like a solid wall or a slice of Swiss cheese? 2/ Last Wednesday, President Trump surprised the world by announcing “I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately.”

1/ Has @elonmusk purchase of Twitter been the “unmitigated disaster” that the @nytimes declared it would be after Elon paid $44 billion for the leading social media platform? 2/ As the New York Times analysis explained two months later, it was “obvious” that “to most people outside Silicon Valley, Elon Musk’s ownership of Twitter has been an unmitigated disaster.” nytimes.com/2022/12/16/tec…

1/ In what category is the US still number one compared to China? 2/ Answer: billionaires.

Who is winning the drone war between Ukraine and Russia? Readers of the American press could be forgiven for thinking that the answer is Ukraine. Over the past year, major American newspapers have carried an average of five stories a week—each touting Ukraine’s success in building and using drones in new and imaginative ways to defeat Russia.

1/ Who lost DeepSeek? 2/ This week’s launch of China’s David to America’s Goliaths has upended much of what we thought we knew about American AI dominance—and taken a trillion dollars off the market value of US AI companies. It is also a vivid reminder of how seriously the US must take attracting and retaining talent—including from China.

1/ Musk has it exactly right. How does Team USA compete and win in a world in which China has 4 times as many people as we do, 4 times as many STEM graduates every year, and invests more than 4 times as much as we do in R&D?

https://x.com/elonmusk/status/1872374103983759835

2/ In one line: by recruiting the most talented individuals from all the 8 billion fellow inhabitants of planet Earth—and riding the waves they make as they realize their dreams.

Who’s wasting money on high-speed rail?

A reader of the Wall Street Journal could be excused for thinking the answer is China. See their recent article subtitled: “China’s train system is one of the biggest public works in history, and it’s becoming a giant money pit.” It spotlights China’s $500 billion spend on new rail in the past 5 years. wsj.com/world/china/xi… But as the piece admits, California’s high-speed rail project linking San Francisco to Los Angeles has “grappled with costs spiraling to more than $100 billion and a still-uncertain completion date.”

As he was struggling to absorb what happened on Tuesday, David Ignatius (@IgnatiusPost) , the nation’s leading foreign policy editorialist, called me up looking for silver linings. His piece that appeared in the @washingtonpost today captures several big ideas. Could Trump bring an end to the war in Ukraine? I am betting that he will. And if he engaged Xi Jinping in his peace process, David quotes me as saying “the two should share a Nobel Peace Prize.” I agree.

1/ In the Auto Race, who is Number 1? 2/ In 2023, which nation made the most automobiles? Which nation’s citizens bought the most number of cars?

1/ Why is TSMC’s attempt to build a semiconductor factory in Arizona falling further and further behind? “TSMC’s debacle in the American desert” from Rest of the World offers clues:

restofworld.org/2024/tsmc-ariz… 2/ Since its announcement in 2022, the landmark Arizona plant has been delayed twice and is currently set to open in 2025, more than a year behind schedule.

Inconvenient Facts about the Chinese Economy. The Peterson Institute’s Nick Lardy’s recent in Foreign Affairs, “China Is Still Rising,” offers a number of inconvenient facts that remind us to follow the numbers instead of the narratives.

foreignaffairs.com/united-states/…

Having returned from a whirlwind tour of 9 intense days of meetings in Beijing, reflecting on my discussion with Xi Jinping: While Xi’s primary objective in meeting with US business leaders (I was included as a ‘representative of the academic and strategic community’) was to emphasize that China is “open for business,” he was also interested in engaging about the broader geopolitical relationship.

1/ The US vs China—who is growing faster than whom? 2/ Because that question has been answered by people using different metrics, it’s understandable that there has been some confusion. In real terms, the consensus supported by the World Bank and IMF agrees that China grew twice as fast as the US: 5.2% versus 2.5%.

1/ China Facts: Who has the most competitive automobile market in the world? Who has the most competitive market for EVs in the world? 2/ The answer is China and China. China sold 30 million autos domestically last year. In contrast, the US sold only half as many—15.5 million. China also overtook Japan to become the world’s largest auto exporter.

As @WSJ and other outlets sound the alarm that China’s 7.2% increase in military spending is “another hefty increase” in its decades-long military buildup, it is important to examine the facts. China’s 7.2% increase is nominal. If China hits its real GDP target of 5% and CPI target of 3%, its military spending as a percent of GDP will shrink in 2024.

Last week, I was interviewed by @NYMag about the dangers of demonizing China. As politically profitable as demonizing China now is, it leads individuals to overestimate China’s strengths and to underestimate its vulnerabilities. nymag.com/intelligencer/… As people awake to the fact that China really is emerging in many arenas as a serious rival to the US and—in some instances—has already displaced the US as the predominant power, they are understandably alarmed.

1/ In his FT article last week, @EdwardGLuce identifies another example of what I term the “Trump Put”—how the realization that Trump could indeed re-take office in a year’s time is causing governments and institutions to alter their behavior today.
rb.gy/gtbzor 2/ Ed notes that Wall Street executives are changing their tune on Trump, as their fiduciary duty ensures they are “paid to hedge bets.” When asked about JP Morgan's prospects under a Biden or Trump presidency, CEO Jamie Dimon said: “My company will survive and thrive in both.”

At Davos, after a small-group discussion with National Security Advisor Jake Sullivan, an Israeli who was at the meeting caught me to say he’d been rereading my book: Essence of Decision. As he put it: the essence of the challenge Biden and his team face in dealing with the Israeli government is that differences within Bibi’s government are at least as big as differences between the US and Israel governments.

China Hype. In the current political environment, politicians and commentators alike are competing to demonstrate who can make the most extreme charges against China. While as I’ve written, I believe it is essential to recognize that China is and will be the fiercest rival a ruling power has ever faced, I am also convinced that the current demonization of China confuses more than it clarifies.