O’Sullivan on Global “Demonstration Contagion”

O’Sullivan on Global “Demonstration Contagion”

By Michael O’Sullivan

Editor’s Note: Michael O’Sullivan, one of the sharpest geopolitical and global markets thinkers out there, writes a must-read weekly letter to subscribers. I always find it fascinating, rich, sober, and erudite. You can see more of Michael’s work here.

10 November, 2019 – In last week’s missive, I discussed the role of rising food prices as a trigger for public protest and I suspect, as a cause of future geopolitical strife. It is not a very happy topic but one that deserves some further analysis given that in recent weeks there has been a remarkable outbreak of protests across a range of countries – from riots in Honduras, to ongoing tension in Hong Kong to climate related demonstrations in India.

Were I one of the many apocalyptic writers who seize upon every misfortune as confirmation of their worldview I would tell you that this is the start of ‘The Levelling’, and that the ‘end’ will follow shortly.

Though I will spare my readers such a gloomy outlook, there is nonetheless a ‘Levelling’ like narrative that unites the motivation for the many international protests in the sense that most of them are provoked by factors that are associated with globalization (though in reality not usually caused by it).

For example, climate change has spurred Extinction Rebellion movements in Europe and environmental protesters in India. Factors that are associated with a lack of what I call ‘country strength’, such as corruption and weak institutions have been amongst the triggers for protests in Lebanon and Iraq, whilst the cost of living and rising fuel costs have brought people out onto the streets in Chile, Egypt, Ecuador and France. Inequality is also a driver, especially so in Chile, Mexico and Turkey.

Together these protests (by the way the number of Google searches on the world ‘protest’ is at a five year high) point to a world where there is limited patience for policy negligence and its negative socio-economic effects. I’ve had a look across the IMF and World Bank databases to find countries that are exposed to corruption, indebtedness, inequality and climate change. Many ‘candidates’ if I can put it like that are in Africa. One country worth watching – where inequality and indebtedness are high (as high as Jamaica), and where climate change is having a growing impact, is the US.  It still has strong institutions but consider what might happen in the context of a deep recession (with no fiscal buffer).

While there is no sense that the various protest movements are in anyway coordinated, they may still be contagious within and across countries.

Within countries, social media makes protests easier to organize at short notice, easier to spread (dis)information and easier to bring to the attention of the wider public. It was no surprise that in the aftermath of the Arab Spring, protestors faced massive social media and cyber counterattacks from the Egyptian and Syrian authorities.

Protests are contagious across countries to the extent that social media can heighten sensitivity to issues and spread the ‘methodology’ of either violent or peaceful protest. For example, one image that crops up in protests around the world is the clenched fist of the Serbian peaceful protest group Otpor. There is also increasing contagion in financial markets in the sense that in emerging markets at least investors are reacting negatively to signs of political strife.

The troubling thought for the outlook is that the economic stresses underlying these protests will not go away anytime soon – inequality takes time to tackle, most governments are fiscally constrained, and many have high debt levels (i.e. Lebanon). To make matters worse, climate change points towards a more radically stressed environment.

However, the positive reading from all of this, at a time when it should be said that the quality of democracy and the rule of law internationally are deteriorating (according to the latest Freedom House ‘Freedom in the World’ report and the Rule of Law indicators in the World Justice Project dataset) is that people want less corruption, more equal societies and better balanced growth.

In that context, what is to be done? There are specific actions that can help, such as the relocation of the World Bank to Africa to act as an anchor against corruption and to spread best practice in institution building.

More broadly, I see a lot of space opening up for new political parties and movements, some that are interlinked across countries and others that are connected by their political methodology (i.e. use of social media). Then, eventually I see the such protests leading to efforts to remake social and political contracts along the lines of the Levellers’ Agreement of the People’, at least in democratic countries, so that policy issues such as climate change, inequality and corruption are more formally recognized and curbed at a policy level.

It will be a bumpy road politically, but the flourishing of protests around the world shows that something profound is occurring.





The Top Ten Global Container Shippers

The Top Ten Global Container Shippers

The Journal of Commerce, in conjunction with research firm Alphaliner, has just published the top 40 Global Container Shipping operators list. What is striking is the dominance of the Top Ten – which control 87.9% of the market.

Here are the Top Ten Global Shipping Container Operators, with their market share.


  1. Maersk Group – 18.9%
  2. MSC – 16.3%
  3. Cosco Shipping – 13.3%
  4. CMA CGM Group – 12.3%
  5. Hapag-Lloyd – 7.6%
  6. Ocean Network Express – 7.1%
  7. Evergreen Line – 5.9%
  8. Yang Ming Line – 2.9%
  9. HMM – 1.8%
  10. Pacific International Lines – 1.8%
The Middle East’s Unique Moment to Shape World Trade

The Middle East’s Unique Moment to Shape World Trade

In my latest syndicated column published by Asia Times, I point to a unique confluence of events that can potentially give the Middle East and North Africa region – namely three states, Egypt, Saudi Arabia, and the UAE — outsized influence in the shaping of our future trade and economic order. All three states take the helm of major global institutions at a critical time: Egypt ascended to the Chair of the African Union, Saudi Arabia will host the next G20 meeting, and the UAE ascended to the presidency of the Indian Ocean Rim Association.

A short excerpt below:

Throughout much of modern history, the Middle East has largely been on the receiving end of decisions made by major powers. Beyond the sphere of oil, it has been receivers of the macro order, rather than a shaper of it.


But a unique confluence of events is taking place this year and next that could change all of that. Consider the following: Egypt ascended the chairmanship of the African Union this year at a critical time in the continent’s history, as virtually every African state has endorsed the new African Continental Free Trade Agreement, one of the most ambitious trade deals ever. Meanwhile, Saudi Arabia will host the Group of Twenty conference of major economies in November 2020, and the United Arab Emirates will soon take over the rotating two-year chairmanship of the Indian Ocean Rim Association, a grouping that includes more than a third of the world’s population and some of the fastest growing economies. Between them, Cairo, Riyadh and Abu Dhabi can play an outsized role in shaping a new global trade architecture.


It is rare for three states in the Middle East and North Africa region to be in such a position of power to shape the world order, particularly at such an uncertain moment in the fate of our globalized economy. It will come as no secret that many Western nations and their citizens have become skeptical of free trade and globalization – despite the fact that the rules of the game were largely written by Western nations.

I also published an original piece in Arabic with Elaph, a pioneering Arabic news media organization, on Saudi Arabia’s moment of opportunity with the G20. You can find it here, and there’s an English version as well, with excerpts below:

Is the global economy cracking?


That is the question on many minds these days as ominous signs loom over the horizon. Germany is the latest concern. The European economic powerhouse witnessed an economic contraction in the 2nd quarter of this year, and could be headed for another quarter of negative growth, thus tipping into recession. Singapore, the bellweather of the global economy, is also witnessing a dramatic slowdown, slashing its 2019 forecast to near zero. Meanwhile, factory output in China has seen its slowest growth in 17 years.


All three cases – Singapore, Germany, and China – have something in common: all are highly reliant on global trade. As trade tensions rise amid the U.S-China showdown and the rise of populist free trade skeptical politicians in the Western world, the Middle East and North Africa region may be facing some heavy economic winds over the next two years. In fact, all across the developing world, the lingering effects of this clash of giants will be felt.


Saudi Arabia has a unique opportunity to play a key role in this uncertain moment. Next year, Saudi Arabia will host the annual G20 Summit of the world’s leading economies. As host, Saudi Arabia will also play a key role in setting the agenda for the summit. By the time the summit takes place in late November 2020, President Donald Trump will be either entering his second term as President or be making his farewell tour.



5 Warning Signs Flashing Across Asia

5 Warning Signs Flashing Across Asia

It has become a familiar feature of the regular unveiling of the IMF’s latest World Economic Outlook: Asia consistently outpaces the rest of the world in terms of growth. In July, the IMF reported that emerging and developing Asia is expected to see 6.2% growth in 2019-20, far outpacing sluggish growth in Europe, modest growth in the United States, and broader emerging markets growth.

Still, over the past week some warning signs have emerged, suggesting that there may be more trouble than the rosy numbers suggest. No doubt, the U.S-China trade dispute roiling the global economy is also roiling Asian economies, but Hong Kong protests, the South Korea-Japan dispute and a slowing India are also playing a role.

While this humble site still believes that the unique combination of demographics, rapid urbanization, unprecedented connectivity and rising middle classes will likely continue to drive Asia forward, it is important to watch these 5 warnings signs flashing across Asia

#1 – Singapore, the Asian trade hub, cut its forecast for economic growth this year to almost zero. Trade hubs like Singapore, Hong Kong, and Dubai often serve as the canary in the coal mine, as their growth is often highly dependent on global trade growth. So, when Singapore slows, there may be something foul in the air.

#2 – Hong Kong, wracked by 10 months of protests and whipsawed by the US-China trade dispute, is likely headed for a recession. What’s even more troubling, as Bloomberg rightly noted, could be that “Hong Kong’s standing as a safe and reliable commercial hub will face irreparable damage – a potential death blow for an economy that has leveraged its business-friendly reputation to become the primary gateway between China and the rest of the world.”

#3 – It has become well-known that China recently had its worst quarter since 1992, with a reported 6.2% growth. Even more troubling, China continues to pile up debt, with the latest tally at $1.5 trillion of dollar-demonimated debt held by Chinese firms. China’s total debt now tops 300% of GDP. Watch this debt space.

#4 –  Passenger vehicle sales fell in India in July by 31%, but this was no one-off fluke. It marks the ninth straight month of passenger vehicle sales falls, raising questions about the oft-heralded rising Indian middle class consumption story driving the future. What’s more, rising tensions between India and Pakistan will not be good for foreign direct investment for either side,  particularly jarring for Pakistan, not long ago an emerging market investment darling.

#5 – South Korea downgraded its trade relationship with Japan amid continued disputes over Japan’s World War II crimes committed against forced Korean laborers. This Tokyo-Seoul sparring comes at a poor time for both sides as they face the shrapnel of the U.S-China trade dispute and rising protectionism emanating from the United States.

We will continue to watch these warning signs, though it does not change the fundamental view of this site, well-articulated by friend and fellow traveler, Parag Khanna, that “The Future is Asian.”



Asia’s Top 10 Retailers – 2019

Asia’s Top 10 Retailers – 2019

The good folks at EuroMonitor International continue to produce some of the finest research on Asia’s economic transformation. Their latest report, downloadable on their site, looks at the Asian Retail Landscape.

These are the Top Ten companies within retailing in the Asia-Pacific region in terms of sales. I have also listed their home country HQ in parentheses, but have not listed sales figures until I understand their methodology better.


  1. Alibaba Group Holding Ltd (China)
  2. JD.Com (China)
  3. Seven and I Holdings Co Ltd (Japan)
  4. AEON Group (Japan)
  5. Amazon.com Inc (USA)
  6. Suning Commerce Group Co Ltd (China)
  7. Walmart Inc (USA)
  8. Lotte Group (South Korea)
  9. Family Mart UNY Holdings Co Ltd (Japan)
  10. Shinsegae (South Korea)
Whither The China Debate in Washington?

Whither The China Debate in Washington?

Here’s something you will hear often in general macro discussions of U.S policy: “there is a bi-partisan consensus forming that we need to get tougher on China.” That may be true among the political classes, but there is a robust debate among China specialists about the direction U.S policy should take. Nahal Toosi of Politico outlines the broad contours of the debate in her sharp piece with an evocative headline: “‘when paradigms die’: China veterans fear extinction in Trump’s Washington.”

A few excerpts from the piece

President Donald Trump’s push to toughen U.S. policy toward China has won over much of the Washington establishment, touching off a seismic shift in how many Americans view Beijing.


But one group is resisting — those who have spent decades pursuing diplomacy with China and who fear their approach might go extinct.


These former officials, diplomats and scholars are wary about the rise of a younger foreign policy generation that is almost uniformly more skeptical of China, never having experienced the impoverished, isolated country it once was. And they’re warning that the increasingly hard-line stance emanating from Washington — from both Republicans and Democrats — could unravel decades of relationship-building, raise the risk of a U.S.-China military confrontation and even lead to a new era of McCarthyism in America.


“I’m a globalist — I want the U.S. to be engaged in the world, including with other major countries like China,” said Susan Thornton, who oversaw East Asian and Pacific affairs in 2017 and 2018 at the State Department and was viewed by some Trump aides as too soft on Beijing. “The reality is China is not going anywhere. It’s one-fifth of humanity.”


Thornton went public with her concerns earlier this month, when she joined about 100 others to publish an open letter to Trump and members of Congress titled “China is not an enemy.”

Now, pair Nahal’s piece with this this illuminating Sinica podcast with the always excellent Kaiser Kuo of SupChina in conversation with Ryan Hass of Brookings that dives deep into the bi-partisan consensus on China narrative, offering criticism of China where it is due and nuance and context where it is also due.

It’s truly one of the best conversations on the China debate you will hear.

Whither Globalization? – A Very Smart Bloomberg Deep Dive

Whither Globalization? – A Very Smart Bloomberg Deep Dive

Bloomberg’s journalism just keeps getting better and better by the month. Here’s a vital, must-read piece on the state of globalization by Shawn Donnan and Lauren Leatherby. A few excerpts that caught my eye below, but go to Bloomberg and read the whole piece here

Globalization is a force both more powerful and ancient than Trump. Too often we think of it—of economic integration and the exchange of ideas, people and goods that comes with it—as a recent phenomenon.


The reality is it has been with us since the dawn of time. Religions like Christianity and Islam are products of globalization. They also have arguably done more to both shape and promote globalization than U.S. multinationals or China’s new corporate giants.


Globalization also isn’t a static force. We associate globalization today with the shipping container, the 1950s invention that increased the efficiency and lowered the cost of the global trade in goods. Or with the outsourcing of jobs in advanced economies and the rebirth of great trading economies like China’s.


But we are entering a new era in which data is the new shipping container and there are far more disruptive forces at work in the world economy than Trump’s tariffs. New manufacturing techniques such as 3D printing and the automation of factories are reducing the economic incentives to offshore production. The smartphones we carry with us are not just products of globalization but accelerants for it. For good or bad, we are more exposed to a global culture of ideas than we have ever been. And we are only becoming more global as a result.

Is globalization really slowing? Maybe, if you only look at the trade in physical goods. But that doesn’t take into account an explosion of the digital economy. That’s important. Increasingly, the digital realm is where the 21st-century economy lives….


As economies mature, we’re selling the rights to produce something to someone in another country rather than shipping it to that country. Those changes also mean less physical trade in goods—no CD crosses a border if you’re streaming the latest Ariana Grande song. Yet that doesn’t mean globalization is slowing. It means it is maturing and evolving.

Traditional trade measures also don’t reflect the real supply chain


There is no economic relationship bigger than the U.S. and China’s. But how you quantify the flows matters. Traditionally, trade data measures shifts in goods by recording products’ value when they leave a port. But the parts in products often come from other countries these days. Even those parts can be made up of parts from elsewhere. That means a more accurate measure of trade and economic relationships involves recording where value is added. And when you do that, relationships start to look different.



Photo of the Day – Istanbul

Photo of the Day – Istanbul

I think we’ve all seen — and marveled — at shots of Istanbul along the Bosphorous, evoking both the complex history of the modern mega-city, its vital role as a sea trade connector between the Mediterranean and the Aegean, as well as its current energy as a commercial hub. I think this one here by photographer Shahriar Etminani is one of the best I’ve ever seen, You can see more of his photos here.

And if you are looking for a good read on Istanbul, check out Istanbul: Memories and the City, by Orhan Pamuk.

The African-American Artist Who Found “a Homeland” in Oman

The African-American Artist Who Found “a Homeland” in Oman

Last night, I attended an event at the Sultan Qaboos Cultural Center in Washington D.C – an often overlooked gem in the heart of mid-town — and came across this painting that caught my eye. It certainly has a 19th century New Silk Road-y feel to it.  Upon further examination, I noted the name of the painter – E. Harper Johnson – and he turns out to be a fascinating African-American artist who spent his final years in Oman under the patronage of the Sultan – the two men seen here.

He was born in Birmingham, Alabama in 1916, and died in Muscat, Oman in 2016. In that span of 100 years, he illustrated more than a dozen books and and worked for some leading publications. A consummate artist, he was also a talented vocalist and violinist (though his violin career ended with a broken wrist injury as a youth). In his later years, he began traveling to East Africa and the Arabian peninsula, and eventually settled in Oman after 1993. After being granted Omani nationality by Sultan Qaboos, he said, “I have finally found my homeland after a long, tiring life, full of travel and work.”

His is a life worth exploring further. If any New Silk Road Monitor readers know more about E Harper Johnson’s years in Kenya or Oman, please write.

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