You should be watching bad economic news out of China

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Welcome to The Daily 202! Tell your friends to sign up here. On this day in 1858, the first official transatlantic telegram passed through the new undersea cable. It was a message from Britain’s Queen Victoria to President James Buchanan.

You should be watching bad economic news out of China

In his 2010 memoirs, “Decision Points,” former president George W. Bush revealed he had the same question of every world leader the first time they met: What keeps you up at night? Sadly, Bush only shared Chinese President Hu Jintao’s answer. But it’s newly relevant.

Hu, who governed 2003-2013, told Bush his biggest worry was the need to create 25 million new jobs per year.

“I found his answer fascinating. It was honest. It showed he worried about the impact of disaffected, unemployed masses. It explained his government’s policies in resource-rich places like Iran and Africa,” Bush wrote. “And it was a signal that he was a practical leader focused inward, not an ideologue likely to stir up trouble abroad.”

(Bush had me until that last line. Ideologue or not, world leaders facing economic unhappiness from “disaffected, unemployed masses” can be tempted to look beyond their borders for actions that stoke rally-’round-the-flag sentiments.)

Hu’s comment felt more relevant this week after President Biden made a lot of global headlines last week when he said China’s mounting economic troubles make America’s biggest global rival “a ticking time bomb.”

Beijing got upset. But Biden was right that the Asian giant’s domestic problems bear watching — a downturn there would be felt globally in unpredictable ways, and could shape Beijing’s decision-making on foreign policy.

Here’s how the president put it: 

• “China is a ticking time-bomb in many cases,” Biden said. “Now people are beginning to agree: China is in trouble. China was growing at eight percent a year to maintain growth  and now closer to two percent a year.”
• “China finds itself in a position where it has the highest unemployment rate going. It’s in a position where the number of people who are of retirement age is larger than the number of people of working age. So, they got some problems. That’s not good because when bad folks have problems, they do bad things.”

Okay, so Biden’s growth rate seems curious.

Nandita Bose and Jeff Mason of Reuters noted official Chinese data tells — a different story:

“Data from China’s National Bureau of Statistics showed the economy grew 4.5% in the first quarter and 6.3% in the second, with gross domestic product up just 0.8% in April-June from the previous quarter after a 2.2% expansion in the first quarter.”

Steve Holland of Reuters asked White House press secretary Karine Jean-Pierre on Monday where the president got his number. She did not say.

But it’s also true that Western analysts have long complained that Beijing overstates its growth rate. And in 2022, John Burn-Murdoch of the Financial Times detailed at some length how China has stopped disclosing many economic indicators as its economic growth has slowed.

Set Biden aside for a second and notice that bad economic news out of China is rolling in.

• Reuters reported Tuesday that Barclay’s has “cut its forecast for China’s 2023 gross domestic product (GDP) growth to 4.5% from 4.9% because of a faster-than-expected deterioration in the housing market.”
• And “China’s economic activity data in July, including retail sales, industrial output and investment, failed to match expectations, fuelling concern over a deeper, longer-lasting slowdown in growth,” the news agency said.
• At the Wall Street Journal, meanwhile, Jason Douglas reported China has decided to stop reporting the unemployment rate for workers ages 16-24. It has set record highs this year and sat at 21.3 percent in June.
• Bloomberg reported China’s central bank cut a key interest rate by the largest amount since 2020 — an effort to stimulate the economy in response to “a worsening property slump and weak consumer spending.” It was the second reduction in three months.

Poor retail sales, housing market, industrial output, and investment, cutting rates, hiding some jobless numbers, reduced growth forecasts — that’s a lot of bad news.

“The risk for the global economy is that a prolonged spell of soggy demand in China holds back growth elsewhere in the world by blunting exports of iron ore, crude oil, factory equipment and luxury goods,” Douglas wrote in the Journal.

“Already, U.S. companies in sectors including chemicals and heavy machinery have warned of disappointing sales in China and a gloomier outlook for what had long been a large and dependable market,” Douglas reported.

Against that backdrop, it’s not hard to see why Beijing would respond angrily to Biden’s efforts to deny China access to certain high-tech American products and stifle some investment in high-tech Chinese sectors.

And that, in turn, is what makes watching the economic news out of China so important.

See an important political story that doesn’t quite fit traditional politics coverage? Flag it for us here.

North Korea’s Kim, in letter to Putin, vows solidarity with Russia

“North Korean leader Kim Jong Un vowed to strengthen relations with Russia so the two countries could continue to ‘smash the imperialists’ arbitrary practices and hegemony,’ according to a state media report,” Min Joo Kim reports.

• “Kim made the promise in a letter to Russian President Vladimir Putin on Tuesday, the anniversary of Korea’s liberation from Japanese colonial rule, in the latest sign that Pyongyang and Moscow are deepening their bonds.”

Milley to visit Israel as U.S. concerns grow over Israeli military crisis

“Gen. Mark Milley, the chair of the Joint Chiefs of Staff, will travel to Israel next week amid growing concerns inside the Biden administration about how the Netanyahu government’s judicial overhaul is affecting the Israeli military, two Israeli officials told Axios,” Barak Ravid reports.

Student loan borrowers approach payment restart with apprehension, confusion

“After all of the twists and turns of the last three years, federal student loan borrowers are experiencing a bit of fatigue and confusion as payments are set to resume in October. The string of extensions — eight since the pause was first introduced in 2020 — has left some in disbelief that the moratorium is finally coming to an end, while others are overwhelmed by their options and the prospects of adding another bill to their budget,” Danielle Douglas-Gabriel reports.

Lunchtime reads from The Post

“Maura came to St. Louis from the Philippines to be put on display at the 1904 World’s Fair. Records suggest that, after her death, a Smithsonian anthropologist took part of her brain,” Claire Healy, Nicole Dungca and Ren Galeno report.

From the Cybersecurity 202

Watchdog: ‘Hate speech,’ other ‘derogatory’ discussions littered intel message apps

“There has been ‘systemic’ misuse of message apps used by the U.S. intelligence community, with users employing language that ‘contained transphobia, hate speech and misogynistic discussions,’ an intelligence community watchdog found,” our colleague Tim Starks reports.

• “Submissions to the watchdog about users misusing the platform ‘indicated a pattern of behavior by IC individuals that did not align with the terms of use of U.S. Government systems,’ the report states. ‘For example, the submissions included allegations that lC individuals engaged in inappropriate political and social commentary, and used derogatory and offensive language while communicating with each other.’”
• “The report serves as the first official confirmation that offensive messages persisted on the platforms. In an explosive blog post last year, former intelligence contractor Dan Gilmore said one of the apps had become a ‘dumpster fire.’ Messages on the platform included messages calling the Jan. 6 insurrection justified, Gilmore said.”

Trump enjoys strong support among Republicans. The general election could be a different story.

“Nearly two-thirds of Republicans — 63% — now say they want the former president to run again, according to new polling from The Associated Press-NORC Center for Public Affairs Research … But in a crucial warning sign for the former president and his supporters, Trump faces glaring vulnerabilities heading into a general election, with many Americans strongly dug in against him,” the Associated Press’s Jill Colvin and Linley Sanders report.

• “While most Republicans — 74% — say they would support him in November 2024, 53% of Americans say they would definitely not support him if he is the nominee. Another 11% say they would probably not support him in November 2024.”

Russia has shown scant interest in prisoner swaps for dozens held in U.S. prisons

“Setbacks securing the release of Wall Street Journal reporter Evan Gershkovich and other Americans held in Russia through a trade for high-profile Russians locked up in other countries have forced U.S. officials to refocus on a deal involving Russian prisoners in U.S. custody. One problem: it’s unclear that Russia wants any of them,” the WSJ’s Dustin Volz and Louise Radnofsky report.

Sinema takes on Schumer, Jeffries and the White House over the border

 “Independent Sen. Kyrsten Sinema is on the warpath over what she and border-state Democrats decry as Arizona’s disproportionately small share of an $800 million pot aimed at alleviating overcrowded migrant holding facilities. She’s not alone in crying foul about Arizona getting short shrift when compared to the Empire State — her potential 2024 opponent Rep. Ruben Gallego (D-Ariz.) is also speaking out on the imbroglio,” Politico’s Burgess Everett reports.

In Wisconsin, Biden attacks a far-right senator but avoids Trump talk

“A week before Republicans visit Milwaukee for their first debate of the 2024 campaign, President Biden traveled to the city on Tuesday and attacked not former President Donald J. Trump or his Republican primary rivals, but Senator Ron Johnson of Wisconsin,” the New York Times’s Reid J. Epstein reports.

• “Mr. Biden’s sustained attack on Mr. Johnson, who won re-election last year to a third term that won’t end until 2029, served as a stand-in for an attack on Mr. Trump.”

Biden to travel to Maui to survey devastation from wildfires

“President Biden will travel to Maui on Monday to survey the devastation caused by wildfires that swept through part of the island last week, amid criticism that he has been too silent about the deadliest such disaster in modern U.S. history,” Amy B Wang and Meryl Kornfield report.

The phone calls from Trump’s team at the core of the Georgia indictment, visualized

“As President Donald Trump and his allies sought to overturn his 2020 election loss, they hammered election officials and lawmakers across the country with phone calls, hoping to persuade them to help reverse the results,” Derek Hawkins, Kati Perry and Nick Mourtoupalas report.

• “About two dozen of those calls are now at the center of the wide-ranging indictment brought against Trump and 18 others in the Atlanta area this week. Together, they make up a key part of the case Fulton County District Attorney Fani T. Willis has assembled to argue that Trump and his co-defendants not only broke the law but did so as part of a criminal enterprise whose goal was to fraudulently keep Trump in power.”

RFK Jr. isn’t just wooing Republicans. He’s hiring them.

“Robert F. Kennedy Jr.’s unconventional campaign for the Democratic presidential nomination has made an unconventional hire in New Hampshire: Aidan Ankarberg, a sitting Republican state representative,” the New Republic’s Ben Jacobs reports.

• “Prior to his work with the campaign, Ankarberg was best known as a prominent member of the Republican leadership in the New Hampshire House of Representatives. (He served as the deputy majority whip until resigning from that position in March; he remains a member of the state house.) Ankarberg has been endorsed by the NRA and signed a 2022 letter drafted by Arizona state Senator Wendy Rogers, a prominent election denier, demanding ‘a 50-state audit’ of the 2020 presidential election.”

As Georgia Republicans rebuke Trump, they are lonely voices in GOP

As indictments mount against Donald Trump, voters at the Iowa State Fair said they’d vote for the former president even if he were to be convicted of charges. (Video: Whitney Leaming, Joyce Koh/The Washington Post)

“After Donald Trump was indicted for the fourth time, a handful of Georgia Republicans at the heart of the case issued a sharp political rebuke of the former president. Ex-lieutenant governor Geoff Duncan argued that Republican voters should assess the damage Trump has wrought and ‘hit the reset button.’ Gov. Brian Kemp refuted Trump’s false election claims and said, ‘The future of our country is at stake in 2024 and that must be our focus,’ But they were lonely voices in their party,” Maeve Reston reports.

• “As Trump on Tuesday said he would be exonerated and planned to offer a more detailed rebuttal next week, some of his rivals in the Republican presidential primary echoed his attacks on the Fulton County prosecutor, even as they sidestepped the substance of the allegations facing him. ‘I think it’s an example of this criminalization of politics,’ Florida Gov. Ron DeSantis said. Only longer-shot hopefuls were directly critical of the former president.”

At 2:30 p.m., Biden will speak about the Inflation Reduction Act from the East Room.

Cancer among younger Americans is on the rise, new study shows

“Most cancers in the United States are found in people age 65 and older, but a new study shows a concerning trend: Cancer among younger Americans, particularly women, is on the rise, with gastrointestinal, endocrine and breast cancers climbing at the fastest rates,” Lindsey Bever reports.

Thanks for reading. See you tomorrow.