Global Economic Shifts and Geopolitical Tensions Rise

The article discusses the potential risks and consequences of a declining global population, citing Elon Musk's concerns about population collapse. However, the author argues that a contracting population is not necessarily a catastrophe, pointing out that population growth has not led to the predicted resource depletion and mass starvation. The article suggests that the timescales used by 'normal people' are different from the very long-term view taken by Musk, and that shrinkage is not a calamity in the short to medium term.

China held a massive military parade on September 3rd, 2025, to commemorate the 80th anniversary of the end of World War II. The parade, presided over by Xi Jinping, featured new weaponry such as supersonic and hypersonic missiles, underwater drones, and robot wolves. The event was attended by 26 national leaders, including Kim Jong Un and Vladimir Putin, prompting a response from President Donald Trump who accused them of conspiring against America with Xi. The parade showcased China's military capabilities and highlighted the country's stance on global issues.

China's leaders believe the yuan has matured as a global currency, driven by the dollar's decline due to President Donald Trump's erratic trade policies and large fiscal deficits. The yuan has reached its highest level since Trump's re-election, attracting foreign investors and governments seeking alternatives to the dollar. China's tightly controlled currency has gained strength as the dollar slumps 7% on a trade-weighted basis since January, marking its worst start to a year since 1973.

China's urban planners are shifting their focus from rapid expansion to creating more livable cities, as the country's property market has slumped and cities face issues like sprawl, smog, and gridlock. The government aims to develop interconnected city clusters, marking a new approach to urban development under Xi Jinping's rule.

The article discusses how Chinese trade continues to thrive despite the trade tensions and attacks from the United States under Donald Trump's presidency. Trump has been vocal about his discontent with China's trade practices, labeling it as the 'chief-ripper-offer' and 'deepest, darkest China'. However, the article suggests that China's trade remains robust, with the rest of the world willing to engage in trade with China.

The European economy is showing signs of recovery despite various challenges. The IMF forecasts average growth of 0.4% this year for Germany, France, and Italy, rising to 1% in 2026. However, there are concerns about the French government's stability, President Donald Trump's tariffs, the ongoing war in Ukraine, and increasing Chinese commercial competition. Despite these challenges, the economy is slowly recovering.

The Economist's finance and economics section covers various topics including the new economics of attention, grain prices, Donald Trump's aid agency, American bondholders' concerns about inflation, Europe's economic recovery, Chinese trade, the potential impact of AI on the stock market, and more. The articles analyze global economic trends, trade policies, and technological advancements, providing insights into the complex and interconnected world economy. The section also touches on the hard right's plans for Europe's economy, supply shocks, and commodity investments.

The article discusses the potential consequences of a dollar crisis, triggered by investors selling American assets, which could have a grim impact on the global economy. The dollar has fallen by over 9% against a basket of major currencies since mid-January, with a significant portion of that decline occurring in April. The article suggests that this decline, combined with rising yields on ten-year Treasuries, is a warning sign that investors perceive America as becoming riskier.

The article discusses the impact of Donald Trump's presidency on US foreign aid agencies. Eight months into his term, Trump has blocked a significant amount of foreign aid, effectively shutting down or freezing several key institutions, including USAID and the Millennium Challenge Corporation. These institutions were established by previous presidents to promote development, infrastructure, and democracy abroad. The article questions whether Trump's actions are a sign of a shift towards a more isolationist foreign policy or a reorientation of US foreign aid towards more strategic interests.

The article discusses the challenges faced by TSMC, the world's largest chipmaker, in expanding beyond Taiwan due to geopolitical tensions with China. Despite record profits and progress on global expansion, TSMC's reliance on Taiwan poses risks. The article highlights the need for TSMC to diversify its operations to mitigate these risks.

The article discusses the potential risks associated with the current AI-driven stock market boom, highlighting the significant increase in stock values since the release of ChatGPT in 2022. The value of America's stock market has risen by $21 trillion, with just ten firms, including Amazon, Broadcom, and Nvidia, accounting for 55% of the rise. The article notes that the AI enthusiasm has led to a surge in IT investment, with AI firms receiving a significant portion of venture capital dollars. The author cautions that the potential cost of an AI stock market bubble bursting has risen alarmingly high.

The article discusses why American bondholders are becoming increasingly anxious about inflation as the Federal Reserve prepares to cut interest rates. The Fed is expected to lower interest rates at its next meeting on September 16th and 17th, with traders debating whether the rate will fall by 0.25 or 0.5 percentage points. The current interest rate is between 4.25% and 4.5%. The article highlights the tricky circumstances surrounding the rate cut, with President Donald Trump having repeatedly called for lower rates. The Fed's chair, Jerome Powell, has hinted at a rate cut, and the market is now certain that it will happen. The article touches on the potential implications of the rate cut and the concerns of bondholders regarding inflation.

The Philippines is heavily reliant on its alliance with the US to counter China's growing assertiveness, but this reliance is fraught with risk due to the unpredictability of US President Donald Trump. A new report by the International Crisis Group think tank warns that the Philippines still lacks the tools to counter China without a dependable US defence partner. The report highlights the challenge of 'grey zone' tactics by China, which have raised doubts about how Washington would interpret the defence treaty's obligations. The Philippines is uncertain about how far it should go in reinforcing its military and expanding security partnerships, with some cautioning that a stronger deterrent could entangle the country in a potential future conflict with China.

The luxury home market in Shanghai is showing signs of fatigue as price cuts of up to 30% fail to attract buyers. Despite a troubled property market across China, Shanghai's luxury sector had previously defied the downtrend due to wealthy buyers pursuing homes in prime locations. However, the market correction after nearly two years of growth has raised concerns among wealthy local investors who had considered luxury homes worth at least 30 million yuan to be safe investments. Brokers note that buyers are now favoring newly built units in prime locations over pre-owned homes.

Taiwan is heavily reliant on imported energy sources, particularly liquefied natural gas (LNG) and crude oil from countries like Qatar, which has close ties to Beijing. This dependence is seen as a critical weakness, leaving Taiwan vulnerable to pressure from China. Experts warn that a prolonged blockade could cripple the island within days. The shutdown of Taiwan's last nuclear power plant and the failure to restart it have exacerbated the issue. The Democratic Progressive Party (DPP) government is struggling to find a solution, caught between the debate over renewables and fossil fuels. A report by the Foundation for Defence of Democracies highlights the strategic liability posed by Taiwan's energy dependence, warning that China could easily disrupt the island's energy supplies through cyber-enabled economic warfare, maritime quarantines, and diplomatic pressure.

China has issued four travel advisories warning of risks in the Philippines in the past five months, citing 'unstable' public security and 'numerous crimes targeting Chinese citizens.' Analysts say that while the average Chinese citizen visiting the Philippines for legitimate purposes seldom gets into trouble, the advisories could slow down two-way trade, investment, and higher education exchanges if heeded by Chinese citizens. The advisories come amid a backdrop of tension between China and the Philippines, including a recent detention case involving a Chinese national and Philippine citizenship documents.

The US is trying to reduce its dependence on China for rare earth metals, crucial for modern technologies and defense systems, by investing in domestic production and forming alliances with other countries. However, China's dominance in the rare earth market, with over 85% of global refining capacity, poses a significant challenge. The US has taken measures such as activating the Defence Production Act and investing $400 million in MP Materials, but it remains uncertain whether these efforts will be successful in reducing reliance on China.