DeepSeek: capitalism at its finest!

Trump is right that DeepSeek is a wakeup call.  For a very long time many on the capitalist side of the argument (including myself) have taken a degree of complacent comfort in the highly derivative nature of Chinese technology.  One of out BTL commenters even went so far as to say that reports of a Chinese stealth fighter couldn't possibly be true.  Of course, we've long noted the undeniable, gargantuan successes of China's mercantile strategy, but hey, that's how Japan, S.Korea and Taiwan joined the club. 

And now, DeepSeek!   Assuming it isn't a fake - and I think we may - it represents an all-time classic example of capitalism at its finest:  people with strong commercial motivation, creativity, and sufficient political freedom - highly qualified, but sufficient - to give rein to it;  and the innovations flow!

And of course in a frontier space like LLMs, random disruptions and breakthroughs are to be expected.  We just need to recognise that a western cultural backdrop is not the only fertile context.  

So 'wakeup call' is all we need to say.  Provided that those who hear it are not just the complacent, comatose denizens of Silicon Valley.  Now, what was it about that stealth fighter again?

ND

Mayday in Japan

I hold no candle for Mrs May, nearly losing an election to actual commies in a right wing country is unforgivable.

But today the news leads with her saying she will stay on and fight another election. This is classic non-story news. Asked a question she gave an answer to put it to bed, after all she is in Japan, trying to get some sort of trade deal going and also offer re-assurance from the Korean menace.

But our intrepid political reporters never give up,why leave the cosy Westminster bubble stories alone when you can create them on demand like this?

What was the PM supposed to say, anything that indicates hesitation and the media line will be she is wobbling and the next call is to Boris. It is a silly and juvenile game indeed.

Re Japan, nice to see Nissan massively expanding its Sunderland production and aiming to increase the use of U.K. Parts. Good deal struck by the Government there, how strange this does not get a mention in the FT - a quality paper also reduced to juvenile behaviour by its editor.

Nuclear War - the world should make this avoidable

It is really quite worrying that this is being discussed.


What lesson should we really learn, to me the obvious one is that we desperately need the UN Security Council to have more muscle.


North Korea should have been stopped from getting hold of Nuclear Weapons, history has shown us that they are very safe in a MAD environment when controlled by sane Governments. North Korea is not sane, never has been - not an adult country that can be trusted with Nukes.


The list of countries like this is quite long, but not overly so. Few societies manage to fail so spectacularly over such a long-period of time, although being communist tends to be a strong marker for this.


The next on my list is Pakistan, utterly corrupt country and culture with religious extremism thrown in too and an existential fear of India. Only then would we get to the likes of Iran.


However, surely North Korea shows that the sanctions process is very key over the longer term - Iraq, with hindsight, even proves that.


I do wonder now that the hell China is going to do in the current circumstances - after all without Chinese help North Korea would still be a peasant state instead of nuclear armed terror threat. It is hard to know as I guess there is potential for China to like the idea of the North eliminating its rivals in South Korea and Japan - equally though, in statecraft the Chinese operate effectively over decades and are useless when things have to be done over days or weeks. A tricky situation indeed, the US is out of the game now, as any sate is when threatened with MAD.

China/Japan - of more import than US-Iran?

This is quite a hard one to ponder. The dispute between China and Japan has been building all year long. In truth, it is for decades. China has never forgiven Japan for its occupation in the 1930's and 1940's; and it was a barbaric occupation by any standards.

Chinese schools teach their students of the horrors, whilst Japanese schools tend to ignore the nasty buts because after all, it was 2 generations ago.

So does this explain the rather weird stand off over some fairly tiny islands in the East China Sea. It seems to in part. There are oil fields and gas fields of some significance, but nothing compared to say the North Sea which several countries were bounded too and happily drew up an agreement to share.

In the South China Sea, things are a bit more obvious. The Spratly's and Colonia Islands are chock full of oil and gas reserves, in the main untapped. Here one can see much more clearly the realpolitik of the Countries and states with competing claims.

The worrying part is the escalation of claims against one another. It could well be that China decides in the near future to use hard power. Its use of soft power in North Africa and the Middle East has produced underwhelming results. And in reality, who is going to challenge China's military a few miles of its coast?

Whereas in Iran, the Country itself is a tinderbox with a move to becoming slightly more moderate and the West is impotent enough to sign a deal that gives them little except a fig leaf to pretend that Iran will comply with reducing its Nuclear ambitions. But its seems neither side are keen for a war, whereas the tension in the East China Sea goes the other way.

China passes Japan into 2nd place

This will be the talk of the markets in the far East this week. after over a century of being outshone by Japan. China will emerge as the largest economy in the far east. Not only bigger than Japan but every other country too except the United States.

No doubt there will be more lengthy articles this week focusing on the how much this changes the political and economic balance of the world. My question is though, how can China avoid going the way of Japan?

Japan had so much going for it in the post-war world. A commitment to working hard, saving hard and supporting the Government. Ths made Japan rich. Then the lack of a balanced economy, a banking crisis and demographics caught up with it. Now Japan is stagnant and still seeking renewal after 15 years.

China certainly faces a worse problem with demographics, its one child law (a huge boon to the world as a whole let us not forget, reducing the huge over-population problem the world has) meaning it will get grey quickly in about 5 years time and there are far more ment than women. This greying will reduce China's ability to create domestic consumption and will also ensure the savings rate remains high

As mentioned I the FT article, the need to come off a dollar peg will cause a massive boom for China the likes of which normally end in a financial crisis. This may well be a theme of the next few years.

China will undoubtely overtake the US to become the world's largest economy, it has after all 5x the population. Will its people ever match income with Americans though?