Highlights of the week: Musk and China's ambitions are not misleading; the US economy is growing, while Germany's is showing the opposite
An overview of the main events of the past seven days and the reaction of the foreign press to them
Last week, almost all the mainstream global media outlets were filled with news about Elon Musk. And not just because of the Twitter rebranding. The Guardian, for instance, pondered why Musk wants X to become the equivalent of WeChat for the West. As you know, the Chinese platform WeChat is a combination of applications used for messaging, social networking, payments, subscriptions, utility bills payment, food delivery, flight and train ticket booking, ride-hailing, and much more. Elon Musk stated that he would like the rebranded Twitter to become just as indispensable in the West.
Elon Musk is eager to dominate. However, Americans don't trust him
"You basically live on WeChat in China because it’s so usable and helpful to daily life, and I think if we can achieve that, or even get close to that at Twitter, it would be an immense success," he told his social media staff. The fascination with the idea of a 'universal app' is not new and has been on the minds of Western tech executives for many years. Last year, it was reported that Microsoft was considering the possibility of creating a 'super app'.
Bruce Daisley, the former head of Twitter’s European operations, says that it is a "slightly flawed premise" to believe that just because all the apps emerged and succeeded in China, the same will happen in other countries. However, he adds that making payments a key part of Twitter's rebranding platform – which is clearly Musk's ambition – could work in the USA, where the online banking and payment systems are less developed than in the UK and Europe. The question is whether you would trust Musk with any payment process, notes Daisley.
Lucy Ingham, the head of content at FXC Intelligence, a data company, says that Musk's ambitions for the platform make sense. "You can have a really good product and a really good system, but if people don’t trust it, it’s not going to happen." Other speakers share the same opinion and also point out that since acquiring Twitter, Musk has fired 80% of the social media's staff and has shown himself to be a "very unreliable partner".
The New York Times is alarmed by Elon Musk's dominant position in satellite internet technologies, and the ways in which he wields this influence are causing great concern. Specifically, it is his near-total control over satellite internet that is troubling. "A combustible personality, the 52-year-old’s allegiances are fuzzy. While Mr. Musk is hailed as a genius innovator, he alone can decide to shut down Starlink internet access for a customer or country, and he has the ability to leverage sensitive information that the service gathers. Such concerns have been heightened because no companies or governments have come close to matching what he has built," the outlet writes.
According to NYT, some of the concerns in Ukraine have proven true: he has repeatedly restricted access to Starlink during the conflict. In September, at a private event attended by then-Speaker of the House Nancy Pelosi and others, Musk proposed a peace plan for Ukraine that involved russia annexing Ukrainian territories. This proposal outraged many of those present.
Last year, Elon Musk refused Ukraine's request to provide access to Starlink near Crimea so that Ukraine could direct a bomb-laden maritime drone at russian ships docked in the Black Sea. Later, Musk stated that Starlink cannot be used for long-range drone strikes. However, according to the outlet, in June, the Pentagon purchased between 400 and 500 new Starlink terminals and services, thereby gaining control over determining the area of Starlink internet coverage in Ukraine, enabling these new devices to perform "key functions and specific missions". Apparently, this is aimed at providing Ukraine with specialised terminals and services to carry out sensitive functions without the fear of communication interruptions.
At the same time, Taiwan is cautious about becoming dependent on Starlink. "We worry that if we order devices from Starlink, we’ll fall into some sort of trap," said Jason Hsu, a senior research fellow at Harvard Kennedy School in Taipei and a former Taiwanese legislator. "Elon has huge commercial interests in China."
The Economist shares a humorous story about Twitter's rebranding: workers attempting to remove the old name from the company's headquarters in San Francisco were stopped by the police halfway through, leaving "er" as the main signage for the company. It would have been even funnier if they had managed to simultaneously write the new name, "X".
The economy of the United States is growing. However, Wall Street analysts are nervous due to the stock market euphoria
Moreover, the British outlet warns that the optimism prevailing in the stock market could have lethal consequences. "Hope of an ai-fuelled productivity boom displaced fears about growth and inflation as the main market narrative. Shares in big tech firms – deemed well-placed to capitalise on such a boom – duly rocketed," writes The Economist.
Later, this optimism spread to the rest of the market: what began as narrow growth turned into a full-fledged bull market. However, the outlet cites Wall Street legend John Templeton: all markets "are born on pessimism, grow on scepticism, mature on optimism and die of euphoria". Currently, according to the authors, the market is right in the euphoria phase.
Meanwhile, the Wall Street Journal reports that the US economic growth is accelerating despite expectations of a slowdown. Last quarter, the economy grew by 2.4%, indicating that the US is avoiding a recession, according to the outlet. As inflation subsides from historical highs and the labour market remains strong, steady growth adds prospects for a soft landing when inflation returns close to the Federal Reserve's target of 2% without a recession.
Economic malaise in Germany and China’s tarnished reputation. Dependence on russian energy resources is becoming evident
A similar assessment of the US economy is given by Bloomberg, while, at the same time, negatively evaluating Germany's economy. "Germany’s economic malaise evokes ‘sick man of Europe' era", the outlet writes, citing data for the second quarter, which showed no growth after the recession. Prolonged industrial weakness clouds the country's prospects. The recession from which Germany has barely emerged has already challenged Chancellor Olaf Scholz's bold forecast in January that such a decline "definitely will not happen".
This time, the prolonged energy crisis in Germany, caused by the war in Ukraine, is harming manufacturers in an economy that is already struggling with a demographic-induced shortage of skilled workers and low productivity. Germany's longstanding headache of how to produce affordable energy, resulting from its years of dependence on russian gas and politically-induced aversion to nuclear energy, remains a separate challenge, just as efforts to accelerate the transition away from fossil fuels.
Meanwhile, the intensification of global competition in the electric vehicle sector threatens its automotive industry. These long-term challenges are coupled with weak demand in China and a tight monetary policy, leading to further industrial contraction. Another quarter-point interest rate hike by the European Central Bank last week to curb inflation will increase pressure on the industry, as reported by Bloomberg. However, experts suggest betting on small businesses, the so-called Mittelstand – a nationwide network of small, often family-owned, specialised enterprises whose products have long been the backbone of the country's export capacity.
China has been the focus of almost all major outlets this week. But an unexpected publication in Al Jazeera stands out, highlighting a study by the Pew Research Center, which reveals a negative view of China worldwide, especially in high-income countries. The survey results show that two-thirds of people in 24 countries have a negative opinion of China. On average, 67% of respondents expressed a negative opinion of Beijing, while only 28% have a positive view.
Pew surveyed over 30,000 adults in 24 countries, including the USA, Mexico, Germany, Australia, Brazil, Israel, Nigeria, Japan, and India. The research shows that China is predominantly perceived negatively in high-income countries such as Australia, Sweden, South Korea, and Japan. It was also noticeably high in the USA, where 50% of respondents identified Beijing as the biggest threat to Washington in an open-ended question, compared to 17% who mentioned moscow.
Respondents in countries such as Indonesia, Nigeria, and Mexico expressed a much more positive view of China, which is likely attributed to a combination of factors – from its role in providing 5G internet to medium-income countries to massive investments through projects like its Belt and Road Initiative. India stood out as a notable exception among medium-income countries, as its relations with China have worsened due to a contentious 3,500 km-long border dispute in the Himalayas. Therefore, 67% of Indian respondents (compared to 46% in 2019) expressed negativity towards Beijing, despite close economic ties between the two countries.
China's attempts to rebrand itself this year and present itself as a global peacemaker also faced failure, even after it acted as a mediator in restoring relations between Saudi Arabia and Iran and proposed to play a similar role in Ukraine and Palestine. On average, 71% of respondents told researchers that they believe China "does not contribute to global peace and stability". Furthermore, 57% accused China of interfering in world affairs, despite the image Beijing is trying to create. In other words, just like in the case of russia, no matter how much you call a skunk a kitty, it won't turn into one, even if it purrs.
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