Thousands of teenagers swarmed out of the towering front gate of Maotanchang High School. Many of them wore identical black-and-white Windbreakers emblazoned with the slogan, in English, “I believe it, I can do it.” It was lunchtime at one of China’s most secretive “cram schools” — a memorization factory where 20,000 students, or four times the town’s official population, train round the clock for China’s national college-entrance examination, known as the gaokao. The grueling test, which is administered every June over two or three days (depending on the province), is the lone criterion for admission to Chinese universities. For the students at Maotanchang, most of whom come from rural areas, it offers the promise of a life beyond the fields and the factories, of families’ fortunes transformed by hard work and high scores. ... Nothing consumes the lives of Chinese families more than the ever-­looming prospect of the gaokao. The exam — there are two versions, one focused on science, the other on humanities — is the modern incarnation of the imperial keju, generally regarded as the world’s first standardized test. For more than 1,300 years, into the early 20th century, the keju funneled young men into China’s civil service. Today, more than nine million students take the gaokao each year (fewer than 3.5 million, combined, take the SAT and the ACT). But the pressure to start memorizing and regurgitating facts weighs on Chinese students from the moment they enter elementary school. ... Even as cram schools have proliferated across urban areas, Maotanchang is a world apart, a remote one-industry town that produces test-taking machines with the same single-minded commitment that other Chinese towns devote to making socks or Christmas ornaments.

With its flying buttresses and domed roof, the Terascale Simulation Facility at the Lawrence Livermore National Laboratory was built as a cathedral to the supercomputer. … The design may suggest some religious reverence for the all-powerful machines. More practically, though, it means they are unencumbered by supporting columns, saving space and creating a more direct route for the arteries of cables to feed and cool the world’s fastest supercomputers. But less than 10 years after being built, the building is already in danger of becoming outdated. … “When we designed this building, we thought it would be good for 50 years but already it’s only adequate and not robust,” says Mike McCoy, who leads the supercomputing effort at Lawrence Livermore as director of the Advanced Simulation and Computing programme. … Even its name risks becoming an anachronism. Terascale computing has been superseded by petascale computing – 1,000 times faster. By 2020, we will be in the exascale age – a thousand times faster again.

Ayungin Shoal lies 105 nautical miles from the Philippines. There’s little to commend the spot, apart from its plentiful fish and safe harbor — except that Ayungin sits at the southwestern edge of an area called Reed Bank, which is rumored to contain vast reserves of oil and natural gas. And also that it is home to a World War II-era ship called the Sierra Madre, which the Philippine government ran aground on the reef in 1999 and has since maintained as a kind of post-apocalyptic military garrison, the small detachment of Filipino troops stationed there struggling to survive extreme mental and physical desolation. Of all places, the scorched shell of the Sierra Madre has become an unlikely battleground in a geopolitical struggle that will shape the future of the South China Sea and, to some extent, the rest of the world. … It was hard to imagine how such a forsaken place could become a flash point in a geopolitical power struggle. … To understand how Ayungin (known to the Western world as Second Thomas Shoal) could become contested ground is to confront, in miniature, both the rise of China and the potential future of U.S. foreign policy. It is also to enter into a morass of competing historical, territorial and even moral claims in an area where defining what is true or fair may be no easier than it has proved to be in the Middle East. … The Spratly Islands sprawl over roughly 160,000 square miles in the waters of the coasts of the Philippines, Malaysia, Brunei, Taiwan and China — all of whom claim part of the islands. Since the 18th century, navigators have referred to the Spratlys as “Dangerous Ground” — a term that captures not only the treacherous nature of the area but also the mess that is the current political situation in the South China Sea. … Why the fuss over “Dangerous Ground”? Natural resources are a big piece of it. According to current U.S. estimates, the seabed beneath the Spratlys may hold up to 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas. On top of which, about half of the world’s merchant fleet tonnage and nearly one third of its crude oil pass through these waters each year. They also contain some of the richest fisheries in the world. … What China has done with Mischief, Scarborough and now with Ayungin is what the journalist Robert Haddick described, writing in Foreign Policy, as “salami slicing” or “the slow accumulation of actions, none of which is a casus belli, but which add up over time to a major strategic change.”

A Peking University economics professor who was sacked for his political views explains the underside of elite Chinese higher education. … Mr. Xi, 53, says he had a mostly apolitical youth in Anhui province, west of Shanghai, where both of his parents were shipyard workers for China's navy. He never considered himself a communist and says he always felt drawn to the West, thanks partly to foreign picture books from his childhood. He imagined life as a painter or translator, and after graduating college in 1984 went to work as an interpreter for the government's Foreign Affairs Office. … His political awakening came later, in 1987-89, when he studied management at the University of Toronto, visited several European democracies—and read Milton Friedman's "Free to Choose." Friedman's writing helped make Mr. Xia a classical liberal and, by the mid-1990s, a student of economics. Today he cites F.A. Hayek, Ludwig von Mises, James Buchanan and Gary Becker among his intellectual idols. The list also includes Xiakoai Yang, the Chinese economist—and Mao-era political prisoner—who convinced him that China cannot thrive without imitating the institutions, and not just the technologies, of the West.

The cruise business in China is still small. In 2014 about 700,000 Chinese travelers cruised, compared with 10 million Americans and more than 6 million Europeans. But the numbers are climbing rapidly—an increase of 79 percent from 2012 to 2014—and the ceiling isn’t yet visible. In the U.S. and Australia, about 3.5 percent of the population cruises each year; the proportion in China is less than one-sixtieth of that. Some forecasters estimate that China will be the No. 2 market by 2017—and that it could eventually replace the U.S. as the largest in the world. ... Local governments have already built cruise terminals in Sanya, Shanghai, Tianjin, and Xiamen, with more on the way in at least four other coastal cities. Cruise companies are bringing ships to China as fast as the ports can squeeze them in. But the hardware is the easy part. The software—the onboard experience of the Chinese customer—is still in beta. Localization itself is nothing new; brands from KFC to Oreo as well as Hollywood studios have tailored their products to the Chinese market, with varying levels of success. For cruise companies, it’s more complicated than hiring a Chinese celebrity spokesperson or throwing in a green tea flavor. They must rethink the entire cruise experience, from food to décor to how a rapidly capitalizing society thinks about class and luxury.

It was a typical workday morning at Wanjia Asset Management Co. in Shanghai's downtown financial district, but the firm's star bond trader Zou Yu was not at his desk. … Zou, 31, had mysteriously failed to report for his job as head of Wanjia's fixed-income department. And his whereabouts remained unknown until five days later when the firm, on April 16, announced that the police had taken Zou into custody for alleged, unspecified financial crimes. … Zou thus joined a growing list of allegedly unsavory bond traders, securities brokers, bankers and fund managers nabbed by authorities this year in their effort to stop illegal deal-making on the nation's interbank bond market.

Something is going to have to give. The credit boom could presage a pick up in near-term growth, but the point is that sooner or later, the government is going to have tighten credit policy and shadow banking regulation more than it has done so far. Sooner would risk some economic growth, later would risk financial stability. It’s a political choice, which the government must feel emboldened and confident to make: five years of 5% real growth, for example, gets you to the same place as a year of around 8%, followed by four years at 4%, but without disruptive and politically sensitive consequences.

Why isn't the rest of Asia afraid of China? … Are tensions high in Asia? It certainly appears so. Over the last few months, North Korea has tested missiles and threatened the United States with nuclear war. China spars regularly with Japan over ownership of a group of disputed islands, and with several Southeast Asian countries over other sparsely inhabited rocks in the South China Sea. Meanwhile, the United States is in the midst of a well-publicized "pivot" to East Asia, and continues to beef up its military deployments to the region. … Yet as of 2012, military expenditures in East and Southeast Asia are at the lowest they've been in 25 years -- and very likely the lowest they've been in 50 years (although data before 1988 is questionable). While it's too early to factor in recent tensions, as China's rise has reshaped the region over the past two decades, East and Southeast Asian states don't seem to have reacted by building up their own militaries. If there's an arms race in the region, it's a contest with just one participant: China.

Dozens of cities are building a metro system. Some do not need it … NOT many global cities of nearly 9m people lack an underground line, but until the end of last year the eastern city of Hangzhou was one of them. Now city slickers and rural migrants squeeze together inside shiny new carriages, checking their smartphones and reading free newspapers like commuters the world over. There is standing-room only in the rush hour and, with tickets at less than a dollar, the metro is revolutionising the way people travel across town. … Two other Chinese cities—Suzhou and Kunming—have also opened their first underground lines in the past year, and the north-eastern city of Harbin is preparing to open one too. Four more cities have just added a new line to their existing systems. At least seven others have begun building their first lines.

Additive manufacturing is growing apace in China … ALTHOUGH it is the weekend, a small factory in the Haidian district of Beijing is hard at work. Eight machines, the biggest the size of a delivery van, are busy making things. Yet the factory, owned by Beijing Longyuan Automated Fabrication System (known as AFS), appears almost deserted. This is because it is using additive-manufacturing machines, popularly known as three-dimensional (3D) printers, which run unattended day and night, seven days a week. … The printers require an occasional visit from a supervisor to top them up with the powdered materials they use as their “inks”, or to remove a completed item, but apart from that they can be left on their own.

Xi is the sixth man to rule the People’s Republic of China, and the first who was born after the revolution, in 1949. He sits atop a pyramid of eighty-seven million members of the Communist Party, an organization larger than the population of Germany. The Party no longer reaches into every corner of Chinese life, as it did in the nineteen-seventies, but Xi nevertheless presides over an economy that, by one measure, recently surpassed the American economy in size; he holds ultimate authority over every general, judge, editor, and state-company C.E.O. ... “He’s not afraid of Heaven or Earth. And he is, as we say, round on the outside and square on the inside; he looks flexible, but inside he is very hard.” ... a quarter of the way through his ten-year term, he has emerged as the most authoritarian leader since Chairman Mao. In the name of protection and purity, he has investigated tens of thousands of his countrymen, on charges ranging from corruption to leaking state secrets and inciting the overthrow of the state. He has acquired or created ten titles for himself, including not only head of state and head of the military but also leader of the Party’s most powerful committees—on foreign policy, Taiwan, and the economy. He has installed himself as the head of new bodies overseeing the Internet, government restructuring, national security, and military reform, and he has effectively taken over the courts, the police, and the secret police. ... Xi describes his essential project as a rescue: he must save the People’s Republic and the Communist Party before they are swamped by corruption; environmental pollution; unrest in Hong Kong, Xinjiang, and other regions; and the pressures imposed by an economy that is growing more slowly than at any time since 1990 (though still at about seven per cent, the fastest pace of any major country). “The tasks our Party faces in reform, development, and stability are more onerous than ever, and the conflicts, dangers, and challenges are more numerous than ever,” Xi told the Politburo, in October.

The party tries to rein in officials with a campaign of self-criticism … ONE official admitted he had sat on too many sofas and not enough wooden stools, and raised too many goblets but only a few simple teacups. The official, quoted in People’s Daily, a state-run newspaper, was taking part in a “democratic life meeting” run by the Communist Party in September in the northern province of Hebei, at which senior officials were required to criticise themselves and their colleagues. The meetings are the latest part of a “mass-line” campaign led by Xi Jinping, China’s president and party chief, to keep the party close to the people.

It sounds like a doomsday scenario drawn up by strategists at the height of the Cold War. … Chinese armies move south into the Korean peninsula and collide with American and South Korean forces moving north. The resulting clashes spark war between nuclear-armed superpowers. … A new report says such a confrontation is still a real danger in the event of a sudden collapse of the North Korean regime. … The report produced by the US research institute, the Rand Corporation, says that North Korea is a failing state that could fall apart at any moment. … It says agreement is urgently needed between Washington and Beijing on contingency plans - including setting up a temporary line of division inside North Korea to keep their armies apart. … Analysts have been predicting the imminent collapse of North Korea for the last two decades.

Many Americans grumble about the wealth of their politicians, but they are paupers compared with their Chinese counterparts. The 50 richest members of America's Congress are worth $1.6 billion in all. In China, the wealthiest 50 delegates to the National People's Congress, the rubber-stamp parliament, control $94.7 billion. Darrell Issa, a Republican from California, is the richest man in Congress, with $355m. China's richest delegate is Zong Qinghou, boss of Hangzhou Wahaha Group, a drinks-maker, whose wealth is almost $19 billion (including assets distributed to family).

China is bafflingly silent about strange, record-breaking changes that have been wreaking havoc on the mighty Mekong River in recent months ... The dams China has built hundreds of miles upstream from Kroolong’s home are what brought me to the Mekong, one of the world’s mightiest waterways. The river is so long that if it were in the US, it would stretch all the way from Los Angeles across to New York. It starts off high in the snowy peaks of the Tibetan plateau before plunging down through the mountains of China’s southern Yunnan province towards Myanmar, Thailand, Laos, Cambodia and finally Vietnam, where it pours into the South China Sea. Just under half the river’s length is in China, which first started damming it in Yunnan more than 20 years ago. ... The early dams were large but nothing like two enormous, newer ones. The Xiaowan, completed nearly four years ago, is one of China’s biggest hydropower projects after Three Gorges on the Yangtze River, with a wall almost as high as the Eiffel Tower and a reservoir that can hold 15 billion cubic metres of water. It is dwarfed in volume, though not quite height, by the newer Nuozhadu dam, which can store 22.7 billion cubic metres of water. Together, the pair can hold enough to drown an area the size of London in water 24 metres deep. ... There have long been odd stories about the impact these two dams might be having on the countries further south, where people have blamed them for everything from drought to a drop-off in fish catches. But what emerged from my visit to the Mekong, as I followed the story of the floods that took Den Kroolong’s boat, was even stranger – a cautionary tale about the world’s newest superpower, and about water, a resource under mounting pressure.

Chinese business has been slow to embrace the internet. As it does, productivity should soar ... AT FIRST glance it would appear that China has gone online, and gone digital, with great gusto. The spectacular rise of internet stars such as Alibaba, Tencent and JD would certainly suggest so. The country now has more smartphone users and households with internet access than any other. Its e-commerce industry, which turned over $300 billion last year, is the world’s biggest. The forthcoming stockmarket flotation of Alibaba may be the largest yet seen. ... So it is perhaps surprising to hear it argued that much of Chinese business has still not plugged in to the internet and to related trends such as cloud computing and “big data” analysis; and therefore that these technologies’ biggest impact on the country’s economy is still to come. That is the conclusion of a report published on July 24th by the McKinsey Global Institute (MGI), a think-tank run by the eponymous consulting firm. It finds that only one-fifth of Chinese firms are using cloud-based data storage and processing power, for example, compared with three-fifths of American ones. Chinese businesses spend only 2% of their revenues on information technology, half the global average. Even the biggest, most prestigious state enterprises, such as Sinopec and PetroChina, two oil giants, are skimping on IT. Much of the benefit that the internet can bring in such areas as marketing, managing supply chains and collaborative research is passing such firms by, the people from McKinsey conclude. ... Although millions of Chinese businesses sell their products on Taobao, an online marketplace owned by Alibaba, vast numbers remain offline: only 20-25% of small firms in China are internet-connected, compared with 75% in America. This helps explain why the labour productivity of local small businesses is roughly two-thirds of the average for all firms in the country; the comparable figure in Britain is 90% and in Brazil it is 95%. ... In all, MGI predicts that “a great wave of disruption has just begun.”

AS IF a global financial-market meltdown, the deepest U.S. recession in seventy years, an existential crisis in the euro zone and upheaval in the Middle East hadn’t already created enough trouble for one decade, now the unrest and anxiety have extended to some of the world’s most attractive emerging markets. Just in the past few months, we’ve seen a rough ride for India’s currency, furious nationwide protests in Turkey and Brazil, antigovernment demonstrations in Russia, strikes and violence in South Africa, and an ominous economic slowdown in all these countries. ... Adding to the uncertainty, as the carnage and confusion in Syria remind us, is the fact that there is no longer a single country or durable alliance of countries both willing and able to exercise consistent global leadership. ... it is all the more remarkable that there’s been so little noise from China, especially since the rising giant has experienced a once-in-a-decade leadership transition, slowing growth and a show trial involving one of the country’s best-known political personalities—all in just the past few months. Given that Europe and America, China’s largest trade partners, are still struggling to recover their footing, growth is slowing across much of the once-dynamic developing world, and the pace of economic and social change within China itself is gathering speed, it’s easy to wonder if this moment is merely the calm before China’s storm. ... Don’t bet on it. ... In a world where governments can’t afford to go it alone to protect their interests, China will struggle to build durable partnerships that extend its power.

China may soon be the world’s biggest producer of wine. In his father’s hometown, a prominent architect — and unlikely winemaker — sees a new Napa. ... When Ma Qingyun visits Yushan, a rural town an hour outside of Xi’an, in China’s Shaanxi province, he travels in a chauffeured black Mercedes-Benz. His car speeds eastward along the newly paved roads ... “How about we chug the first glass?” Frank Fu, a Shanghai-based venture capitalist, suggests, holding up his full wineglass and looking around. Laughs ripple among Ma’s guests, unsure if the suggestion is serious. Ma nods and laughs. “Sure!” Fu clinks glasses with his neighbors before tilting his head back and downing the wine. A few of the other guests join in. ... Baijiu is still the most popular alcohol in China (and accounts for about 38 percent of worldwide alcohol consumption), but the past few decades have seen a rapid expansion of the country’s wine market. China is now the fifth-largest wine-producing nation in the world, and it nearly tripled its consumption of red wine between 2008 and 2013, becoming the world’s largest consumer of the beverage. But old drinking habits linger, and Ma has acquired a benevolent patience with potential buyers who swig his painstakingly crafted pinots as if they were baijiu.

She’ll dip her hands into a tray of water, to determine whether the temperature is just right. She can explain the intricacies of heating glass in a potassium ion bath. When she passes a grinding machine, she is apt to ask technicians to step aside so she can take their place for a while. ... Ms. Zhou knows the drill. For years, she labored in a factory, the best job she could get having grown up in an impoverished village in central China. ... Ms. Zhou has honed her hands-on knowledge into a world-class, multibillion-dollar operation, one at the vanguard of China’s push into high-end manufacturing. Lens Technology is now one of the leading suppliers of the so-called cover glass used in laptops, tablets and mobile devices, including the Apple iPhone and the Samsung Galaxy. This year, her factories are expected to churn out more than a billion glass screens, each refined to a fraction of a millimeter. ... In 2003, she was still making glass for watches when she received an unexpected phone call from executives at Motorola. They asked if she was willing to help them develop a glass screen for their new device, the Razr V3.

Despite a slowdown in China, the world's largest gaming center is doubling down on its future. ... Barely 10 years ago, Francis Lui and his family were building a relatively modest fortune largely from quarrying rock in Hong Kong and processing slag from blast furnaces on mainland China. Today, in the Chinese enclave of Macau, they preside over two palatial casinos that alone generate vastly more gaming revenue than the entire Las Vegas Strip. They're also acquiring a stake in the Monaco royal family-controlled company that operates the Casino de Monte-Carlo. ... the soft-spoken, U.S.-educated billionaire is in the process of placing a far bigger bet than any of the high rollers who wager as much as $250,000 a hand in the Galaxy’s most exclusive VIP rooms. Having just spent $3.1 billion doubling the size of the Galaxy, he’s now pressing ahead with another $7.4 billion worth of investments. And that’s just a part of the $27 billion that global casino companies such as Las Vegas Sands, Wynn Resorts, and MGM Resorts International plan to spend over the next few years in the world’s largest but most-troubled gaming market. ... Macau’s gaming revenue plummeted 37 percent to $15.2 billion in the first half of the year. During the 18 months ended in June, the decline wiped more than $100 billion from the value of six of the world’s biggest casino companies. ... Macau’s fate may be tied to developments on Hengqin, an island triple its size that’s located across a narrow strait. Galaxy is the first of Macau’s six casino licensees to acquire land on Hengqin, which is part of Guangdong province and which Beijing wants to develop into a nongaming leisure destination full of golf courses, Disney-esque theme parks, and other family-focused attractions. ... It all sounds like a pharaonic exercise in overbuilding. And yet tiny Macau, with only 27,000 hotel rooms, compared with Las Vegas’s 150,000, attracted 31.5 million visitors last year, two-thirds of them from the mainland and many of them day-trippers. The new construction aims to add 19,000 more rooms by 2018.

All told, along a three-hundred-mile stretch, I found twenty-six Chinese lingerie dealers: four in Sohag, twelve in Asyut, two in Mallawi, six in Minya, and two in Beni Suef. It was like mapping the territory of large predator cats: in the Nile Valley, clusters of Chinese lingerie dealers tend to appear at intervals of thirty to fifty miles, and the size of each cluster varies according to the local population. Cairo is big enough to support dozens. Dong Weiping, a businessman who owns a lingerie factory in the capital, told me that he has more than forty relatives in Egypt, all of them selling his products. Other Chinese people supply the countless underwear shops that are run by Egyptians. For the Chinese dealers, this is their window into Egypt, and they live on lingerie time. Days start late, and nights run long; they ignore the Spring Festival and sell briskly after sundown during Ramadan. Winter is better than summer. Mother’s Day is made for lingerie. But nothing compares with Valentine’s Day, so this year I celebrated the holiday by saying goodbye to my wife, driving four hours to Asyut, and watching people buy underwear at the China Star shop until almost midnight. ... No Upper Egyptian woman would wear such garments in public, but it’s acceptable at home. This is one reason that the market for clothing is so profitable: Egyptian women need two separate wardrobes, for their public and their private lives. ... In general, Chinese dealers prefer Egyptian Muslims to Christians. This is partly because Muslims are more faithful consumers of lingerie, but it’s also because they’re easier to negotiate with. The Copts are a financially successful minority, and they have a reputation for bargaining aggressively. This is what matters most to Chinese dealers—for them, religion is essentially another business proposition. ... differences seem perfectly matched for the exchange of lingerie. The Chinese dealers are small, and they know little, and they care even less—all of these qualities help put Egyptian customers at ease. ... “Their strategy is to make economic linkages, so if you break these economic linkages it’s going to hurt you as much as it hurts them.” ... In “China’s Second Continent,” published in 2014, Howard French estimates that a million Chinese live on the continent, and China does more than twice as much trade with Africa as the United States does.

The farm-by-farm fight between China and the United States to dominate the global food supply. ... If China hopes to feed (and pacify) its growing population while also loosening the very real stranglehold that America has on its national food supply, its farmers have to start producing a lot more corn—not just enough to meet their domestic demand in good years but enough to maintain a stockpile to offset their global market impact during bad ones. For decades, China has increased corn yields by putting more acres into production, but they’re running out of arable land, and the USDA now estimates that Chinese corn consumption will rise by 41 percent by 2023, far outpacing production increases. The only tenable way for China to meet its own demand, then, is by planting high-performance hybrids, which can single-handedly double or potentially even triple per-acre corn production. Chinese scientists haven’t developed a significant corn hybrid in years. But Monsanto and DuPont Pioneer, the two American seed giants, have produced so many successful hybrids that they now control 45 percent of all the seed sold in the world. ... The Department of Justice maintains that China is quietly permitting and even encouraging companies to steal American agricultural secrets right out of the ground. Acquiring the technology behind these next-generation hybrids could save companies like DBN Group—and the country—as much as a decade, and many millions of dollars, in research.

The recent slowdown in China’s growth has caused concern about its long-term growth prospects. Evidence suggests that, before 2008, China’s growth miracle was driven primarily by productivity improvement following economic policy reforms. Since 2008, however, growth has become more dependent on investment and overall growth has slowed. If the recent reform plans can successfully address the country’s structural imbalances, China could maintain a solid growth rate that might help smooth its transition to high-income status. ... Theory suggests that three factors contribute to economic growth: capital accumulation, labor force expansion, and productivity improvement. ... China’s growth miracle since the early 1980s has significantly raised the standards of living in China. It has also made China an increasingly important contributor to world economic growth and a large and growing market for U.S. exports. The rapid growth was driven primarily by productivity gains and capital investment. The recent growth slowdown has raised the concern that China’s growth miracle could be ending.

The world is about to experience an unprecedented consumption boom, which presents both challenges and opportunities for investors everywhere. Animal protein consumption, energy, air travel, health care, and education are some of the most relevant sectors involved as the upcoming changes in population and income collide. ... The world in general—and India in particular— is in the midst of a fascinating transition right now. Taking a step back from our day-to-day focus to view the bigger picture can offer a different perspective on the dynamics of various countries in a volatile and uncertain world. Envision a map that is drawn to represent how economists view the world. Imagine a map on which the area occupied by a country as a percentage of total area is equivalent to its percentage of global GDP. Compared with traditional maps, in which country sizes are based on land area, the United States, Europe, and definitely Japan would appear bloated. Other regions would look smaller—for example, Africa or India. Africa especially is quite difficult to see on the economists’ map. ... Now, imagine another map on which land area is proportionate to the country’s percentage of the global population. If the United States is viewed this way, it will be much smaller than on the economists’ map. In the population map, Africa would become relevant and uncertainties about the importance of India and China would disappear. Focusing on the differences in these maps may permit us to realize our biases in viewing the world.

Something else must be driving the fall in Chinese equities. ... What could that be? Have China’s banks overextended themselves more recently? Central planning or not, as we all learned in 2008, a surge in shadow banking can lead to terrible things. ... I am no expert on China, but it is very tempting to conclude that the Chinese gambling spirit has simply migrated from Macau to Shanghai. ... Relative to 1999, when the euro was first introduced as an accounting currency, Greek workers had at one point (around 2009-10) enjoyed almost twice the wage growth compared to the average German worker. Although much of the advantage has since been given up, Greek workers have still out performed their German colleagues since the introduction of the euro – at least as far as wage growth is concerned ... Ukraine, the Middle East and Puerto Rico are all in the dumps – but for three very different reasons. ... the deflation talk is likely to blossom up again, and several countries on either side of the Atlantic could be flirting with recession later this year or early next. Consequently, yields on long bonds could fall further, and stock markets may be in troubled waters for a while. I don’t expect this to be anywhere nearly as bad as 2008, though. It is a normal cyclical downturn, which may not even be strong enough to be classified as a recession. But a slowdown it is. ... I think the U.S. economy will substantially outperform most other OECD economies over the medium as well as the long term – even if there is a modest cyclical slowdown just around the corner.