Recommended Weekend Reads
Are the CRINKs a Real Global Power Bloc Or Not? Taking a Deep Dive into the US-Japan Trade Deal, and the Projected Impact of Generative AI on Productivity Growth
September 12 - 14, 2025
Each week, we gather up the best research and reports we have read in the past week and pass them on to you. Below is this week’s curated collection. We hope you find them interesting and informative, and that you have a great weekend.
What’s Up with The CRINK’s?
CRINK Economic Ties: Uneven Patterns of Collaboration Center for Strategic and International Studies
This brief explores the post-2022 economic ties among China, Russia, Iran, and North Korea—the so-called CRINK states. Historically, economic alignment among military allies has been uneven and has not necessarily indicated the formation of a cohesive bloc. The World War II–era Axis powers, for instance, had fragmented economic cooperation due to geographic distance, wartime needs, sanctions, mistrust, and a focus on self-sufficiency—factors that also constrain CRINK today. Still, signs, including rising trade in energy and dual-use technologies, point to growing economic coordination. Assessing these ties is difficult, however, due to limited or opaque data (especially from Iran and North Korea) and increased informal trade since Russia’s 2022 invasion of Ukraine. This brief draws from diverse international and industry-specific sources to fill data gaps. Findings show uneven patterns: China-Russia economic ties have grown, especially in energy and dual-use goods, but Chinese investment in Russia remains modest amid concerns over sanctions-related investment risks. Other CRINK members show far weaker economic coordination.
Russia’s New Fear Factor Foreign Affairs
Among elites in Russia today, something dark is happening. According to Novaya Gazeta, the independent Russian newspaper, there have been 56 deaths of successful businesspeople and officials under strange circumstances since February 2022. Many of them have fallen out of windows. More and more, people who have loyally served Putin’s system are being persecuted, mainly on the grounds of corruption. As the Putin regime turns on its own people, it, too, has begun to replace them with a new breed of loyalists, people whose primary qualifications are their apparent fealty to the leader, and sometimes their participation in the war. Still, Putin prefers experienced and talented technocrats for the most responsible positions, such as governors and ministers. After more than three and a half years of war and mounting economic challenges, Putin’s aim is not to fight corruption. His goal is to avoid internal threats. And to do that, he needs to turn the elites into a frightened and therefore controllable class.
China’s Anti-Western Bloc? Not So Fast Center For European Analysis
The Shanghai Cooperation Organization (SCO) summit in Tianjin from August 31-September 1 was filled with carefully curated images of the post-Western world that China is working to construct. For the men complaining that they, and their peoples, have been poorly rewarded by the global system, this was a big moment. Photographs captured China’s Xi Jinping, Russia’s Vladimir Putin, and India’s Narendra Modi in a huddle and holding hands. That in itself was enough to send a not-very-friendly message to the United States and its European and Asian allies. But that snapshot failed to show intense competing agendas among these countries. For now, at least, it is premature to interpret it as either a significant challenge to the Western order or an alliance of authoritarian states.
Why India and China Remain Bitter Rivals Shyam Saran/Time
Shyam Saran is a former Foreign Secretary of India and the author of “How China Sees India and the World.” In this essay, he argues that the visuals of exaggerated cordiality between Prime Minister Narendra Modi of India, President Vladimir Putin of Russia, and President Xi Jinping of China at the recently held Shanghai Cooperation Organization (SCO) summit on September 1 displayed China’s convening power. But the gathering of major non-Western leaders in Tianjin, a city in eastern China, didn’t do much to resolve the long-standing border dispute and ever-growing competition between India and China.
Update on the Trade Wars
Investing in Security and Success: Analysis of the US-Japan $550 Billion Strategic Investment Fund The Hudson Institute
The centerpiece of the recent trade agreement between the United States and Japan was Japan’s promise to invest $550 billion in a new fund that would help “rebuild and expand core American industries.” On September 4, the US and Japan signed a memorandum of understanding (MOU) that details the full scope of the investment framework, including:
Japan should allocate the $550 billion before President Donald Trump’s term ends on January 19, 2029.
Investments should go to key strategic sectors—semiconductors, pharmaceuticals, critical minerals, metals, shipbuilding, energy (including pipelines), artificial intelligence (AI), and quantum computing.
The president will create an investment committee to recommend and oversee investments. The US Secretary of Commerce will chair the investment committee and select its other members.
A consultation committee, with designees from both the United States and Japan, will advise an investment committee, which will then recommend projects. The consultation committee will also provide legal and strategic input to the investment committee.
The United States Investment Accelerator will execute, manage, and administer the investments. This office is based within the Department of Commerce, and the Secretary of Commerce has the power to appoint its executive director.
The US will create a special purpose vehicle (SPV) for each investment. The US or its designees will govern these investment SPVs.
With the president’s approval, the US will propose projects and their investment amounts for Japan to review. Japan will have about two months to respond and transfer the necessary funds—in US dollars—to the investment accelerator.
Japan has the right to decline to fund all or part of a project. But the US can then impose tariffs on Japanese imports in response.
Japan and the US will evenly split profits from the project until Japan recoups its investment. Afterward, profits will be disbursed at a ratio of 90 percent to the US and 10 percent to Japan.
The US government will try to arrange leases to federal land, access, water, power, and energy to investment projects, as well as organize offtake arrangements. The federal government will also expedite relevant regulatory processes.
When possible, Japanese firms will receive priority over comparable foreign firms to serve as vendors and suppliers for projects.
A Guide to Trump’s Section 232 Tariffs, in Maps Council on Foreign Relations
Section 232 tariffs aim to protect U.S. national security. Created by the Trade Expansion Act of 1962, Section 232 empowers the president to charge duties pending the results of a Department of Commerce investigation into the imports’ effects on national security. The Donald Trump administration has already used this tool to raise levies on aluminum, cars and car parts, copper, and steel—and has launched Section 232 investigations into nine other types of products. These twelve graphics dive into each sector, laying out the scale of imports, their concentration by country, and the geopolitics of exporting nations, separating friends—NATO members, major non-NATO allies, and free trade agreement (FTA) partners—from potential foes.
Geoeconomics, Data Centers, and Power Generation
Financial Bubbles Happen Less Often Than You Think William Goetzman/Wall Street Journal
Bubbles loom large in our historical understanding of the financial markets. They are memorable. They are colorful. They are scary. They raise questions about investor psychology and the madness of crowds. In good times, we worry if we’re going to be caught in the next big bubble. Looking at financial bubbles since 1790, however, we find that they are much rarer than their presence in the public imagination—and not necessarily purely negative. They sometimes set the stage for major changes in people’s worldviews, upending old ideas about the possibilities and limitations of business. Sometimes bubbles remake society itself, as all that investor money funds technological advances that change the world.
Abstract: This paper examines the resurgence of industrial policy and national security strategy across the United States, China, and the European Union. We analyze how these major economic powers are implementing distinct approaches to industrial policy while pursuing similar objectives of technological leadership and national economic prosperity. The United States has adopted a hawkish stance with extensive trade policies and subsidies. China has pursued ambitious growth in a range of sectors through long-term planning and strong government control. The European Union has balanced autonomy with trade openness and somewhat less state intervention. Our comparative analysis reveals that while these policies may be successful in strengthening domestic economies, they collectively reshape the world economy in ways that may disadvantage other nations, especially in the global South. However, ‘connector’ countries in the global South are benefiting by forging strategic ties with several superpowers. Additionally, the rise of China gives hope for South-South development cooperation that upend existing imperial arrangements often characterized by North-South relations. We argue that the convergence of industrial policy and national security represents more than a temporary response to recent disruptions; it signals a fundamental shift in the world economy towards more economic nationalism.
The Projected Impact of Generative AI on Future Productivity Growth Penn Wharton Budget Model
The Penn Wharton Budget Model (PWBM) team estimates that 40 percent of current GDP could be substantially affected by generative AI. Occupations around the 80th percentile of earnings are the most exposed, with around half of their work susceptible to automation by AI, on average. The highest-earning occupations are less exposed, and the lowest-earning occupations are the least exposed.
AI’s boost to productivity growth is strongest in the early 2030s, with a peak annual contribution of 0.2 percentage points in 2032. After adoption saturates, growth reverts to trend. Because sectors that are more exposed to AI have faster trend TFP growth, sectoral shifts during the AI transition add a lasting 0.04 percentage point boost to aggregate growth.
Compounded, TFP and GDP levels are 1.5% higher by 2035, nearly 3% by 2055, and 3.7% by 2075, meaning that AI leads to a permanent increase in the level of economic activity.
Caution is required in interpreting these projections of AI’s impact, which are based on limited data on AI’s initial effects. Future data and developments in AI technology could lead to a significant change in these estimates.
In ongoing work, PWBM is estimating the impact of AI on the federal budget. In very preliminary analysis, we estimate that AI could reduce deficits by $400 billion over the ten-year budget window between 2026 and 2035.
How Retainable are AI-Exposed Workers? Federal Reserve Bank of New York
Abstract: We document the extent to which workers in AI-exposed occupations can successfully retrain for AI- intensive work. We assemble a new workforce development dataset spanning over 1.6 million job training participation spells from all U.S. Workforce Investment and Opportunity Act programs from 2012 to 2023, linked with occupational measures of AI exposure. Using earnings records observed before and after training, we compare high AI exposure trainees to a matched sample of similar workers who only received job search assistance. We find that the average earnings return to training among AI-exposed workers is high, around $1,470 per quarter. Low-exposure trainees capture higher returns, and trainees who target AI-intensive work face a 29 percent earnings return penalty relative to their high-exposure peers who pursue more general training. We estimate that between 25 and 40 percent of occupations are “AI retrainable” as measured by their workers receiving higher pay for moving to more AI-intensive occupations—a large magnitude given the relatively low-income sample of displaced workers. Positive earnings returns in all groups are driven by the most recent years when labor markets were tightest, suggesting training programs may have stronger signal value when firms reach deeper into the skill market.
Data Centers Make the Beige Book, Plus Power Problems Paul Kedrosky Blog
Recent reports from the Federal Reserve’s Beige Book and five regional Federal Reserve Banks point out that the explosion of data center construction is “causing a step increase in regional electricity loads” – meaning, power generation is the biggest constraint on continued data center capex at the current rate.
