“Techlash”

Exhibit 65: Chinese Flight Incursions Into the Taiwanese Air Defense Identification Zone

The number of Chinese military incursions into Taiwan’s Air Defense Identification Zone has increased.

ACR Aircraft Involved in Incursion 60

50

40

30

20

10

0 Nov-20 Feb-21 May-21 Aug-21 Nov-21

Data through December 31, 2021. Source: Investment Strategy Group, Ministry of National Defense of Taiwan.

• Spread China’s influence • Undercut US influence • Drive wedges between Washington and its allies and partners • Maintain China’s innovation and industrial policies • Use opportunities to reduce tensions with

Washington33 These are long-term goals that do not pose an immediate threat to global growth or financial markets in 2022. The most serious geopolitical risk is a Chinese takeover of Taiwan. As shown in Exhibit 65, Chinese military incursions into Taiwan’s Air Defense Identification Zone have increased in frequency and in terms of the number of aircraft involved over the past year. While neither Carter nor Bremmer expect an imminent invasion of Taiwan, both warn of increased rhetoric and provocations. Of course, there is always a risk of misstep or accident such as the 2001 collision of a US Navy spy plane and a Chinese fighter jet.

Aside from Taiwan, both President Xi Jinping and President Biden have other priorities in 2022.

President Xi is most likely to be focused on securing his third term at the 20th National Congress of the CCP in October 2022, keeping COVID-19 under control and maintaining growth while addressing the debt overhang epitomized by the financial problems of property developers like Evergrande.

Similarly, President Biden is most likely to be focused on bringing COVID-19 under control, advancing the Build Back Better agenda—albeit on a smaller scale than originally envisioned— and trying to minimize the losses from the midterm elections where Democrats are projected to lose a large number of seats in the House of Representatives.

North Korea: We are least worried about rising geopolitical tensions with North Korea. Its leader, Kim Jong Un, made considerable progress during the Trump administration in building its nuclear weapons and increasing its long-range missile capabilities. While experts say that North Korea continues its military capabilities, Kim Jong Un’s focus seems to have turned to domestic issues.

In a speech at a five-day plenary meeting of the Workers’ Party’s Central Committee in late December 2021, the North Korean leader emphasized fighting COVID-19 as the top priority, followed by boosting agricultural production.34

Joe Biden and the 100-day obsession The true cost of long covid Sleaze and the Tories A history of post-pandemic booms

MAY 1ST–7TH 2021

The most dangerous place on Earth

A Chinese takeover of Taiwan is a serious geopolitical risk.

“Techlash”

The backlash against technology companies that we highlighted last year has continued.

As discussed by Kostin in his 2022 US equity outlook, the Federal Trade Commission under the Biden administration has undertaken