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How to prevent a war between America and China over Taiwan

Also: Thanks to Putin, Germany has woken up

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Also: Thanks to Putin, Germany has woken up
The Economist

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August 11th 2022

The Economist this week

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We have two covers this week. In our American and Asian editions we argue that the crisis triggered by the visit of Nancy Pelosi, speaker of the House of Representatives, to Taiwan has exposed the fragility of the status quo. Since the previous stand-off in 1995-96, America, China and Taiwan have all grown uneasy with the ambiguities and contradictions on which peace precariously rests. China, especially, has bared its teeth. If the world is to avoid war, it urgently needs to strike a new balance. The danger in this is that China uses the crisis to set new boundaries for its encroachments into what Taiwan considers its airspace and territorial waters. China could also attempt to impose even stricter limits on the island’s dealings with the rest of the world. That must not happen. 
In our European editions we examine the new Germany. Complacent and just a little self-satisfied, Europe’s most important country was late to realise how fast the world was changing around it. Now, however, Vladimir Putin’s invasion of Ukraine has prodded it into action. A remarkable opportunity is within its grasp, as Germans experience a rare thing in a democracy: a consensus about the need for broad, sweeping change to the economy and security. Three days after the invasion, Olaf Scholz, then a new chancellor heading an untested coalition, gave his much-applauded Zeitenwende speech to the Bundestag, signalling a break with the country’s post-war tendency towards pacifism. He has set the agenda for years to come. Mr Putin’s warmongering may prove to be the catalyst that turns Germany into his own nightmare: a stronger, bolder, more determined leader of a more united Europe.

Zanny Minton Beddoes

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The world this week

After months of gridlock, America’s Senate passed a giant spending bill focusing on climate change, health care and tax reform. In a big advance for Joe Biden’s green agenda, families and companies will be given incentives to buy electric cars and energy-efficient appliances, and clean-energy generation will be expanded. On health, the government will be allowed to negotiate lower prices with drug firms, which will benefit the elderly. The tax reforms include a 15% minimum corporate tax based on income reported to shareholders. Named the Inflation Reduction Act, it is anything but. Still, it is a win for Mr Biden, a year after the demise of his larger $3.5trn spending bill.

More from Politics this week

America’s annual rate of inflation, measured by the consumer-price index, dropped to 8.5% in July, from 9.1% in June. Petrol prices explained the dip. The average price of a gallon of car fuel is now just under $4; in mid-June it was around $5. The economy is also cooling, shrinking by 0.9% at an annual rate in the second quarter after a contraction of 1.6% in the first. The labour market is still red hot, however. Employers created 528,000 jobs in July, many more than had been expected.

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