Xi’s Big Mistake

By John Mauldin

I have mixed feelings about China. 

On the plus side, I think the country’s massive economic transformation may be one of the most impressive events in human history. 

Bringing hundreds of millions from primitive rural lives into relatively prosperous cities within a few years was awe-inspiring. 

I greatly admire the millions of Chinese entrepreneurs worldwide who create jobs and technology. 

They’ve helped the entire world in countless ways.

And yet, I can’t forget that China’s leaders are devoted, ideologically centralist communists. 

Americans sometimes apply that term casually to our political opponents. 

Xi Jinping is an actual communist. 

His regime permits some limited market-like activity, but only to help achieve the government’s goals, which remain communist.

When the West first began engaging with China in the 1980s and then allowed it into the World Trade Organization in 2001, many hoped exposure to our ways would tug China toward capitalism. 

It seemed to be happening for the first few decades, too. 

But the hope is fading.

In a 2015 letter (When China Stopped Acting Chinese), I said this:

Beijing’s stimulus efforts created the stock market bubble; now their unsuccessful efforts to keep it from bursting are shaking my confidence in their desire to allow market forces to play a greater role in the transition from a top-down society to a consumer-driven, bottom-up society.

Still, I’ve learned not to underestimate the Chinese leadership. 

They make mistakes but usually recognize them and change course quickly. 

We’ll see what they learn from their current misadventures in stimulus and their attempts at top-down control of an essentially uncontrollable market. 

If they don’t learn the right lessons, China will face an even harder lesson in the future.

Six years later, it looks like Chinese leaders didn’t learn the right lessons. 

Xi has been trying to balance economic freedom and authoritarian control and it’s not working like it used to.

Today we’ll review some recent events that illustrate where Xi went wrong. 

Then we’ll think about whether the Xi government can change course, whether it wants to… and whether it will survive.

Selling the Rope

Chinese ride-hailing company Didi Chuxing had its US initial “public offering” (I’ll explain those quote marks in a minute) last month, raising $4.4 billion. 

The shares plunged a few days later. 


Widely called the “Uber of China,” Didi seems to have good prospects. 

The problems came from outside.

For one, the Chinese government decided to investigate whether Didi presented a “cybersecurity threat.” 

The company was ordered not to accept new users and its mobile apps were taken down from online app stores. 

But audits, or lack thereof, may be a bigger problem, and not just for Didi. 

My friend Mark Grant explains in one of his letters this week:

The core of the issue is that the Chinese government will no longer give US market regulators, any of the regulating bodies, the power to inspect the audits of Chinese companies listed on US exchanges. 

There are at least 248 Chinese companies, listed on three major US exchanges, with a total market capitalization of $2.1 trillion, according to the US-China Economic and Security Review Commission.

Earlier this year the Securities and Exchange Commission began rolling out rules threatening to delist foreign companies from American exchanges if they do not meet US auditing standards for three years. 

The Chinese response was that Chinese regulators will conduct the audit inspections and deliver their conclusions to the US Public Company Accounting Oversight Board. 

This was soundly rejected, as it should have been, by the SEC. (emphasis mine)

In the press, recently, there has been all kinds of talk about the Didi IPO fiasco and the effect on Chinese tech companies and on new Chinese listings. 

This is all fine, but it does not go nearly far enough. 

The issues are much, much bigger.

On the equity side, how can you invest in a Chinese company, any Chinese company, regardless of size, or theoretical revenues or profits, without audited financials? 

There will be no way to know if any of it is accurate and foreign assertations will have all of the reliability of a drop of water purportedly not dripping down the Great Wall, because of the Chinese sunlight. 

No one will have any reliable knowledge of what is actually going on. 

No one, in his right mind, would invest in any company, domiciled anywhere, on this basis.

Mark is right; investors shouldn’t throw money at companies based on financial statements that don’t have some kind of trusted third-party verification.

But there’s a bigger problem here. The Didi IPO was not a normal IPO, at least as we think of them in the West. 

US investors who bought these “shares” don’t actually own equity. 

They own pieces of a Caymans “variable interest entity,” (VIE) which has a contract with the parent company. 

This structure is necessary because under Chinese law foreigners can’t own Chinese shares directly.

Didi duly warned investors in its US offering (see risk factors in their registration statement) that they had no shareholder rights and the Chinese government had final control. 

This isn’t new. US-listed Chinese companies since at least Alibaba in 2014 have used the VIE structure. 

It’s one of those things that works great until it doesn’t.

This arrangement did have a key advantage, though, at least for the Chinese. 

It let Chinese enterprises rake in foreign capital while giving up no ownership and reserving the right to leave their own “investors” high and dry. 

This method may now be approaching its expiration date but it worked well for a long time.

That’s how Xi and the Chinese Communist Party operate. 

They do things that look capitalist but really aren’t, lacing them with unnoticed poison pills for later use. 

It’s similar to their appropriation of US technology, trademarks, and other intellectual property. We are literally selling them the rope.

“Prepare for War”

We should distinguish between Chinese business leaders and the Chinese government. 

I think the former are mostly just trying to run their companies the right way. 

They are like entrepreneurs everywhere, trying to grow their businesses to the best of their ability. 

The latter group makes it difficult and sometimes impossible.

This can be hard to grasp. 

Xi and the other communists really believe they can have it both ways, conducting “business” while also maintaining iron-like control over everything. 

They may not exercise their control, but they want to have it.

Those VIE companies are a good example. 

Some experts say the whole structure is illegal under Chinese law, yet it is widely used. 

The government looks the other way. 

But by doing so, the authorities give themselves a giant weapon they can use any time. 

The business executives are aware of this and modify their behavior accordingly. (Note that verb “modify.”)

In theory, this could still end well. 

Having successfully allowed people a taste of capitalism and its benefits, the government might think it can continue. 

Meanwhile those capitalist benefits might gradually usurp the Communist ideology.

Recent events say that’s unlikely, though. 

Beijing appears to be concluding it has squeezed all the advantage it can from capitalism. 

Is Didi any more a technological risk than scores of other companies? 

Not really. 

Sometimes you have to create object lessons to keep everyone in line.

In hindsight, things seem to have gone wrong after the 2008 financial crisis. 

Facing potential social unrest, China responded with massive debt-financed investment in infrastructure, housing, and other projects. 

Some were needed, others were make-work distractions. 

But all the debt was real. 

And over time, it has become a heavier burden.

Xi Jinping inherited this situation when he took power in 2013. What is his plan? 

According to Cai Xia, a Chinese professor and high-level CCP member and now expatriate dissident living in the US, Chinese Communism hasn’t changed. 

She wrote a lengthy paper under the auspices of the Hoover Institution. 

She maintains Xi is merely dropping the pretense.

Here’s Ambrose Evans-Prichard in a recent Telegraph column, writing a useful summary.

Like many amateur observers of China, I had assumed that Xi Jinping’s iron-fist policies at home and abroad were a break with the more emollient approach from Deng to Hu Jintao (if you can call the Tiananmen Square massacre emollient), when China seemed to be softening from a totalitarian to an authoritarian regime. 

Cai Xia makes clear that the fundamental character of the CCP has been unchanging.

The party has merely dropped the facade and dispensed with Deng Xiaoping’s tactical dictum: “bide your time, and hide your strength” (韬光养晦). 

It has also acquired the means of totalitarian control that Hitler and Stalin could only dream of, whether face recognition technology or digital tracking through the Social Credit System.

The long list of Xi’s affronts, from the Nine Dash Line to the South China Sea, to the pitiless asphyxiation of Hong Kong, to the intimidation of Australia, to the Uighur camps, are by now well-known, culminating in wolf warrior diplomacy and state-sponsored disinformation on Covid-19.

We are so inured to it that President Xi’s “wall of steel” speech at the 100th birthday party almost seems banal. 

We know what the party thinks. 

The Fifth Plenum text setting out China’s strategy until 2035 revives the term “prepare for war” (备战), not used for over half a century.

“Prepare for War” is an exaggeration, at least I hope, but it is growing less unthinkable. 

When you have two great powers whose systems are irreconcilable, and neither is willing to change, the options list shrinks.

Sleepwalking to Confrontation

Not everyone thinks disengagement and confrontation is inevitable. 

Ian Bremmer outlined the issues in his last letter, reaching a different conclusion.

Ian pointed out that unlike the US-USSR Cold War, the US and China are highly interdependent. 

He broke it down into three components:

Hostility (where both countries want the other to fail): This includes mostly the national security issues like Taiwan and the South China Sea, plus issues both countries see as core principles, like China’s treatment of Hong Kong, the Uighurs, and Tibet.

Competition (each wants to outperform, but not destroy the other): These are the economic issues, like international trade and investment, technology, and domestic political stability. 

Both countries are the other’s supplier as well as customer. 

Each wants to win, but also needs the other.

Cooperation (both want to work together for mutual gain): This includes the global challenges like climate change, terrorism, etc. 

They agree on the goals but lack of trust makes cooperation difficult.

We naturally focus on the areas of conflict, but Ian thinks the full US-China relationship is actually working pretty well. 

It changes with time, of course. Ian rates the relationship as currently 20% hostility, 70% competition, and 10% cooperation. 

But he also says much of the competition is becoming hostility.

Ian takes as given that neither country will do anything that would be perceived as “weakness.” 

But if no one will blink, how do you avoid coming to blows? 

Ian thinks it is possible.

More likely, a change in policy comes from internal failures of the present trajectory. 

How would that happen?

In China: Xi leans into more state control of strategic sectors, high-performing talent starts to leave, productivity dives, and growth stalls and debt spirals… giving technocratic Chinese political leaders more space to nudge Beijing policymaking back towards more interdependence.

In the United States: Domestic divisions make industrial policy half-hearted, the private sector retains capture of the regulatory environment, the post-Biden administration renders strategic reorientation of the US economy incoherent and affords allies more space to direct their own course.

Historians tell us the dangers of sleepwalking into confrontation. 

But in the US-China relationship, domestic incoherence and lack of ability to effectively implement long-term strategy makes cold war less likely… precisely because it allows existing forces of interdependence to persist unmolested.

I hope Ian is right. From my perch, I’m not sure much of this is feasible. 

I think Xi has made a giant mistake with recent business crackdowns. 

He may have calculated he can do without Western companies. 

But without them, what will happen to the Chinese businesses that still turn to the US and Europe for capital, customers, expertise, and technology?

Moreover, can the Chinese miracle continue if millions of small entrepreneurs stop believing the government will let them succeed? 

I don’t mean big companies. 

I’m talking about restaurant owners, drivers, shopkeepers—all those who keep the economy moving.

Cai Xia, who was in a position to know, has an even more chilling outlook.

Cai Xia’s contention is that the Communist regime is more brittle than it looks, like the Soviet regime before the end. 

“I recommend that the US be fully prepared for the possible sudden disintegration of the [Chinese Communist Party],” she said.

Imagining what such a “sudden disintegration” would look like, I suspect it wouldn’t be pretty, even if good in the long run. 

Economically, it could make 2008 or even the COVID pandemic look mild.

China Problems and Big Brother

China is facing large problems, some obvious and others more subtle. 

But I think problem number one is Xi has made a giant mistake with recent business crackdowns.

China is the ultimate Orwellian Big Brother state. 

Especially within the cities, the government can literally watch everything you do and track everything you buy, from your noodles to your clothes, who you talk to, what websites you visit. 

All of the data Chinese corporations gather is available to the CCP, who use it to create China’s “social credit system.” 

If you Google that, the first thing that pops up says this:

The China social credit system is a broad regulatory framework, intended to report on the “trustworthiness” of individuals, corporations, and governmental entities across China.

The consequences of a poor social credit score can be serious. 

It affects travel prospects, employment, banking access, and ability to enter contracts

On the other hand, a positive credit score can make a range of business transactions easier for both individuals and corporations. 

Foreign businesses have to work with consultants to make sure they have good social credit scores, and the CCP dictates what that means. 

It is the ultimate top-down centralist panopticon.

As mentioned at the beginning, many Chinese are quite entrepreneurial, given the opportunity. 

That being said, entrepreneurialism is not a racial characteristic. 

There is something in an entrepreneur that makes them want to start their own business or enterprise. 

A willingness to take risk is obviously part of that DNA. 

The United States is extraordinarily lucky in that we attracted people who were willing to take risks simply to come here.

I may not understand the Chinese mindset, but I think I have a pretty good grasp of the entrepreneurial mindset. 

Successful entrepreneurs don’t fit into a mold. 

You can see why some entrepreneurs thrive and you have to scratch your head to figure out how others did it. 

Some work well within their system. 

Others simply create new territory and methods.

Xi is going to deprive China of that second set of entrepreneurs, those willing to create something entirely new that might not fit well within the current social credit system. 

I think the growing Big Brother state will stifle innovation. 

Who wants to risk their social credit score? 

It is one thing to risk your reputation and capital, and another to risk your ability to live and work.

China’s panopticon blocks that risk-taking impulse. 

The consequences will accumulate and reduce growth. 

And with over half the country still living in extreme poverty, that doesn’t bode well for the future.

Further, China has a serious demographic problem. 

The one-child policy instituted in 1980 really kicked in around 1990, as you can see in the population pyramid below.

Source: Index Mundi

Normally, population pyramids are actual pyramids. 

Let’s look at India as an example. 

This is a population pyramid.

Source: Index Mundi

While we are on this, let’s look at Japan:

Source: Index Mundi

Japan has similar demographic characteristics to China, but with one huge difference. 

Japan grew rich while it grew older. 

China has grown older before growing rich.

All countries have problems, but even with all its impressive growth and infrastructure, China has more. 

Which to me makes it more dangerous.

The SEC is correctly insisting on audits for Chinese companies listed on US exchanges. 

I personally think we should ban new Chinese listings unless they agree to US audit standards. 

Kicking out currently-listed Chinese companies will be trickier, as US investors don’t actually own the shares many think they do. 

We don’t want to blow a $2 trillion hole into US investor assets.

US corporations need to rethink how they approach China. 

For some, there will be few issues. 

For others? 

Real problems.

This week the Biden administration warned US companies about doing business in Hong Kong. 

China has essentially removed the rule of law that enabled Hong Kong’s financial activity. 

The US advisory reportedly cites the risks of electronic surveillance and having to surrender corporate and customer data to the government.

Xi apparently thinks that it is time to forgo access to the US markets. 

Maybe he thinks Chinese companies can list in Hong Kong and Westerners will still invest. 


Then again, maybe not.

Rule of law should be critical to any right-thinking investor. When the CCP can nudge an auditor to give a thumbs-up or thumbs-down based on some concept of social credit, how can you trust their assurances? Will that happen often? We don’t know. But we know it’s possible.

I’m not saying avoid China entirely, as there are still opportunities. 

But you should have your eyes wide open and understand the risks. 

I would prefer China-exposed US or other Western companies that give you real audits and normal shareholder rights.

China is going to be a massive headache for the world over the next few decades.

Washington DC, Maine, and Colorado

I plan to go to Washington DC for a few days before heading out to Bangor, Maine, and then Grand Lake Stream for Camp Kotok, the annual fishing and economic fest. 

This year my youngest son Trey (who is now 26) will once again accompany me, which he has done for most years since he was 12. 

Then I will go to Steamboat, Colorado, for a speaking engagement before heading home.

The problems in Cuba are a topic of interest here in Puerto Rico. 

Interesting conversations. 

People ask why the US turns away Cubans fleeing political unrest and persecution but accepts those fleeing Central America for similar reasons? 

I don’t have a good answer, at least one that is politically correct.

We also talked about entrepreneurs. 

The Cuban community in Florida is nothing if not entrepreneurial. 

They have been a huge plus to the local and national culture. 

Growing up with immigrants (legal and illegal) from mostly Mexico, I would argue that they have also contributed to a vibrant culture within Texas and the border states. 

I have consistently been pro-immigration for 40 years.

I want risk-takers and freedom-lovers from all over the world, especially those with education and talent, to share in the American experiment.

And with that, I will hit the send button. 

Have a great week and remember where your ancestors came from. 

Most of us came from risk-taking immigrants.

Your needing more space to talk about China analyst,

John Mauldin
Co-Founder, Mauldin Economics

Rocks and hard places

Big miners’ capital discipline is good news for investors

Not, alas, for the planet

High in the mountains of southern Peru lies Quellaveco, a vast open-pit copper mine. 

It is one of the world’s largest untapped deposits of the red metal. 

Anglo American, a mining giant and its majority owner, has, along with another investor, spent over $5bn getting it up and running. 

It is expected to come online in 2022. 

Once operational it will add more than 10% to the copper output of Peru, the world’s second-biggest producer of the stuff.

In the past when commodity prices were surging, as they have been of late (see chart 1), the world’s miners would be piling into projects like Quellaveco. 

This time the notable thing about it is its uniqueness. 

Few of the diversified mining behemoths—Anglo American, bhp, Glencore, Rio Tinto and Vale—have big new mines in the works. 

That is partly because of the industry’s long lead times; Anglo bought Quellaveco in 1992. 

But other forces, too, lie beneath the subdued investment. 

They will have consequences for the mineral-intensive energy transition towards a climate-friendlier world.

The big five miners consolidated their market power with a spate of huge mergers in the 2000s, just in time for China’s emergence as a voracious consumer of metals. 

The result was a 15-year supercycle of high prices. 

Miners splurged around $1trn chasing higher volumes and mega-projects. 

Many proved disastrous—perhaps a fifth of that investment was returned to shareholders, according to one estimate. 

After a round of firings, a new generation of mining bosses promised to do better. 

In the past few years value, not volume, became the industry’s watchword. 

“We will never lose our capital discipline,” vows Eduardo Bartolomeo, boss of Vale.

So far the miners have kept their promise. 

Although capital spending in the industry has grown since 2015, it is still 50% below its peak in 2012. 

Most of that has gone on sustaining current output, not adding new capacity. 

Even as rising metals prices have padded profit margins, spending on exploration has stayed low, notes Danielle Chigumira of Bernstein, a broker (see chart 2). That is a break from the past.

Whether the sobriety lasts will depend on a fresh crop of ceos. 

In the past 18 months three of the big five got new bosses. 

In January 2020 Mike Henry took the reins at bhp. 

A year later Jakob Stausholm became boss of Rio Tinto, after his predecessor was fired in the wake of the destruction of a 46,000-year-old Aboriginal site in Australia. 

On July 1st Gary Nagle will take the top job at Glencore, ending Ivan Glasenberg’s 19-year reign at the Swiss-based trader-turned-miner. 

Mark Cutifani, Anglo American’s boss, may retire next year.

Their biggest challenge is responding to the energy transition. 

The companies have taken some defensive steps, getting out of the most carbon-intensive operations. 

Rio Tinto left the thermal-coal business in 2018. 

On June 6th Anglo spun off its coal operation. 

bhp and Vale have promised to do the same. 

Mines across the world are emitting less carbon dioxide, as operators invest in renewable power and try to electrify mining vehicles.

On paper, the energy transition could be a mining bonanza. 

If the world is to meet the Paris climate agreement’s target of limiting global warming to 1.5°C above pre-industrial levels, the demand for metals such as cobalt, copper, lithium and nickel will explode. 

The International Energy Agency, a forecaster, calculates that an electric car needs six times the mineral content of one with an internal combustion engine.

The average onshore wind farm is nine times more resource-intensive than a gas-fired power plant.

Shifting towards green metals is, however, proving harder than moving away from dirty minerals. 

The big-five miners’ portfolios are weighed down with commodities from the past supercycle. 

Iron ore and fossil fuels still account for over half their mining revenues and three-quarters of their gross operating profits. 

High metal prices make potential targets look dear.

The other option, developing their own projects, also presents problems. 

One is investors. 

Since torching shareholder value the last time around, miners have been on a tight leash. 

Bosses “know the way to be sacked is to have one of these mega-projects”, says one big investor. 

Much of the cash flowing in thanks to surging commodity prices is going back to shareholders in record dividends and buy-backs. 

One mining executive fears that the fat returns have changed the make-up of his shareholders, attracting yield-hungry investors averse to growth projects.

Second, many energy-transition metals are simply too small a market for the big miners to bother with. 

Take lithium, which is used in batteries. 

In 2004 Rio Tinto discovered a large deposit in Jadar in Serbia. 

When the project comes online in a few years it may add 2-3% to Rio’s revenue, reckons Liam Fitzpatrick of Deutsche Bank. 

That is not enough to move the needle at a firm with a market value of $140bn. 

The market for cobalt is even smaller.

The exception is copper. 

Its ubiquitous use in electrical wiring makes it one of the biggest metals markets by value even today. 

If the world is to meet its climate goals, demand for it could almost triple. 

However, finding a big new copper project is hard. 

Prospected deposits are getting smaller and ore grades worse. 

That makes mining them more expensive. 

Possibly except for swashbuckling Glencore, big miners increasingly steer clear of less-explored copper-rich regions like the Democratic Republic of Congo (drc), which tend to be politically unstable. 

Even when miners find a seam, increasing output is a slog—and becoming more of one as public pressure mounts on miners to mitigate risks to the local environment and residents. 

The average mine takes over 15 years to move from discovery to production.

Then there is resource nationalism. 

The covid-19 pandemic has emptied government coffers. 

Miners worry that they will be asked to make up the shortfall. 

Chile, the world’s largest copper producer, is rewriting its constitution. 

A new bill making its way through parliament could slap an 80% tax on mining profits. 

Peru’s left-wing president-elect, Pedro Castillo, wants to tax mining profits at 70%. 

Zambia and Panama, two other copper-rich countries, are also considering higher taxes.

One thing that could loosen the mining supermajors’ purse-strings is competition. 

Small firms, such as Lithium Americas and Global Cobalt, hope to strike it big. 

So do some non-Western giants. 

Norilsk Nickel, a large Russian miner, plans to invest $15bn-17.5bn over five years (last year it spent $1.7bn). 

Zijin Mining, a Chinese rival, also has big expansion plans. 

If prices stay high—which some mining bosses doubt given their rapid rise, as well as copper’s slide since its peak in May—certain big projects in tricky places like the drc may begin to look attractive again.

Price support could come courtesy of governments in the West. 

On June 8th the White House published an inter-agency review of supply chains, arguing for more action in securing critical minerals, including lithium and nickel. 

The eu wants to do the same with its green industrial strategy. 

Mr Bartolomeo of Vale expects miners to forge more strategic partnerships with national authorities in the future.

If supply does not increase, however, shortages of some metals such as copper may prove unavoidable. 

Some of the shortfall could perhaps be met by substituting other metals or more recycling of previously used ones. 

But not all of it. 

Investors applaud the mining bosses’ newfound restraint. 

The planet may prefer a return to past exuberance.

"No One Is Safe": Extreme Weather Batters the Wealthy World

Floods swept Germany, fires ravaged the American West and another heat wave loomed, driving home the reality that the world’s richest nations remain unprepared for the intensifying consequences of climate change.

By Somini Sengupta

Some of Europe’s richest countries lay in disarray this weekend, as raging rivers burst through their banks in Germany and Belgium, submerging towns, slamming parked cars against trees and leaving Europeans shellshocked at the intensity of the destruction.

Only days before in the Northwestern United States, a region famed for its cool, foggy weather, hundreds had died of heat. 

In Canada, wildfire had burned a village off the map. 

Moscow reeled from record temperatures. 

And this weekend the northern Rocky Mountains were bracing for yet another heat wave, as wildfires spread across 12 states in the American West.

The extreme weather disasters across Europe and North America have driven home two essential facts of science and history: The world as a whole is neither prepared to slow down climate change, nor live with it. 

The week’s events have now ravaged some of the world’s wealthiest nations, whose affluence has been enabled by more than a century of burning coal, oil and gas — activities that pumped the greenhouse gases into the atmosphere that are warming the world.

“I say this as a German: The idea that you could possibly die from weather is completely alien,” said Friederike Otto, a physicist at Oxford University who studies the links between extreme weather and climate change. 

“There’s not even a realization that adaptation is something we have to do right now. 

We have to save people’s lives.”

The floods in Europe have killed at least 165 people, most of them in Germany, Europe’s most powerful economy. 

Across Germany, Belgium, and the Netherlands, hundreds have been reported as missing, which suggests the death toll could rise. 

Questions are now being raised about whether the authorities adequately warned the public about risks.

Flood damage in Erftstadt, Germany, on Friday.Credit...Sebastien Bozon/Agence France-Presse — Getty Images
A dry Hensley Lake in Madera, Calif., on Wednesday.Credit...David Swanson/Reuters

The bigger question is whether the mounting disasters in the developed world will have a bearing on what the world’s most influential countries and companies will do to reduce their own emissions of planet-warming gases. 

They come a few months ahead of United Nations-led climate negotiations in Glasgow in November, effectively a moment of reckoning for whether the nations of the world will be able to agree on ways to rein in emissions enough to avert the worst effects of climate change.

Disasters magnified by global warming have left a long trail of death and loss across much of the developing world, after all, wiping out crops in Bangladesh, leveling villages in Honduras, and threatening the very existence of small island nations. 

Typhoon Haiyan devastated the Philippines in the run-up to climate talks in 2013, which prompted developing-country representatives to press for funding to deal with loss and damage they face over time for climate induced disasters that they weren’t responsible for. 

That was rejected by richer countries, including the United States and Europe.

“Extreme weather events in developing countries often cause great death and destruction — but these are seen as our responsibility, not something made worse by more than a hundred years of greenhouse gases emitted by industrialized countries,” said Ulka Kelkar, climate director at the India office of the World Resources Institute. 

These intensifying disasters now striking richer countries, she said, show that developing countries seeking the world’s help to fight climate change “have not been crying wolf.”

Indeed, even since the 2015 Paris Agreement was negotiated with the goal of averting the worst effects of climate change, global emissions have kept increasing. 

China is the world’s biggest emitter today. 

Emissions have been steadily declining in both the United States and Europe, but not at the pace required to limit global temperature rise.

A reminder of the shared costs came from Mohamed Nasheed, the former president of the Maldives, an island nation at acute risk from sea level rise.

What recent extreme weather disasters are revealing about the world and climate change.

Climate change takes center stage in Germany’s election campaign.

‘I am heartbroken’: Returning home to devastation, with a sense of shock.

“While not all are affected equally, this tragic event is a reminder that, in the climate emergency, no one is safe, whether they live on a small island nation like mine or a developed Western European state,” Mr. Nasheed said in a statement on behalf of a group of countries that call themselves the Climate Vulnerable Forum.

Municipal vehicles sprayed water in central Moscow on July 7 to fight midday heat.Credit...Alexander Nemenov/Agence France-Presse — Getty Images

The Bootleg Fire in southern Oregon this week.Credit...John Hendricks/Oregon Office of State Fire Marshal, via Associated Press

The ferocity of these disasters is as notable as their timing, coming ahead of the global talks in Glasgow to try to reach agreement on fighting climate change. 

The world has a poor track record on cooperation so far, and, this month, new diplomatic tensions emerged.

Among major economies, the European Commission last week introduced the most ambitious road map for change. 

It proposed laws to ban the sale of gas and diesel cars by 2035, require most industries to pay for the emissions they produce, and most significantly, impose a tax on imports from countries with less stringent climate policies.

But those proposals are widely expected to meet vigorous objections both from within Europe and from other countries whose businesses could be threatened by the proposed carbon border tax, potentially further complicating the prospects for global cooperation in Glasgow.

The events of this summer come after decades of neglect of science. 

Climate models have warned of the ruinous impact of rising temperatures. 

An exhaustive scientific assessment in 2018 warned that a failure to keep the average global temperature from rising past 1.5 degrees Celsius, compared to the start of the industrial age, could usher in catastrophic results, from the inundation of coastal cities to crop failures in various parts of the world.

The report offered world leaders a practical, albeit narrow path out of chaos. 

It required the world as a whole to halve emissions by 2030. 

Since then, however, global emissions have continued rising, so much so that global average temperature has increased by more than 1 degree Celsius (about 2 degrees Fahrenheit) since 1880, narrowing the path to keep the increase below the 1.5 degree Celsius threshold.

As the average temperature has risen, it has heightened the frequency and intensity of extreme weather events in general. 

In recent years, scientific advances have pinpointed the degree to which climate change is responsible for specific events.

For instance, Dr. Otto and a team of international researchers concluded that the extraordinary heat wave in the Northwestern United States in late June would almost certainly not have occurred without global warming.

A firefighting helicopter in Siberia in June. Credit...Maksim Slutsky/Associated Press

Lytton, British Columbia, devastated by wildfires last month. Credit...Darryl Dyck/The Canadian Press, via Associated Press

And even though it will take extensive scientific analysis to link climate change to last week’s cataclysmic floods in Europe, a warmer atmosphere holds more moisture and is already causing heavier rainfall in many storms around the world. 

There is little doubt that extreme weather events will continue to be more frequent and more intense as a consequence of global warming. 

A paper published Friday projected a significant increase in slow-moving but intense rainstorms across Europe by the end of this century because of climate change.

“We’ve got to adapt to the change we’ve already baked into the system and also avoid further change by reducing our emissions, by reducing our influence on the climate,” said Richard Betts, a climate scientist at the Met Office in Britain and a professor at the University of Exeter.

That message clearly hasn’t sunk in among policymakers, and perhaps the public as well, particularly in the developed world, which has maintained a sense of invulnerability.

The result is a lack of preparation, even in countries with resources. 

In the United States, flooding has killed more than 1,000 people since 2010 alone, according to federal data. In the Southwest, heat deaths have spiked in recent years.

Sometimes that is because governments have scrambled to respond to disasters they haven’t experienced before, like the heat wave in Western Canada last month, according to Jean Slick, head of the disaster and emergency management program at Royal Roads University in British Columbia. 

“You can have a plan, but you don’t know that it will work,” Ms. Slick said.

Other times, it’s because there aren’t political incentives to spend money on adaptation.

“By the time they build new flood infrastructure in their community, they’re probably not going to be in office anymore,” said Samantha Montano, a professor of emergency management at the Massachusetts Maritime Academy. 

“But they are going to have to justify millions, billions of dollars being spent.”

Christopher Flavelle contributed reporting.

Somini Sengupta is an international climate correspondent. She has also covered the Middle East, West Africa and South Asia for The Times and received the 2003 George Polk Award for her work in Congo, Liberia and other conflict zones. 

Where human life began

The promise of the African genome project

A Cameroonian professor hopes to illuminate human genetic diversity

When the Mutambaras’ first son was a about 18 months old they began to worry about his hearing. 

The toddler did not respond when asked to “come to Mama”. 

He was soon diagnosed as deaf, though no doctor could tell the Zimbabwean couple the cause. 

Several years later their second son was also born deaf.

This time a doctor referred them to Hearing Impairment Genetics Studies in Africa (hi-genes), set up in 2018 by Ambroise Wonkam, a Cameroonian professor of genetics now at the University of Cape Town. 

The project is sequencing the genomes of Africans with hearing loss in seven countries to learn why six babies in every 1,000 are born deaf in Africa, a rate six times that in America. 

In Cape Town, where Mr and Mrs Mutambara (not their real names) live, a counsellor explained that the boys’ deafness is caused by genetic variants rarely found outside Africa.

What is true of deafness is true of other conditions. 

The 3bn pairs of nucleotide bases that make up human dna were first fully mapped in 2003 by the Human Genome Project. 

Since then scientists have made publicly available the sequencing of around 1m genomes as part of an effort to refine the “reference genome”, a blueprint used by researchers. 

But less than 2% of all sequenced genomes are African, though Africans are 17% of the world’s population (see chart). 

“We must fill the gap,” argues Dr Wonkam, who has proposed an initiative to do just that—Three Million African Genomes (3mag).

The evolutionary line leading to Homo sapiens diverged 5m-6m years ago from that leading to chimpanzees, and for almost all that time the ancestors of modern humans lived in Africa.

Only about 60,000 years ago did Homo sapiens venture widely beyond the continent, in small bands of adventurers. 

Most of humanity’s genetic diversity, under-sampled though it is, is therefore found in Africa. 

Unfortunately, that diversity is also reflected in the greater variety of genetic illnesses found there.

The bias in sequencing leads to under-diagnosis of diseases in people of (relatively recent) African descent. 

Genetic causes of heart failure, such as the one that caused the ultimately fatal collapse of Marc-Vivien Foé, a Cameroonian football player, during a game in 2003, are poorly understood. 

The variation present in most non-Africans with cystic fibrosis is responsible for only about 30% of cases in people of African origin. 

This is one reason, along with its relative rarity, that the illness is often missed in black children. 

Standard genetic tests for hearing loss would not have picked up the Mutambara boys’ variations. 

And such is the diversity within the continent that tests in some countries would be irrelevant in others. 

In Ghana hi-genes found one mutation responsible for 40% of inherited deafness. 

The same variation has not been found in South Africa.

Bias also means that little is known about how variations elsewhere in the genome modify conditions. 

With sickle-cell disease, red blood cells look like bananas rather than, as is normal, round cushions. 

About 75% of the 300,000 babies born every year with sickle-cell disease are African. 

The high share reflects a bittersweet twist in the evolutionary tale; sickle-cell genes can confer a degree of protection against malaria. 

Other mutations are known to lessen sickle-cell’s impact, but most knowledge of genetic modifiers is particular to Europeans.

Quicker and more accurate diagnosis would mean better treatment. 

The sooner parents know their children are deaf, the sooner they can begin sign language. 

Algorithms that incorporate genetic information, such as one for measuring doses of warfarin, a blood-thinner, are often inappropriately calibrated for Africans.

Knowing more about Africans’ genomes will benefit the whole world. 

The continent’s genetic diversity makes it easier to find rare causes of common diseases. 

Last year researchers investigating schizophrenia sequenced the genomes of about 900 Xhosas (a South African ethnic group) with the psychiatric disorder. 

They found some of the same mutations that a team had discovered in Swedes four years earlier. 

But those researchers had to analyse four times as many of the homogeneous Scandinavians to find it. 

Research by Olufunmilayo Olopade, a Nigerian-born oncologist, into why breast cancer is relatively common in Nigerian women, has revealed broad insights into tumour growth.

Dr Wonkam’s vision for 3mag, as outlined in Nature, a scientific journal, is for 300,000 African genomes to be sequenced per year over a decade. 

That is the minimum needed to capture the continent’s diversity. 

He notes that the uk biobank is sequencing 500,000 genomes, though Britain’s population is a twentieth the size of Africa’s. 

The plummeting cost of technology makes 3mag possible. Sequencing the first genome cost $300m; today the cost of sequencing is around $1,000. 

If data from people of African descent in similar projects, like the uk biobank, were shared with 3mag, that would help.

So too would collaboration with genetics firms, such as 54Gene, a Nigerian start-up.

The 3mag project is building on firm foundations. 

Over the past decade the Human Heredity and Health in Africa consortium, sponsored by America’s National Institutes of Health and the Wellcome Trust, a British charity, has supported research institutes in 30 African countries. 

It has funded local laboratories for world-class scientists such as Dr Wonkam and Christian Happi, a Nigerian geneticist.

There are practical issues to iron out. 

One is figuring out how to store the vast amounts of data. 

Another is rules around consent and data use, especially if 3mag will involve firms understandably keen to commercialise the findings. 

Dr Wonkam wants to see an ethics committee set up to review this and other matters.

At times he has wondered whether his plan is “too big, too crazy and too expensive”. 

But similar things were said about the Human Genome Project. 

Its researchers used the Rosetta Stone as a metaphor for the initiative and its ambition. 

In a subtle nod, Dr Wonkam has a miniature of the obelisk on a shelf in his office. 

It is also a reminder of how understanding African languages, whether spoken or genetic, can enlighten all of humanity.