Afternoon Coffee: China Plans to Develop ‘Polar Silk Road,’ How Tax Reform is Driving Increased Automation

China announced plans Monday to develop shipping lanes through the Arctic to become a “Polar Silk Road,” the BBC reports. The Chinese government said it would work with Russia and other Arctic countries to create viable routes that could become available due to global warming. The new route could take 20 days off of the 48 days it currently takes to get to Rotterdam from China via the Suez Canal.

Automation Incentives

Incentives in the new tax code are hastening the push by manufacturers to modernize, especially to install new robots and replace aging machines sooner than planned, according to the Wall Street Journal. For the next five years companies can immediately deduct the entire cost of equipment purchases from their taxable income, encouraging some companies to forgo hiring hard-to-find labor and instead double-down on automation.

NAFTA Update

Officials from the U.S., Canada and Mexico will wrap up the sixth of seven planned rounds of talks on modernizing the North American Free Trade Agreement (NAFTA) Monday in Montreal, where representatives claimed signs of optimism have started to appear. As Reuters reports, major disagreements remain between the three parties, but some sections, such as the chapter on anti-corruption and other less controversial areas, have been completed recently.

Durable Goods

And finally, a manufacturing update: Orders for durable goods rose 2.9% in December, according to CNBC, far outpacing the 0.8% increase expected by economists and foreshadowing continued strength for American industry in 2018.

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