Economic
World Bank Warns of Global Recession Next Year if Central Banks Lift Interest Rates Too High
Central banks’ efforts to tame inflation could tip the world economy into recession next year, according to a new World Bank study that encouraged policy makers in major economies to keep in mind the spillover effects of monetary tightening. Central banks around the world have been rapidly raising interest rates this year in an effort to reduce the highest inflation in decades. In the U.S., the Federal Reserve is on track to lift interest rates by at least 0.75 percentage point at its meeting next week, while central banks in England, Canada and the European Union have all also raised rates recently. If expected rate increases fail to lower inflation to central banks’ targets, monetary policy officials may raise rates higher than expected, which could cause a recession, the World Bank authors wrote. “Global growth is slowing sharply, with further slowing likely as more countries fall into recession,” said World Bank Group President David Malpass. “My deep concern is that these trends will persist, with long-lasting consequences that are devastating for people in emerging market and developing economies.” Because both fiscal and monetary policy makers are trying to reduce inflation, they would be unlikely to try to boost economic demand in the event of a slowdown, the study found. The combination of both monetary and fiscal tightening could accelerate a potential slowdown. Click here to read…
Dollar’s Rise Spells Trouble for Global Economies
The U.S. dollar is experiencing a once-in-a-generation rally, a surge that threatens to exacerbate a slowdown in growth and amplify inflation headaches for global central banks. The dollar’s role as the primary currency used in global trade and finance means its fluctuations have widespread impacts. The currency’s strength is being felt in the fuel and food shortages in Sri Lanka, in Europe’s record inflation and in Japan’s exploding trade deficit. This week, investors are closely watching the outcome of the Federal Reserve’s policy meeting for clues about the dollar’s trajectory. The U.S. central bank is expected Sept 21 to raise interest rates by at least 0.75 percentage point as it fights inflation—likely fueling further gains in the greenback. In a worrying sign, attempts from policy makers in China, Japan and Europe to defend their currencies are largely failing in the face of the dollar’s unrelenting rise. Last week, the dollar steamrolled through a key level against the Chinese yuan, with one dollar buying more than 7 yuan for the first time since 2020. Japanese officials, who had previously stood aside as the yen lost one-fifth of its value this year, began to fret publicly that markets were going too far. The ICE U.S. Dollar Index, which measures the currency against a basket of its biggest trading partners, has risen more than 14% in 2022, on track for its best year since the index’s launch in 1985. Click here to read…
UN launches education facility
UN Secretary-General Antonio Guterres and his special envoy for global education, Gordon Brown, on Sept 17 launched the multibillion dollar International Finance Facility for Education (IFFEd). With the first projects expected in 2023, IFFEd will support education and skills development investments in lower-middle-income countries. With an initial funding of $2 billion, the facility is expected to expand to $10 billion by 2030. Since the COVID-19 pandemic began, two-thirds of countries have cut their education budgets, but education is the building block of peaceful, prosperous, stable societies, said Guterres at a joint press conference with Brown. Guterres said that the “world is experiencing multiple crises,” and governments, businesses and families everywhere are feeling the financial strain. “But education is the building block for peaceful, prosperous, stable societies,” he stressed. “Reducing investment virtually guarantees more serious crises further down the line. We need to get more, not less, money into education systems.” Wealthy countries can increase funding from domestic sources, but many developing countries are being hit by the cost-of-living crisis, and urgently need support for education, Guterres said, adding that this is exactly the role of the IFFEd. This facility is aimed at getting financing to lower-middle-income countries – home to half of the world’s children and youth – and to the majority of the world’s displaced and refugee children, he noted. Click here to read…
UN urges Moscow and Kiev to allow fertilizer exports – FT
The UN is carrying out “urgent” negotiations with Russia and Ukraine to secure a deal on chemical exports through the Black Sea in a bid to prevent a global food crisis, the Financial Times reported on Sept 13, citing people familiar with the matter. According to the outlet, UN diplomats are in talks with Moscow and Kiev on reopening a pipeline to transport ammonia from Russia to Ukraine’s Black Sea port of Yuzhny (renamed “Pivdennyi”) and further to the global markets. Ammonia is a key ingredient in fertilizer production, with Russia accounting for 20% of global exports. A major pipeline transporting the chemical from Russia’s southwestern Samara region to the Ukrainian port was shut down following the start of hostilities between the two countries in late February. The pipeline has the capacity to carry about 2.3 million tons of ammonia a year. Its closure contributed to a surge in fertilizer prices which have more than doubled in the past year. “Talks are moving in the right direction and every effort is being made by all parties at every level to ensure a positive outcome,” the FT quoted Rebeca Grynspan, the UN trade official, as saying. The proposal, if successful, will help resume exports of about 2 million tons of Russian fertilizers, worth $2.4 billion via the same sea corridor which has been unblocked following a grain deal between Russia and Ukraine. Click here to read…
Russia to become China’s largest gas supplier – Gazprom
Russian energy giant Gazprom is likely to become the largest natural gas supplier to the Chinese market, as deliveries are constantly growing, the deputy director of the strategy department, Kirill Polous, stated on Sept 13. “Taking into account the previously signed contract for the supply of gas under the Power of Siberia project, the total contracted volumes amount to 48 billion cubic meters [including deliveries from Russia’s Far East]. With a high degree of probability, after reaching the specified volume of exports, Russia may become the largest gas supplier to China,” he said during discussion at the St. Petersburg International Gas Forum. “At the same time, it is also important that while developing cooperation in the gas industry, Russia and China do not increase mutual dependence to critical levels,” he noted. Polous also noted the shift to national currencies in trade settlements between the two countries, saying that “during the Eastern Economic Forum, an agreement was reached to transfer payment for gas supplies via the Power of Siberia gas pipeline into rubles and yuan.” “We are talking about stable pricing mechanisms and the absence of regulatory barriers for the implementation of gas projects,” he stressed. Gazprom has been ramping up gas exports to China via the Power of Siberia mega pipeline. Click here to read…
The Energy Market’s Next Crisis: Oil Tanker Shortages
In the new era of energy shortages, one aspect of the situation has tended to get overlooked: the transport of energy. Demand for tankers has been on the rise since the European Union slapped sanctions on Russia in the spring, and this trend is only going to intensify in the coming months as the EU embargo on Russian oil and fuels enters into effect. Bloomberg reported this week that shipping companies were scrambling to get their hands on as many ice-class tankers as they could ahead of the embargo, which comes into effect in early December for crude oil and two months later for fuels. The vessels will be necessary to continue moving Russian oil and fuels in non-European directions, the report noted, as the EU would no longer be able to buy them, even though European buyers are currently stocking up on Russian oil and fuels in anticipation of the embargo. The war in Ukraine and the EU’s response to it have already livened up the global tanker market considerably – and with it, freight costs for hydrocarbons. Since the February 24 invasion, demand for tankers has spiked and is likely to remain robust in the observable future, not least because supply is quite limited, Svelland Capital’s Tor Svelland told CNBC in August. Click here to read…
US can’t save EU from energy crisis – FT
The US is not able to ease the EU’s energy crunch by increasing its shipments of oil and gas, the Financial Times reported on Sept 14, citing shale industry executives. “It’s not like the US can pump a bunch more. Our production is what it is. There’s no bailout coming, not on the oil side, not on the gas side,” Wil VanLoh, the head of private equity group Quantum Energy Partners, one of the largest shale industry investors, told the news outlet. Europe is grappling with a growing energy shortage, trying to secure new sources of supplies while moving away from Russian energy. Analysts fear that the upcoming EU embargo on Russian oil will send prices to new record highs. According to the International Energy Agency, oil sales from Russia could fall by almost 20% when the EU embargo takes full effect, which is a vast amount for the global market to lose with Russia being one of the world’s largest petroleum exporters. Over the past several months, Europe has increased purchases of oil and liquefied natural gas (LNG) from the US, but according to shale industry executives, there is not much more they can do. “We’re not adding [drilling] rigs and I don’t see anyone else adding rigs,” Scott Sheffield, the CEO of Pioneer Natural Resources, one of the biggest oil producers in the US, told FT. Click here to read…
Russia’s Economic War Hits Europe’s Factories
Factory production in Europe is faltering as the economic war between Russia and the West begins to chip away at the continent’s economic foundations. European Union data out Sept 14 showed eurozone factory output had dropped by 2.3% in July from a month earlier, the first decline since March, partly reflecting cutbacks in energy-intensive sectors. Since invading Ukraine, Russian President Vladimir Putin has weaponized the country’s vast stores of energy to undermine European support for Kyiv. This month, Russia turned off the taps to a key natural-gas pipeline, Nord Stream. As Sep 14’s data showed, Moscow’s choking of energy supplies to Europe has driven up production costs, making it harder for some manufacturers to operate economically. Most economists expect Europe’s main economies to contract in the coming months, with the severity of the recession dependent on average temperatures, progress in storing natural gas from non-Russian suppliers and the impact of government efforts to help households and industry. “The darkest cloud on the horizon is clearly in the eurozone,” said Marcelo Carvalho, global head of economics at BNP Paribas. Europe’s factories aren’t alone in seeing a surge in costs as a consequence of the war. European households are also facing sharply higher utility bills. Click here to read…
Vietnam data storage law rankles Big Tech and CPTPP trade bloc
Technology companies are scrambling to comply with an abrupt regulation to store data in Vietnam, a requirement they say will impair business and put Hanoi on a collision course with a mega trade deal that forbids the forced use of domestic servers. Internet platforms from YouTube to Facebook had been following drafts of the rule, now called Decree 53, for three years before it was signed into law last month with little notice. It is set to take effect on Oct. 1. It is unclear how Vietnam will enact the decree without reneging on its pledge against forced data localization, one it has made as a party to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. But another CPTPP member would have to litigate the issue to force Hanoi to keep its pledge. Nikkei Asia contacted all six other countries that ratified the trade pact, and none would say if it planned to use the pact’s enforcement tool. Beijing further complicates the internet debate, having passed a similar cyberlaw. Vietnam would have another country in its corner if the trade bloc approves China’s application to join. Japan and Canada, which were key to finalizing the CPTPP, are monitoring next steps in the Southeast Asian country. Click here to read…
China home to two global top 5 science & technology clusters; East Asia dominates top ranking: WIPO
China is home to two of the world’s largest five science and technology clusters, making the East Asia at the top of global ranking chart of Global Innovation Index (GII) released by the World Intellectual Property Organization (WIPO) on Sept 14. Four of the world’s five largest science and technology clusters are located in East Asia with Tokyo-Yokohama being the biggest one, followed by the Shenzhen-Hong Kong-Guangzhou cluster in South China and the Beijing cluster in North China. One cluster in South Korea and another in the US ranked fourth and fifth, the chart showed. China’s overall number of science and technology clusters reached 21 in the latest pre-release chart, equal to the cluster number in the US for the first time. Germany and Japan ranked second and third with 10 and five clusters respectively. Compared with the last chart, three Chinese clusters in Zhengzhou, Central China’s Henan Province, Qingdao in East China’s Shandong Province and Xiamen in East China’s Fujian Province have recorded the fastest growth, followed by Berlin in Germany and Istanbul in Turkey. Each year, the GII ranks the top-level innovative capacity of around 130 countries and economies around the world. Click here to read…
China’s economy shows signs of recovery with upbeat retail sales and industrial production, but ‘pessimism prevails’
China’s economy recovered better than expected in August, but growth momentum continues to weaken amid renewed coronavirus outbreaks and mass lockdowns, slowing exports and a housing downturn, signalling a cloudy outlook for the rest of the year. Retail sales beat expectations to rise by 5.4 per cent year on year in August, up from the 2.7 per cent growth in July. Strong automobile sales, which surged by 15.9 per cent year on year, led the way thanks to policy support including tax cuts and subsidies. Restaurant revenue rebounded to post growth of 8.4 per cent, up from a 1.5 per cent contraction in July. Investment bank Goldman Sachs said, “favourable base effects more than offset the drag from tighter Covid restrictions on the back of protracted local outbreaks”. Industrial production, a gauge of activity in the manufacturing, mining and utilities sectors, rose by 4.2 per cent in August, year on year, up from 3.8 per cent growth in July. In comparison, the property market is mired in a deep slump, with real estate investment contracting further to nearly 14 per cent, after a 12.1 per cent decline in July. New home prices also fell by 0.29 per cent last month from July, despite stimulus and incentives to boost demand. Click here to read…
Biden to hit China with broader curbs on U.S. chip and tool exports–sources
The Biden administration plans next month to broaden curbs on U.S shipments to China of semiconductors used for artificial intelligence and chipmaking tools, several people familiar with the matter said. The Commerce Department intends to publish new regulations based on restrictions communicated in letters earlier this year to three U.S. companies–KLA Corp, Lam Research Corp and Applied Materials Inc, the people said, speaking on the condition of anonymity. The plan for new rules has not been previously reported. The letters, which the companies publicly acknowledged, forbade them from exporting chipmaking equipment to Chinese factories that produce advanced semiconductors with sub-14 nanometer processes unless the sellers obtain Commerce Department licenses. The rules would also codify restrictions in Commerce Department letters sent to Nvidia Corp and Advanced Micro Devices last month instructing them to halt shipments of several artificial intelligence computing chips to China unless they obtain licenses. Some of the sources said the regulations would likely include additional actions against China. The restrictions could also be changed and the rules published later than expected. So-called “is informed” letters allow the Commerce Department to bypass lengthy rule-writing processes to put controls in place quickly, but the letters only apply to the companies that receive them. Click here to read…
From block to blue ticks: How China became big business for Twitter
Even as China bars 1.4 billion citizens from Twitter, its local authorities are splurging on global advertising on the site, helping make the country the platform’s fastest-growing overseas ad market and one of its largest non-U.S. revenue sources. A Reuters review of publicly available government tenders, budget documents and promoted tweets from 2020 to 2022 shows local authorities and Chinese Communist Party propaganda offices for cities, provinces and even districts across the country have flocked to Twitter to buy ads. The promotions, often outsourced by local governments to state media, pitched local attractions, as well as cultural and economic achievements, to an international audience, and were permitted under an exemption to Twitter’s ban on state-media advertising. The review shows for the first time just how important China has become for Twitter, under pressure from investors to meet growth targets as its U.S. business stalls. It comes with the company embroiled in a legal battle with Tesla Chief Executive Elon Musk, who is attempting to back out of his unsolicited $44 billion offer to buy Twitter. Four sources told Reuters operations in China became a source of internal clashes between teams keen to maximize the sales opportunity and others concerned at the optics of doing business with state-affiliated entities at a time of growing tension between Beijing and Washington. Click here to read…
Date set for Sri Lanka to present debt restructuring, IMF bailout plans to creditors
Crisis-hit Sri Lanka will make a presentation to its international creditors this week, laying out the full extent of its economic troubles and plans for a debt restructuring and multibillion-dollar International Monetary Fund bailout. Years of economic mismanagement combined with the Covid-19 pandemic have left Sri Lanka in its worst economic crisis since independence from Britain in 1948, causing it to default on its sovereign debt. The country’s Ministry of Finance said in a statement via legal firm Clifford Chance that an online call on September 23 would be open to all its external creditors and be “an interactive session” in which participants can ask questions. Sri Lanka’s woes came to a head in July when then-President Gotabaya Rajapaksa fled the country and resigned after violent public protests. His replacement Ranil Wickremesinghe has managed to reach a preliminary deal with the IMF that if formalised would provide the country US$2.9 billion in loans over four years. “Authorities intend to update their external creditors on the most recent macroeconomic developments, the main objectives of the reform package agreed with the IMF … and the next steps of the debt restructuring process,” the statement dated September 17 said. The country’s borrowings are so complex that estimates of the total range from US$85 billion to well over US$100 billion. Click here to read…
EU moves to ban products made with forced labor
The European Union unveiled plans Sept 14 to ban products made with forced labor, in an effort to crack down on a modern-day form of slavery that a U.N. agency estimated affects more than 27 million people worldwide. The European Commission, which proposes EU laws, said the policy would remove from the 27-nation bloc’s markets all products made with forced labor. It would also stop them from being made in the world’s biggest trading bloc or shipped through it. The move does not target specific companies, industries or countries. “Our aim is to eliminate all products made with forced labor from the EU market, irrespective of where they have been made. Our ban will apply to domestic products, exports and imports alike,” commission Executive Vice-President Valdis Dombrovskis said. The EU’s executive arm defines forced labor as a situation where a person is coerced to work through violence or intimidation, or in more indirect ways by having their debt manipulated, their identity papers stolen or being threatened with denunciation to immigration authorities. Under the plans, the commission would set up and operate a public database containing information about suspect products and practices. EU countries would designate an authority to enforce the rules, and customs officers would have responsibility for ensuring compliance at the bloc’s borders. Click here to read…
Strategic
Xi and Putin vow mutual support, but military backing unlikely, analysts say
In their first face-to-face meeting since Russia invaded Ukraine, Chinese President Xi Jinping and Russian President Vladimir Putin pledged to support each other on “issues concerning their respective core interests”, but analysts say the chance of the two powers defending each other militarily remains unlikely. Putin addressed his Chinese counterpart as “Comrade Xi Jinping, my dear friend” during their reunion on Sept 15, while Xi reciprocated by calling Putin his “old friend”, according to the Kremlin’s readout. The two agreed on expanding “pragmatic cooperation”, including in trade, agriculture and connectivity, but left out military cooperation, with Putin acknowledging Beijing’s “questions and concerns” about the Ukraine crisis. “China is ready to work with Russia in extending strong support to each other on issues concerning their respective core interests,” Xi was quoted by state news agency Xinhua as saying, without referring to Ukraine. According to S. Mahmud Ali, associate fellow at the University of Malaya’s Institute of China Studies, China has historically described matters of territorial integrity and jurisdictional claims as “core interests”, but Russia has not used this particular phrasing. “It can be surmised that both states consider certain aspects of vital national interests as ‘core interests’ which effectively define their strategic ‘red lines’, whose violation by third parties – in this case, the United States – would not be countenanced and would be counteracted,” said Ali. Click here to read…
China-focused group of global lawmakers meet in Washington to discuss united response to Beijing
Some 60 elected lawmakers from around the world gathered in Washington on Sept 13 to discuss forming a united response to confront China and what they describe as the challenges its Communist Party poses to democratic values. The Inter-Parliamentary Alliance on China held its summit hosted by two well-known American senators and critics of Beijing: Republican Marco Rubio of Florida, and Democrat Bob Menendez of New Jersey, who chairs the Senate Foreign Relations Committee. The alliance discussed how to coordinate their response to Beijing. Stating he had “never seen a more challenging time for the United States” in his 30 years working in foreign policy, Menendez laid out the situation before the world as not a “choice between the US and China or the West and China” but about “what type of world do you want to live in”. He warned of threats Taiwan faces, adding that the self-ruled island China regards as a renegade province “generates 95 per cent of the world’s semiconductors”. Menendez said the world could “ill afford” to have the Chinese ultimately “control that reality” or see the people of Taiwan “be overcome against their will.” Click here to read…
Biden says US troops would defend Taiwan from attack by Beijing
US President Joe Biden has said American troops would defend Taiwan if Beijing were to attack the island – his clearest statement yet on the issue. In a 60 Minutes interview that aired on Sept 18, Biden was asked whether the US would defend the island. He responded: “Yes, if in fact there was an unprecedented attack.” He also said “yes” when asked to clarify whether that meant “US forces, US men and women” would defend Taiwan in case of an attack from Beijing. The 1979 Taiwan Relations Act, which governs US ties with Taiwan, requires the United States to ensure the self-ruled island has the resources for self-defence and to prevent any unilateral change of status in Taiwan by Beijing. But it does not require the US to defend the self-ruled island militarily. Washington has historically been strategically ambiguous about the United States’ role if Beijing were to attack the island. The strategic ambiguity allows Washington to keep ties with Beijing and to deter attacks on the island. Mainland China and Taiwan split in 1949 at the end of a civil war when the Nationalist Kuomintang was defeated by Communist Party forces and fled to Taipei. Click here to read…
Putin clarifies Russia’s main goal in Ukraine
Russia’s plan for its military operation in Ukraine has not changed, and the main objective remains to liberate the entire territory of the two Donbass republics, Russian President Vladimir Putin said on Sept 16. The statement comes amid an ongoing counter-offensive by Kiev. “There are no adjustments to the plan. The General Staff makes operational decisions in the course of the campaign as to what is considered a key objective,” Putin told reporters on the sidelines of the Shanghai Cooperation Organization (SCO) summit in Samarkand, Uzbekistan. “The main goal is the liberation of the entire territory of Donbass. This work continues, despite the attempted counterattacks by the Ukrainian army,” the Russian president added. Putin pointed out that the Russian army continues to make “incremental” advances in the Donbass itself. He also said Moscow is “not in a hurry” in Ukraine. Commenting on the “Kiev Security Compact” presented by Ukraine this week, the Russian president noted that the two countries had worked out a set of security guarantees and terms for ending the conflict back in March at the Istanbul talks – but then Kiev walked away from the table. “Now they say they don’t want any agreements with Russia, but wish to win on the battlefield. Well, flag in hand,” Putin said, using a Russian idiom for ironically wishing someone success in a hopeless endeavor. Click here to read…
China sanctions CEOs of Raytheon Technologies, Boeing Defense over arms sale to Taiwan region
The Chinese government is set to impose sanctions on Gregory J. Hayes, Chairman and Chief Executive Officer of Raytheon Technologies Corporation, and Theodore Colbert III, President and Chief Executive Officer of Boeing Defense, Space & Security, following recent US arms sales to China’s Taiwan region, the Chinese Foreign Ministry announced on Sept 16. Mao Ning, spokesperson from the ministry, said at Sept 16’s media briefing that the sanctions were imposed in order to safeguard China’s sovereignty and security interests, as the two companies were involved in the latest US arms sale to the Taiwan region. US arms sales to Taiwan region are a blatant violation of the one-China principle and the provisions of the three China-US joint communiqués, especially the August 17 Communiqué. The arms sales gravely undermine China’s sovereignty and security interests, and severely harm China-US relations and peace and stability in the Taiwan Straits. China firmly opposes and strongly condemns them, Mao said. Mao stressed that China urges the US and relevant parties to stop arms deals with Taiwan or creating tensions across the Straits, noting that China will continue to take all necessary measures to firmly safeguard its sovereignty and security interests in light of situational developments. Click here to read…
US to disburse $3.5bn of frozen Afghan funds
The US is preparing to release half of the $7 billion of seized Afghan central bank funds and transfer them to a bank in Switzerland for further disbursement. The Taliban, meanwhile, demands the money be made available to the Afghan government. The move was announced on Sept 14 by the US Treasury, which stated that the $3.5 billion would be placed in a so-called ‘Afghan Fund’ set up at Switzerland’s Bank for International Settlements, and that the funds would be used to bolster Afghanistan’s macroeconomic stability by paying for things such as electricity imports and covering arrears at international financial institutions. According to Bloomberg and other media outlets, two representatives of the Treasury, who spoke to journalists on the condition of anonymity, explained that the main purpose of the move is to prevent the Taliban regime from gaining access to the money, which was seized following the US withdrawal from Afghanistan last year. “We don’t agree with the transfer of money to the account indicated, but [we wish for it] to be transferred to Da Afghanistan Bank {DAB, the country’s central bank},” a Taliban DAB official told the TRT World news outlet, adding that the Afghan government would not object to a third-party monitoring system to ensure the funds are spent properly. Click here to read…
Turkey’s Erdogan targets joining China-led SCO: media
President Tayyip Erdogan said he was targeting membership of the Shanghai Cooperation Organization (SCO) for NATO-member Turkey, broadcaster NTV and other media said on Sept 17. He was speaking to reporters after attending the SCO summit in Uzbekistan before heading to the United States. “Our relations with these countries will be moved to a much different position with this step,” Erdogan said. When asked if he meant membership of the SCO, he said, “Of course, that’s the target.” Turkey is currently a dialogue partner of the SCO, whose members are China, Russia, India, Pakistan, Kyrgyzstan, Tajikistan, Kazakhstan and Uzbekistan. Iran is set to formally join as a full member next year. Amid bilateral discussions at the summit, Erdogan had talks with Russian President Vladimir Putin and Erdogan said Turkey and Russia had reached a deal resolving a dispute over a nuclear power plant being built at Akkuyu in southern Turkey. NTV reported Erdogan as saying that the Turkish contractor IC Ictas had been reinstated in the project, confirming comments by two sources to Reuters on Sept 16. Last month, the Russian state nuclear energy company Rosatom, which is running the project, terminated its contract with IC Ictas over what it called “numerous violations.” “God willing we will be able to finish and inaugurate the first (Akkuyu) unit in 2023,” Erdogan added. Click here to read…
Japan to broaden scope of defense budget as Taiwan tensions mount
Japan is considering overhauling how it categorizes defense spending, creating a broader budget framework that includes funding for scientific research as well as space and cyber programs to respond to evolving security challenges, including a possible conflict in Taiwan. Under the plan, the annual budget allocated to the Ministry of Defense would be grouped together with security-related programs handled by other agencies and ministries. The government aims to adopt the change from fiscal 2023. The plan comes as Japan faces serious security challenges from neighbors including China, Russia and North Korea. The U.S. is also pressuring Tokyo to bolster its defense capabilities. With the new system, Japan will change its approach to defense spending, which so far has focused on upgrading equipment, and bring it more in line with the U.S. and European practice of covering a wide range of programs. The change would enable Japan to look at defense spending from a broader perspective and assess its effectiveness. Japan currently defines the defense budget as spending handled by the Defense Ministry. The cabinet voted in 1976 to limit the spending to below 1% of gross domestic product. The cap was removed from the fiscal 1987 budget, but the figure has largely remained around the 1% threshold. Click here to read…
China asks Japan for caution on Taiwan issue at diplomatic event
The Chinese ambassador called on Japan for caution in dealings with Taiwan at a symposium in Tokyo on Sept. 12 to commemorate the 50th anniversary of normalization of ties between Japan and China. “We hope (the Japanese government) is cautious in its words and actions with regard to the Taiwan issue, not sending a wrong signal to people supporting Taiwan’s independence, as well as not participating in any provocative moves that use Taiwan to keep China in check,” said Kong Xuanyou, the Chinese ambassador to Japan. Looking back on the past 50 years, Kong praised progress made in relations between Japan and China. “Interaction and cooperation between us in various fields made a great leap forward in their quantity and quality and achieved unprecedented width, depth and height,” he said. On the current state of relations between Japan and China, however, Kong pointed out, “Complex and sensitive aspects still exist, and we are entering a period in which many new contradictions occur.” Wang Yi, state councilor and Chinese foreign minister, also stressed China’s stance of placing importance on the Taiwan issue in his video message shown prior to Kong’s speech. Japanese Foreign Minister Yoshimasa Hayashi also sent a video message to the event. Click here to read…
Bangladesh fears new Rohingya exodus from fighting in Myanmar
Clashes between Myanmar’s army and rebels are sparking fears of a new Rohingya exodus into Bangladesh, where the government says it can no longer bear the burden. Hundreds of frightened people have gathered near the border and are looking for opportunities to cross the Naf River into Bangladesh, refugees who have made it say, according to an official of the Arakan Rohingya Society for Peace and Human Rights (ARSPH), an advocacy group. Muhammed Jubair, general-secretary of the the ARSPH, said newcomers to Bangladesh include two children, two women and a man who crossed earlier this month. Some media outlets have reported that over a dozen Rohingya people entered Bangladesh this month and have taken shelter at the camps around Cox’s Bazar. The trickle comes as Bangladesh already hosts around 1 million refugees in a cluster of camps, raising concerns among Bangladeshi officials that far more may be on the way. At the same time, Dhaka recently summoned Naypyidaw’s ambassador to protest about bullets and mortars that fell on Bangladeshi territory since renewed fighting broke out in August, sparking panic among residents. Jubair said that due to the clashes, Rohingya residents in Myanmar are afraid to go outside for work, have no food, and thus are trying to flee. Click here to read…
Iran demands guaranteed removal of sanctions for progress in nuke talks: media
Iranian President Ebrahim Raisi said to make progress in the ongoing nuclear talks, the removal of U.S. sanctions on Iran should be accompanied by guarantees and the resolution of safeguards issues, official IRNA news agency reported on Sept 16. Raisi made the remarks in an interview with Al Jazeera news channel in the Uzbek city of Samarkand on Sept 15 night, stressing the Iranian government is determined to protect the rights of its people. Speaking of possible direct talks with the U.S., Raisi said “direct negotiations with the U.S. on a (possible) nuclear deal is of no use, and the United States should take trust-building measures with Iran.” The Iranian president questioned Washington’s recent move to impose fresh anti-Iran sanctions, saying that if the United States is seeking an agreement with Iran, “why does it impose new sanctions amidst the nuclear negotiations?” Over the past week, Washington has announced sanctions on a number of Iranian nationals and companies as well as the Iranian Ministry of Intelligence. Iran signed the JCPOA with world powers in July 2015, agreeing to curb its nuclear program in return for removing sanctions on the country. However, former U.S. President Donald Trump pulled Washington out of the agreement and reimposed unilateral sanctions on Tehran, prompting the latter to drop some of its commitments under the pact. Click here to read…
Germany’s Scholz sees no imminent nuclear deal with Iran
German Chancellor Olaf Scholz made clear Sept 12 that he doesn’t expect an agreement with Iran in the immediate future to restore Tehran’s tattered nuclear deal with world powers, though he said there’s no reason for Iran not to sign up and European countries would remain “patient.” Scholz spoke after meeting in Berlin with Israeli Prime Minister Yair Lapid, who insisted that restoring the 2015 agreement would be “a critical mistake.” Germany, along with France, Britain, Russia and China, is still a party to the deal and involved in talks on its revival that have dragged on for over a year. The European countries “have made proposals, and there is no reason now for Iran not to agree to these proposals, but we have to take note of the fact that this isn’t the case, so it certainly won’t happen soon, although it looked for a while like it would,” Scholz said. “We remain patient, but we also remain clear: Iran must be prevented from being able to deploy nuclear weapons.” The German leader said that “a functioning international agreement to limit and monitor the Iranian nuclear program is the right way” to do that. But Lapid said that “it is time to move past the failed negotiations with Iran,” which he said can’t and won’t achieve the goal of stopping Iran getting a nuclear weapon. His office said he also shared intelligence with the German government. Click here to read…
News Analysis: Egyptian president’s visit to Qatar gives impetus to deepening ties
Abdel-Fattah al-Sisi’s state visit to Qatar, the first made by an Egyptian president in four years after the diplomatic rift between the two Arab countries, has added strong impetus to deepening the bilateral relations, experts said. His two-day visit, which came upon an invitation by the Qatari emir, ended on Sept 14, reflecting that the two countries are keen to consolidate the rapprochement into cooperation in a wide range of fields since diplomatic relations were restored in January 2021, according to the experts. Leaders of the two countries discussed ways to foster closer cooperation and deepen the relations in trade, economy and investment, in addition to Arab regional and international developments. They also witnessed the signing of three cooperation agreements respectively in investment, social affairs, and ports, according to Egypt’s Presidency Spokesperson Bassam Rady. “The visit is part of recent moves for warming ties after quite a long time of frayed relations,” said Tariq Fahmy, professor of political sciences at Cairo University. In January 2021, the Arab quartet of Egypt, Saudi Arabia, the United Arab Emirates, and Bahrain signed the Al-Ula Declaration with Qatar, ending their all-around boycott of Doha since mid-2017. In response, Qatari emir Sheikh Tamim bin Hamad Al Thani visited Cairo in June. In late March, Cairo and Doha agreed to invest 5 billion U.S. dollars in Egypt. Click here to read…
South Korea emerging as key arms supplier amid billion-dollar deals with Poland, Malaysia
South Korea is reportedly expecting to sign multibillion-dollar contracts to export its home-grown light combat aircraft to Poland and Malaysia as early as this month as the country is quickly emerging as a key player in the weapons market. Analysts said South Korea’s fast growth in arms exports was largely thanks to its vast manufacturing industries that were ready to be used for weapons production in large quantities to cope with persistent threats from North Korea. “South Korea is one of a few countries in the world that have arms production capacities that are able to meet the growing needs of countries in the current geopolitical turmoil,” Senior Researcher Kim Mi-jung at the Korea Institute for Industrial Economics and Trade (KIET) told This Week in Asia. SBS TV, citing a well-informed industry source, said a representative of Korea Aerospace Industries Ltd. (KAI), the developer of the supersonic FA-50, left for Poland on Sept 13 to sign a contract this week to export 48 of the aircraft for some US$3 billion. The deal with Poland will be “the largest in history in terms of the exports of FA-50”, the source was quoted as saying. A KAI spokesman declined to comment until the agreements are signed – which could take place by the end of the week according to SBS TV. Click here to read…
S Korea seeks neutral ground in US-China chip war
China and South Korea have agreed to establish a new Collaborative Supply Chain Council to address any disruptions of their extensive and interdependent economic relationship in a timely fashion. In what could be taken as pointed irony, the Dong-A Ilbo reported that “With the supply chain reform beginning in earnest led by the US, it is a conclusion from an in-depth discussion between economic ministers of China and Korea…” Ever since the Trump administration slapped sanctions on Chinese tech giant Huawei in 2019, the US has been stepping up efforts to exclude China from international high-tech supply chains. The new supply chain agreement was reached at the 17th South Korea-China Meeting on Economic Cooperation held on August 27. The meeting also resulted in MOUs on other aspects of economic collaboration between the two sides, including joint projects in third countries. China’s Global Times noted that “South Korea needs a stable Chinese market to export its key products and China also needs South Korea for industrial development.” It quoted Da Zhigang, director of the Institute of Northeast Asian Studies at Heilongjiang Provincial Academy of Social Sciences, as saying, “Seoul showed it wanted to maintain mutual trust and steady cooperation with Beijing in industrial chains and supply chains in the face of pressure by the US from the ‘Chip 4’.” Click here to read…
Health
End of Covid pandemic in sight – WHO
World Health Organization Director General Tedros Adhanom Ghebreyesus declared on Sept 14 that the end of the Covid-19 pandemic is close at hand. While the virus is still spreading at the same level as last year, despite mass vaccination, deaths have fallen significantly. “We are not there yet. But the end is in sight,” Tedros said at a press briefing. Claiming that vaccination and other public health measures have reduced the threat posed by the virus, the WHO chief called on governments to push for 100% vaccination of vulnerable people and healthcare workers, and 70% vaccination of the general public. “A marathon runner does not stop when the finish line comes into view, she runs harder with all the energy that she has left,” he said. “Now is the worst time to stop running.” The impact of vaccines, masks, lockdowns, and other public health measures on the virus’ spread has been a controversial issue, with near-totally vaccinated countries like Singapore still experiencing waves of infection this summer that dwarfed similar spikes in 2021 and 2020. Some 3.1 million cases of Covid-19 were confirmed globally in the week ending September 5, compared to 3.9 million in the same week in 2021, and 1.9 million in the same week in 2020. Click here to read…
Chinese universities implement classified closed-loop measures amid flare-ups
Several Chinese universities in cities including Beijing, Southwest China’s Chengdu and Guiyang have conducted closed-loop management to ensure students and faculties’ health amid this wave of flare-ups on campuses. At least four universities in Chengdu such as University of Electronic Science and Technology and the Southwestern University of Finance and Economics have carried out classified measures in different campuses based on the epidemic situation. For instance, students should avoid unnecessary outing and personnel who have to enter the campuses should present health code, travel code and 24-hour nucleic acid testing negative results, and online studying will be continued, according to Chengdu authorities on Sept 13. For some students who haven’t returned to schools, they will still wait and study at home online based on epidemic situation. “We have no concerns over the epidemic prevention and control in the campus as the measures taken were strict for the sake of the students and teachers’ health,” a parent surnamed Ge of a senior student from Chengdu-based University of Electronic Science and Technology told the Global Times on Sept 13. Students need to take nucleic acid tests once a day and dine-in is not allowed in campus, and students now study online and express delivery can be placed outside the school gate, according to Ge. Click here to read…
