Economic

China ADRs tumble as Xi’s new team sparks worries over economy’s path

US-listed shares of Chinese companies slumped on Oct 24 after President Xi Jinping’s new leadership team sparked investor concerns that ideology-driven policies would be prioritised at the cost of private sector growth. Ecommerce giants Alibaba, JD.com as well as internet behemoth Baidu crashed between 14 per cent and 17 per cent, even as the benchmark S&P 500 edged higher. The iShares MSCI China ETF tanked 10 per cent, tracking its steepest one-day drop ever. “The concern is that the Chinese government is continuing to move to a more socialist economic model under Xi which may require Chinese companies to place ever more focus on social goals rather than profitability,” said Rick Meckler, a partner at Cherry Lane Investments in New Vernon. “By consolidating power, Xi is likely to face little opposition to this form of nationalization of corporate interests.” Earlier in the day, Hong Kong stocks slumped 6.4 per cent to 13-year lows and China’s blue-chip shares slid 2.9 per cent as investor worries over the direction of the world’s second largest economy overshadowed upbeat third-quarter growth data. Xi secured a precedent-breaking third leadership term on Oct 23 and introduced the new Politburo Standing Committee stacked with loyalists. Click here to read…

Yuan falls to lowest since 2008 global crisis, despite state bank support

China’s yuan fell on Oct 21 to its weakest level against the dollar since the global financial crisis of 2008, despite attempts by major state-owned banks to stabilise the market. Sources told Reuters that state banks sold dollars in the onshore foreign exchange market to prevent the spot price from weakening past the 7.25 per dollar level. State banks usually trade on behalf of the central bank in China’s foreign exchange market, but they can also trade for their own purposes or execute orders for corporate clients. Still, the onshore yuan finished the domestic trading session down 0.46 per cent on the day at 7.2494 per dollar, the weakest such close since Jan. 14, 2008. For the week, it looked set to fall 0.78 per cent as the surging dollar continued to batter emerging market currencies, taking its depreciation so far this year to 12.3 per cent. Traders said yuan weakness may persist, reflecting broad dollar strength as Federal Reserve officials show no signs of backing down from their hawkish rhetoric on rate hikes, while Chinese policymakers try to support the sputtering economy. Meanwhile, Chinese authorities continued to set firmer-than-expected yuan guidance in a bid to keep the currency stable during the politically sensitive Communist Party Congress, market participants added. Click here to read…

Xi promotes ‘aerospace clique’ to counter U.S. as a defence power

As Chinese President Xi Jinping prepares to secure an unprecedented third term in power, he has placed more than 10 former officials from state-owned companies linked to defence into key party and state positions as part of a national effort to challenge the U.S. in the military and aerospace arenas. In his report at the start of the Communist Party’s national congress, Xi pledged to “boost the overall performance” of China’s high-tech “innovation system,” eyeing Beijing’s policy of military-civil fusion combining technical advances from the private sector with defence technology. Russia’s invasion of Ukraine and China’s sabre-rattling over Taiwan have heightened tensions between Beijing and Washington. In that context, the party is using its “whole nation system,” a term from the central planning era to describe tapping all of the country’s sectors, to mobilize development of space and weapons programs. While serving as party leader during the past decade, Xi has promoted people who worked at state-owned military contractors overseen by the State Administration of Science, Technology and Industry for National Defense. Members of this “aerospace clique” — executives at defence industry groups involved in space development — have been especially favoured in climbing the career ladder. These enterprises have worked in tandem with the People’s Liberation Army. Click here to read…

China makes it easier for firms to borrow from overseas as yuan drops

China’s central bank and foreign exchange regulator on Oct 25 raised the cross-border macro prudential adjustment ratio for corporates and financial institutions, making it easier for domestic firms to raise funds from overseas markets. The People’s Bank of China (PBOC) said in a statement it raised a parameter on cross-border corporate financing under its macro-prudential assessments to 1.25 from 1. Oct 25’s move will “increase the sources of cross-border funds for enterprises and financial institutions, and guide them to optimise the asset-liability structure,” the PBOC said in the statement posted on its website. The move, which reverses a previous adjustment in 2021 to tighten overseas financing, comes at a time the Chinese yuan faces renewed depreciation pressure. Allowing more capital inflows could alleviate such downside pressure. The yuan has lost 13 per cent against a buoyant dollar so far and looks set for the biggest annual drop since 1994, when China unified market and official rates. Click here to read…

China tackling decoupling with FDI promotion push

China’s government will implement a series of measures to attract foreign companies to invest in high-end manufacturing in mainland China, a counter to US-led efforts to persuade firms and allied nations to “decouple” from China and its supply chains. The National Development and Reform Commission (NDRC), the Ministry of Commerce, the Ministry of Industry and Information Technology (MIIT) and three other ministries on Oct 25 suggested that foreign companies should be provided with sufficient land resources and a level playing field to develop their mainland businesses. The call came as new Chinese leadership was formed after the week-long 20th National Congress of the Communist Party of China (CPC) ended Oct 22. The call was also made ahead of a global financial summit set to be held in Hong Kong on November 2. The Hong Kong Monetary Authority (HKMA) said more than 200 international bankers and business leaders would attend the summit and that they would be exempted from some Covid rules during the three-day health monitoring period after their arrival. Meanwhile, Ned Price, a spokesman of the United States Department of State, said on Oct 24 the US would not change its stance toward China after CPC General Secretary Xi Jinping was given a third term.Bloomberg reported that US officials are now trying to set up a meeting between US President Joe Biden and Xi. Click here to read…

As intervention threat grows, Japan says confronting FX speculators ‘strictly’

Japanese Finance Minister Shunichi Suzuki said on Oct 21 that authorities were dealing with currency speculators “strictly”, as an extended sell-off of the yen kept markets on heightened alert for further dollar-selling intervention by Tokyo. “We are confronting speculators strictly,” Suzuki told a regular news conference, when asked whether the Japanese yen was under attack by speculators. “It’s inappropriate for me to comment on such a question under the current circumstances.” Suzuki was speaking as the dollar strengthened to 150.22 yen, the highest since Aug 1990, earlier Oct 21, after breaking the key psychological level of 150 on Oct 20. The dollar has surged around 30 per cent against the yen this year, despite Japan spending up to a record 2.8 trillion yen (US$19.7 billion) intervening in the foreign exchange market in September to support its currency for the first time since 1998. Suzuki underscored the importance of maintaining trust in Japan’s finances, after Britain was plunged into financial crisis in the wake of a violent market reaction to plans for huge unfunded tax cuts, forcing its premier to resign after just six weeks in office. “It’s not that Japan’s finances are undergoing a major shift in phase leading to the current yen weakening,” Suzuki said. “We must adhere to fiscal discipline.” Click here to read…

US nuclear industry has a Russia problem – Reuters

US companies may fail to launch next generation nuclear power plants with new Small Modular Reactors (SMR) without supplies of Russian uranium, Reuters reported on Oct 20. The advanced reactors, according to developers, are three times more efficient than conventional versions, they consume less fuel and are crucial for the country’s agenda to meet net-zero emissions. SMRs need High-Assay Low-Enriched Uranium (HALEU), which is enriched to levels of up to 20%, compared to about 5% for the uranium that powers most nuclear plants. The only company which currently sells this type of uranium commercially is Tenex – a subsidiary of Russian state-owned nuclear energy major Rosatom. While the company has not been subject to Western sanctions, being an important part of the global nuclear fuel supply chain, US firms X-energy and Terra Power that have state contracts to develop advanced reactors, are reluctant to buy Russian uranium. “We understand the need for urgent action to incentivize the establishment of a sustainable, market-driven supply of HALEU,” a spokesperson from the US Department of Energy told Reuters. It is not clear who can replace Russian HALEU which is needed to fuel nine out of ten of the advanced reactors funded by Washington.Click here to read…

UAE to invest in Russian tech – official

The United Arab Emirates is keen to invest in Russian high-tech companies and to host their representative offices, Deputy Economy Minister Abdullah Ahmad Al Saleh said on Oct 21. Speaking at the Made in Russia forum, he noted that Russian tech companies which he had visited had demonstrated a high level of development. “They have offered a number of inventions and new technologies that we would like to invest in, and we would also like to have their headquarters in our country,” he said, adding that it’s important to promote start-ups. Al Saleh has called for mutual cooperation between the two countries in such areas as space, medicine and green energy, in particular highlighting Russia’s experience in space technology. He also outlined further plans to develop joint projects, saying that “we are working in the fields of renewable energy, [projects] related to green economy, and also developing business in medical and pharmaceutical sectors. There are also plans to establish cooperation in telemedicine.” Despite its close ties to the US, the UAE has been cautious in its criticism of Russia, and unlike the US and the EU, has not imposed strong restrictions against the country. Last week, Russia’s President Vladimir Putin met with his UAE counterpart Mohammed bin Zayed Al Nahyan, in St. Petersburg. The leaders expressed Moscow and Abu Dhabi’s willingness to develop cooperation on all levels. Click here to read…

Discontent Rises in Europe as Economic War with Russia Pushes Up Cost of Living

A wave of protests triggered by rocketing living costs and a looming recession is sweeping across Europe, testing the resolve of governments that have so far maintained unity in their costly economic war with Russia. The public backlash against high prices for electricity and heating as temperatures begin to fall is also fuelling tensions between European capitals over richer nations’ larger relief packages, which poorer neighbours say are distorting the market and compounding the crisis. On Oct 20, thousands of people took to the streets across France to demand higher wages. Striking teachers, railway and health workers staged marches in dozens of cities, including Paris, snarling traffic and disrupting public transport. In Belgium, the Czech Republic, Hungary and Germany, tens of thousands have marched in recent weeks, demanding pay rises to offset inflation, more state support, and government intervention in the energy market and, in some instances, an end to sanctions against Russia. Despite measures to support households and businesses totalling 264 billion Euros, equivalent to $266 billion, according to Brussels-based think tank Bruegel—by far the largest such package in Europe—Germany has seen weekly protest rallies since the end of the summer, many of them concentrated in the country’s former communist east. Click here to read…

EU Commission proposes tougher pollution rules

The European Union’s executive arm sought on Oct 26 to toughen up pollution restrictions to ensure that harmful pollutants are eliminated by 2050 to potentially save the lives of hundreds of thousands of people. The European Commission’s proposals center on air, waste and water pollution, and need the backing of the EU parliament and member states before they can be made mandatory. That is likely to take many months. Air pollution is the biggest threat to the bloc’s 450 million citizens. The proposals include the doubling of limits to permissible fine air particles by 2030. Such particles are make up a significant part of air pollution overall, which the EU says is killing nearly 300,000 people a year. Because effective enforcement of pollution rules has so far proven difficult, the proposals will empower ailing citizens to seek legal redress with better compensation rights and collective action to seek damages. On just air pollution, the Commission estimates that as much as 121 billion euros could be saved by 2030 if the rules are adopted. ”The cost of inaction is far greater than the cost of prevention,” said Environment Commissioner Virginijus Sinkevicius. Russia’s war in Ukraine is affecting all EU plans and environmental protection is no exception given that Moscow’s energy squeeze on EU nations has already forced many nations to revive policies centredon fossil fuel use. Click here to read…

Biden’s IPEF trade pact lacks core policy: CSIS head

The Biden administration’s lack of a coherent trade policy will hamper Washington’s efforts to place a greater focus on the Indo-Pacific, John Hamre, CEO of the Center for Strategic and International Studies, said on Oct 21. “Where I fault the Biden Administration is on their weak policy concerning trade,” the head of the Washington-based think tank told the CSIS/Nikkei Symposium in Tokyo via video. Hamre said the Indo-Pacific Economic Framework that Washington launched in place of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership lacks content. “The core is missing,” he said, pointing out that Asian partners want increased market access and more trade opportunities, which the IPEF has not addressed in detail. “Foreign policy in Asia is trade policy. And with no trade policy, America can’t be a full partner in building the new Asia.” Hamre, a deputy defence secretary in the Bill Clinton administration, talked of two fundamental policy decisions by former U.S. presidents — one by Barack Obama and one by Donald Trump — that have led to “remarkable consistency” in American security policy and have set the foundation for President Joe Biden’s approach to Asia. On Obama’s pivot to Asia, Hamre said, “For the first time in American history, we said that Asia, not Europe, was our highest priority.” Click here to read…

How the Diesel Crisis Became an Inflationary Time Bomb

According to the EIA, the US now has just 25 days of diesel supply, the lowest since 2008; and while inventories are record low, the four-week rolling average of distillates supplied – a proxy for demand – rose to its highest seasonal level since 2007. The reasons for the collapse in inventories and the price surge are four-fold. First, local diesel demand has recovered quicker than gasoline and jet-fuel from the impact of the pandemic, draining stocks. Second, foreign demand is also strong, with American diesel exports running at unusually high level. Third, and according to many, most important of all, the US also has lower refining capacity than before, reducing its capacity to make fuels. Fourth is Russia’s invasion of Ukraine. The US was importing a significant amount of Russian fuel oil before the war, which its Gulf of Mexico-based refiners turned into diesel. The trade ended after the White House sanctioned Russian petroleum exports. Some relief is on the way. At least two vessels carrying around 1 million barrels of diesel are due to arrive in New York after being diverted from their original destinations in Europe. Delta’s Trainer refinery in Pennsylvania is also returning from seasonal maintenance, which will increase regional diesel production. The bottom line, as the Bloomberg energy strategist notes, is that “the timing of today’s diesel crisis couldn’t be worse.” That’s because the EU, which relies still on Russian diesel exports, will ban imports from February onward (assuming it survives the winter). Click here to read…

U.S. Economy Grew 2.6% in Third Quarter, GDP Report Shows

The U.S. economy grew in the third quarter but showed signs of a broad slowdown as consumer and business spending faltered under high inflation and rising interest rates. Gross domestic product—a measure of goods and services produced across the nation—grew at a 2.6% annual rate in the third quarter after declining in the first half of the year, the Commerce Department said Oct 27. Trade contributed the most to the third quarter’s turnaround as the U.S. exported more oil and natural gas with the war in Ukraine disrupting supplies in Europe. Consumer spending, the economy’s main engine, grew but at a slower pace than in the prior quarter. Businesses slashed spending on buildings, however, and residential investment fell at a 26.4% annual rate, the department said. Stocks were mixed after the GDP release and earnings announcements. Treasury yields fell. Economic uncertainty is growing and many economists are worried about the possibility of a recession in the coming 12 months. They expect the Federal Reserve’s efforts to combat high inflation by raising interest rates will further weigh on the economy. “The overall state of the economy is deteriorating and a lot of it is just the weight of elevated inflation and higher interest rates,” said Richard F. Moody, chief economist at Regions Financial Corp.“Click here to read…

Iran to export 40 gas turbines to Russia

Iran has signed a contract with Russia to export 40 home-grown gas turbines to the country, Shana News Agency affiliated to the Iranian oil ministry reported on Oct 23. Iran is now capable of meeting 85 percent of its domestic needs for gas equipment and facilities, and its gas production has doubled despite the severe US sanctions, Shana quoted Reza Noshadi, head of Iran Gas Engineering and Development Company, as saying. Iran and Russia have in recent years expanded their cooperation in different areas. In July, the two countries signed a memorandum of understanding, according to which Russia is expected to invest about $40 billion in Iran’s petroleum industry, Shana reported. In late July, Governor of the Central Bank of Iran Ali Salehabadi announced that the Tehran Stock Exchange had launched the rial-ruble trading, official news agency IRNA reported. About a month later, he said Tehran and Moscow will expand the use of national currencies in transactions to other areas of bilateral trade, semi-official Fars News Agency reported. In late August, Russian Foreign Minister Sergei Lavrov said Russia and Iran are finalizing a comprehensive document on their cooperation. “We are satisfied with the way our bilateral relations are developing. They are reaching a new qualitative level, which will be fixed in a large agreement between the two countries,” Lavrov said at a joint briefing following his meeting with his Iranian counterpart Hossein Amir-Abdollahian in Moscow. Click here to read…

Myanmar Joins North Korea and Iran on Global Illicit Finance Blacklist

A global financial watchdog added Myanmar to its list of countries where businesses and financial institutions are at high risk of exposure to money laundering and terrorist financing, potentially accelerating the country’s economic isolation that was triggered by a military coup last year. The Financial Action Task Force, a Paris-based intergovernmental body whose 39 members include almost all of the world’s major financial centers including the U.S., China and a number of European nations, said on Friday that Myanmar failed to address a large number of deficiencies in its anti-money-laundering and terrorist financing systems. As a result, it said the Southeast Asian country was added to what is informally known as the FATF blacklist. The list consists of just two other nations, Iran and North Korea, which the FATF says have “significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation.” While the designation doesn’t automatically trigger sanctions, FATF urges member countries to scale up due diligence measures that can make it harder for businesses and banks to work in Myanmar. Rights groups say the junta has killed more than 2,300 people and arrested over 15,000 since seizing power on Feb. 1, 2021. Click here to read…

Strategic

Team Xi: China’s new leadership line up

Xi Jinping has unveiled a line up of loyalists in his new inner circle after he secured a third term as China’s leader. The members of the Communist Party’s Politburo Standing Committee were introduced by Xi in ranking order on Oct 23, offering clues about the country’s next premier and other key posts. They are Li Qiang, Zhao Leji, Wang Huning, Cai Qi, Ding Xuexiang, and Li Xi. Li, 63, was elevated from Shanghai party chief — a position that has almost always meant a promotion to the standing committee. He will succeed Li Keqiang as premier next March. According to his official bio, Li started off as a technical worker at just 17 years of age. He later studied at various institutions and obtained an EMBA from the Hong Kong Polytechnic University in 2005. Li’s career path overlapped with Xi’s in the eastern coastal province of Zhejiang, when Li was a city party boss and later a secretary-general in the provincial party committee directly under Xi. He spent his entire career in Zhejiang before Xi promoted him to head Jiangsu Province in 2016. Li’s career advanced despite criticism for his handling of Shanghai’s chaotic two-month COVID-19 lockdown earlier this year. Zhao Leji, 65, will serve a second term on the committee and will likely head the NPC. Click here to read…

Misreading Xi and the rise of Li

The professional China commentariat and its echo chamber in the Western media were blindsided by the appointment of Shanghai party head Li Qiang as the country’s premier, the number two position to Xi Jinping. Li is a tech-savvy supporter of high-tech entrepreneurship who believes that China’s future lies in the digital economy. Xi, the Western press insisted with near unanimity, had reverted to Maoism. Li is the Shanghai party chief. Few if any previous Shanghai leaders have failed to advance to the Standing Committee, Xi included. That his advance to the number two position nonetheless came as a surprise to most Western analysts merely proves how much so many have misread Xi in particular and Chinese governance in general. Li studied business administration and holds an MBA degree from Hong Kong Polytechnic University, a top-tier Asian business and technology school funded by Hong Kong tycoon Li Ka-shing. He has supported technological entrepreneurship as the leading edge of China’s development. Among other things, Li was one of Jack Ma’s most visible supporters in the China Communist Party leadership. He brought Elon Musk’s Tesla to Shanghai. His appointment affirms the leadership’s support for private-led high-tech industry. Li was chosen for his track record of economic and financial innovation in the Shanghai Free Trade Zone, for bringing in major foreign investment (up by 32% in 2021 despite Covid) and for the policy papers on economic development he wrote for Xi as his assistant in Zhejiang. Click here to read…

Analysts seize on Xi’s mention of strong ‘strategic deterrence’ as sign of China’s nuclear build-up

China is expected to boost its nuclear arsenal after pledges to improve strategic deterrence appeared in its key Communist Party congress report for the first time. “We will establish a strong system of strategic deterrence,” President Xi Jinping said at the opening of the 20th party congress on Oct 16. In his work report, which lays out the country’s development path for the next five years and beyond, Xi called for an increase in the proportion of “new-domain forces with new combat capabilities”. He also called for accelerated development of unmanned, intelligent combat capabilities, promotion of coordinated development and application of the network information system. There was no mention of the concept of strategic deterrence in Xi’s last party congress report in 2017 or in his historical resolution last year, but the country’s 14th five-year plan report released last year emphasised the need to “build a high-standard strategic deterrence”. Analysts said it indicated China would improve its nuclear deterrence capability amid its rivalry with another nuclear power, the US. Song Zhongping, a former People’s Liberation Army instructor, said the statement meant China would “strengthen its development of strategic nuclear forces” to safeguard its national security. Song said the PLA must strengthen its “nuclear triad” forces – its combination of ground-based intercontinental ballistic missiles (ICBMs), submarine-launched missiles and air-launched weapons – as well as its second-nuclear strike capability to respond to a nuclear attack. Click here to read…

Taiwan braces for tougher mainland China forces, defence minister says after Central Military Commission overhaul

Taiwan will have to deal with a tougher and more modernised People’s Liberation Army following the reshuffle of top military leadership in mainland China, the island’s defence minister said on Oct 24. Not only were members of Beijing’s newly appointed Central Military Commission younger than previous commissions, but some of them were more familiar with Taiwan and had a tech background and combat experience, Chiu Kuo-cheng said. “It means the [PLA] will adopt a tougher strategy in dealing with Taiwan in the future,” Chiu said. He made the comments in response to lawmakers’ queries in a legislature meeting in Taipei on how the mainland’s new CMC would affect combat strategies towards the self-ruled island. The Chinese Communist Party reshuffled its top military leadership on Oct 23, a day after the closing session of its 20th party congress, signalling that the PLA would become more focused on Taiwan in the next five years and beyond. General He Weidong, 65, who has a wealth of command experience in China’s eastern military districts, was made the CMC’s second-ranked vice-chairman. Except for CMC Chairman President Xi Jinping, 69, and General Zhang Youxia 72, who was promoted to first-ranked vice-chairman, the remaining five commission members are aged between 58 and 67 – younger than members of previous commissions, Chiu said. Click here to read…

US-Taiwan arms production plan seeks to deter China

Taiwan and the US plan to jointly manufacture weapons to firm up Taipei’s defences against a possible China invasion, a move that could spike already high and rising tensions around the self-governing island. Last week, Nikkei reported that initial discussions have commenced on joint US-Taiwan weapons production, an arrangement that would see US defence companies provide technology and know-how to Taiwan or alternatively assemble weapons in the US using Taiwan-made parts. The negotiations, however, are expected to extend well into 2023 on various issues. Although Taiwan has not to date co-produced US weapons, its Hsiung Feng II and III anti-ship missiles are made with US technology including state-of-the-art US-made gyroscopes for precision targeting. Previous US administrations were thought to be cautious about military and dual-use technology transfers to Taiwan due to the risk of classified information leaking to China. When asked to confirm details of the proposed joint weapons production with Taiwan, US State Department principal deputy spokesperson Vedant Patel said that the US is looking into all possible means to ensure rapid transfer of armaments to Taiwan. China’s rising bellicosity towards Taiwan, high demand for US weapons in the Ukraine war and spiralling costs of US weapons may have driven the Biden administration to consider co-production to accelerate arms transfers to the self-governing island, as it often takes as long as a decade between US government approval of arms sales and final delivery. Click here to read…

Germany, France Divided Over Energy Crisis and China

Geopolitical tensions, from Europe’s energy crisis to relations with China, are driving a wedge between Germany and France, straining ties between countries that have anchored the European Union’s economy and security for decades. The rift was apparent in the decision to scale back a summit Oct 26 between German Chancellor Olaf Scholz and French President Emmanuel Macron. The two leaders were initially expected to meet in Fontainebleau, south of Paris, with their cabinet members in tow. That customary display of Franco-German unity was abruptly rescheduled for January, however, setting the stage for Mr. Scholz to travel to Paris on Oct 26 for a more modest working lunch with Mr. Macron inside the Elysée Palace. A French official said the leaders discussed the overall state of the Franco-German relationship as well as their stances on energy, defence and Mr. Scholz’s plans to visit China next month with a delegation of business leaders. Mr. Scholz’s China trip has become a source of frustration for European leaders who fear Beijing aims to pit Germany against its neighbours. The last time Chinese President Xi Jinping visited Paris in 2019, Mr. Macron invited then-Chancellor Angela Merkel and former European Commission President Jean-Claude Juncker to join the talks, maintaining a united diplomatic front. Click here to read…

Germany forced to slash rearmament plans – Handelsblatt

Germany is “massively” reducing its rearmament plans as high inflation and a strong dollar have made the equipment too expensive to buy for the country, unnamed political and defence industry representatives have told Handelsblatt newspaper. Many projects, especially those for the navy and air force, would likely have to be cancelled, the outlet reported on Oct 21. The fate of a third batch of K130 corvettes is now hanging in the balance, along with new Eurofighter jets for electronic warfare, frigates, and self-propelled howitzers, which were to be ordered to replace equipment sent by Berlin to Ukraine, the sources claimed. The number of units in a second batch of Puma infantry fighting vehicles, the cost of which was estimated at €304 million ($299.8 million) earlier this year, is also being reduced on a weekly basis, an unnamed politician from the ruling ‘traffic light’ coalition told the paper. “Since many projects run for five to seven years, inflation in this dimension creates a serious financial problem,” one of the sources explained. The economic situation has been fraught in Europe as the burden of the Covid-19 pandemic was further aggravated by the fallout from sanctions imposed by the EU on Moscow over its military operation in Ukraine, and the subsequent reduction in the supply of Russian energy to the bloc. Click here to read…

Russia, NATO hold nuclear drills as Ukraine villages pounded

NATO and Russia’s military alike staged planned annual nuclear exercises Oct 26 as the Russian president repeated the unfounded claim that Ukraine plans to set off a radioactive “dirty bomb.” On the battlefront, Russian forces pounded more than 40 Ukrainian villages over the past day. Russian President Vladimir Putin remotely monitored the drills of his strategic nuclear forces, which involved multiple practice launches of ballistic and cruise missiles in a show of force. Russian Defense Minister Sergei Shoigu reported to Putin that the exercise simulated a “massive nuclear strike” retaliating for a nuclear attack on Russia. The Biden administration said Russia provided advance notice of the annual drills. NATO is carrying out its own long-planned annual nuclear exercises in north-western Europe. Without providing any evidence, in remarks carried by Russian TV, Putin said Ukraine plans to “use a so-called ‘dirty bomb’ as a provocation” and contended the United States was using Ukraine as a “battering ram” against Russia and its regional allies, turning the country into a “testing ground for military-biological experiments.” It was the first time Putin himself made the unsubstantiated dirty bomb allegation, which his officials have been repeating since last week. Click here to read…

What are dirty bombs?

Dirty bombs are conventional explosive weapons containing radioactive material, the kind that might be used for ordinary medical radiotherapy, in food conservation or in industry. A dirty bomb is “not a nuclear bomb,” said Wolfgang Richter, a retired officer and expert on security at the German Institute for International and Security Affairs, or SWP. “This means there are no nuclear chain reactions, which unleash tremendous explosive force,” he added. Nuclear weapons generate deadly heat and waves of pressure as well as extremely dangerous radiation, which spreads over vast areas through wind and rain. Dirty bombs don’t do most of that. In fact, dirty bombs are most dangerous during their initial explosion, Richter said. However in the long run, the radiation emitted can prove hazardous or even lethal, depending on the dosage. The size of the detonation and strength of radiation determines how much territory may be contaminated and even perhaps rendered temporarily uninhabitable. A terrorist weapon? Dirty bombs are not new. Until now, many considered them to be a weapon that mostly terrorists might deploy. In 2003, police seized illegal deliveries of radioactive caesium and strontium in Tbilisi and Bangkok. Both substances could have been used to build dirty car bombs. Click here to read…

Ukraine updates: US warns Russia over satellites threats

Washington has warned Moscow against shooting down US satellites after Russian threats that it might target them. “I would just say that any attack on US infrastructure will be met with a response and will be met with a response appropriate to the threat that’s posed to our infrastructure,” US National Security Council communications director John Kirby said Oct 27. A senior Russian Foreign Ministry official had earlier said that commercial satellites from the United States and its allies could become legitimate targets for Russia if they were involved in the war in Ukraine. “Quasi-civilian infrastructure may be a legitimate target for a retaliatory strike,” Konstantin Vorontsov, deputy director of the foreign ministry’s department for non-proliferation and arms control, was quoted as saying by TASS. “We are talking about the involvement of components of civilian space infrastructure, including commercial, by the United States and its allies in armed conflicts,” Vorontsov was quoted as saying at the United Nations. Vorontsov did not mention any specific satellite companies, though billionaire Elon Musk said earlier this month that his rocket company SpaceX would continue to fund its Starlink internet service in Ukraine, citing the need for “good deeds.” Musk said last week that SpaceX’s Starlink services have not received any funding from the US Department of Defense. Starlink terminals are used in Ukraine by both the military and civilian population. Click here to read…

Kremlin responds to US troop deployment on Ukrainian border

The US troop deployment in Romania increases risks for Russia’s security, and will prompt Moscow to take countermeasures, Kremlin spokesman, Dmitry Peskov said on Oct 26. He was referring to the US Army’s 101st Airborne Division, which is currently stationed in Romania on the border with Ukraine. Speaking to reporters, Peskov noted that “the closer American troops are to our borders, the greater danger we are in.” He went on to say that Moscow factors in such a military presence when developing its security framework. Peskov reiterated that such a deployment on Russia’s doorstep “does not contribute to predictability and stability.” Last week, speaking to CBS News, commanders of the 101st Airborne Division said that they would not hesitate to enter Ukraine should a direct conflict break out between Russia and NATO. In total, around 4,700 American soldiers from 101st Airborne have been sent to Europe. While in Romania, the division, which has been nicknamed “Screaming Eagles,” is holding live-fire ground and air assault exercises with their NATO counterparts. According to its commanders, the division is the closest US unit to the fighting in Ukraine, and it is actively monitoring the Russian military while organizing drills to “replicate exactly what’s going on” there. NATO has repeatedly stated that it is not a party to the conflict and will not send its troops into Ukraine.Click here to read…

Deal reached on moving U.S. military port within Okinawa

After a nearly half-century impasse, an agreement was reached on the location and shape of a facility that will take over the functions of the U.S. forces’ Naha military port. The central government, the Okinawa prefectural government, the Naha city government and the Urasoe city government agreed on Oct. 25 that the relocation site would cover around 49 hectares on reclaimed land in a sea area off the west coast of Urasoe. Full-scale construction work is expected to start soon. The Okinawa prefectural government estimates it will take at least 17 years to complete the new facility. The Naha military port covers about 56 hectares at a site in Naha that is regarded as an “entrance” to Okinawa Prefecture. Two years after Okinawa Prefecture was reverted to Japanese control, Tokyo and Washington agreed in 1974 that the Naha military port would be returned to Japan. But one condition of the deal was the relocation of the Naha port’s functions. Finding a locale willing to accept the new military site proved difficult over the following decades. In 2013, Japan and the United States agreed that the port in the prefectural capital would be returned to Japan “in or after fiscal 2028.” The Oct. 25 agreement by the four parties was reached at an online meeting of the “council on the relocation” of the Naha military port. Only the opening part of the meeting was shown to the general public. Click here to read…

China rejects Japan’s so-called exclusive economic zone in waters east of Taiwan

China’s Foreign Ministry spokesperson Wang Wenbin said on Oct 26 that China does not recognize Japan’s so-called exclusive economic zone and its exercise of jurisdiction in waters east of China’s Taiwan region. Wang made the remarks at a regular press briefing when answering a query concerning a stand-off between Japan’s coastguards and a Taiwan’s research ship operating in relevant waters, which the Japanese side claimed as its exclusive economic zone. Wang said the waters are just over 60 nautical miles from the island of Taiwan, and Chinese scientific research institutions, including those from China’s Taiwan region, have the right to carry out scientific exploration activities in the area. Foreign countries should not interfere. China and Japan have not yet carried out maritime delimitation in waters east of Taiwan, and China does not accept the notion of a so-called Japanese exclusive economic zone or its so-called exercise of jurisdiction in the relevant waters. China has lodged representations with Japan, urging the Japanese side not to interfere with the scientific exploration activities of Chinese ships, including those from Taiwan region, in the relevant waters, Wang added. Click here to read…

With unrest in West Bank, US and Israeli presidents focus on Iran

Talks at the White House between United States President Joe Biden and Israeli President Isaac Herzog have focused on Iran, the Israeli government said on Oct 26, as its military engaged in a crackdown on Palestinian groups in the occupied West Bank. In remarks to reporters before the meeting in Washington, DC, the two leaders did not mention Palestinians despite mounting tensions and violence, especially in the West Bank city of Nablus, where six Palestinians were killed this week. Instead, Herzog invoked the crackdown on anti-government protests in Iran as he sat next to Biden in the Oval Office. “This is an example of Iran crushing their own citizens while moving forward towards nuclear weapons and supplying lethal weapons that is killing innocent citizens in Ukraine,” Herzog said. “I think the Iranian challenge will be a major challenge to be discussed.” In a statement describing the talks, the White House said later on Oct 26 that Biden “emphasized the importance of taking steps to deescalate the security situation in the West Bank”. After the meeting, the Israeli president said in a statement that the two leaders discussed “mainly the issue of Iran’s pursuit of nuclear weapons”. While Tehran denies pursuing a nuclear weapon, Israel has continued to oppose diplomatic efforts between the US and Iran to revive the 2015 nuclear deal that saw Iran scale back its nuclear programme in exchange for international sanctions relief. Click here to read…

Sunak to be UK’s next PM, set to face challenges in leading UK out of economic mess

Rishi Sunak will become the UK’s next prime minister as he won the race on Oct 24 to replace Liz Truss as Conservative Party leader, and after former leader Boris Johnson pulled out of the race on Oct 23. Chinese experts hold a cautious attitude on the future after Britain’s former finance minister is set to become the next UK prime minister, especially on whether he will be able to lead the country out of its economic mess. Though Sunak is believed to hold a more pragmatic view compared to his predecessor, it’s unlikely that he will be able to fix the country’s structural problems overnight, some experts said. Unlike Truss and Johnson, Sunak, with a background in finance and economy, is expected to make it a priority to handle domestic issues in a stable manner, which means that he may avoid the aggressive rhetoric that Truss adopted, and there won’t be any significant shift in his upcoming policies in dealing with either Russia or China, according to some experts. However, facing a highly divided party, Sunak needs to first stabilize his governance as his legitimacy could be challenged again, leading to another shift in power. Sunak has become the new Conservative leader and will be prime minister after Penny Mordaunt followed Boris Johnson in withdrawing from the running, minutes before the party was due to announce how many MPs had backed each candidate, the Guardian reported. Click here to read…

US ‘in hurry’ to reach nuke agreement: Iranian FM

Iranian Foreign Minister on Oct 22 said his country has received a US message expressing American hastiness to reach the nuclear deal with Iran, official IRNA news agency reported. “Three days ago, we received a message from the United States, and told them that the [International Atomic Energy] Agency [IAEA]’s accusations against Iran’s nuclear program should be resolved” before any agreement, said Hossein Amir-Abdollahian in the Armenian capital of Yerevan. Asked about US officials’ comments about the nuclear negotiations being off the US agenda, he said, “Americans are contradictory in their words and behaviour, as they are in a hurry to reach the agreement in their [recent] message.” While the US continues to exchange messages with Iran, they “are seeking to exert political and psychological pressure [on Iran] and want to gain concessions in the negotiations,” he said. “We do not give any concessions to the American side, and we move within the framework of logic and the framework of an agreement that respects the red lines of the Islamic Republic of Iran, but at the same time we never leave the negotiating table.” Click here to read…

Health

TB passes COVID-19 as top infectious killer

Following gargantuan global efforts against COVID-19, tuberculosis (TB) is once again the world’s biggest infectious killer, a top expert has told AFP, lamenting the lack of focus on rooting out TB. Mel Spigelman, president of the nonprofit TB Alliance, hailed the swift and dramatic progress to rein in the ­COVID-19 pandemic, with a vast array of safe and effective vaccines, tests and treatments developed in the space of two years. “But the juxtaposition with TB is pretty stark,” he said in an interview. TB, once called consumption, was the world’s biggest infectious killer before the arrival of COVID-19, with 1.5 million people dying from the disease each year. With global COVID-19 deaths steadily declining, “TB has regained the dubious distinction,” Spigelman said. The TB Alliance, a nonprofit working to develop and deliver faster-acting and affordable drugs against the disease, especially in poorer countries, points out that based on the annual death rate, TB kills 4,109 people a day. That compares to 1,449 people a day dying due to ­COVID-19, calculated from the 40,578 deaths reported in the past 28 days on the Johns Hopkins University dashboard. But unlike COVID-19, there appears to be little, and even waning, interest in taking on TB. Click here to read…

Japan set to be short of 1 million medical, welfare workers in 2040

Japan is set to face a shortage of around 1 million medical and welfare service workers in 2040, when the country’s elderly population is expected to almost peak. The government offered this dire warning in its Annual Health, Labour and Welfare Report 2022, presented to a Cabinet meeting on Sept. 16. Securing a sufficient number of workers is “one of the most important agenda items facing social security services,” the report said. In the meantime, frontline workers in social security services are pressing for improved working conditions.Officials projected the shortfall in numbers based on anticipated economic growth and demographic changes in Japan. They concluded that demands on medical or nursing care services will grow further from 2025, the year the baby boomers will become 75 or older. They estimated that in 2040, when second-generation baby boomers will be 65 or older, medical and welfare services will require 10.7 million workers. By that time, only 9.74 million workers are expected to be available, leaving a shortfall of 960,000 people, the report warned. A total of 8.91 million people worked in medical or welfare services as of 2021, a 1.9-fold increase over the course of approximately 20 years, according to statistics. However, as the number of working age people–those between 20 and 64–will fall significantly in coming years, it will be impossible to secure the necessary workforce, officials say. Click here to read…