Economic

Ukraine war: risk of sanctions puts China stocks in valuation, geopolitical traps as companies face Russia dilemma

Chinese stocks are on “cheap sale” after a US$2.4 trillion sell-off in both onshore and offshore markets since Russia invaded Ukraine. What investors cannot price, however, is the risk of sanctions on China’s biggest companies. As a result, investors should favour markets that are least exposed to the secular US geopolitical conflict with Russia and China, according to strategists at BCA Research. The risk premium-compression trade, touted by strategists at Goldman Sachs, can possibly wait. China has refused to condemn Russia’s military aggression in Ukraine, while also publicly opposing the mounting Western sanctions on the Kremlin. That stance has presented a dilemma for Chinese firms operating in Russia, including Xiaomi, Sinopec and Alibaba Group Holding, the owner of this newspaper. Foreign investors pulled almost US$10.7 billion from the Chinese stock markets in the first half of this month, according to Jefferies, one of the worst drawdowns on record by the Stock Connect’s northbound investors. The capital outflow suggests global funds may see the market as a valuation trap. “Outflows from China on the scale and intensity we are seeing are unprecedented,” the Institute of International Finance said in a report last week. “The timing of outflows – which built after Russia’s invasion of Ukraine – suggests foreign investors may be looking at China in a new light, though it is premature to draw any definitive conclusions.” Click here to read...

The Odds Don’t Favor the Fed’s Soft Landing

Federal Reserve Chairman Jerome Powell explained this week what he and his colleagues hoped to accomplish with the interest-rate increases they initiated last week. “The economy achieves a soft landing, with inflation coming down and unemployment holding steady,” he told a conference of economists. In 1965, 1984 and 1994, the Fed raised interest rates enough to cool an overheating economy without precipitating recession, he noted, adding it may have done the same in 2019 but for the Covid-19 pandemic. Unfortunately, history isn’t on his side. Inflation is much further from the Fed’s objective, and the labor market, by many measures, is tighter than in previous soft landings. Yet the Fed starts with real interest rates—nominal rates adjusted for inflation—much lower, in fact deeply negative. In other words, not only is the economy already traveling above the speed limit, the Fed has the gas pedal pressed to the floor. The odds are that getting inflation back to the Fed’s 2% target will require much higher interest rates and greater risk of recession than the Fed or markets now anticipate. The biggest contrast with prior soft landings was that in the past, the Fed sought only to keep inflation from going up—not to actually push it downClick here to read...

The risks of a global financial schism are mounting

The unprecedented ferocity of sanctions against Russia is frequently seen as demonstrating the West's continued financial power. But such hubris overlooks emerging geographical divisions in the equity and foreign exchange markets, which suggest that Western reach is waning and that recent events may, in fact, prove to be the last hurrah of its global financial hegemony. The first is the growing fracture in global equity markets. This has been an issue for some time, with both the U.S. and China using national security fears to create barriers for international investors. The U.S., for example, continues to expand the list of Chinese companies which its domestic investors are prohibited from owning. It will also delist Chinese stocks from the New York exchanges if they fail U.S. auditing requirements. At the same time, China has made it more difficult for its companies to list overseas, citing data security concerns, and is encouraging those already trading in the U.S. to come home. But more problematically for international equity investors, the precedent set by the Russian sanctions has dramatically increased their geopolitical risks. If bilateral relations between China and the West deteriorate further, the fear is that any investments in the Asian economic superpower could one day be rendered either frozen or worthless. Click here to read...

China’s private firms see Russia as land of opportunity, up for grabs amid West’s exodus

From car parts to food and household cleaners, smaller private firms in China are seeking ways to capitalise on the “void” left by a mass exodus of high-profile Western brands from the Russian market. But the outlook for state-owned companies and banks is a little foggier. Western sanctions over the war in Ukraine have sent the likes of Ford, Coca-Cola and other iconic brands heading for the exit in Russia. This has created opportunities for Chinese firms, despite warnings from the United States and its allies over providing assistance to help circumvent the various bans and restrictions imposed on Russia. China’s ambassador to Russia has already urged Chinese traders in Moscow to seize the business opportunities arising from the crisis, and to restructure their businesses to “fill the void in the Russian market”, according to a Russia Confucius Culture Promotion Association post on its official WeChat account. “Under the complex geopolitical situation, big corporations face a lot of hardships, or even cutoffs, in payment and supply chains,” Zhang Hanhui said during a meeting with local business representatives earlier this month. Wang Chuanbao, the president of the Federation of Overseas Chinese in Moscow, also told the Post that the gap left by Western companies in Russia has led to an imbalance of supply and demand, undoubtedly generating new business opportunities. Click here to read...

US reinstates tariff exemptions on some Chinese products

US President Joe Biden’s administration will reinstate tariff exemptions on more than 350 Chinese imports, his trade office said on March 23, accounting for about two-thirds of waivers that had expired at the end of 2020. News of the exemptions, which will apply retroactively from last October until the end of 2022, came after the conclusion of a public comment period that the US Trade Representative’s (USTR) office announced last October. During that phase, companies were asked to comment on whether affected goods could be sourced from countries other than China, whether product procurement had been affected by global supply chain shifts and if there was domestic capacity for manufacture of the products. “The focus of the evaluation will be whether, despite the first imposition of these additional duties in September 2018, the particular product remains available only from China,” the USTR said at the time. In a statement announcing the waivers, the USTR said on March 23 that the determination had been made “after careful consideration of the public comments, and in consultation with other US agencies.” The USTR also sought input from the White House’s Covid-19 response team, according to a filing in the Federal Register, suggesting efforts by the administration to minimise the trade dispute’s impact on pandemic response-related supply chains. Click here to read...

US & G7 Allies Go After Russia's Ability To Sell Its Gold As Sanctions Evasion 'Lifeline'

G7 leaders by week's end following March 24's trio of Ukraine-related summits, for which Biden was present in Brussels, agreed to launch new measures seeking to crack down on Russia's ability to evade US and EU led financial sanctions. As a March 24 White House statement announced, "G7 and EU announce sanctions evasion initiative to prevent circumvention and backfilling of our unprecedented sanctions; continue to blunt Central Bank of the Russian Federation’s ability to deploy international reserves including gold." The statement additionally detailed that the US and its allies will "continue to work jointly to blunt Russia’s ability to deploy its international reserves to prop up Russia’s economy and fund Putin’s war, including by making clear that any transaction involving gold related to the Central Bank of the Russian Federation is covered by existing sanctions." On March 25, a day after Biden and his pals in Brussels discussed ways to stop Russia utilizing its gold reserves to maintain some stability in an increasingly chaotic economy, the Bank of Russia announced plans to begin buying gold from its banks at a fixed price. This could serve two purposes: 1) provide a path to liquidity for SWIFT-constrained banks, and 2) centralize more of the nation's gold as Putin accelerates his de-dollarization plans. Click here to read...

There is no substitute for Russian oil – UAE

The world’s energy markets need Russian oil and no producer can replace it, United Arab Emirates (UAE) Minister of Energy Suhail al-Mazrouei said on March 28. Russia produces some 10 million barrels of oil a day, which makes it a critical member of the OPEC+ energy alliance, al-Mazrouei explained during an energy forum in Dubai. “Leaving the politics aside, that volume is needed today,” he insisted, adding that “unless someone is willing to come and deliver that amount, we don’t see that someone can substitute Russia.” The International Energy Agency announced earlier this month that it had decided to release 60 million barrels of oil from its emergency reserves, saying that global oil markets were already tight with highly volatile prices and commercial inventories at their lowest level since 2014. Many have expressed doubts, however, about whether it was possible to ditch Russia’s energy resources. Qatar – which holds the third-largest natural gas reserves in the world – said last week that it was practically impossible to replace Russian gas on the European market, as between 30 and 40% of the total volume of gas supplied to the world market comes from Russia. Click here to read...

EU nations band together to buy gas

European Commission President Ursula von der Leyen told reporters on March 25 that the European Union will purchase gas on its own and divide it between members, a new development for the 27-member bloc. “The energy mix and concrete situation in our members is very different but we need to work together to pool our weight,” Von der Leyen said at a press conference after a two-day summit in Brussels, Belgium. “We have an enormous purchasing power. Therefore, I welcome that we will now use our collective bargaining power. Instead of outbidding each other, driving prices up, we will pool our demand.” Von der Leyen has already promised to reduce Europe’s dependence on Russian gas, but some EU countries remain dependent on a steady supply from Russia. Germany, whose leaders have recently warned that their economy could crash were Russian imports sanctioned, relies on Moscow for more than half of its gas supply. However, leaders in Berlin have balked at paying for Russian gas in rubles, as Russian President Vladimir Putin demanded they do earlier this week. In a joint news conference with US President Joe Biden on March 25, von der Leyen said that Washington would step up its deliveries of Liquefied Natural Gas (LNG) to “at least 50 billion cubic meters” per year, which she said would replace a third of the gas currently provided by Russia. Click here to read...

G7 rejects Russian demand to pay for gas in rubles

The Group of Seven major economies have collectively agreed to reject Moscow’s demand to pay for gas imports from Russia in rubles, according to German Energy Minister Robert Habeck. “All G7 ministers agreed completely that this [would be] a one-sided and clear breach of the existing contracts,” Habeck told journalists on March 28. The minister added that “payment in rubles is not acceptable” and that the nations will urge the companies affected “not to follow” the demand issued by Russian President Vladimir Putin last week. On March 28, Putin ordered the government, the central bank, and Gazprombank to develop the necessary tools to switch all payments for Russian natural gas from “unfriendly states” to rubles from March 31. This includes countries that have targeted Russia’s financial system and seized its foreign reserves in response to the crisis in Ukraine. Kremlin spokesperson Dmitry Peskov said Russia will stop shipping natural gas to countries that reject the demand. Click here to read...

EU agrees on new digital rules to rein in Big Tech dominance

The European Union set the stage for a stepped-up crackdown on big tech companies with an agreement on landmark digital rules to rein in online “gatekeepers" such as Google and Facebook parent Meta. EU officials agreed late March 24 on wording for the bloc's Digital Markets Act, part of a long-awaited overhaul of its digital rulebook. The act, which still needs other approvals, seeks to prevent tech giants from dominating digital markets, with the threat of whopping fines or even the possibility of a company breakup. For instance, they face tighter restrictions on using people's data for targeted online ads — a primary source of revenue for Google and Facebook — while different messaging services or social media platforms would be required to work together. The new rules underscore how Europe has become a global pacesetter in efforts to curb the power of tech companies through an onslaught of antitrust investigations, stringent regulations on data privacy and proposed rules for areas like artificial intelligence. “What we have been deciding about yesterday will start a new era in tech regulation," the European Union's lead lawmaker Andreas Schwab, said at a press conference March 25. The same day, however, the European Union reached a preliminary agreement with the U.S. that paves the way for Europeans’ personal data to be stored in the U.S.Click here to read...

Kazakhstan does not want to be behind new Iron Curtain: Official

Kazakhstan does not wish to be behind any new Iron Curtain that Russia may seek to erect, the country’s deputy foreign minister has said, as Astana treads a fine line amid Moscow’s invasion of Ukraine. German newspaper Die Welt on March 28 quoted Roman Vassilenko as saying that his country would not want to be on the wrong side of a new “iron curtain”, referring to the Western term for a dividing line between Eastern and Western Europe during the Cold War. Kazakhstan has been seeking a balance between distancing itself from Russia’s offensive in Ukraine and not upsetting its northern ally. Vassilenko also said companies exiting Russia due to the war in Ukraine were welcome to move their production to Kazakhstan. Countries should not come merely to avoid sanctions against Russia, “but all companies with a good reputation that want to move their production here are welcome”, Vassilenko said. A raft of Western companies are shuttering businesses in Russia in response to pressure from consumers to take a stand against the invasion of Ukraine. Vassilenko signaled that his country was pressing on with its planned reforms and had no intention of returning to the political setup of the Cold War. Click here to read...

ASEAN faces 'collateral damage' from Ukraine war's Europe impact

The Russia-Ukraine war is threatening Southeast Asia's economic recovery from the pandemic -- if not always directly, then by dealing damage via Europe. While analysts have downplayed the Association of Southeast Asian Nations' economic exposure to Russia and Ukraine, they caution that a protracted conflict that hurts the European Union will have spillover effects, hitting everything from trade to tourism. Malaysia's Maybank this month warned of "collateral damage on ASEAN" from the conflict and resulting sanctions against Russia. "A broader Europe downturn will have larger knock-on effects on ASEAN's exports, foreign direct investment and growth," Maybank's report said. "The European Union accounts for a substantial 9% of ASEAN exports, and more than 11% for Vietnam and the Philippines." It added that foreign direct investment from the EU makes up 11% of ASEAN's total. For Singapore, analysts Chua Hak Bin and Lee Ju Ye noted that the EU accounts for 9.2% of the financial hub's total non-oil domestic exports. They cut their forecast for growth in the city-state's gross domestic product this year to 2.8% from 3.8% "on the back of lower global and EU growth, higher energy prices [and] manufacturing supply chain disruptions." "We are more worried about a broader Europe slowdown or a possible EU recession," they stressed. Click here to read...

Huawei net profit up 76% in 2021 despite U.S. crackdown

Huawei Technologies' net profit rose more than 75% in 2021 despite its first-ever decline in revenue, thanks to steady growth in profitability and one-off gains from spinning off its budget smartphone line and a server business, the embattled Chinese company said March 28. "Despite a revenue decline in 2021, our ability to make a profit and generate cash flows is increasing, and we are more capable of dealing with uncertainty," Huawei CFO Meng Wanzhou said at a news conference held to deliver the company's annual report. Meng attributed the revenue decline in part to a U.S. clampdown pressuring the company's smartphone and PC businesses. China's maturing 5G infrastructure deployment and fallout from the coronavirus pandemic, meanwhile, has slowed the growth of Huawei's telecom business, according to the CFO. This was Meng's first company earnings event since she returned to China from Canada in October last year after spending nearly three years battling extradition to the U.S. on fraud charges. Meng said the enhanced profitability of Huawei's businesses also helped increase the company's cash flow and reduced its liability ratio. "[Huawei's] overall financial structure has become more resilient and flexible," she said. Click here to read...

Russian Tankers Going Dark Raises Flags on Sanctions Evasion

Russian tankers carrying oil chemicals and oil products are increasingly concealing their movements, a phenomenon that some maritime experts warn could signal attempts to evade unprecedented sanctions prompted by the invasion of Ukraine. In the week ended March 25, there were at least 33 occurrences of so-called “dark activity” -- operating while onboard systems to transmit their locations are turned off -- by Russian tankers, said Windward Ltd., an Israeli consultancy that specializes in maritime risk using artificial intelligence and satellite imagery. That’s more than double the weekly average of 14 in the past year. The dark operations occurred mainly in or around Russia’s exclusive economic zone, according to Windward, which conducted the research at Bloomberg’s request. Commercial vessels are required by international maritime law to have their automatic identification system, or AIS, turned on while at sea. Disabling or manipulating a ship’s identification system is at the top of deceptive shipping practices cited by the U.S. Treasury Department in an advisory last May to curb illicit shipping and sanctions evasions. Click here to read...

Strategic

Regime change, the controversial strategy the US no longer wants

The United States says it is not seeking a "regime change" in Russia, hasty clarification that shows the strategy once popular among neoconservatives has become a hot button issue after negative experiences in Iraq, Afghanistan and Libya. President Joe Biden caused a stir March 26 when, during an impassioned speech in Warsaw, said his Russian counterpart Vladimir Putin "cannot remain in power." The White House rushed to downplay the phrase, which was not part of Biden's prewritten remarks, insisting the US leader was not suggesting a regime change in Moscow. But Biden refused to walk back the comment March 28, although he said he was only expressing his "moral outrage," not outlining a policy to overthrow Putin. Even hinting at such a tactic appears taboo in Washington. US Secretary of State Antony Blinken has made refusing regime change a central tenet of his diplomatic approach, promising as early as March 2021 not to "promote democracy through costly military interventions or by attempting to overthrow authoritarian regimes by force. "We have tried these tactics in the past. However well-intentioned, they haven't worked," he said. The history of US foreign policy is littered with such attempts both clandestine and overt -- and more or less successful -- to resolve a crisis by replacing the leaders of an adversary country. Click here to read...

NATO set for new troop deployment on ‘eastern flank’

NATO Secretary General Jens Stoltenberg said thousands of troops will soon be deployed to four countries in Eastern Europe, calling for the alliance to be bolstered “in all domains,” as it oversees around 140,000 soldiers on the continent. Speaking ahead of a NATO summit set for later this week, Stoltenberg told reporters on March 23 that he expects member states to agree to “strengthen NATO’s posture in all domains,” including “major increases to our forces in the eastern part of the alliance on land, in the air and at sea.” “The first step is the deployment of four new NATO battlegroups in Bulgaria, Hungary, Romania and Slovakia,” he continued. “Along with our existing forces in the Baltic countries and Poland, this means we will have eight multinational NATO battlegroups all along the eastern flank, from the Baltic to the Black Sea.” A battlegroup is made up of between 1,000 and 1,500 soldiers and usually includes both tank and infantry units. In total, Stoltenberg said there are now “hundreds of thousands of allied troops at heightened readiness across the alliance,” among them 100,000 American soldiers stationed in Europe and another 40,000 under direct NATO command, who will remain “as long as necessary.” Click here to read...

China-EU summit: war in Ukraine looms over long-delayed talks

Despite Beijing’s attempts to separate the Ukraine issue from its ties with Europe, Russia’s invasion is set to hang heavily over the long-delayed annual China-EU summit on April 01, according to sources and diplomatic observers. The gathering could also be a chance to assess the EU’s shift from an economic bloc to a geopolitical player. “This time we have made it clear to China that we really want to talk about Ukraine,” a European government source with knowledge of the summit agenda said. Another European government source briefed on the summit said: “It is reasonable to expect China to stick to the sanctions and not to provide support to Russia in any way – at least not doing more than what they have done.” It is also understood that the human rights dialogue – a sideline component of the annual summit – will be put off for a third year but the stalled bilateral trade deal – the Comprehensive Agreement on Investment (CAI) – will still be up for discussion when the gathering gets under way on April 1. The summit was last held in June 2020 and was called off last year after Brussels’ accusations of human rights abuses in Xinjiang set off a flurry of sanctions between the European Union and China. The European Parliament then voted to freeze discussion of the CAI, which took seven years to negotiate. Click here to read...

G20 presidency: Firm but calm

President Joko ”Jokowi” Widodo needs to make more concerted efforts in facing the rising global tension caused by Russia’s invasion of Ukraine, which has had direct impacts on the success of the Group of 20 summit in Bali on Oct. 30. One of the most sensitive issues is the demand of the United States and its allies in NATO, the European Union and Australia to exclude Russia from the annual meeting. Indonesia’s position as the host is very clear that it would invite all members to Bali and wants all leaders to come to Bali for the meeting. G20 leaders know that the forum does not have a clear mechanism for expelling or freezing the membership of a country. Due to the tricky nature of the matter, President Jokowi has to make sure that all official statements and information related to the G20 summit from the host should come from a single agency or a ministry. The government is facing a critical moment that requires unity within its ranks. There are ministers whose comments about Russia's participation and the possibility to raise the issue of the Ukraine crisis during the summit can upset other countries. The Foreign Ministry has made it clear that “the Ukraine issue cannot be discussed because, of course, this is a global problem that has had a tremendous impact on the global economy”. Click here to read...

Israel to host US, Arab diplomats in ‘Abraham Accords’ summit

Israel said it will host a “historic summit” beginning on March 27, with the participation of top diplomats from the United States and three Arab states with which it has normalised ties. “At the invitation of Foreign Minister Yair Lapid, this upcoming March 27 and March 28 … a historic diplomatic summit will be held in Israel,” the Israeli foreign ministry said on March 25. A series of diplomatic meetings would be attended by US Secretary of State Antony Blinken and his counterparts from the UAE, Bahrain and Morocco, it said, without giving further details. The agreements, reached under former US President Donald Trump, broke with decades of Arab consensus that there would be no relations with Israel while the Palestinian question remains unresolved. But the Arab countries which have normalised ties said they were motivated by the economic benefits of establishing official relations with Israel, despite opposition from the Palestinians. In a separate development, Jordanian state media said King Abdullah II would host Egyptian President Abdel Fattah el-Sisi, Iraq’s Prime Minister Mustafa al-Kadhimi and Sheikh Mohammed bin Zayed Al Nahyan, Abu Dhabi’s powerful crown prince, in the southern Jordanian city of Aqaba on March 25. Click here to read...

Focus on the IRGC ‘terror’ designation in Iran nuclear talks

The issue of a “terror” designation on Iran’s Islamic Revolutionary Guard Corps has taken centre stage during the ongoing efforts to revive the country’s 2015 nuclear deal with world powers. As the European Union’s negotiations coordinator, Enrique Mora, met with Iranian officials in Tehran on March 27, the discourse there and elsewhere was dominated by whether the United States will lift its “foreign terrorist organisation” (FTO) designation of the IRGC. Mora and Iranian chief negotiator Ali Bagheri Kani exchanged views during their meeting and agreed to maintain contact. Mora then met with foreign minister Hossein Amirabdollahian. Both Iranian officials told him that if the American side is “realistic”, an agreement can be reached to revive the Joint Comprehensive Plan of Action (JCPOA), as the accord is formally known. Mora will soon head to Washington, where he will meet American officials on March 28. In an interview with state television on March 26, Amirabdollahian had confirmed that the FTO designation, in addition to sanctions imposed on IRGC subsidiaries and entities, is the main remaining obstacle to an agreement. Click here to read...

Nigeria: 7,000 Boko Haram, other fighters surrender in a week

Some 7,000 members of the Islamic State West Africa Province (ISWAP) and Boko Haram have surrendered in northeast Nigeria in the past week, according to local media reports. On March 23, the News Agency of Nigeria quoted Major General Christopher Musa, a top commander in the region, as saying that an onslaught targeting ISWAP and Boko Haram fighters has continued to record significant success. Musa said at least 7,000 Boko Haram and ISWAP members surrendered in the last week during the operations. “This is evident as thousands of the insurgents comprising combatants, non-combatants, foot soldiers, alongside their families, continued to lay down their arms in different parts of Borno to accept peace,” he said. The surrendering fighters and their families are expected to be profiled by the Nigerian army and other stakeholders before they undergo rehabilitation processes, the general added. Since 2009, Boko Haram has launched an uprising in northeast Nigeria. Its attacks have spread to neighbouring Niger, Chad and Cameroon, prompting a military response. The group has also become splintered, with one faction pledging allegiance to ISIL (ISIS). Click here to read...

Solomons confirms China security talks; Australia, N.Z. concerned

The Solomon Islands confirmed on March 25 it was creating a partnership with China to address security threats and ensure a safe environment for investment as part of a diversification of its security relations. A security pact with the Pacific island nation would be a major inroad for China in a region that U.S. allies Australia and New Zealand have for decades seen as their "back yard." Australia and New Zealand have expressed their concern about the impact on regional security of military cooperation between China and the Solomon Islands after a draft document outlining the proposed cooperation was leaked this week. "Broadening partnerships is needed to improve the quality of lives of our people and address soft and hard security threats facing the country," the government of the Solomon Islands said in its first public comment on the matter. It said in a statement it was "diversifying the country's security partnership including with China" and was working to sign a number of agreements with it "to further create a secure and safe environment for local and foreign investments." A security agreement with Australia, signed in 2017, would be preserved as the Solomon Islands deepened its relations with China, it said. Click here to read...

Pakistan's Khan on brink as no-confidence proceedings start

Pakistan Prime Minister Imran Khan faces an imminent no-confidence vote that threatens to bring down his government, in what would be a first for the South Asian country. The motion was tabled on March 28 in a special National Assembly session, setting in motion proceedings toward the vote. The session has now been adjourned until March 31 when the debate over the motion is expected to begin. When the vote will take place is still unknown, but the prime minister is widely expected to lose it, after members of his party defected and allies turned against him amid a storm of criticism over his economic stewardship. Khan, who was elected in 2018, has been trying to save his job, including by turning to the Supreme Court. With large competing rallies on March 27, there are also concerns that the political crisis could spiral into violence, potentially causing turbulence for China's Belt and Road Initiative, of which Pakistan is a key country. The government has been under fire over rising inflation and accusations it is "selling out Pakistan's sovereignty" to the International Monetary Fund in exchange for loans. In February, the nation borrowed $1.05 billion from the IMF after a sixth progress review. Opposition parties submitted their application for the no-confidence motion on March 8. Click here to read...

Chinese foreign minister makes surprise stop in Afghanistan

China's foreign minister made a surprise stop in Kabul on March 24 to meet Afghanistan's Taliban rulers, even as the international community fumes over the hard-line movement's broken promise a day earlier to open schools to girls beyond the sixth grade. The official Bakhtar News Agency announced Wang Yi will meet with Taliban leaders "to discuss various issues including the extension of political relations, economic, and transit cooperation." The Taliban, who swept to power last August with the chaotic end to 20 years of war by a U.S. and NATO coalition, have been seeking international recognition in order to open up their economy, which has been in free fall since their arrival. China has not shown any inclination to recognize the Taliban government but it has avoided criticizing the new rulers, despite their repressive rules directed particularly at women, denying them unhindered access to work and school. China has, however, kept its embassy in Kabul open and offered limited emergency assistance. Wang is one of the highest level visitors to Afghanistan since the Taliban's return. China has economic and mining interests in Afghanistan, and Afghans familiar with past talks between the Taliban and Chinese officials say Beijing wants Taliban commitments to prevent China's Uyghur opponents from setting up operations in Afghanistan. Click here to read...

China’s big military mission: to train elite commanders for joint operations

For the People’s Liberation Army, it is one of the most “important and pressing” issues of the time. To observers, it is essential if China is to defend itself and keep peace in the region in an era of evolving international relations. The pressing need, they say, is for the Chinese military to develop commanders skilled in conducting joint operations across the various divisions of the armed forces. In the past, each branch has trained staff independently, but now the military is trying to foster cooperation between the services to raise combat strength. Hong Kong-based military analyst Song Zhongping said the tense international situation required the Chinese military to have more commanders capable of coordinating cross-branch operations. “The United States has ramped up military pressures in the Indo-Pacific region, including the Taiwan Strait, forcing Beijing to prepare for the worst,” Song said. “The world is not at peace, only those who are well-trained and capable of joint operations can defend the homeland and the country, and maintain peace and stability in the region, and even the world.” China was researching the training of joint operation military commanders in the late 2000s, following the lead of the United States. However, in the past China’s cross-service training has lacked momentum and the right procedures, supervision and logistics, according to South Sea Fleet Captain Colonel Yang Yang in a PLA Daily report. Click here to read...

China warns Nepal of external interference threat in US grant wake

Chinese Foreign Minister Wang Yi has warned Nepal of “external interference” threatening the core interests of both countries, a month after Kathmandu ratified a US aid grant branded by Beijing as “coercive diplomacy”. In talks with his Nepali counterpart Narayan Khadka and Prime Minister Sher Bahadur Deuba in Kathmandu on March 26, Wang repeated Beijing’s position of “non-intervention” and respect for the “sovereignty, independence and territorial integrity” of all countries. “China will work with Nepal to safeguard the principle of non-interference in internal affairs and … resist unilateralism and oppose power politics, and contribute to regional peace and stability,” the foreign ministry quoted Wang as saying. “China believes that the affairs of Nepal should be decided by its people. China opposes any attempts to undermine Nepal’s sovereignty and independence, interfere in its internal affairs and engage in geopolitical games in Nepal.” Khadka reaffirmed Nepal’s commitment to the one-China policy and to “not allow any activity against China on Nepali territory”, according to The Himalayan Times, a newspaper based in Kathmandu. International relations analysts said Wang was reminding Nepal that its decision last month to accept a US$500 million grant from Washington’s Millennium Challenge Corporation (MCC) might also harm China’s national interests in the country, given that Kathmandu is also a signatory to Beijing’s Belt and Road Initiative. Click here to read...

North Korea Has a Bigger Missile, and the U.S. Has Fewer Options

Four years ago, the U.S. and its allies won the support of Russia and China to bring tough sanctions against North Korea in response to an intercontinental-ballistic missile launch. Now, Kim Jong Un’s regime has launched a more-powerful ICBM. But it’s a different world, and the U.S. has fewer options to respond. “This is like the Cold War, in the sense we’ve reverted,” said Scott Snyder, a Korea expert at the Council on Foreign Relations. “The point is that the job is harder because there are tools missing from the toolbox.” North Korea’s 2017 ICBM launch—with an estimated range far enough to reach the U.S. mainland—was seen as clearly out of bounds, even in the eyes of its close allies in Beijing and Moscow. The long-range test resulted in caps to North Korea’s fuel imports and a repatriation of overseas laborers who earned foreign currency for the regime. The invasion of Ukraine has left little room for agreement at the United Nations among the world’s major powers. With Russia and China expected to block any sweeping penalties at the U.N. Security Council, the U.S. faces limited, and likely less effective, options to slow North Korea’s nuclear pursuits. The Biden administration can bring pressure through unilateral sanctions, military posturing and tighter coordination with allies—all actions the U.S. has taken recently, including in the aftermath of March 24’s ICBM launch. Click here to read...

Biden’s Budget Calls for Increase in Defense Spending, Including Funds for Ukraine

President Biden called for the largest-ever level of military spending and increased funding for law enforcement in a $5.8 trillion budget, playing down his proposals for expanding social programs in favor of backing initiatives generally favored by centrist lawmakers. The budget, released March 28, also seeks higher taxes on businesses and the wealthiest Americans, part of an emphasis on reducing the federal deficit that departs from last year’s budget that laid out ambitious spending increases. The shift comes as Mr. Biden has struggled to move much of his agenda through Congress. The Russian invasion of Ukraine, Mr. Biden’s decline in opinion polls, and decades-high inflation have combined to pull many Democrats toward issues they see as better resonating with voters. Democrats have narrow control of the House and the 50-50 Senate, and Republicans have lined up against many of the Biden administration’s proposals. Democrats are bracing to lose control of either or both chambers of Congress in the fall’s midterm elections. The administration is seeking $813 billion for military spending in fiscal year 2023, which begins Oct. 1, a roughly 4% increase from the $782 billion enacted for this fiscal year. Budget figures aren’t adjusted for inflation. Click here to read...

Myanmar leader vows to ‘annihilate’ opponents of army rule

Myanmar’s leader vowed March 27 to intensify action against homegrown militia groups fighting the military-run government, saying the armed forces would “annihilate” them. Senior Gen. Min Aung Hlaing, speaking at a military parade marking Armed Forces Day, also urged ethnic minorities not to support groups opposed to army rule and ruled out negotiations with them. Forced to turn away from peaceful protests, many of those opposed to military rule took up arms, forming hundreds of militia groups called People’s Defense Forces--better known as PDFs. In some parts of the country, they’ve joined forces with well-organized, battle-hardened ethnic armed groups, which have been fighting for greater autonomy for decades. Min Aung Hlaing, addressing thousands of military personnel during the parade in the capital Naypyitaw, said he would not negotiate with “terrorist groups and their supporters for killing innocent people” and threatening peace and security. He said the military--known as the Tatmadaw--“will annihilate them to (the) end,” according to an official translation of his speech. His government has declared major resistance organizations--regardless of whether they are directly engaged in armed struggle--as terrorist groups. Membership or even contact with them carries harsh punishment under law. Click here to read...

Medical

China launches biggest COVID lockdown since start of pandemic

China on March 28 rolled out its biggest COVID-19 lockdown since the start of the pandemic as Shanghai moved to confine some 25 million residents to their homes across the financial hub, which is battling its worst virus outbreak. The two-stage plan, which was announced on March 27 after officials had repeatedly brushed off "rumors" of a full-scale shutdown, will see the sprawling city divided by the Huangpu River, locked down for nine days to carry out staggered checks on millions of residents as coronavirus cases surged to a record. "It is necessary to take more decisive and resolute measures to further reduce social contacts, quickly detect and find infected people, and completely eliminate the hidden transmission of the virus," city official Wu Fan told reporters on March 28. The extensive measures will mark China's largest lockdown since Wuhan, the city where the virus was first detected in late 2019, confined some 11 million people to their homes for more than two months in early 2020. Shanghai had earlier ruled out a broad lockdown in favor of "grid screening," a strategy to mass-test residential districts deemed high risk, and then seal them off if infections were foundClick here to read...

Commentary: Not all of us will be so quick to ditch masks completely

Though we look with eager eyes towards the proverbial light at the end of the tunnel, I think back to the extraordinary gains we’ve made in these two years. Gains that we should keep – even if the pandemic eases out of sight. This civic mindedness extends beyond mask-wearing. As a community, we also made significant changes in personal hygiene and social behaviour – from no longer leaving soiled tissue on the table after meals, to not double-dipping food and sanitising our hands regularly. Notice how wait staff automatically give us sharing spoons for dishes without asking? There is a new unwritten rule among my friends to inform one another and reschedule meet-ups, even if we just feel a scratchy throat or sniffly nose coming on. We are more mindful of not going to work when sick, where previously we may have succumbed to presenteeism and ended up coughing our lungs out (often sans mask pre-pandemic) on public transport and in the office. And thanks to safe distancing rules, we’ve found new comfort in our sense of personal space. There are practical benefits to such behaviour as well. Many of us didn’t catch our usual flu or a cold. Doctors have said all this mask-wearing, hand washing and distancing have drastically reduced respiratory illnesses. Click here to read...