Global Developments and Analysis: Weekly Monitor, 18 April 2022 - 24 April 2022

Economic

Ukraine crisis: China must prepare for ‘fragmented’ trade blocs, global financial crisis, Beijing adviser says

Russia’s invasion of Ukraine is an ideological confrontation that threatens to make the world more polarised, while Washington’s sanctions blitz on Moscow could backfire causing a US dollar crisis and financial disaster, one of China’s top policy advisers says. In a newly-published speech, David Daokui Li, head of Tsinghua University’s academic centre for Chinese economic practice and thinking, said the war could lead to the formation of three major geopolitical blocs and stir another global financial crisis. “The Russia-Ukraine crisis has originated from decades-long concern among Western countries about different ideologies,” said Li, who is also a member of the Chinese People’s Political Consultative Conference. “The struggling globalisation process could change directions and the global economy could become fragmented with ideologically-close countries forming their own economic, trade and investment blocs.” To prepare for growing risks, the world’s second largest economy should position itself as a global hub for yuan-denominated financial products to lure overseas investors and establish more international organisations to strengthen international influence, he said. In his speech, Li said the world could be divided into three major blocs with separate supply chains, including one led by the United States, a European market centred on Germany and France, and one revolving around China that included Belt and Road countries. Click here to read... [2]

US could lower China tariffs to combat inflation, White House adviser suggests

Washington is weighing a reduction of tariffs on non-strategic goods from China such as bicycles and apparel, a White House national security official said on April 21, as part of efforts to combat soaring inflation. “While they may have created negotiating leverage, they serve no strategic purpose,” Daleep Singh, deputy national security adviser for international economics, said of the tariffs imposed on Chinese imports during the trade war that began in 2018. “Our opportunity … is to reframe the purpose of these tariffs so that they’re advancing real, strategic priorities of the United States,” Singh said at an event hosted by the Washington-based Bretton Woods Committee. Such a move would maintain tariffs on goods connected to critical supply chains, foundational technologies and national security but reduce duties on things like bicycles, apparel and underwear, he said. Singh also suggested that the arrangement could have a mutual component, whereby China could move to lift some of its own non-strategic tariffs on US imports given Beijing’s “very serious supply chain concerns” caused by the economic fallout of its zero-Covid strategy. Apart from some targeted exemptions the Biden administration reinstated in March, a proactive, strategic cut in tariffs such as those mentioned by Singh would be the first substantial US effort to narrow the trade war’s scope. Click here to read... [3]

China to cut forex deposit reserve requirement in ‘clear signal to stabilise yuan’

China will lower banks’ foreign exchange deposit reserve requirement next month in an attempt to stem the rapid weakening of the yuan against the US dollar. The People’s Bank of China (PBOC) said on April 25 that it will cut the amount of foreign exchange deposits banks have to set aside by 1 percentage point to 8 per cent from May 15. The move is aimed at enhancing the capabilities of financial institutions in managing foreign exchange funds, the central bank said in a brief statement. The yuan weakened sharply against the US dollar by more than 1 per cent last week in the onshore market, hitting the lowest level since August 2011, amid increasing market concerns over capital outflow in the face of the planned US rate increases and the slowdown of China’s economy. The offshore rate broke 6.60 per US dollar in midday trading on April 25 ahead of the PBOC move and quickly rebounded by 300 basis points soon after the announcement. The central bank raised the reserve ratio twice last year to stem the rapid strengthening of the currency. Former finance minister Zhu Guangyao said on April 24 that the US monetary policy shift was expected to come at an “unprecedented intensity and pace” which will be “the biggest pressure for us”. Click here to read... [4]

EU issues guidelines for gas payments in rubles

In an advisory document sent to member states on April 21, the European Commission reportedly said that Moscow's gas-for-rubles proposal does not necessarily prevent a payment process that would comply with EU sanctions against Russia. The document said there were options that could allow companies to continue lawfully paying for gas. “EU companies can ask their Russian counterparts to fulfil their contractual obligations in the same manner as before the adoption of the decree, i.e. by depositing the due amount in euros or dollars.” The procedure for securing exemptions from the requirements of the decree is not yet clear, it added. The plan is identical to what the Russian government had suggested earlier this month. Brussels also said that, before making payments, EU operators could make a clear statement that they consider their contractual obligations to be completed when they deposit euros or dollars with Gazprombank – as opposed to later, after the payment is converted into rubles. According to the document, the sanctions regime does not prohibit companies from opening accounts with Gazprombank, or from engaging with the bank to attempt to seek a solution. Click here to read... [5]

West considers three options for Russian oil – media

Officials from the US and EU are reportedly discussing measures Brussels can take to effectively curb oil imports from Russia and slash the revenues Moscow receives. The options include a ban, a price cap, and a payment mechanism that would allow revenue generated from crude oil to be withheld from the heavily sanctioned country, according to people familiar with the matter, as quoted by Bloomberg. The talks come as part of the West’s latest sanctions campaign against Russia over the military operation in Ukraine. While the US introduced a total ban on energy from Russia, which was echoed by Canada, Australia, and Japan, EU member states have been split on the matter. The US is reportedly concerned that an outright EU ban on Russian oil could send prices skyrocketing, only boosting Moscow’s revenue. On April 21, US Treasury Secretary Janet Yellen confirmed that a full embargo could hurt European economies hard without creating as much impact on Russia as planned. Brussels is expected to put forward proposals for EU members to discuss as soon as next week. Earlier this week, several diplomats told Politico that the EU would introduce a sixth package of sanctions against Russia as early as next week. Click here to read... [6]

The West Is Still Buying Russian Oil, but It’s Now Harder to Track

Russia ramped up oil shipments to key customers in recent weeks, defying its pariah status in world energy markets. One increasingly popular method for delivery: tankers marked “destination unknown.” Oil exports from Russian ports bound for European Union member states, which historically have been the biggest buyers of Russian crude, have risen to an average of 1.6 million barrels a day so far in April, according to TankerTrackers.com. Exports had dropped to 1.3 million a day in March following the Ukraine invasion. Similar data from Kpler, another commodities data provider, showed flows rose to 1.3 million a day in April from 1 million in mid-March. But an opaque market is forming to obscure the origin of that oil. Unlike before Russia invaded Ukraine, oil buyers are worried about the reputational risk of trading crude that is financing a government that Western leaders accuse of war crimes. Oil from Russian ports is increasingly being shipped with its destination unknown. In April so far, over 11.1 million barrels were loaded into tankers without a planned route, more than to any country, according to TankerTrackers.com. That is up from almost none before the invasion. One reason to obscure the origin of Russian oil is that countries desperately need the crude to keep economies going and prevent fuel prices from surging even further. Click here to read... [7]

Asia's nuclear power dilemma: Ukraine war drives energy turnarounds

The nuclear power debate is about more than environmental benefits and energy efficiency. A highly sensitive issue, moves toward or away from nuclear are also driven by public opinion. Before the war in Ukraine, Russian gas was considered by many in Asia and Europe to provide a safer main source of energy than nuclear. This idea took hold in the wake of the Fukushima disaster in 2011, when Thailand spiked plans for five nuclear reactors. But 11 years after a magnitude-9.0 earthquake and tsunami triggered the meltdown and subsequent disabling of the Fukushima Daiichi plant on the country's northeast coast, even Japan is rethinking its nuclear game in the light of sanctions on Russia. On April 8, Prime Minister Fumio Kishida told reporters that he aims to maximize the use of renewable energy and nuclear power following a ban on Russian coal imports. Three days later, shares of Tokyo Electric Power Company Holdings, which powers the capital and ran Fukushima Daiichi along with two other nuclear plants, jumped 16%.Talk of nuclear power is revolutionary for Singapore. A 2012 study concluded that "conventional large reactor technologies were not suitable for deployment in Singapore." But the world has changed. Reactors today can be much smaller, have better cooling systems, faster shutdowns and quicker emergency responses. Click here to read... [8]

New Zealand PM eyes economy reboot with Japan, Singapore visits

New Zealand Prime Minister Jacinda Ardern left April 18 for Singapore and Japan as her first trip overseas since the outbreak of the COVID-19 pandemic, with hopes of boosting the economy amid her declining domestic approval rating. Though details of her itinerary have not yet been announced, Ardern will hold talks with her counterparts in the two countries during her trip, which ends April 24. She is expected to seek strengthening New Zealand's cooperation with Japan and Singapore in the fields of security as well as trade and tourism. Ardern was accompanied by Minister for Trade and Export Growth Damien O'Connor and more than 10 representatives from the dairy, tourism, renewable energy and other industries. In a statement released before her departure, Ardern stressed that the trip was economy-oriented, saying, "Our message abroad will be very clear -- New Zealand is open for business." New Zealand banned the entry of all foreign nationals in principle in March 2020 and has been easing the rule by stages since the start of this year. It plans to resume the acceptance of visitors from Japan and Singapore without quarantine, effective on May 1. Tourism accounted for more than 9% of New Zealand's pre-pandemic gross domestic product if indirect effects are included, according to the Tourism Industry Aotearoa. Click here to read... [9]

EU sets new online rules for Google, Meta to curb illegal content

Alphabet unit Google, Meta and other large online platforms will have to do more to tackle illegal content or risk hefty fines under new internet rules agreed between European Union countries and EU lawmakers on April 23. The agreement came after more than 16 hours of negotiations. The Digital Services Act (DSA) is the second prong of EU antitrust chief Margrethe Vestager's strategy to rein in Alphabet unit Google, Meta and other U.S. tech giants. Last month, she won backing from the 27-country bloc and lawmakers for landmark rules called the Digital Markets Act (DMA) that could force Google, Amazon, Apple, Meta and Microsoft to change their core business practices in Europe. EU lawmaker Dita Charanzova, who had called for such rules eight years ago, welcomed the agreement. Under the DSA, the companies face fines up to 6% of their global turnover for violating the rules while repeated breaches could see them banned from doing business in the EU. The new rules ban targeted advertising aimed at children or based on sensitive data such as religion, gender, race and political opinions. Dark patterns, which are tactics that mislead people into giving personal data to companies online, will also be prohibited. Click here to read... [10]

World’s biggest sovereign wealth fund takes a hit

Norway announced on April 21 that the nation’s sovereign wealth fund, the world’s largest, lost $74 billion (- 4.9%) during the first quarter of the year due to the market turmoil caused by geopolitical tensions in Ukraine. According to the country’s central bank, which operates the $1.3 trillion fund, the world’s largest single shareholder lost 5.2% on stocks and 4.8% on fixed income. “The first quarter has been characterized by geopolitical turbulence, which has also affected the markets,” the deputy head of the fund, Trond Grande, said in a statement, as quoted by Bloomberg. In February, Norway decided to drop Russian assets from the fund in response to Moscow’s launch of a military operation in Ukraine. However, it ran into problems with actually implementing the decision after Moscow barred foreigners from executing trades on its stock markets. According to estimates presented on March 3, the fund’s loss on its Russian equity stakes could amount to around $2.8 billion, with the stake considered to be worth about 2.5 billion kroner ($285 million), down from 27 billion kroner (over $3 billion) at the end of last year. Chief Executive Nicolai Tangen warned in January that the fund’s growth over the past 25 years isn’t likely to continue. He pointed to interest rates being at record lows, equity markets at all-time highs, and inflation seen remaining “high for a long time.” The fund, which Norway has built up with revenue from its oil exports, has a portfolio of about 9,000 stocks. Often called an “Oil Fund,” it was established in the 1990s. Click here to read... [11]

Indonesia launches new state holding entity for defense sector

Indonesian President Joko Widodo on April 20 launched a new state-owned holding entity for the defense sector as Jakarta aims to reduce its level of foreign dependence in the procurement of weapons and equipment. State-owned electronics equipment manufacturer LEN Industri has been appointed as Indonesia's new defense industry holding entity with a new name: Defense Industry Indonesia, or Defend ID. It oversees four other state-owned companiesin related sectors. They are shipbuilder PAL Indonesia, aircraft maker Dirgantara Indonesia, explosives producer Dahana and tank and weaponry manufacturer Pindad. "We have to use the state defense holding and its strategic programs as a steppingstone to transform, to build a strong and modern defense industry," Widodo said during the inauguration ceremony for Defend ID at PAL Indonesia's shipyard in Surabaya, East Java Province. The president added he wants Indonesia to cut its heavy reliance on imported armaments and military equipment, as well as materials used in their production, through the development of the domestic defense industry. April 20's launch ceremony also included the signing of several agreements, including a $1.1 billion contract for PAL to modernize 41 Indonesian navy ships. Indonesian Defense Minister Prabowo Subianto said Defend ID is also tasked with developing local components used in the manufacturing of "key technologies" to raise their level to 50% from around 41% currently. Click here to read... [12]

Twitter, Elon Musk Deal Could Be Announced April 25

Twitter Inc. is in advanced discussions to sell itself to Elon Musk and could finalize a deal April 25, people familiar with the matter said, a dramatic turn of events just 11 days after the billionaire unveiled his $43 billion bid for the social-media company. The two sides worked through the night to hash out a deal that would be valued at $54.20 a share, or $44 billion, the people said. Assuming there isn’t a last-minute snag, the deal is expected to be announced after the market closes April 25, if not sooner. It’s not clear why the total value of the deal has increased slightly from prior expectations, but it could be related to an updated share count. Twitter had been expected to rebuff the offer, which Mr. Musk made April 14 without saying how he would pay for it, and put in place a so-called poison pill to block him from increasing his stake. But after the Tesla Inc. chief disclosed that he has $46.5 billion in financing and the stock market swooned, Twitter changed its posture and opened the door to negotiations. The Wall Street Journal reported April 24 that Twitter had warmed up to Mr. Musk’s proposal and could reach a deal this week. Click here to read... [13]

Japanese Yen’s Drop Raises Potential for Broader Market Trouble

The Japanese yen has dropped to a 20-year low against the U.S. dollar. That risks being bad news far beyond Tokyo—in the $23 trillion market for U.S. Treasurys. Traders around the world watch the yen’s rise and fall not just to follow Japanese markets but also to gauge how investors globally are feeling. Usually, when markets are rallying, the yen tends to weaken against other currencies. When markets get turbulent, the yen tends to gain ground. The yen has fallen 12% against the dollar in 2022, even as the Russia-Ukraine war sent global stocks sliding. Its fall has been so steep that it ranks as the worst-performing currency this year out of 41 tracked by The Wall Street Journal—worse than the Russian ruble or Turkish lira. The yen is key to global finance, ranking as the third-most-traded currency in the world. The Federal Reserve is poised to begin winding down its extensive bond-buying program as early as next month. The central bank is counting on investors like Japanese institutions—the biggest foreign buyers of U.S. Treasurys—to step in and help absorb the increased supply of Treasurys on the market. But the yen’s rout might cut into Japanese demand for Treasurys. That is because as the yen weakens, Japanese investors with dollar-denominated assets will have to pay more to hedge against the risk of currency fluctuations cutting into their returns. Click here to read... [14]

China’s rising household debt is shattering dreams of financial freedom, and ‘fears are spreading’

Salary reductions, lay-offs, lockdowns and regulatory crackdowns are upending the lives of those who were once the envy of China’s middle class. The leverage ratio of Chinese households – measuring their indebtedness in relation to their income – had climbed to 62.2 per cent by the end of 2021, from less than 5 per cent in 2000, surpassing the level of Germany and nearing that of Japan, according to a quarterly report released by the National Institution for Finance & Development (NIFD) in February. China’s strict coronavirus control measures, such as lockdowns in key financial and manufacturing hubs, have disrupted business, crippled consumption and cast a cloud over an economic recovery that had already been losing steam since the second half of last year. But Beijing remains unwavering in its zero-Covid approach, fuelling worries over the mounting economic costs of staying the course – a strategy that some critics say worked better for China in its fight against less-contagious earlier variants of the virus than against Omicron. Meanwhile, personal debt keeps rising, and even some of the most affluent members of China’s middle class are wrestling with fears over what comes next. Click here to read... [15]

WFP: 20 million risk starvation as Horn of Africa drought worsens

Twenty million people are at risk of starvation this year as delayed rains worsen an already brutal drought in Kenya, Somalia and Ethiopia, the United Nations has warned. For months, extreme drought has left the Horn of Africa on the verge of a humanitarian catastrophe, destroying crops and livestock and forcing huge numbers of people to leave their homes in search of food and water. As long-awaited rains fail to materialise nearly a month into the current rainy season, “the number of hungry people due to drought could spiral from the currently estimated 14 million to 20 million through 2022”, the UN’s World Food Programme (WFP) said on April 19. Six million Somalis – almost half of the population – were facing extreme levels of food crisis and there was “a very real risk of famine in the coming months” if current conditions prevailed, WFP said. In Kenya, half a million people were on the brink of a hunger crisis, with communities in the north of the country especially at risk due to their reliance on livestock. The number of Kenyans in need of assistance has risen more than fourfold in less than two years, the agency said. Meanwhile, malnutrition rates in drought-hit southern and southeastern Ethiopia have surged above emergency thresholds, while the north of the country has been in the grip of a 17-month war between government forces and Tigrayan rebels. Click here to read... [16]

Strategic

U.S. Wants to See Russia Weakened, Defense Secretary Lloyd Austin Says After Ukraine Visit

The Biden administration’s aim in the Ukraine war is to see Russia’s military capabilities degraded and Ukraine’s strengthened, to prevent Moscow from attempting to conquer territory by force in the future, U.S. officials said April 25. “We want to see Russia weakened to the degree that it can’t do the kinds of things that it has done in invading Ukraine,” Defense Secretary Lloyd Austin said after he and Secretary of State Antony Blinken became the highest-level U.S. officials to visit the Ukrainian capital of Kyiv since Russia invaded Ukraine on Feb. 24. A senior U.S. official told reporters after Messrs. Blinken and Austin returned from Kyiv, “However this ends up, Russia will be in a much weaker position. Ukraine will be in a much stronger position to further deter against any renewed aggression once this is over.” Meanwhile, on April 25 the U.S. said it would return diplomats to Ukraine and work to re-establish its embassy in the capital of Kyiv. The White House said President Biden would appoint an ambassador to Ukraine, the first since 2019. In an attempt to stem the flow of heavy weapons from the U.S. and other allies to the front lines in Ukraine, Russia on April 25 hit several Ukrainian railway hubs with missile strikes, severely disrupting rail traffic. Click here to read... [17]

‘Sanctions mean chaos’: China’s foreign minister echoes Xi Jinping’s ‘transcendent’ global security initiative call

China has stepped up calls to remove unilateral sanctions and renewed its push for a global security initiative that it says will transcend Western security theories. In an article in Communist Party mouthpiece People’s Daily on April 24, Chinese Foreign Minister Wang Yi wrote that sanctions were causing more chaos. Wang made the assessment as part of an expansion on a global security initiative advocated by Chinese President Xi Jinping at the Boao Forum for Asia on April 21, saying the initiative “transcended Western geopolitical security theory”. At the forum, Xi said China opposed decoupling and called for action to stop “severe and negative” spillover effects from policy decisions and to help stabilise the global supply chain. Facing mounting pressure from the United States, Beijing is trying to challenge Washington’s global agenda and consolidate ties with its neighbours, calling on them not to side with the US. Tensions between China and the US escalated when Russia invaded Ukraine, and Washington has threatened Beijing with sanctions for refusing to condemn Moscow. China has vowed to continue normal trade relations with Russia, which it calls a comprehensive strategic partner. Click here to read... [18]

Japan's foreign minister promises stronger military to help U.S.

Japan's foreign minister promised his country would bolster its military to help the United States maintain regional security during a visit on April 23 to a U.S. aircraft carrier patrolling Asian waters. "Today I was able to experience first hand the frontline of national security," Yoshimasa Hayashi told reporters in the hangar deck of the USS Abraham Lincoln sailing in waters south of Tokyo. Japan will "significantly strengthen" its defence capabilities and work closely with the United States, he added. Hayashi spoke amid concern in Japan that Russia's invasion of Ukraine, which it sees as an affront to international diplomatic norms, could encourage neighbouring China to use military muscle to win control of Taiwan and threaten nearby Japanese islands. Japan has also expressed concern about Beijing's deepening security ties with Moscow that have included joint drills in waters surrounding Japan. China has said its intentions in Asia are peaceful. Hayashi flew out to the aircraft carrier from Tokyo with U.S. Ambassador Rahm Emanuel, who warned that the invasion of Ukraine, which Russian describes as a "special operation", posed security risks in regions far beyond Europe, including in the Indo Pacific. Click here to read... [19]

Bluebook calls Russian invasion 'major turning point in history'

The Russian invasion of Ukraine dominates parts of this year’s Diplomatic Bluebook, released by the Foreign Ministry on April 22, which returned to criticizing Russia over its occupation of the Northern Territories. In addition, the bluebook dropped the mention of the importance of Japan-Russia ties and said there was no prospect for talks of a peace treaty between the two countries to officially end World War II. The hostile Russian action against Ukraine was described as “a major turning point in history because it threatens the international order established after the end of the Cold War.” Wording included in last year’s edition about the “extremely important” ties Japan had with Russia were deleted in this year’s bluebook. The bluebook said the invasion of Ukraine “could never be accepted because it was an outrageous act that shakes the very foundation of international order based on the prohibition against the use of force, the rule of law and respect for human rights.” The bluebook is a record of Japan’s diplomatic efforts and descriptions of the current international situation. It normally covers diplomatic events between January and December of the previous year, but the 2022 edition was heavily rewritten after Russia invaded Ukraine on Feb. 24. Click here to read... [20]

LDP: Enemy plans for missile launch would be first attack

A Liberal Democratic Party panel has effectively expanded the definition of “attack” to allow the Self-Defense Forces to strike enemy bases while maintaining Japan’s long-held exclusively defensive posture, at least on paper. The LDP’s Research Commission on Security on April 21 approved recommendations that will serve as a starting point in compiling a new National Security Strategy by the end of the year. One of the recommendations was the use of the term “counterattack capability” to allow the SDF to strike an enemy base that is believed to have started preparing for a missile attack against Japan. “The government will decide (whether to use the new SDF function) once the situation arises where the enemy has made a clear intent of launching an attack and has begun taking steps for that move,” Itsunori Onodera, chairman of the commission, said. The recommendations named China, Russia and North Korea as threats to Japan’s security, adding that development of new missiles, especially by China, has raised fears that Japan can no longer defend itself by only intercepting incoming missiles. The new SDF function had previously been proposed as “pre-emptive strike capability.” Click here to read... [21]

Swiss block German request to deliver ammo to Ukraine

Authorities in Bern have rejected – on the basis of neutrality – two recent requests by Germany to re-export Swiss-made ammunition to Kyiv, the SonntagsZeitung paper reports. “Both Germany’s inquiries were answered in the negative, with reference to Swiss neutrality and the binding rejection criteria of the law on war materiel,” a spokesman for the Swiss State Secretariat of Economic Affairs (SECO) told the newspaper on April 24. SECO did not confirm whether the requests were related to ammunition used in Marder infantry fighting vehicles – tanks requested by Kyiv and which are currently part of debates in Germany about sending military material to Ukraine. Chancellor Olaf Scholz this week has faced heavy criticism for his government’s reluctance to deliver heavy weapons to Kyiv to help defend Ukraine against Russian attacks, as other NATO members step up shipments. Scholz has said Germany’s military stocks are too depleted to send any heavy battlefield weapons like tanks and howitzers, while those the German industry has said it could supply could not easily be put into use. Swiss neutrality and weapons export rules prohibit sending arms to countries engaged in a civil war or an international conflict. Arms sales are also bound by a “declaration of non-re-exportation”, which stops Swiss-made weapons from being forwarded to another country without the prior approval of SECO. Click here to read... [22]

Solomon Islands pact cements China's Pacific power status

The announcement by China and the Solomon Islands in late March that their two governments had concluded a bilateral security agreement has been a teachable moment on multiple fronts. Among many lessons, the most important is that the world can now confidently ignore Beijing's regular denials that it has no interest in securing a military presence in the Pacific. In 2018, when the Australian media reported on the possibility of Beijing establishing a naval facility on the island of Vanuatu, the Chinese Foreign Ministry spokesman called the idea "sheer fiction." But there is no denying the truth of the deal with the Solomon Islands, initially leaked by disgruntled government critics in the pacific nation and now confirmed by both countries. Negotiated at speed after the Chinese Embassy and ethnic Chinese-owned shops were trashed in rioting late last year, the pact lists Beijing's requests in detail, from the sorts of weaponry that Chinese police and paramilitary can carry to the access that their visiting ships would enjoy. Beijing's intentions are clear enough: to place armed police on the ground as a precursor to obtaining a strategic beachhead in the Pacific, a region hitherto dominated by the U.S. and its allies for more than 70 years. Click here to read... [23]

South Korea's next top diplomat calls 2015 'comfort women' pact official

South Korea's incoming Foreign Minister Park Jin acknowledged April 20 that a bilateral agreement signed with Japan in 2015 over wartime "comfort women" is official, hinting how the new government, led by President-elect Yoon Suk-yeol, would approach history issues with Tokyo. The two countries signed a deal in December 2015 to put an end to the historical feud over women who worked at wartime Japanese military brothels against their will. However, the current Moon Jae-in government that came into office in 2017 described it as "seriously flawed," causing bilateral ties to sink to the lowest point in years. "The agreement on 'comfort women' is an official one, and the current Moon Jae-in administration also acknowledges it. The most important part is joint efforts from South Korea and Japan to recover the honor and dignity of the victims," Park told reporters. Wartime issues stemming from Japan's 1910-1945 colonization of the Korean Peninsula have overshadowed ties between the Asian neighbors, both U.S. allies. Park's remarks came ahead of the dispatch to Japan of president-elect Yoon's delegation for talks over bilateral issues and cooperation with Japanese lawmakers, diplomats and business leaders. Japan's top government spokesman Hirokazu Matsuno said in Tokyo that the agreement settled the issue of comfort women "finally and irreversibly" and stressed the need to keep a promise between the two nations. Click here to read... [24]

Kim Jong-un pens farewell letter to South Korean leader

Kim Jong-un has thanked outgoing South Korean President Moon Jae-in for his “historic” work to improve the relations between the two neighbors. Moon steps down next month to be replaced by conservative president-elect Yoon Suk-yeol, who has signaled that he will take a tougher line on North Korea. “Kim Jong-un appreciated the pains and effort taken by Moon Jae-in for the great cause of the nation until the last days of his term of office,” Pyongyang’s state-run Korean Central News Agency (KCNA) reported on April 22. The North Korean leader paid tribute to “historic joint declarations giving hope for the future to the entire nation” signed by him and Moon. “The exchange of the personal letters between the top leaders of the North and the South is an expression of their deep trust,” KCNA said. Moon has had several high-profile meetings with Kim. In 2018, he became the first South Korean president to visit Pyongyang in more than a decade, and the first leader from Seoul to give a speech to the North Korean public. He also helped to arrange historical meetings between Kim and then-US President Donald Trump in 2018 and 2019. Moon’s office confirmed the exchange of “letters of friendship” with the North. “The era of confrontation should be overcome with dialogue,” the outgoing president wrote in his farewell message. Click here to read... [25]

France’s Emmanuel Macron Wins Second Term in Presidential Election

French President Emmanuel Macron was re-elected by a wide margin, according to projections based on early ballot counts, overcoming deep divisions among voters worried about inflation, the war in Ukraine and the impact of immigration on France’s national identity. Mr. Macron garnered 58.8% of the estimated vote April 24, while far-right leader Marine Le Pen won 41.2%, according to a projection from polling firm Ipsos. Mr. Macron, 44 years old, becomes the first French president to secure a second term in office since 2002, when then-President Jacques Chirac beat Ms. Le Pen’s father, Jean-Marie Le Pen, in a 64-point landslide. Since then, however, the country has fractured along economic, generational and geographical lines, with wealthier urban voters gravitating toward Mr. Macron and younger, working-class voters in France’s rural areas backing Ms. Le Pen. Mr. Macron is now under pressure to unite millions of French who cast ballots for his rivals in the election’s first-round of voting, when more than 50% of the vote went to candidates on the far right and far left. At stake is Mr. Macron’s drive to consolidate years of pro-business overhauls to the French economy—from tax cuts to his loosening of rules on hiring and firing employees—that have fueled discontent among voters who haven’t prospered under his administration. Click here to read... [26]

Pakistan's new PM picks coalition cabinet after Khan ousted

New Pakistani Prime Minister Shehbaz Sharif on April 19 appointed a multi-party coalition cabinet made up of what had previously been political rivals in opposition who united to oust Imran Khan. The cabinet, including five women, immediately set to work cementing relations with China as it battles a downward economic spiral. It will govern the country for a maximum of 16 months, after which a national election is due. But with divergent views among the fledgling partners on whether to hold an election sooner than August 2023, it is unclear how long the government will remain in place. Among the key appointments was Finance Minister Miftah Ismail, 57, a businessman and economist tasked with stabilizing a troubled economy and restarting talks with the International Monetary Fund. Aisha Ghaus Pasha, a former provincial finance minister, will work with Ismail as a state minister for finance. Ismail's first officially announced meeting was with the Chinese Embassy's charge d'affaires, the finance ministry said in a statement. Beijing has pledged billions of dollars in loans and investment in Pakistan under the China-Pakistan Economic Corridor (CPEC), a part of its Belt and Road Initiative. The cabinet is comprised of 33 ministers and three advisers, newly appointed Information Minister Marriyum Aurangzeb told reporters. Click here to read... [27]

First-time invite for China’s public to comment ahead of 20th Communist Party congress

China’s Communist Party has invited public comment on a number of issues ahead of its 20th congress later this year, in a first for the ruling party ahead of its five-yearly key political gathering. State news agency Xinhua said people can make suggestions on “full and strict party governance, high quality development, comprehensive reform and opening up, [and] whole-process people’s democracy”. The party is also seeking views on “law-based state governance, socialist cultural advancement, people’s livelihoods and ecological progress”. People have until May 16 to submit their comments and suggestions to websites and mobile apps for Xinhua, party mouthpiece People’s Daily and state broadcaster CCTV. The move follows a fierce campaign last year to rein in private capital in a number of sectors, including technology, after-school tutoring and internet financial services. It also comes amid widespread discontent over job losses and food shortages, with strict lockdowns in many cities to curb Covid-19 outbreaks. China has prioritised maintaining economic and social stability ahead of the party congress later this year, when President Xi Jinping is expected to secure his third term as party general secretary, as the rest of the top leadership undergoes a major reshuffle. However, economic growth – a cornerstone of the party’s rule for decades – is facing strong headwinds. Click here to read... [28]

Iran, Saudi Arabia hold fifth round of talks in Baghdad

Iran and Saudi Arabia have held a fifth round of direct talks in Baghdad, an outlet close to Iran’s security forces has confirmed. Senior representatives of Iran’s Supreme National Security Council (SNSC) and Saudi Arabia’s intelligence chief, Khalid bin Ali Al Humaidan, attended the talks, according to Nournews, affiliated with the SNSC, which did not mention the date of the meeting. The outlet said the main challenges to re-establishing ties between the two countries were discussed in a “positive” atmosphere that “painted a brighter outlook” for the future of bilateral relations. It added that the talks could also pave the way for a meeting of the two foreign ministers. Tehran and Riyadh cut off diplomatic ties in 2016. Both sides have so far expressed hope the talks could ease bilateral and regional tensions, but have downplayed expectations of a major breakthrough. In addition to Iraq, which has hosted all rounds of direct talks between Iran and Saudi Arabia beginning in April 2021, Oman was also reported to have played a role in organising the latest session. So far, the only actionable outcome of the direct talks appears to have been the reopening of Iran’s representative office at the Jeddah-based Organisation of Islamic Cooperation (OIC). The news comes as Iran, last month, “temporarily suspended” talks with Saudi Arabia without citing any reasons. Click here to read... [29]

Arab League urges Israel to stop Jewish prayers at Al-Aqsa Mosque

The Arab League has called on Israel to end Jewish prayers inside the Al-Aqsa Mosque compound in occupied East Jerusalem and warned that such actions were a flagrant affront to Muslim feelings and could trigger wider conflict. The league broke its silence on April 21 on recent violent events at Al-Aqsa, saying Israel had restricted Muslims in their right of worship in Jerusalem’s Old City, while also allowing ultra-nationalist Jews to enter the sacred site under police protection. “Our demands are clear that Al-Aqsa and Haram al Sharif in all its area is a sole place of worship for Muslims,” Jordanian Foreign Minister Ayman Safadi told reporters after an emergency meeting of the league in Amman. The meeting was called to discuss what the league termed “illegal Israeli policies and measures” in Jerusalem. Arab League chief Ahmed Aboul Gheit said Israel was violating a centuries-old policy according to which non-Muslims may visit the Al-Aqsa compound, but they must not pray there. Israeli riot police stormed the Al-Aqsa mosque compound last week during which at least 158 Palestinians were wounded and hundreds were detained. Safadi, who spoke with United States Secretary of State Antony Blinken this week, met senior US Department of State officials touring the region on April 20 to discuss reducing tensions at the sacred site. Click here to read... [30]

Israel Adds Yuan to $206 Billion Reserves in ‘Philosophy’ Change

Israel’s central bank has made the biggest changes to its allocation of reserves in over a decade, adding the Chinese yuan alongside three other currencies to a stockpile that last year exceeded $200 billion for the first time ever. Starting this year, the currency mix will expand from the trio of the U.S. dollar, the euro and the British pound to include the Canadian and Australian dollars as well as the yen and the yuan, which is also known as the renminbi. The additions mark a change in the Bank of Israel’s “whole investment guidelines and philosophy,” Deputy Governor Andrew Abir said in an interview.To accommodate the changes, the euro’s share will fall to 20% -- the lowest in at least a decade -- from just over 30%, while the dollar will account for 61%, down from 66.5%. The pound’s weighting, by contrast, will almost double to 5%, returning to a level last seen in 2011. The “dramatic” rise in Israel’s foreign-exchange reserves led the central bank to lengthen its investment horizon, Abir said. “We look at the need to earn a return on the reserves that will cover the costs of liability.” Click here to read... [31]

Medical

Beijing Orders Citywide Covid-19 Testing as Fears of Lockdown Spark Panic-Buying

Chinese authorities raced to carry out citywide Covid-19 tests across Beijing, betting their rapid action to crush a nascent outbreak in the nation’s capital will avoid a repeat of the chaos seen during Shanghai’s stringent lockdown, though raising the risk that China’s strict antivirus policies will further damage the faltering economy. Residents had rushed to buy food and other essentials as fears of a Shanghai-style lockdown of the city grew. City officials late on April 24 ordered three rounds of tests beginning April 25 for all residents of Chaoyang, Beijing’s most populous district and home to embassies and many foreign multinationals. Residents’ movements in several large city blocks covering roughly 2.5 square miles would be curtailed as tests are conducted, officials said. By 8 p.m. April 25, almost 3.7 million tests had been carried out, with more than 520,000 results received. All of them were negative, officials told a late-night press conference. But they also announced the testing would be expanded to all the major built-up areas of the city of about 21.5 million people, following a recent surge in new infections. There were 29 cases reported on April 25 afternoon, eight more than in the previous 24-hour period and more than triple the new cases of the previous day. Click here to read... [32]

China’s food security, spring harvest threatened by excessive zero-Covid measures at local levels

A growing chorus of voices emanating from Chinese ministries and state media are calling for an end to excessive coronavirus-control measures that pose a threat to the spring harvest, and by extension the nation’s food security. With agricultural production in various parts of China facing disruptions, there could be an adverse effect on the long-term supply, warned a front-page commentary in the official Economic Daily on April 25. The piece pinned blame on the “one-size-fits-all” approach to tackling the virus, and on the additional heavy-handed restrictions imposed by some local authorities. “While preventing and controlling outbreaks, it is very important and urgent to effectively safeguard agricultural production,” it said. Farming waits for no one … one late step will delay the whole process. Have some officials forgotten this? And in a commentary published on April 24, Xiake Dao, a social media channel affiliated with the overseas edition of party mouthpiece People’s Daily, also took aim at local officials in some regions without coronavirus clusters. It criticised their decisions to randomly block roads, set checkpoints, and not allow farmers to access their fields. Click here to read... [33]