Global Developments and Analysis: Weekly Monitor, 02 May 2022 - 08 May 2022

Economic

US trade chief signals China tariff relief an option as prices soar

President Joe Biden’s top trade negotiator signalled that relief from US tariffs on China is one option under consideration to confront the fastest inflation in four decades, while cautioning that the duties should be studied in the context of broader economic policy. The tariffs should be examined as part of a look at strategies across the board, including monetary, fiscal and tax policy, US Trade Representative Katherine Tai said in interview at the Milken Institute Global Conference in Los Angeles on May 02. Tai said that the US needs to make sure that the tools it deploys to meet the short-term challenge of inflation are effective and do not undermine the medium-term goal of changing the relationship with China. The tariffs have spurred some companies that were producing in China for the US market to move their manufacturing and base of operation to other countries, Tai said. Tai’s comments come after Treasury Secretary Janet Yellen last month suggested the US is open to scaling back the widespread Trump-era tariffs on merchandise imports from China to help provide relief to Americans. The USTR as soon as this weekend may begin a mandatory review of the first group of tariffs on more than US$300 billion in Chinese imports. Click here to read... [2]

China Remains an Outlier in a World of Surging Inflation

As inflation soars around the world, the world’s second-largest economy has kept it at bay. Consumer prices in China increased just 1.5% in March from a year earlier, after rising 0.9% in 2021 from the year before. By contrast, the U.S. annual inflation rate was 8.5% in March and 7.5% in 2021, the steepest since 1982. In the eurozone, annual inflation reached a record 7.5% in April. Some 71% of 109 emerging and developing economies experienced 5% or higher inflation in 2021, twice as large as at the end of 2020, the World Bank says. Although Chinese inflation is expected to tick up a bit more when fresh data is released this week, most economists believe it won’t surpass the government’s full-year target of around 3% in 2022. Partly that is because consumer demand, an important source of U.S. inflation, is extremely weak in China right now. It is also because China uses aggressive tactics, including price controls and protectionist trade actions, to keep imported inflation from flowing through to consumers. Analysts say while those strategies have helped China in the short run, they have long-term costs, and would be hard to replicate in more market-oriented economies. China is less susceptible to demand-led inflation than countries like the U.S. because it relies more heavily on investment than consumption to drive growth. Click here to read... [3]

China trade: ‘sharp decline’ in exports as growth slows to lowest in 2 years as zero-Covid dents outlook

Strict zero-Covid controls contributed to sending China’s export growth to its lowest rate in almost two years in April, with hopes of recovery set to face multiple headwinds from prolonged lockdowns, global inflation and geopolitical tensions. China’s overall exports grew by a better-than-expected 3.9 per cent last month from a year earlier to US$273.62 billion, compared with growth of 14.7 per cent in March, data released on May 09 showed, but the figure represented the lowest growth rate since June 2020. And China’s export momentum is likely to remain weak in the coming months, with domestic coronavirus control-fuelled supply chain disruptions set to continue into June, according to Tommy Wu, lead China economist at Oxford Economics. “External demand will continue to be weighed by elevated global inflation, as well as uncertainty created by the Russia-Ukraine war, including impacts of formal and informal sanctions,” Wu said. Overall, China’s imports remained flat in April from a year earlier at US$222.5 billion, compared with a fall of 0.1 per cent in March, although this was also better than expected. China’s total trade surplus was US$51.12 billion in April compared to US$47.3 billion in March. China’s imports from Russia soared by 56.6 per cent from a year earlier to a record US$8.8 billion in April, although exports fell by 25.9 per cent to US$3.8 billion. Click here to read... [4]

China urges equal cooperation on audit issues, after 80 companies added to SEC list

As the US moves to put dozens more Chinese firms on its list of companies that could face delisting, its threatening effect is obviously ebbing, and it has become an irreversible trend for these US-listed firms to prepare for homecoming listings, Chinese experts told the Global Times on May 05. The US Securities and Exchange Commission (SEC) on May 04 added more than 80 Chinese firms, including e-commerce platforms JD.com and Pinduoduo, to a list of entities facing possible delisting from US bourses, citing its so-called Holding Foreign Companies Accountable Act (HFCAA), which came into effect in December 2020. Under the act, the SEC has the authority to delist foreign-based companies from exchanges if they fail to file reports required by the Public Company Accounting Oversight Board (PCAOB) for three consecutive years. The 88 companies, the sixth batch to be added and now on the provisional list, have to provide evidence to the SEC by May 25 that they do not qualify for delisting. Otherwise, they will be placed on a conclusive list. So far, there are 128 Chinese firms targeted, including 105 on the provisional list and 23 on the conclusive list, according to the SEC website. There are about 200 New York-traded firms with parent companies based in the Chinese mainland or Hong Kong. Click here to read... [5]

Japan eyes debut of U.S. Indo-Pacific economic plan during Biden visit

U.S. President Joe Biden's visit to Japan later this month is expected to coincide with the formal launch of a new U.S. economic strategy for the Indo-Pacific region, Japan's ambassador to Washington said on May 09. Koji Tomita told a virtual event hosted by Washington's Center for Strategic and International Studies that Japan and the United States had been working on the details of the Indo-Pacific Economic Framework (IPEF), which, he said, needed to strike a balance between inclusivity and high standards. Asian countries are keen to boost ties with the United States, but have been frustrated by its delay in detailing plans for economic engagement with the region since former President Donald Trump quit a regional trade pact in 2017. Biden, who is due to visit South Korea and Japan from May 20 to May 24, announced the plan for IPEF last year, and his administration's strategy for the Indo-Pacific region announced in February said the plan was to launch it in early 2022. Tomita said Biden's visit would send a powerful signal that the United States remains focused on the Indo-Pacific in spite of the war in Ukraine. Click here to read... [6]

The Tech Industry’s Epic Two-Year Run Sputters

The technology industry, which powered the U.S. economy during the pandemic and grew at tremendous scale during a decade of ultralow interest rates, is confronting one of the most punishing stretches in years. Global powerhouses and fledgling startups are feeling pain from a variety of economic, industry and market factors, spawning postpandemic turbulence in e-commerce, digital advertising, and electric vehicles, ride-hailing and other segments. Companies that emerged as job-creating juggernauts in the past two years—collectively adding hundreds of thousands of workers to their payrolls in engineering, warehouse and delivery jobs—have begun to freeze hiring or even lay off employees. Concerned that some of the forces that have propelled tech ever upward have begun to fade, investors have sent share prices for a number of companies, including Lyft Inc. and Peloton Interactive Inc., plunging on disappointing financial results or other news. The stocks of Netflix Inc., Facebook parent Meta Platforms Inc. and Amazon.com Inc. all are down more than 30% this year, exceeding the more-than-13% drop in the S&P 500. Investors are divided on the question of whether the slowdown is temporary—as well-positioned companies work through a period of stagnation after expanding ultrafast in recent years—or if these are the early signs of a deeper retrenchment for the industry and its investors. Click here to read... [7]

Companies rush to replace ‘just in time’ supply chains with ‘just in case’ contingencies as Covid-19 upends global manufacturing

Many companies had already moved or mulled the idea of shifting manufacturing facilities out of China after it became embroiled in a gruelling trade war with the US. “It takes 2,500 components to make a car, but just one component to not make a car,” said Madhur Jha, head of thematic research at Standard Chartered in India, who led a May 5 report on the pandemic’s impact on global supply chains. The consequences of the disruptions in global manufacturing “is leading to a renewed focus on the concentration risks inherent in supply chains,” he said. “Some companies are likely to accelerate trends that were already under way, shortening and simplifying supply chains.” The same stories were repeated across the spectrum of manufactured products, from clothing to electronics and toys. The problem is pushing companies to consider a “just in case” supply chain to augment the “just in time” model that had served the world in the past four decades. Global trade has gradually declined since the global financial crisis. Average annual growth in volumes dropped to 2 per cent between 2013 and 2019, well below the 5.9 per cent average from 2001 to 2007. The significance of supply chains within global trade has also diminished, according to Standard Chartered Bank. Click here to read... [8]

Russia defies predictions of collapse – media

The Russian economy has largely shrugged off “unprecedented sanctions” from the West, The Economist noted, crediting the sharp rise in revenues from oil and gas exports. Russian consumer spending is up again, interest rates are going down, and the ruble is stronger than before the conflict in Ukraine escalated. “Russia’s economy is back on its feet,” the British weekly pointed out on May 06, adding that it was “defying predictions of collapse” as a result of embargoes imposed by the US and its allies. The ruble is now “as valuable” as before, says The Economist, on account of “capital controls and high interest rates.” As of May 06, the Russian currency was actually stronger than before the conflict – 65.8 to the US dollar, compared to 81 on February 23. Russia is also continuing to pay its foreign-currency bonds, despite US and UK attempts to force it into a default. Russians are spending “fairly freely” on cafés, bars and restaurants once again, according to numbers from Sberbank, Russia’s largest bank. The Russian central bank lowered the key interest rate from 17% to 14% in late April. Predictions that Russia’s GDP will decline up to 15% this year are “starting to look pessimistic,” notes The Economist. Click here to read... [9]

Mystery of the rising ruble revealed

After losing nearly half of its value in March due to Western sanctions, the Russian currency has staged an extraordinary recovery, strengthening to levels not seen in over two years. RT talked to Sergey Kopylov, a junior partner at consulting company BSC and a lead researcher at Plekhanov Russian University of Economics, to find out what’s behind the ruble’s resilience. According to the researcher, the West had defaulted on its obligations to Russia when it froze the assets of the country’s central bank. “This is the abolition (something like cancel culture) of the rules of international financial relations based on global total return swaps, redistribution of risk, guarantees of property rights and distribution of seigniorage.” It was these rules that determined the old ruble exchange rate and the approaches to its establishment that we are accustomed to, the expert said, adding that those rules “no longer apply.” Kopylov explained that the strengthening of the ruble is due to the fact that it is now based purely on exports and imports, and its value is determined by its purchasing power parity (PPP). The International Monetary Fund (IMF) estimated the Russian currency’s PPP at the end of 2021 at 29.127 rubles per one dollar. According to the Big Mac Index, that rate stood at 23.24 rubles to the dollar. Click here to read... [10]

Russia makes use of Nord Stream 2

Russian energy giant Gazprom announced on May 05 that it will use the onshore capacity of Nord Stream 2, designed to pump natural gas to Germany, for Russia’s domestic market. “As the Nord Stream 2 offshore gas pipeline is currently not in use, and taking into account the gas supply requirements of consumers in northwest Russia, Gazprom has decided to use the excess onshore gas transmission capacity of Nord Stream 2 to develop gas supplies to the regions of northwest Russia,” the company said on its official Telegram channel. Gazprom noted that only half of the pipeline’s capacity would be available for Europe if the pipeline were allowed to operate in the future. “If the German side decides to commission Nord Stream 2, only one line of the pipeline with 100% load can be put into operation,” it said, adding that “the commissioning of the second offshore string of Nord Stream 2 may not begin until 2028.” The Nord Stream 2 gas pipeline stretches from the Russian coast under the Baltic Sea to Germany. Its construction was completed in September 2021, and by December it was ready for operation. However, German authorities stopped certification of the pipeline prior to the conflict in Ukraine. The two-string pipeline was supposed to pump 55 billion cubic meters of natural gas annually from Russia to Germany. Click here to read... [11]

OPEC fails to boost output as members face capacity woes

The OPEC cartel — which has struggled for many months to revive oil supplies halted during the pandemic — effectively failed to increase output at all last month, as members remained plagued by capacity constraints. While Iraq made a substantial boost, countries such as Libya and Nigeria saw their production fall amid operational disruptions and diminished investment, according to a Bloomberg survey. Even group leader Saudi Arabia didn’t hike by as much as permitted by their agreed quota. International crude prices are holding near $105 a barrel as OPEC’s struggle is exacerbated by a de facto embargo on Russian supplies by many refiners following the invasion of Ukraine. The lofty price levels are feeding into an inflationary spike that’s battering consumers and threatening growth, alarming policy makers around the world. Key consumers such as the U.S. have grown exhausted with pressing the Saudis to fill in the supply gap, and taken to deploying emergency oil reserves. The kingdom’s refusal to open the taps more quickly reflects its belief that markets remain adequately supplied despite the war launched by Russia, with which it jointly leads the OPEC+ alliance of producers. The Organization of Petroleum Exporting Countries added just 10,000 barrels a day in April, compared with a scheduled 274,000 a day, the survey showed. Click here to read... [12]

EU rejects ban on shipping Russian crude — media

Brussels has opted to cancel plans to prohibit EU member-owned ships from moving Russian crude oil to third-party countries, documents seen by Bloomberg showed. However, a ban on insuring Russian tankers is reportedly still being reviewed. If passed, this could represent an effective barrier to exports of oil from the sanction-hit country. The ban on transporting Russian crude, which was proposed as part of the EU’s sixth package of sanctions over Moscow’s military operation in Ukraine, was reportedly opposed by Greece, whose economy heavily relies on shipping, people familiar with the matter told the media. If adopted, the step would have effectively dented exports of Russia’s crude, since Greece has over a quarter of the world’s oil tankers by capacity. EU countries are still debating the sixth package, with diplomats seeking to overcome objections voiced by Hungary to a proposed ban on Russian oil. They were unable to reach a deal over the weekend. Last week, the bloc proposed a revision to the oil embargo in order to finally agree the ban. The measure is expected to give several member states, including Hungary, Slovakia and the Czech Republic, extra time to comply with the measure. Click here to read... [13]

Is today’s education system fit for purpose in a world splitting into rival blocs?

The American Enterprise Institute (AEI), a conservative think tank, has just produced a fascinating study on the implications of higher education for national security. Covering 1950-2040, the study acknowledged that the US attained its uncontested power status because it had the highest levels of educational attainment and manpower. In 1950, the US, with about 6 per cent of the world’s population, had 45 per cent of the global pool of tertiary-educated 25-64 year olds; India had 5 per cent and China 3 per cent. By 2020, America’s share had dropped to roughly 16 per cent, with China fast catching up, and India at just under 10 per cent. By 2040, depending on the estimate, China may double its share to 15-20 per cent, with India at 12 per cent, overtaking the US at 10 per cent. In 1950, eight of the top 10 largest pools of highly educated working-age labour were in advanced countries. By 2020, their share was about half. By 2040, this is likely to be only three in 10. India and China would lead as countries with the largest pools of highly trained manpower, especially in science and technology, with the US “an increasingly distant third-place contestant”. Click here to read... [14]

4-day week catching on among firms in changing Japan

More of Japan’s biggest corporate names are moving toward introducing a four-day workweek, a notion that was once unthinkable in a country whose postwar prosperity was built on a work force willing to sacrifice home life for the good of the company. The change, triggered partly by a growing labor shortage brought on by a rapidly aging population and dwindling birthrates as well as changing lifestyles and expectations, has the potential to rewrite the country’s work landscape. For one, it would widen the gap in days off between large and small companies. Electronics giant Hitachi Ltd. is among a growing number of big companies introducing a four-day workweek. Initially, the policy will apply to around 15,000 employees. Hitachi said it does not plan to reduce the salaries of those choosing the four-day option, but will ask them to make up the difference in work hours over a five-day week by working longer when they are in the office. Companies are moving in this direction for all sorts of reasons. In the past, employees often chose to quit to care for elderly relatives or children. Allowing workers to choose four-day workweeks would give them more time to attend to the domestic front and allow them to retain their jobs in the company. Click here to read... [15]

Turkey’s inflation rate soars to almost 70 percent

Turkey’s official inflation rate has spiralled to nearly 70 percent in April, posing a huge challenge to President Recep Tayyip Erdogan, whose unconventional economic policies are often blamed for the economic turmoil. The consumer price index rose by 69.97 percent year-on-year in April compared with 61.14 percent in March, the national statistics agency said on May 05. Erdogan insists that sharp cuts in interest rates are needed to bring down soaring consumer prices, flying in the face of economic orthodoxy. The collapse of the lira has pushed up the cost of energy imports and foreign investors are now turning away from the once-promising emerging market. Russia’s invasion of Ukraine and the coronavirus pandemic have exacerbated the energy price spikes and production bottlenecks. Analysts say Turkey’s annual inflation rate, the highest since Erdogan’s ruling AK Party stormed to power in 2002, is largely linked to his unconventional economic thinking. Erdogan has put pressure on the nominally independent central bank to start slashing interest rates. In April, the bank kept its benchmark interest rate steady for the fourth consecutive month, bowing to pressure despite high inflation. The biggest price increases in April were in the transport sector, standing at 105.9 percent, while the prices of food and non-alcoholic drinks jumped 89.1 percent. Click here to read... [16]

Strategic

US plans to counter China ‘at risk because of allies’ reluctance to host missile systems’

Washington’s strategy to counter China is at serious risk of failure because of the reluctance of its allies in the Indo-Pacific to permanently host missile systems, an analysis by a US think tank has concluded. The report by the Rand Corporation said that domestic political considerations and their economic ties to China meant it was unlikely that any of the five US allies in the region – Australia, Japan, the Philippines, South Korea and Thailand – would be willing to host ground-based intermediate-range missiles. The missiles have a range of up to 5,000km (3,5oo miles) and – following the US withdrawal from the Intermediate-Range Nuclear Forces Treaty in 2019 – could develop more of the missiles and deploy them in the region to counter China. China never signed the treaty, which was agreed by the US and Soviet Union at the end of the Cold War, and has been developing its own intermediate-range missiles, including the DF-21 – dubbed the “carrier killer” – and the nuclear capable DF-26. The report suggested that alternative options for the US included jointly developing or selling the missiles to an ally, which would control its own system; deploying them to the region in times of crisis; or a peacetime rotational deployments. Click here to read... [17]

China tells US it will not be scared off by sanctions over Taiwan

The United States will face “unimaginable consequences” if it plays the Taiwan card and Beijing will not be intimidated by sanctions like those on Russia, a Chinese foreign vice-minister has said. Le Yucheng told an online security forum on May 06 evening that it was “ridiculous” to blame China for Russia’s invasion of Ukraine and accused the US of sacrificing Ukraine for its own geopolitical interests. China has been criticised for not condemning Russia’s invasion, and the US and its allies have expressed concern over the security of Taiwan, which Beijing considers a breakaway province be to reunified with the mainland – by force if necessary. In response to American warnings that China would face similar sanctions to those placed on Russia if it attacked Taiwan, Le said “China must be unified, and will be unified”, and sanctions and isolation “could absolutely not scare China”. “What kind of storms haven’t we weathered in the more than 70 years since the founding of the People’s Republic of China?” he said, adding that in the past few years the US had already taken coercive measures – such as tariffs, reducing cooperation, arresting people on espionage charges – but was not able to break China. Click here to read... [18]

China will boost ties with Russia in military tech, energy and space, top envoy says

China will continue to deepen cooperation with Russia on military technology, energy and space, according to its top envoy in Moscow, amid speculation that Beijing might help its neighbour evade sanctions over the war in Ukraine. In an interview with Russian state news agency Tass, Zhang Hanhui said energy had been the “most important, fruitful and extensive area of pragmatic cooperation between Russia and China”. He said such cooperation would be strengthened but – as Europe tries to reduce its dependence on Russian fuel – Zhang stopped short of promising to buy more oil and gas from Russia. Zhang said there were difficulties in bilateral trade with Russia but the two sides would enhance settlements in their national currencies to ensure stable trade that they hoped would reach US$200 billion by 2024. “The US and Western sanctions against Russia are indeed causing some problems for Sino-Russia practical cooperation, and the two countries should strengthen communication and coordination to solve the difficulties caused by sanctions to both sides in trade settlement and logistics,” Zhang said. Asked during the Tass interview if military tech cooperation would become a priority after the war in Ukraine, Zhang said cooperation between China and Russia was in line with their core interests and not targeted at third parties. Click here to read... [19]

U.S. gave intel before Ukraine sank Russian warship: official

The U.S. says it shared intelligence with Ukraine about the location of the Russian missile cruiser Moskva prior to the strike that sank the warship, an incident that was a high-profile failure for Russia's military. An American official said May 05 that Ukraine alone decided to target and sink the flagship of Russia's Black Sea Fleet using its own anti-ship missiles. But given Russia's attacks on the Ukrainian coastline from the sea, the U.S. has provided "a range of intelligence" that includes locations of those ships, said the official, who was not authorized to speak publicly and spoke on condition of anonymity. The Biden administration has ramped up intelligence sharing with Ukraine alongside the shipment of arms and missiles to help it repel Russia's invasion. The disclosure of U.S. support in the Moskva strike comes as the White House is under pressure from Republicans to do more to support Ukraine's resistance and as polls suggest Americans question whether President Joe Biden is being tough enough on Russia. Speaking earlier May 05 after a New York Times report about the U.S. role in supporting Ukraine's killing of Russian generals, Pentagon spokesman John Kirby said American agencies "do not provide intelligence on the location of senior military leaders on the battlefield or participate in the targeting decisions of the Ukrainian military." Click here to read... [20]

Russia blacklists Japanese PM

Japanese Prime Minister Fumio Kishida has been included on a list of sanctioned persons issued by Russia’s Foreign Ministry on May 04. The measure comes in response to an “unprecedented anti-Russian campaign” led by Kishida’s administration, the ministry points out. Moscow has blacklisted 63 officials and public figures, with the country’s foreign minister, minister of defense, finance and justice ministers among them. They all are banned from entering Russia. The foreign ministry blames Tokyo for “unacceptable rhetoric towards the Russian Federation, including defamation and direct threats,” which are “repeated by public figures, experts and representatives of the Japanese media, and completely subjected to the Western bias” towards the country. Since Russia launched its military operation in Ukraine in late February, Japan supported Western sanctions imposed against Moscow, including freezing Russian individuals’ assets, banning imports of certain goods and phasing out imports of coal (which covers about 11% of the country’s coal needs.) In March, amid worsening relations, Russia ended an arrangement dating back to 1991 that allowed Japanese citizens to visit the Kuril Islands without a visa and has broken off talks with Japan on formally ending the Second World War, citing Tokyo’s “openly unfriendly” conduct.Click here to read... [21]

South Korea joins NATO cyber defense

South Korea has become the first Asian member state of NATO’s Cooperative Cyber Defense Center of Excellence (CCDCOE), the country’s Yonhap news agency reported on May 05. In a statement cited by the media outlet, Seoul’s National Intelligence Service (NIS) said it plans to “strengthen our cyber response capabilities to a world-class level by increasing the number of our staff sent to the center and expanding the scope of joint training.” South Korea’s accession to the CCDCOE has brought the number of members to 32, with 27 being NATO states, referred to as sponsoring nations. Korea and the other four members from outside the US-led bloc are contributing participants. According to the NIS, it applied to join the CCDCOE back in 2019, and has participated in the center’s activities since then – including the Locked Shields cyber defense wargames – for two consecutive years since 2020. Commenting on its admittance to the group, Seoul’s intelligence agency noted that “cyber threats are causing great damage not only to individuals but also to separate nations and also transnationally,” which makes “close international cooperation” crucial. Based in Estonia’s capital, Tallinn, the CCDCOE was founded back in 2008 in response to a 2007 massive cyberattack on Estonia’s state networks – something the country’s authorities were quick to blame on Russia.Click here to read... [22]

As Philippines votes, could it be a ‘dead heat’ between Marcos and Robredo?

Millions of Filipinos crowded voting centres on May 09 to elect a new president in a 10-way race that is either set to be marked by a landslide win or a nail-biting cliffhanger, depending on which side of the political fence the observer is on. The Philippine Commission on Elections (Comelec) said it expected a clear winner would emerge for the top two posts in a week, for local posts by May 10, and for senatorial posts by May 12. “By the seventh day, we can already see the winning president and vice-president based on partial and unofficial results,” Comelec Commissioner George Garcia said in a May 5 briefing. He said the poll body expected a high turnout among the 67.5 million registered voters, of whom more than seven million would cast their ballots for the first time. At stake are 18,180 political positions, including a six-year-term president, 12 members of the Senate who will also serve for six years, and thousands of governors, mayors and members of local legislative councils who will serve for three. While six pre-election surveys have singled out former senator Ferdinand “Bongbong” Marcos Jnr as the runaway winner, two new surveys, one using a different methodology and disclosed on May 06 have predicted a “dead heat”, come-from-behind win for his main rival Leni Robredo. Click here to read... [23]

North Korea tests missile apparently fired from submarine

North Korea fired a suspected ballistic missile designed to be launched from a submarine on May 07, South Korea’s military said, apparently continuing a provocative streak in weapons demonstrations that may culminate with a nuclear test in the coming weeks or months. South Korea’s Joint Chiefs of Staff said the launch occurred from waters near the eastern port city of Sinpo, where North Korea has a major shipyard building submarines, but it didn’t immediately say how far the missile flew. It also wasn’t clear whether the launch would have involved an actual submarine or an underwater test platform. Japan’s Defense Ministry also confirmed the launch, but it didn’t immediately release flight details. The launch was apparently North Korea's first demonstration of a submarine-fired ballistic system since October last year when it test-launched a new short-range missile from the 8.24 Yongung, its only known submarine capable of firing a missile, in what was its first underwater test launch since 2019. The launch came three days after the South Korean and Japanese militaries detected the North firing a suspected ballistic missile from near its capital, Pyongyang, on May 04, and three days before the inauguration of South Korean President-elect Yoon Suk Yeol, who has vowed to take a tougher approach over the North’s nuclear ambitions. Click here to read... [24]

U.K. and Japan reach new defense deal amid Russia concerns

The militaries of Britain and Japan will “work more closely together” under a defense deal that British Prime Minister Boris Johnson announced during talks with his Japanese counterpart May 05. Johnson hosted Japanese Prime Minister Fumio Kishida at the British leader’s 10 Downing St. residence. He noted the “strong stance” Japan has taken “against the Russian aggression in Ukraine” and drew a parallel with the security situation in Asia. “There is direct read across from the actions of autocratic, coercive powers in Europe to what may happen in East Asia,” Johnson said. “That’s why we want to work more closely together.” Johnson’s office said the deal will allow the armed forces of the two Group of Seven countries to deploy together for training, joint exercises and disaster relief. The prime ministers agreed that “democracies around the world needed to stand in unity against authoritarian regimes,” the office said after their meeting. Kishida’s first official visit to the U.K. as prime minister was marked with an overflight of London by three Royal Air Force planes. Japan has condemned Russia’s invasion and joined Western nations in imposing sanctions against Moscow. Britain has announced an “Indo-Pacific tilt” in its foreign policy in the wake of its departure from the European Union in 2020 and sees Japan as its key East Asian ally. Click here to read... [25]

US Senator Marco Rubio introduces Taiwan Peace through Strength Act

U.S. Senator Marco Rubio on May 3 introduced the Taiwan Peace Through Strength Act, which would speed up the transfer of weapons and boost joint training and planning between the two countries.“An invasion of Taiwan could happen within this decade. Taiwan needs our support, and my bill will make Xi Jinping and the Chinese Communist Party think twice before launching a foolish invasion,” Rubio said in a press release. He added that the U.S. should make every effort to prevent an attack on Taiwan, or it will “risk losing the Indo-Pacific region to the Chinese Communist Party.” The bill would require the Pentagon to review the U.S.’ Taiwan defense strategy annually and create a list of specific weapons that are approved for Taiwan to purchase based on that assessment. It would compel the U.S. Department of State to pre-authorize the arms listed in the Defense Department’s annual review for expedited transfer to Taiwan. The act also would oblige defense contractors to prioritize Taiwan’s Foreign Military Sales (FMS) orders ahead of other countries “regardless of the order in which the contracts were signed.” Additionally, the bill would set up a comprehensive joint training program to improve Taiwan’s defense capabilities and develop a high-level, military planning mechanism between Taiwan and the U.S. Click here to read... [26]

US State Department site deletes 'Taiwan is part of China'

The U.S. State Department last week changed the wording on its U.S.-Taiwan relations page to delete reference to Taiwan as being part of China and removed a statement disavowing Taiwan independence. According to the Internet Archive's Wayback Machine, as recently as May 3, the U.S. State Department fact sheet on bilateral relations with Taiwan stated that like the 1972 Shanghai Communique, the 1979 U.S.-P.R.C. Joint Communique severing ties with Taipei in favor of Beijing, acknowledged the "Chinese position that there is but one China and Taiwan is part of China." The fact sheet was dated Aug. 31, 2018 during the Trump administration. In addition, the webpage stated the U.S. "does not support Taiwan independence." In July of last year, the White House coordinator for the Indo-Pacific Kurt Campbell said that the U.S. supports a strong "unofficial relationship" with Taiwan but that "we do not support Taiwan independence." On May 5 of this year, the State Department created a new version of the U.S.-Taiwan relations fact sheet. In this new version, reference to the 1979 joint communique has been greatly diminished in a statement that simply points out that the U.S. 'one China' policy is "guided by the Taiwan Relations Act, the three U.S.-China Joint Communiques, and the Six Assurances." Click here to read... [27]

Sri Lankan Prime Minister Mahinda Rajapaksa Resigns Amid Economic Crisis

Sri Lankan Prime Minister Mahinda Rajapaksa resigned after months of mass protests against his government’s handling of an economic crisis that has led to double-digit inflation, rolling blackouts and acute shortages in fuel and medicines. The war in Ukraine and the pandemic have heaped pressure on one of the world’s most vulnerable economies. Rising commodity prices and the loss of tourism revenue have proven too much to bear for a country that was already hobbled financially from high levels of foreign debt and sweeping tax cuts that decimated revenues. The result has been the country’s worst economic crisis since it gained independence in 1948, prompting protesters to call on President Gotabaya Rajapaksa to step down. The resignation on May 09 of Mahinda Rajapaksa, his older brother and a former president of the country, deals a major blow to a family that has held a tight grip on Sri Lankan politics over much of the past two decades. “The president can’t survive also, the people are looking for change,” said Eran Wickramaratne, a senior opposition figure who attended May 09’s protests with opposition leader Sajith Premadasa. The resignation of the prime minister came hours after authorities imposed a nationwide curfew following violent clashes between supporters of the government and opponents in Colombo, the nation’s capital. Click here to read... [28]

CIA Chief Met Saudi Crown Prince Last Month in Push to Mend Ties

CIA Director William Burns made an unannounced trip to Saudi Arabia last month to meet with Crown Prince Mohammed bin Salman, U.S. and Saudi officials said, as the Biden administration pushes to repair ties with a key Middle East security partner. The visit took place in mid-April in the coastal city of Jeddah, where the Saudi leadership spent much of the Islamic holy month of Ramadan. While details of what the two men discussed weren’t available, recent sources of U.S.-Saudi tension include oil production, Russia’s invasion of Ukraine, the Iran nuclear deal and the war in Yemen. “It was a good conversation, better tone than prior U.S. government engagements,” one American official said of the top U.S. spy’s meeting with Prince Mohammed, who runs Saudi Arabia’s daily affairs on behalf of his 86-year-old father, King Salman. Mr. Burns is a former deputy secretary of state who studied Arabic and held postings in the Middle East, as well as having prior experience in covert diplomacy. Political fissures between the U.S. and Saudi Arabia have deepened since Russia invaded Ukraine, senior officials from both governments have said. The risk for the U.S. is that Riyadh will align more closely with China and Russia, or at least remain neutral on issues of vital interest to Washington, as it has on Ukraine. Click here to read... [29]

Syria’s Assad meets top Iranian leaders in surprise Tehran visit

Syrian President Bashar al-Assad has held meetings with Iran’s supreme leader and the country’s president during a surprise visit to Tehran, a key military backer of the Syrian regime. Assad met with Supreme Leader Ayatollah Ali Khamenei and President Ebrahim Raisi after making an unannounced visit to the Iranian capital on May 08 morning and then left for Damascus the same day, according to Nournews, an outlet affiliated with Iran’s Supreme National Security Council (SNSC). The supreme leader’s website confirmed the meeting. Its readout of the rare sit-down quoted Khamenei as telling Assad that his “victory in an international war” has increased the credibility of Syria, and that Iran wishes to boost bilateral ties. “Today’s Syria is not Syria before the war, even though there was no destruction back then, but now the respect and credibility of Syria is much more and all look to it as a power,” Khamenei was quoted as saying. Khamenei also took aim at countries in the region which have normalised ties with Israel or hold high-level meetings with its officials, saying this is while their own people are chanting anti-Zionist slogans on Quds Day. This is the Syrian president’s second trip to Tehran since the start of Syria’s war in 2011. He had previously met the Iranian supreme leader, his biggest regional ally, in February 2019. Click here to read... [30]

Iran confirms EU envoy visit to save stalled nuclear deal talks

The European Union’s coordinator for talks on restoring Iran’s 2015 nuclear deal with world powers will visit Tehran on May 03 in an effort to find a solution to a months-long standoff between Tehran and Washington. Nournews, an outlet affiliated with Iran’s Supreme National Security Council (SNSC), which leads the nuclear deal negotiations, on May 07 confirmed the upcoming visit by Enrique Mora, the deputy secretary-general of the European External Action Service (EEAS). “Considering the EU’s role in exchanging viewpoints between Tehran and Washington, Enrique Mora’s trip to Tehran can be regarded as a new step for constructive negotiations surrounding the few but important remaining issues,” the outlet reported. It did, however, emphasise that Iran has remained in the negotiations despite “the persistence of hostile approaches by the US against our country” that it said goes against the spirit of constructive negotiations. The talks to restore the Joint Comprehensive Plan of Action (JCPOA), as the deal is formally known, began in April 2021 but have stalled for months as Iran and the United States have failed to reach agreement on a number of limited but crucial issues. Click here to read... [31]

Mali: Military government breaks defence accords with France

Mali’s ruling military has announced it is breaking its defence accords with former colonial ruler France, condemning “flagrant violations” of its national sovereignty by the French troops stationed there. The announcement was the latest sign of deteriorating relations between Mali and France. Authorities in Bamako said they had informed Paris of the decision on May 02 afternoon. France so far has not issued an official reaction to the announcement.“For some time now, the government of the Republic of Mali notes with regret a profound deterioration in military cooperation with France,” spokesman Colonel Abdoulaye Maiga said in a televised statement. Maiga cited multiple instances of French forces having violated the country’s airspace. He referred to the June 2021 move by France to end joint operations with Malian forces and mentioned another decision taken in February to pull French troops out of the West African state. The agreements Mali has ended were those that set the framework for France’s intervention in Mali in 2014. They were signed a year after France deployed a large force to help Mali’s army stop an offensive by armed groups there. Tensions between France and the military government in Mali, which seized power in August 2020, had been rising for some time. Click here to read... [32]

Medical

COVID-19 vaccine makers shift focus to boosters

COVID-19 vaccine makers are shifting gears and planning for a smaller, more competitive booster shot market after delivering as many doses as fast as they could over the last 18 months. Executives at the biggest COVID-19 vaccine makers including Pfizer Inc and Moderna said they believe most people who wanted to get vaccinated against COVID-19 have already done so - more than 5 billion people worldwide. In the coming year, most COVID-19 vaccinations will be booster shots, or first inoculations for children, which are still gaining regulatory approvals around the world, they said. Pfizer, which makes its shot with Germany's BioNTech SE, and Moderna still see a major role for themselves in the vaccine market even as overall demand declines. Upstart US vaccine maker Novavax Inc and Germany's CureVac NV, which is working with GlaxoSmithKline, are developing vaccines they hope to target at the booster market. The roles of AstraZeneca Plc and Johnson & Johnson, whose shots have been less popular or effective, are expected to decline in this market. "It becomes a very competitive game with companies battling it out with pricing and for market share, even for vaccines that are considered to be the best, like Pfizer and Moderna," said Hartaj Singh, an analyst at Oppenheimer & Co. Click here to read... [33]

Omicron threat mutating fast and furious

By now, many of us will be familiar with the Omicron variant of SARS-CoV-2, the virus that causes Covid. This variant of concern has changed the course of the pandemic, leading to a dramatic rise in cases around the world. We are also increasingly hearing about new Omicron sub-variants with names such as BA.2, BA.4 and now BA.5. The concern is these sub-variants may lead to people becoming reinfected, leading to another rise in cases. Why are we seeing more of these new sub-variants? Is the virus mutating faster? And what are the implications for the future of Covid? All viruses, SARS-CoV-2 included, mutate constantly. The vast majority of mutations have little to no effect on the ability of the virus to transmit from one person to another or to cause severe disease. When a virus accumulates a substantial number of mutations, it’s considered a different lineage (somewhat like a different branch on a family tree). But a viral lineage is not labeled a variant until it has accumulated several unique mutations known to enhance the ability of the virus to transmit and/or cause more severe disease. Because Omicron has spread swiftly and has had many opportunities to mutate, it has also acquired specific mutations of its own. These have given rise to several sub-lineages, or sub-variants. Click here to read... [34]