Global Developments and Analysis: Weekly Monitor, 11 July - 17 July 2022

Economic

China faces difficult decisions with slide in economic growth

China’s economic growth teetered on the brink of contraction in the second quarter year on year, reflecting a two-month lockdown of the financial and industrial hub of Shanghai. This came on top of Covid-19 shutdowns and travel curbs that have hampered recovery in the world’s second-biggest economy. Following an increase in gross domestic product of 4.8 per cent in the first quarter, growth in the three months to June of just 0.4 per cent dragged expansion in the first half down to 2.5 per cent. This year’s growth target of “around 5.5 per cent” would require a bounce back to 7.5 per cent in the second half. But a return to stable growth will be the paramount goal of Beijing ahead of a landmark political meeting later this year, the 20th national party congress, which includes a leadership reshuffle. This can be expected to lead to increased pressure to fine-tune President Xi Jinping’s zero-Covid strategy and for stimulatory measures, such as looser monetary policy and fiscal stimulus, without triggering a surge of inflation. This is in contrast to a tightening cycle to combat inflationary growth well under way among China’s trading partners. Recent statements by top leaders have shown a rising sense of urgency about the need to put the economy back on a stable track. However, if there is to be a new round of credit-driven investment it should not be at the cost of exacerbating local debt problems. Click here to read... [2]

China and EU to hold high-level trade talks this week after months of delays

Just before the summer lull hits Brussels, the European Union will hold a high-level trade dialogue with China on July 19 – talks the 27-member bloc has been trying to organise for more than three months. Valdis Dombrovskis, the European commissioner for trade, and Chinese vice-premier Liu He will co-chair the virtual meeting, which will also include representatives from the trade and economic ministries of both sides. According to a European Commission representative, a number of global economic challenges will be discussed, including food security and energy prices, supply chains, financial services, and bilateral trade and investment concerns. “The dialogue is taking place against the background of war in Europe and increasing uncertainties in the global economic outlook,” the representative said. The last high-level meeting between the EU and China was a virtual summit in April; it ended unsuccessfully after the EU failed to gain any assurances from China that it would not support Russia’s war against Ukraine financially or militarily. But both sides agreed to talk again “to find concrete ways to progress on these issues before the summer”. While Brussels continued pushing Beijing to nail down a date, China took time in responding. Click here to read... [3]

Europe Fears Widespread Economic Fallout if Russian Gas Outage Drags On

As a deadline approaches for Russia to resume supplying natural gas to Germany this week, European officials and executives are growing concerned about a cascading economic fallout that would spread across the continent should Moscow keep the tap shut. The Nord Stream pipeline that ferries gas from Siberia to Germany closed July 11 for annual maintenance that is expected to last 10 days. Many in the West fear that Moscow might prolong the closure, possibly permanently, and deprive Germany, Europe’s industrial powerhouse, of a key ingredient for its and its neighbors’ factories. European leaders blamed Moscow for using gas as a weapon when flows along the pipeline began to ebb last month. Moscow blamed that shortfall on technical issues related to Western sanctions. According to the annual maintenance schedule, Nord Stream goes back online July 21, meaning that gas flow should resume the following day. Complicating the calculus, officials and executives say it might not be easy to determine whether Russia is restoring gas flows fully. Under one scenario, Moscow could switch the pipeline back on but with lower volumes, as it already has, citing technical problems linked to the sanctions. Germany is highly dependent on Russian gas, and it also acts as a transit hub for gas headed to Austria, the Czech Republic and Ukraine. Click here to read... [4]

China jobs: youth unemployment hits record high in June – nearly 1 in 5 young people out of work

The hits keep coming for China’s disillusioned youth who increasingly cannot seem to catch a break when it comes to landing work in a job market that – at least for their demographic – keeps going from really bad to even worse. Nearly one out of five young jobseekers were unemployed last month as China’s youth unemployment rate hit an all-time high of 19.3 per cent in June, official figures show. It was a sharp rise from 18.4 per cent in May, and marked a year-on-year increase of 25 per cent. The intensifying struggle among those aged 16-24 to carve out their own piece of China’s economic pie came in the midst of the nation’s economy growing by a mere 0.4 per cent in the second quarter of 2022, year on year. This was largely the result of Beijing’s zero-Covid strategy, which forced large-scale lockdowns in Shanghai and other major cities – far from ideal conditions in which China’s latest army of fresh college graduates were plunged into. China’s National Bureau of Statistics (NBS) has previously noted that new graduates generally push the unemployment rate upward come June and July each year, but the youth unemployment rate has seen a steady rise since October. Click here to read... [5]

A fifth of Chinese developers face insolvency as investors grow tired of repeated bond extensions, S&P Global warns

At least a fifth of rated Chinese property developers will end up becoming insolvent, putting as much as US$88 billion of their distressed bonds at risk, according to S&P Global Ratings. While some developers have resorted to debt extensions and bond exchanges to buy time to avoid default, investors will soon lose patience and press their claims through the courts or debt restructuring if a recovery of the sector does not play out by the first quarter of 2023, the ratings agency said. Exchanges and debt extensions have been the two most common ways for Chinese developers to resolve their bond default risks. Guangzhou R&F Properties, for example, recently received approval to regroup all 10 tranches of its offshore bonds worth a total of US$4.94 billion due between now and 2024 into three amortisation notes that mature in 2025, 2027 and 2028, giving it three to four years of breathing room as it struggles to raise cash. But “this forbearance may not continue,” said S&P. “If a sales turnaround is not forthcoming, investors will reject repeated extensions. “The end of the beginning is at hand for China developer defaults.” Click here to read... [6]

Russia has price cap-busting oil plan - media

Russia has ramped up efforts to create its own national oil pricing benchmark as part of its response to Western efforts to limit its oil revenues, Bloomberg reported on July 14, citing government and industry sources. According to the agency, the Western sanctions campaign, which was launched after Russia began its military operation in Ukraine, and the attempts to squeeze its oil export revenue with a proposed price cap, have reinvigorated the idea. US Treasury secretary Janet Yellen is attempting to set an upper limit on how much Moscow can charge for its crude exports. Some experts have warned that the scheme may backfire. The Russian government wants to have a pricing benchmark in action sometime between March and July of 2023, the business news outlet reported. Discussions about the plan are in the early stages, but were confirmed by an executive in the energy industry, the report said. The country has tried for years to launch a national benchmark based on crude trade at the St. Petersburg International Mercantile Exchange, but the volume of foreign deals made on the exchange has not been high enough for this purpose. The US and its allies are seeking to damage Russian crude trade with nations like China and India, which refused to join the sanctions drive, by leveraging their dominance in the areas of insurance and finance. Click here to read... [7]

Saudi Arabia outlines what it will do for oil output

Saudi Arabia is ready to increase oil production to its maximum of 13 million barrels per day but does not have the capacity to pump out more, Crown Prince Mohammed bin Salman said during his address at the US-Arab summit in Jeddah on July 16. “The kingdom has announced an increase in its production capacity level to 13 million barrels per day, after which the kingdom will not have any additional capacity to increase production,” he was quoted as saying by UAE’s newspaper The National. The crown prince also said that the global community should join forces to support the worldwide economy, but noted that unrealistic policies regarding energy sources would only worsen the situation. “Adopting unrealistic policies to reduce emissions by excluding main sources of energy will lead in coming years to unprecedented inflation and an increase in energy prices and rising unemployment, and a worsening of serious social and security problems,” he stated. Mohammed bin Salman’s words come a day after his talks with Joe Biden, who was in Saudi Arabia on his first visit as US president, and urged the kingdom to increase oil production in order to reduce global reliance on supplies from Russia. Commenting on his trip to the kingdom, Biden said Saudi Arabia’s “energy resources are vital for mitigating the impact on global supplies of Russia’s war in Ukraine.Click here to read... [8]

Middle East Buyers Ramp Up Russian Fuel Imports

US and European sanctions have led to a significant shift in the direction of Russian energy flows. Bloomberg reports diesel and other fuel products shunned by many countries in the West are heading to the Middle East. Increasing flows began after the Russian invasion of Ukraine and reached 155,000 barrels a day in June, according to new data from Vortexa Ltd. Meanwhile, European imports have slumped 30% since the invasion on Feb. 24. Vortexa's data shows most of the products arriving in the Middle East from Russian ports are fuel oil, diesel/gasoil, and more recently, jet fuel and kerosene. "Most of the Middle East's imports from Russia are of fuel oil -- a leftover from the refining process and often used in power generation and shipping," Bloomberg noted. About a third of the inflows of fuel products went into the Fujairah Oil Terminal for storage in the United Arab Emirates. Imports of Russian fuel products are at a 2016 high and could increase further because of Western trade restrictions to punish President Putin for the invasion of Ukraine. However, Koen Wessels, senior oil products analyst at Energy Aspects Ltd, said Russian flows to the Middle East will be temporary and could eventually slow because of shipping insurance-related restrictions for vessels leaving Russian ports. Click here to read... [9]

Afghan minister holds talks with Chinese mining firm, progress to be expected

An Afghan government official from the mining sector met with the representative of a Chinese mining company July 17, and they discussed issues ranging from technical to financial operations of the Aynak copper project, the second-largest copper ore body in the world. But an insider said that no substantive progress was made. A staffer of Chinese mining giant Metallurgical Group Corp (MCC), the company that owns the Aynak copper project, told the Global Times July 18 that the company has staff in Afghanistan at the moment, and they are keeping in close contact with the new Afghan government over the project. The remark came as the Acting Minister of Mines and Petroleum Sheikh Shahabuddin Delawar held a meeting Sunday with a vice president of MCC-JCL Aynak Minerals Co (MJAM), a Chinese-funded mining company registered in Afghanistan under MCC, according to the official website of the Afghan Ministry of Mines and Petroleum. Discussions were held at the meeting on the latest developments, as well as technical, financial and land acquisition issues, and the transfer of ancient artifacts in the field of the Aynak project, said the ministry. While there have been frequent talks, no substantive progress has been made, the Global Times learned. "The only thing we needed to confirm with the Afghan government is the ownership of the mine, which has already been done with the new government," a staffer with the MCC Group said. Click here to read... [10]

Kishida: Up to 9 nuclear reactors to go online by winter

Prime Minister Fumio Kishida said the central government intends to bring up to nine nuclear reactors online this winter to prepare for possible power shortages during peak periods. Kishida told a July 14 news conference that he instructed economy minister Koichi Hagiuda to start preparations. “We are aiming to put as many nuclear reactors as possible online,” said Kishida. “We will have up to nine reactors operating this winter to secure enough sources of energy to cover about 10 percent of Japan’s overall power consumption.” The move comes as the government is asking the public to save electricity this summer amid a power shortage, which will likely become even more severe in the winter. According to government sources, five of the nine reactors are at Kansai Electric Power Co.’s nuclear power plants in Fukui Prefecture: the No. 3 and No. 4 reactors at the Oi plant; the No. 3 reactor at the Mihama plant; and the No. 3 and No. 4 reactors at the Takahama plant. All nine reactors were brought online at least once after passing the Nuclear Regulation Authority’s screening for a restart. Four were in operation as of July 14. Kishida said he also instructed government officials to get 10 more units of thermal power plants ready for operations to ensure a stable power supply during peak periods. Click here to read... [11]

China closes in on Japan's hydrogen technology patent lead

Though Japan continues to lead the world in hydrogen-related technology, its edge is narrowing as new patent filings by the country's companies and research institutions slow while Chinese players forge ahead with government backing. Hydrogen is considered the ultimate clean fuel since it emits no carbon dioxide when burned. Tokyo-based research company Astamuse, in which Nikkei has a stake, has compiled a ranking of countries, scored in terms of the competitiveness of their hydrogen technologies between 2011 and 2020, based on the number of times their patents were cited in similar patent applications, expiration dates and other data. The 2020 figures were based on preliminary data. Japan came out on top overall propelled by its strength in fuel-cell patents, which are key to harnessing hydrogen to power cars, homes and factories. Toyota Motor has been developing fuel-cell vehicles for the past three decades, and became the first automaker in the world to commercialize the vehicles in 2014. It had expanded their driving range about 30% by 2020. Japanese petroleum company ENEOS and Industrial gases company Iwatani operate more than 160 hydrogen stations, and are working to halve the cost of building a new station from the current range of 300 million yen to 400 million yen ($2.19 million to $2.91 million) currently. Click here to read... [12]

China locks in record long-term LNG deals to bolster energy security

As global competition for liquefied natural gas intensifies in response to the Ukraine war, China is increasingly turning to long-term contracts of a decade or more to ensure the country's growing needs will continue to be met years into the future. Chinese demand for natural gas grew at the fastest rate on record in 2021. LNG demand jumped 18% to 78.9 million tons, surpassing Japan as the largest importer. Spot contracts accounted for 39% of China's LNG imports last year. But contracts lasting 10 to 20 years make up a rapidly growing portion of those with delivery dates in 2022 and beyond. Chinese players signed 23 long-term contracts for a total of 27 million tons of LNG in 2021, according to Mika Takehara at Japan Oil, Gas and Metals National Corp. Both figures were among the largest on record, she said. Most LNG was purchased by China's three state-owned energy groups -- China National Petroleum Corp., CNOOC and China Petrochemical, known as Sinopec. But energy companies owned by regional governments and private-sector utilities are also increasingly dealing directly with overseas suppliers. Three-quarters of the sellers were located in the U.S., Qatar and Russia. Between January 2021 and this April, Chinese companies had signed 10 contracts for 13.9 million tons to 14.8 million tons of LNG from American entities alone. Click here to read... [13]

Myanmar revokes foreign company exemption from currency rules

The Central Bank of Myanmar on July 13 reversed its position on exempting foreign companies from forced exchanges of currency to the local kyat, several sources at the bank said. The central bank in April had instructed financial institutions to convert foreign currency earned by its customers into kyat within one business day. Existing foreign-currency deposits were also to be converted into the kyat in stages. In mid-June, the bank issued a notice exempting companies that are 10% or more owned by overseas entities, which applied to the majority of foreign companies doing business in Myanmar. It has now rescinded this exception in a new notice, sources said. Companies making investments approved by the Myanmar Investment Commission, as well those operating in special economic zones, are expected to remain exempt. The currency exchange rule comes as Myanmar suffers a serious shortage of foreign currency following its military takeover in February 2021. The government established the Foreign Exchange Supervisory Committee in April, which now must approve any conversions from kyat to a foreign currency, or money transfers abroad. Foreign currency from the forced conversions will be used to repay foreign debt flagged as a priority by the FESC. Click here to read... [14]

Why China can’t let Laos default

Laos faces intensifying economic and financial crises and there is likely no way out without some form of a Chinese bailout or debt forgiveness. Various warning signs are blinking red in the small Southeast Asian country. The national currency, the kip, has lost around a third of its value against the US dollar compared to this time last year. Inflation hit 23% in June, its highest level in decades. Meanwhile, much of the landlocked country faces fuel shortages. The communist-run government has huffed and bluffed but finally undertook a cabinet reshuffle in late June, bringing in a new commerce minister and central bank governor. Some emergency measures have stemmed certain economic problems from worsening. But those haven’t alleviated the nation’s underlying financial woes, which are now more precarious than ever. “The chances that Laos will default on its debt obligations are extremely high,” says Carl Thayer, an emeritus professor at the University of New South Wales in Australia. Indeed, the country’s foreign debts have swelled to over US$14 billion, or 88% of gross domestic product (GDP). Around half that amount is owed to China, including the Lao state’s one-third stake in the $5.9 billion China-Laos railway, a megaproject that opened in December amid concerns about the line’s commercial viability. Vientiane barely scraped through making its annual debt repayments last year. Click here to read... [15]

Super-strong dollar imperils world economy

The US dollar has been on a major surge against major global currencies in the past year, recently hitting levels not seen in 20 years. It has gained 15% against the British pound, 16% against the euro and 23% against the Japanese yen. The dollar is the world’s reserve currency, which means it is used in most international transactions. As a result, changes in its value have implications for the entire global economy. Below are five of the main ones. 1. Even more inflation. Petrol and most commodities such as metals or timber are usually traded in US dollars (though with exceptions). So when the dollar gets stronger, these items cost more in local currency. For example in British pounds, the cost of US$100-worth of petrol has risen over the past year from £72 to £84. And since the price per liter of petrol in US dollars has risen steeply as well, it is creating a double whammy. When energy and raw materials cost more, the prices of many products go up for consumers and businesses, causing inflation around the world. The only exception is the US, where a stronger dollar makes it cheaper to import consumer products and therefore could help to tame inflation. Click here to read... [16]

Strategic

‘Judgment Day’ warning as Russia hunts Ukraine’s US-made HIMARS

Nearly five months since President Vladimir Putin ordered the February 24 invasion of Ukraine, Russian forces are grinding through the Donbas region of eastern Ukraine and now occupy around a fifth of the country. Shoigu, one of Putin’s closest allies, inspected the Vostok group which is fighting in Ukraine, the defence ministry said. Shoigu “instructed the commander to give priority to the enemy’s long-range missile and artillery weapons,” the defence ministry said. The ministry said the weapons were being used to shell residential areas of Russian-controlled Donbas and to deliberately set fire to wheat fields and grain storage silos. Russian defence ministry spokesman Igor Konashenkov said a depot in the Black Sea port of Odesa that stored Harpoon anti-ship missiles was hit, while a US-supplied HIMARS multiple-launch rocket system was struck in the eastern Donetsk region. There are concerns in Moscow that Ukraine’s longer-range missiles could be used to target Crimea, which Russia annexed from Ukraine in 2014. Crimea is of particular strategic importance to Russia as it includes the headquarters of its Black Sea fleet at Sevastopol. Another prized target would be the 18km (11-mile) bridge that links the Black Sea peninsula with mainland Russia. That prospect of an attack on Crimea prompted a warning from Russia’s former president Dmitry Medvedev, who said such an attack would trigger devastating consequences for the Ukrainian leadership. Click here to read... [17]

Chinese military upgrades near disputed Himalayan border viewed as provocative in India

The upgrading of China’s military projection and logistics capabilities along the Line of Actual Control (LAC) in the Himalayas, designed to prepare for contingencies, is being viewed by the Indian side as offensive and provocative. Citing Indian intelligence sources, The Hindu said the People’s Liberation Army had expanded its troop accommodation capacity within 100km (60 miles) of the LAC from 20,000 to 120,000 in the past two years. The Indian newspaper’s report, published late last month, said the PLA had deployed four divisions, or 48,000 troops, from its Xinjiang military district, with the soldiers being rotated on the disputed border facing eastern Ladakh, where the worst fighting in over four decades saw at least 20 Indian soldiers and four from the PLA killed in the Galwan Valley two years ago. Zhou Chenming, a researcher from the Yuan Wang military science and technology think tank in Beijing, confirmed the PLA had renovated and expanded barracks along the LAC since that clash, including permanent buildings and temporary ones. “Many of the permanent buildings are warehouses for fuel storage, while other accommodation and portable facilities will be used for housing troops,” Zhou said, adding that the PLA was capable of deploying up to 120,000 troops to the LAC in a week if necessary. “China doesn’t need to station so many troops in border areas because of its powerful military projection capacity and infrastructure and logistics supply network.” Click here to read... [18]

South Korea’s Yoon faces becoming a ‘lame duck’ as nepotism claims, wife’s gaffes hit ratings

Barely two months after South Korean President Yoon Suk-yeol took office, his support base has quickly dwindled as a lack of experience, accusations of a poor attitude, gaffes and various political and personal issues weigh on his approval ratings. This could complicate his political agenda, especially in a parliament where the liberal opposition Democratic Party dominates his conservative People Power Party. His approval rating plunged to 32 per cent from a high of 53 per cent five weeks earlier, according to an opinion poll last week by Gallup Korea. Disapproval stood at 53 per cent, up 19 percentage points in the same five-week period. Yoon’s approval rating could extend its decline, as he had barely two months to rally his base before his ratings began to tank. Approval ratings of South Korea’s presidents typically stand at 70-80 per cent during their early months in office, fuelled by high expectations for their new governments. Resentment among conservatives against former president Moon Jae-in’s political missteps such as skyrocketing real estate prices and his associates’ alleged nepotism had helped Yoon to the presidency. Yoon was initially lauded for delivering on his election promise to make himself more accessible than his predecessors, allowing journalists to question him on his way to work every morning, a first for a South Korean president. But he came under fire for his curt responses and poor attitude. Click here to read... [19]

China’s Communist Party finds it easier to win hearts and minds at home than overseas

When Xi Jinping became China’s president in 2013, he showed he was determined to maintain the Communist Party’s mandate to rule by winning the people’s hearts and minds. At the start of his first term he ordered bureaucrats across the country to confess any loss of touch with the grass roots to the party. The campaign ended up lasting for more than a year. He also kicked off a far-reaching anti-corruption campaign, with graft busters setting up a website and a social media account that enabled people to report corruption via their phones. Xi also famously warned the party in 2013 of the risk of losing the people’s trust, using the term Tacitus Trap, which describes a lack of trust in a government regardless of its actions. Yet just months before Xi is set to begin his third term as the party’s leader at this year’s 20th party congress, crises have emerged that point at the heart of trust in the government, including a banking fiasco in which thousands of people risk losing all their savings in local banks. The Tacitus Trap, named after the Roman historian, describes the dire situation facing a government when no matter what it says or does, people assume it is a lie or a bad deed. It was one of three traps, along with the middle-income trap and the Thucydides Trap, that Xi warned publicly in 2013 could undermine China’s rise. Click here to read... [20]

Three more countries set to join BRICS - official

Saudi Arabia, Turkey, and Egypt plan to join BRICS, and their potential membership bids could be discussed and answered at next year’s summit in South Africa, Purnima Anand, the president of the organization, told Russian media on July 14. “All these countries have shown their interest in joining [BRICS] and are preparing to apply for membership. I believe this is a good step, because expansion is always looked upon favorably; it will definitely bolster BRICS’ global influence,” she told Russian newspaper Izvestia. The BRICS nations (Brazil, Russia, India, China, and South Africa) account for over 40% of the global population and nearly a quarter of the world’s GDP. Anand said the issue of expansion was raised during this year’s BRICS summit, which took place in late June in Beijing. The BRICS Forum president said she hopes the accession of Saudi Arabia, Turkey, and Egypt will not take much time, given that they “are already engaged in the process,” though doubts that all three will join the alliance at the same time. The news of the three nations’ plans to join BRICS comes after Iran and Argentina officially applied for membership in late June, with Iranian Foreign Ministry spokesman Saeed Khatibzadeh touting the bloc as a “very creative mechanism with broad aspects.” Click here to read... [21]

Italian president rejects PM Draghi’s resignation

Italian President Sergio Mattarella on July 14 rejected Prime Minister Mario Draghi’s attempt to resign. Draghi announced his intent to step down after he survived a confidence vote but lost the backing of his largest coalition partner. Draghi met with Mattarella following a confidence vote in the Italian Senate earlier in the afternoon. While the PM comfortably survived the vote by 172-39, the ballot was boycotted by the Five Star Movement, the largest partner in Draghi’s broad coalition government. Having earlier stated that he would not remain in power without the support of the Five Star populists, Draghi said that he would step down as the conditions to govern “no longer exist.” However, Mattarella has the power to accept or reject the prime minister’s resignation, and he chose the latter option. The move sends Draghi back to Parliament where a fresh confidence vote will likely be held. Should Draghi win the support of lawmakers, snap elections could be avoided. Mattarella appointed Draghi, who formerly led the European Central Bank, in 2021, in a bid to stave off an economic downturn as Italy recovered from the coronavirus pandemic. However, Draghi has faced persistent criticism from the Five Star Movement’s leader, Giuseppe Conte, over rising inflation and energy costs, as well as his support for EU sanctions on Russia and weapons shipments to Ukraine. Click here to read... [22]

Russia-Ukraine grain talks outcome revealed

Russia and Ukraine have agreed to establish a joint coordination center on grain exports in Istanbul that will include representatives from all parties, Turkish Defense Minister Hulusi Akar told local media following the four-way talks that also involved Turkey and the UN. On July 13, negotiators from Russia, Ukraine, Turkey and the UN met in the Turkish city to discuss the situation regarding the held-up Ukrainian exports. Ahead of the meeting, Ukraine’s Foreign Minister Dmitry Kuleba said that Kiev and Moscow had been close to breaking the impasse on the issue. “An agreement has been reached on technical issues such as joint controls at the destination points and … the safety of navigation on the transfer routes,” Akar told journalists. Russian and Ukrainian delegations “should meet again in Turkey next week,” he said, adding that the parties would “review all the details once again” during that meeting. Ukraine is one of the world’s leading grain exporters. Yet, it has been unable to export its grain by sea due to the ongoing conflict with Russia. Kiev and Western nations have accused Moscow of preventing Ukrainian grain shipments from leaving the nation’s Black Sea ports. Click here to read... [23]

South Korea seeks to kickstart talks to resolve historical feuds with Japan

South Korea hopes a high-level visit to Tokyo next week will kickstart talks aimed at a breakthrough in historical disputes despite concerns the death of former Japanese premier Shinzo Abe could disrupt efforts to mend ties, Seoul officials said. Relations between the two North Asian U.S. allies have been strained over disputes dating to Japan’s 1910-1945 occupation of Korea. Washington has been pressing Tokyo and Seoul to mend fences in the face of the North Korean nuclear threat and the rising influence of China. Officials in the administration of new South Korean President Yoon Suk-yeol, who took office in May vowing to improve ties with Japan, told Reuters they feel emboldened by Japanese Prime Minister Fumio Kishida’s recent election victory which could give him more scope to advance his policy agenda for another three years. Foreign Minister Park Jin will visit Tokyo as early as next week, a trip which a senior official handling Japan policy said is aimed at “turning on the tap” for serious negotiations on issues relating to wartime laborers, which stalled under Yoon’s predecessor. Park will visit Tokyo on July 18, Japan’s public broadcaster NHK reported on July 14. South Korea did not immediately confirm the report. Yoon would also likely use his Aug. 15 Liberation Day speech marking Korea’s independence from Japan as a chance to send a reconciliatory message to Tokyo, the official added. Click here to read... [24]

China's Xi visits Xinjiang for first time in 8 years

Chinese President Xi Jinping visited Xinjiang this week for the first time since 2014, seeking to demonstrate his success in subduing the country's restive northwestern region. The trip, reported by state broadcaster China Central TV and other news outlets, comes as Xi works to solidify a rare third term as leader of the Chinese Communist Party at its twice-a-decade congress this fall. Xi observed freight trains on the China-Europe Railway Express in the regional capital of Urumqi on July 12. "With the Belt and Road Initiative progressing, Xinjiang is no longer an outlying area," he said. "It has become a pivotal region with historical significance." The following day, Xi visited a residential community in Urumqi and watched a traditional dance performance by Uyghur Muslims. "We need to bring even more happiness to the lives of different ethnic groups," he said. The state-run Xinhua News Agency published a photo of a maskless Xi walking the streets, surrounded by Uyghur children. During Xi's last visit to the Xinjiang region in September 2014, suicide bombers attacked a train station in Urumqi. He warned of a protracted struggle with "terrorist separatists" in the region and ordered a crackdown against "terrorist elements." The Xi administration has pushed for the "sinicization" of Islam in Xinjiang. Click here to read... [25]

China, Russia military activity near Japan up 2.5 times since Ukraine

Chinese and Russian military activity around Japan increased 2.5 times in the four months following Russia's invasion of Ukraine on Feb. 24, sparking alarm here over a potential escalation. Releases by Japan's Ministry of Defense show 90 instances of activity by Chinese and Russian military vessels and aircraft near Japan in the four months after the invasion began. There had been 35 in the four months before. A Chinese vessel and Russian vessel entered Japan's contiguous zone near the Japanese-administered Senkaku Islands on July 4. The Russian vessel then sailed north through the Senkakus on July 5 before entering the contiguous zone near Japan's southernmost Okinotori islets the following day. The type of activity recorded has also shifted since the Ukraine invasion began. On June 7, four aircraft believed to be part of the Russian military flew straight toward Japan from west of Hokkaido. They shifted course just before entering Japanese airspace after the Japan Air Self-Defense Force scrambled fighter jets in response. Before turning away, the four planes were on a trajectory toward Hokkaido's largest city of Sapporo, a Japanese defense official said. Concern is growing that such activity may be part of planned military operations in the area. Click here to read... [26]

Abe's house of cards: Death leaves largest party faction in limbo

Nearly a week after an assassin took the life of former Japanese Prime Minister Shinzo Abe, the ruling party faction he led has yet to zero in on a possible successor. The largest faction in the Liberal Democratic Party, known as Seiwa-kai, is scrambling to maintain unity. But Abe's murder left the group with little time to select and groom a suitable successor, putting it in a precarious position. The group boasts 93 conservative-leaning upper and lower house LDP lawmakers, with many calling for bigger military spending and revising the nation's pacifist charter. After producing the longest-serving prime minister, the group yields enormous clout in the party. Senior members met July 11 at a Tokyo hotel to discuss the next step but could only muster a vague pledge to maintain solidarity. In 2017, Abe floated the idea of having four core leaders in the faction, modeled after a similar setup his father, Shintaro Abe, had when he led the faction decades ago. Given the lack of a clear leader, the faction could opt for this option. Right now, Hakubun Shimomura and Ryu Shionoya, both former education ministers, are serving as acting chairs of the faction. They have supported Abe's family through the ordeal by meeting with mourners at his private residence. "There are proposals to have two acting chairs or to set up a seven-person structure," said a senior member of Abe's faction. Click here to read... [27]

Sri Lanka's acting president declares state of emergency

Sri Lanka's acting President Ranil Wickremesinghe has declared a state of emergency, according to a government notice released late on July 17, as his administration seeks to quell social unrest and tackle an economic crisis gripping the island nation. "It is expedient, so to do, in the interests of public security, the protection of public order and the maintenance of supplies and services essential to the life of the community," the notification stated. Sri Lanka's ousted President Gotabaya Rajapaksa, who fled overseas this week to escape a popular uprising against his government, has said he took "all possible steps" to avert the economic crisis that has engulfed the island nation. Gotabaya Rajapaksa's resignation was accepted by parliament on July 15. He flew to the Maldives and then Singapore after hundreds of thousands of anti-government protesters came out onto the streets of Colombo a week ago and occupied his official residence and offices. Sri Lanka's parliament met on July 16 to begin the process of electing a new president, and a shipment of fuel arrived to provide some relief to the crisis-hit nation. Wickremesinghe, an ally of Rajapaksa, is one of the top contenders to take on the presidency full-time but protesters also want him gone, leading to the prospect of further unrest should he be elected. Click here to read... [28]

Biden Lays Out a U.S. Middle East Vision Heavy on Diplomacy

President Biden laid out his vision for the U.S. role in the Middle East July 16, pledging to stay engaged in the region and strengthen relationships with Arab nations to counter the influence of China, Russia and Iran. “The United States is going to remain an active engaged partner in the Middle East as the world grows more competitive, and the challenges we face more complex,” Mr. Biden said in a 10-minute speech in this seaside town during a summit of Arab leaders. “It’s only becoming clear to me how closely interwoven America’s interests are with the successes of the Middle East.” “We will not walk away and leave a vacuum to be filled by China, Russia or Iran,” he added. He also repeated a pledge that the U.S. is committed to preventing Iran from acquiring a nuclear weapon. Mr. Biden said the U.S. would chart a new approach to the Middle East focused on diplomacy over aggression. “Today, I’m proud to be able to say that the era of land wars in the region, wars involving huge numbers of American forces, is not underway,” he said. Mr. Biden’s speech comes amid mounting concern about Washington’s commitment to the region, which was galvanized by the chaotic pullout from Afghanistan last summer. Click here to read... [29]

Biden disputes Saudi minister’s account of meeting with MBS

President Joe Biden hints the foreign minister of Saudi Arabia was not being truthful in his account of the US leader’s meeting with the kingdom’s crown prince, Mohammed bin Salman (MBS). Biden was referring to comments made by Adel al-Jubeir, who told Fox News he did not “hear” the US president tell MBS that he directly blamed him for the killing of journalist Jamal Khashoggi during their discussion in Jeddah on July 15. “I didn’t hear that particular phrase,” al-Jubeir told Fox News correspondent Alex Hogan in an interview on July 16. “The president mentioned that the US is committed to human rights because since the founding fathers wrote the constitution and he also made the point that American presidents – this is part of the agenda of every American president.” Upon returning to the White House early on July 17 after his four-day Middle East trip, Biden was asked by reporters if al-Jubeir was telling the truth in recounting his exchange with MBS. Biden pointedly replied: “No.” Biden, who visited Saudi Arabia, Israel and the occupied West Bank in his first trip to the region as US president, previously told reporters he brought up Khashoggi’s killing at the top of his initial meeting with the Saudi crown prince. He said he “indicated” to MBS that he held him “personally responsible” for the 2018 killing. He added that MBS repeatedly denied responsibility during their meeting. Click here to read... [30]

Amid Russia-Ukraine war, Putin to visit Iran for Syria talks

As Russia’s war on Ukraine grinds on, President Vladimir Putin will travel to Iran next week for a Syria summit with his Iranian counterpart Ebrahim Raisi and Turkey’s Recep Tayyip Erdogan, the Kremlin has announced. “The president’s visit to Tehran is being planned for July 19,” Kremlin spokesman Dmitry Peskov said on July 12. He added the trio would meet for peace talks on Syria. Russia, Turkey and Iran have in recent years been holding talks as part of the so-called “Astana peace process” to end more than 11 years of conflict in the Middle Eastern country. Russia and Iran are the key military and political backers of Syrian President Bashar al-Assad, while Turkey has provided military assistance to the Free Syrian Army and other rebel groups still fighting against al-Assad’s forces in the northwest. The foreign trip marks the Kremlin chief’s second since he sent troops into Ukraine in late February; he visited Tajikistan in late June. Russia and Iran hold close ties, while Turkey has attempted to act as a mediator during the Ukraine conflict. July 12’s announcement comes after the White House said on July 11 that it believed Moscow was turning to Iran to provide it with “hundreds” of drones, including those capable of carrying weapons, for use in Ukraine. Click here to read... [31]

Health

WHO declares Marburg outbreak in Ghana, after first two cases of deadly Ebola-like virus reported

Two cases of the deadly Marburg virus have been identified in Ghana, the first time the Ebola-like disease has been found in the West African nation, health authorities announced on Sunday. Earlier in the month, blood samples taken from two people in the southern Ashanti region suggested the Marburg virus. The samples were sent to the Pasteur Institute in Senegal which confirmed the diagnosis, the Ghana Health Service (GHS) said. “This is the first time Ghana has confirmed Marburg Virus Disease,” said GHS head Patrick Kuma-Aboagye said in a statement. No treatment or vaccine exists for Marburg, which is almost as deadly as Ebola. Its symptoms include high fever as well as internal and external bleeding. A total of 98 people identified as contact cases are currently under quarantine, the GHS statement said, noting that no other cases of Marburg had yet been detected in Ghana. The World Health Organization (WHO) said Guinea had confirmed a single case in an outbreak declared over in September 2021. Previous outbreaks and sporadic cases of Marburg in Africa have been reported in Angola, the Democratic Republic of the Congo, Kenya, South Africa and Uganda, according to the World Health Organization. Click here to read... [32]

China makes tweaks, but tough COVID policy still drags on economy

China has been tweaking its stringent COVID curbs but shows no sign of backing off from its “dynamic zero” policy and has lagged in vaccination efforts that would enable it to do so, casting a heavy shadow over the world’s second-largest economy. The absence of a roadmap out of zero-COVID and expectations that it will persist well into 2023 leaves residents and businesses facing a prolonged period of uncertainty. Recent scattered COVID flare-ups, the imposition of lockdowns in some cities and the arrival of the highly contagious BA.5 variant have added to those worries. On July 15, China is expected to report that gross domestic product (GDP) grew just 1 percent in the second quarter, with full year growth forecast at 4 percent, according to a Reuters poll - far short of Beijing’s official target of around 5.5 percent for 2022. In addition to a sharp lockdown-induced slowdown, growth has been weighed down by a sputtering property market and an uncertain global outlook. This week, Shanghai’s 25 million people were subject to more mandatory city-wide testing, and fear of tougher measures or getting caught up in China’s zero-COVID bureaucracy continues to exact an economic toll, including on consumption and jobs. Nomura estimated 31 cities were implementing full or partial lockdowns as of July 11, affecting nearly 250 million people in regions accounting for a quarter of China’s GDP. As the rest of the world tries to coexist with COVID, China points to the lives saved by its tough measures. Click here to read... [33]