Global Developments and Analysis: Weekly Monitor, 09 January - 15 January, 2023

Economic

Goldman strategists say funds are switching to non-US assets on weaker dollar, China reopening bets

Equities are kicking off 2023 with a dramatic reversal in trends, with investors flocking to non-US assets, according to Goldman Sachs. The country’s equities have seen outflows of about US$5 billion just in the first two weeks of the year, strategists led by Cecilia Mariotti wrote in a note on Jan 18. Lower gas prices, a weaker dollar and have spurred inflows into stock funds of Europe, China and other emerging markets, they added. “We might be at a turning point for regional equity fund flows,” Mariotti said, adding that there is a case for “a more meaningful acceleration” in non-US flows as “regional diversification has historically proved more valuable past the dollar peak.” European equity funds attracted inflows for the first time since Russia invaded Ukraine nearly a year ago, according to Goldman, citing data from EPFR Global and Haver Analytics. The data is the latest evidence that investors are eyeing opportunities outside the US as recession looms. Moreover, the dominance of expensive growth-linked sectors such as technology in the S&P 500 Index may deter some as interest rates are still rising. Bank of America’s latest fund manager survey this week showed investors are the most underweight on US equities since 2005. Elsewhere, strategists including those at Citigroup and Goldman have turned more bullish on European stocks as economic growth proves resilient. Click here to read... [2]

Saudi Arabia Is Open To Discuss Non-Dollar Oil Trade Settlements

Saudi Arabia, the world’s largest crude oil exporter, is open to discussing oil trade settlements in currencies other than the U.S. dollar, Saudi Minister of Finance, Mohammed Al-Jadaan, told Bloomberg TV in an interview in Davos on Jan 17. The Saudi signal that it could be open to talks about oil trade arranged in non-dollar currencies could be another threat to the current dominance of the U.S. dollar in global oil trade. “There are no issues with discussing how we settle our trade arrangements, whether it is in the US dollar, whether it is the euro, whether it is the Saudi riyal,” Al-Jadaan told Bloomberg TV. “I don’t think we are waving away or ruling out any discussion that will help improve the trade around the world,” the Saudi minister added. The Saudi riyal has been pegged to the U.S. dollar for decades, while the Saudi oil exports continue to support the petrodollar system from the 1970s in which the world’s top oil exporter prices its crude in U.S. dollars. However, Saudi Arabia is willing to deepen its strategic cooperation in oil trade with China, the world’s largest crude oil importer. Last month, China and Saudi Arabia agreed to expand crude oil trade as they upgraded their relations to a strategic partnership during the visit of Chinese President Xi Jinping in the Saudi capital Riyadh. Click here to read... [3]

Chinese newborns in 2022 expected to drop below 10 million with total population expected to shrink for the first time in decades: demographer

The figure of Chinese newborns in 2022 to be declared is expected to drop below 10 million, a record low since 1949, and the total Chinese population is expected to shrink for the first time in decades, a Chinese demographer said as the Chinese demographic figures are expected to be released next week. He Yafu, an independent demographer, said the number of newborns in 2022 is expected to further decline from 2021, and the number of deaths is expected to increase compared with 2021. The combined effects of which will lead to the negative growth of the Chinese population in 2022 for the first time in decades. He proposed a full liberalization on childbirth, warning that negative factors in demography will undermine the long-term growth potential of economy unless the government's policies to promote childbirth start to take effect, He told the Global Times on Jan 12. Considering the declining trend of newborns during the past few years and the newborns' figures released by local governments in the previous months of 2022, He predicted that the number of newborns in China fell by 5 to 10 percent from 2021, stood at a number between 10.09 million and 9.56 million. Meanwhile, He said the deaths of the Chinese population in 2022 may increase a bit more than the figure of 10.14 million in 2021, due to the further aging population. Click here to read... [4]

U.S. Nears Debt Ceiling, Begins Extraordinary Measures to Avoid Default

The Treasury Department began taking special measures to keep paying the government’s bills on Jan 19 as the U.S. bumped up against its borrowing limit, kicking off a potentially lengthy and difficult debate in Congress over raising the debt ceiling. With the federal government constrained by the roughly $31.4 trillion debt limit, the Treasury Department began deploying so-called extraordinary measures. Those accounting maneuvers, which include suspending investments for certain government accounts, will allow the Treasury to keep paying obligations to bondholders, Social Security recipients and others until at least early June, the department said last week. That gives lawmakers on Capitol Hill and the Biden administration roughly five months to pass legislation raising or suspending the debt limit. In a letter to congressional leaders on Thursday, Treasury Secretary Janet Yellen said there was “considerable uncertainty” about how long extraordinary measures can last. “I respectfully urge Congress to act promptly to protect the full faith and credit of the United States,” Ms. Yellen said. House Republicans are planning to use the debt ceiling, which will need to be raised in 2023, as leverage to get spending cuts. But Democrats are looking to act now in the lameduck session to prevent that. Click here to read... [5]

Top China, US economic officials in first face-to-face meeting in 2 years

China and the United States agreed to step up policy coordination to counter economic headwinds and climate change, after top economic officials of the world’s two largest economies held their first face-to-face meeting in more than two years in a bid to manage bilateral tensions. Chinese Vice-Premier Liu He on Jan 18 met US Treasury Secretary Janet Yellen in Zurich, Switzerland, with the US describing the conversations as “candid, substantive, and constructive”. The two discussed macroeconomic and financial developments, while Yellen raised issues of concern “in a frank exchange of views”, the US Treasury Department said in a statement. The two sides further agreed Yellen would visit China in the near future and that a reciprocal visit to the US would be arranged. Washington and Beijing have sought to put a floor under their troubled relationship following a summit in November between President Xi Jinping and President Joe Biden on the sidelines of the Group of 20 meeting in Indonesia. US Secretary of State Antony Blinken is expected to make his first trip to China in early February. “Both sides agreed it is important for the functioning of the global economy to further enhance communication around macroeconomic and financial issues,” the Treasury Department said in the statement. Click here to read... [6]

China GDP: ‘double-dip’ saw US economic gap widen last year after second-lowest growth since 1976

Beijing’s hardline zero-Covid strategy likely led to the economic gap with the United States widening last year after China’s economy grew at its second slowest pace in 46 years, according to analysts. The world’s second-largest economy grew by 2.9 per cent in the fourth quarter of last year, data released on Jan 17 showed, as China’s gross domestic product (GDP) for 2022 grew by 3 per cent to 121 trillion yuan (US$18 trillion). China’s full-year growth figure was only slightly better than the 2.2 per cent growth seen in 2020, which was the lowest since 1976, and fell short of the official “around 5.5 per cent” target. But the annual figure was still better than expected after a coronavirus-ravaged 2022, and comes after Beijing abruptly ended its zero-Covid strategy last month, raising hopes that China can resume its bid to end the US’ lengthy run as the world’s largest economy, which economists at Goldman Sachs said in December could occur by around 2035. “The double-dip last year led to a bigger economic gap with the US, rather than narrowing,” said Qiu Xiaohua, former head of the National Bureau of Statistics (NBS), after China’s economy grew by 6 per cent in 2019 and recovered from the 2020 decline by expanding by 8.4 per cent in 2021. Click here to read... [7]

China Focus: Chinese provinces set sanguine economic goals for 2023

Chinese provinces have set robust 2023 targets for major economic indicators from GDP to retail sales, setting an upbeat tone for the economic recovery from the COVID-19 shadows. The 2023 GDP growth targets range from 4 to 9.5 percent for China's provincial-level regions. More than half of them expect their GDP to grow by 6 percent or higher, according to government work reports delivered at the annual sessions of the local people's congresses. Hainan, a southern island province and a tourist hotspot, targeted the GDP growth at 9.5 percent, the highest among Chinese provincial regions, as it expects a strong revival of its tourism this year. Among the highest goals are also those by Tibet Autonomous Region and Xinjiang Uygur Autonomous Region, which have anticipated their GDP to grow at 8 percent and 7 percent, respectively, in 2023. Economic heavyweights such as Guangdong, Jiangsu, and Zhejiang mostly set GDP targets at 5-6 percent, as these provinces boast bigger economic sizes and are focusing more on improving quality, experts said. The southern manufacturing heartland Guangdong province, whose GDP accounts for about one-tenth of the country's total, set a GDP growth target of at least 5 percent for 2023. Shanghai, a financial hub in east China, expects to notch a year-on-year GDP growth of over 5.5 percent this year. Click here to read... [8]

Taiwan’s Asia Silicon Valley is plagued by delays and lukewarm interest, setting the project back years

The government’s National Development Council said in 2016, when the Asia Silicon Valley project was announced, that it planned to initially allocate US$358 million. The money was earmarked for internet infrastructure, mobile broadband services and industry-university collaboration. But by 2026, current-generation technology such as 5G infrastructure may evolve to the point where prospective tenants have little interest in Asia Silicon Valley sites, Tsai said. For Gogolook, a decade-old company that develops anti-fake and anti-scam software for social media apps, the Asia Silicon Valley endeavour would mean little to its business, according to CEO Jeff Kuo. “Most of our activities are in Taipei, and if we do remote work, then location isn’t that important,” he said. Taipei is a 30- to 45-minute drive away. He said that another programme started by the government, Taiwan Startup Stadium, helps burgeoning firms connect with partners from overseas – part of the intended purpose of Asia Silicon Valley. As Taiwan’s start-up environment “isn’t that good”, the government must offer unwavering support for Asia Silicon Valley to avoid more delays or over-complexity, said Brady Wang, a Taipei-based analyst with Counterpoint, a market research firm specialising in technology. Asia Silicon Valley is expected to help 200 start-ups “succeed” and command 5 per cent of the world’s internet-of-things production value, among a plethora of other metrics outlined in a November report by the Taiwan government’s National Science and Technology Council. Click here to read... [9]

Taliban build ties to U.S. rivals with new China oil deal

The Taliban-led administration in Afghanistan is pursuing new economic ties with countries like China and Russia in an effort to end its isolation from the rest of the world, starting by inking a 25-year oil extraction contract with a Chinese company. Announced in early January, this marks Afghanistan's first major international resource development deal since the Taliban took control in August 2021. Xinjiang Central Asia Petroleum and Gas (CAPEIC) is expected to invest $150 million in the country in the first year of the contract and $540 million over three years. The administration will initially have a 20% interest in the project, increasable to 75%. It expects the deal to create 3,000 new Afghan jobs. Afghanistan is believed to sit atop $1 trillion worth of natural resources, such as oil, gold and lithium. The U.S. and Europe imposed sanctions on Afghanistan following the Taliban takeover, essentially cutting off the foreign assistance that the country relied on so heavily. But China, Russia and Iran, which face their own issues with the U.S., have been making overtures to the Taliban-led government despite not formally recognizing it. Before the CAPEIC deal was announced, acting Afghan Industry and Commerce Minister Nooruddin Azizi told Reuters that China, Russia and Iran were interested in investing in Afghanistan. Projects under consideration include industrial parks and thermal power plants, as well as special economic zones built on land previously used for American military bases, he said. Click here to read... [10]

China relaxes 'red lines' on property sector borrowing in policy pivot

China will ease its "three red lines" policy restricting borrowing by property developers, a central bank official said Jan 13, as part of a plan to help the embattled industry. Zou Lan, head of the monetary policy department at the People's Bank of China, said the change will apply to 30 well-performing developers with a certain "systemic importance" in terms of scale, area of operations and other factors. The move adds to signs that China's leadership now favors economic stability over action on underlying problems, such as excessive debts. The three red lines had been meant to rein in credit to developers and tamp down real estate speculation. Zou did not reveal specifics of the new action plan designed to strengthen balance sheets. But the current cap on a borrower's debt-to-equity ratio are among the requirements expected to be relaxed. The action plan also includes 100 billion yuan of loans for rental housing, as well as a refinancing scheme for asset management companies designed to encourage mergers and acquisitions within the industry, the state-run Xinhua News Agency reported. China's top 30 developers sold about 5.2 trillion yuan ($775 billion) worth of housing in 2022, according to the China Index Academy -- around 40% of the nationwide total for January-November last year published by the government. Click here to read... [11]

China wraps up two-year tech crackdown, top official says

China's more than two-year clampdown on its sprawling internet sector is coming to an end, according to a top central bank official. The special campaign to rectify 14 internet platform companies' financial businesses is basically complete with few remaining issues to resolve, said Guo Shuqing, Chinese Communist Party secretary of the People's Bank of China (PBOC). Further supervision of the sector will be normalized, and support will be given to help platform companies play a bigger role in job creation and global competition, said Guo, who is also chairman of the China Banking and Insurance Regulatory Commission (CBIRC). The statement was the first signal from a top regulatory official that the government is winding down a massive clampdown that affected the country's biggest internet companies including Alibaba Group and Tencent Holdings. Beijing took aim at the country's most valuable companies starting in October 2020, warning that platform operators might abuse their power and undermine competition. The crackdown later engulfed everything from e-commerce to ride-hailing and online education. It led to the suspension of Ant Group's blockbuster initial public offering and the delisting of ride-hailing giant Didi Global from New York only five months after its debut. The tough regulatory posture along with rising economic headwinds spurred rounds of sell-offs of China tech stocks, wiping out as much as 70% of their market value in Hong Kong and the U.S. Click here to read... [12]

Japan paying families 5 million yen to leave Tokyo

The Japanese government has announced a fresh round of incentives for people to move out of the Tokyo region. From April 2023, families seeking a new life in greener pastures will receive 1 million yen (US$7, 756) per child. This represents an increase of 700,000 yen ($5,430) on previous such payments. Once the whole benefits package is included, the maximum amount a family will be able to receive is 5 million yen. 5 million yen might sound like a lot of money. However, this translates to $38,782, which will be quickly used up in relocating to a new home, job and community, and reduced incomes. The main purpose of the scheme is to contribute both to easing overcrowding in the Tokyo region and revitalizing more rural and remote areas of Japan with an injection of youth and entrepreneurialism. It is significant that this new scheme was announced in December, ahead of the New Year holidays when many urban dwellers return to their rural roots, and conversations inevitably turn to what the future holds. Even more significant is the fact that this is not the first time the government has launched such a scheme. In fact, successive Japanese administrations have tried – and largely failed – to stabilize rural prefectures’ populations and reduce urban overcrowding for 70 years. Click here to read... [13]

South Korea Bets Big On Nuclear Energy At The Expense Of Renewables

South Korea will rely more on nuclear power generation in its efforts to reach net zero by 2050, according to its latest plan, which envisages a lower share of renewable power generation in the electricity mix. South Korea will aim to have nuclear energy account for nearly one-third of its electricity generation capacity by 2030, while renewables are set to meet 21.6% of power demand, down from a previous forecast of just over 30%, per government documents released on Jan 12 and quoted by Bloomberg. In earlier plans, South Korea was targeting a 24% share of nuclear power generation capacity. Currently, 25 reactors provide about one-third of South Korea’s electricity from 23 GWe of plant, according to the World Nuclear Association. President Yoon Suk-yeol, elected in March 2022, scrapped his predecessor’s policy to phase out nuclear energy over some 45 years. The new president has set a target for nuclear to provide at least 30% of the country’s electricity in 2030. South Korea’s latest plan also calls for a lower share of LNG in the power generation mix as part of the country’s net-zero targets, as many countries have moved to bolster their energy security after the Russian invasion of Ukraine and the market turmoil that followed. Since the Russian invasion of Ukraine, many Western allies of the U.S. and the EU have stepped up efforts to ensure energy security and depend less on energy commodities. Many of those have chosen to rely more on nuclear energy. Click here to read... [14]

EU becomes world’s biggest LNG importer

Purchases of liquified natural gas (LNG) made by countries of the European Union in 2022 soared 58% versus the previous year, making the bloc the world’s number one importer of the fuel, FT reported Jan 09, citing data from Refinitiv. Last year, the EU’s imports of LNG amounted to 101 million tons, having outpaced purchases made by China, Japan and South Korea. EU imports of LNG equaled 137 billion cubic meters (bcm) of natural gas, which is just three bcm less than the volumes supplied by Russia in 2021. Last year, the import of Russian gas transferred by pipelines more than halved to 60 bcm. As a result, the bloc accounted for 24% of global LNG imports during the period, At the same time, the share of Japan and China totaled 17% and 15% respectively, while South Korea accounted for 11% of the world’s imports of LNG. LNG now makes up some 35% of EU’s total gas supplies, up from 20% recorded in 2022, according to think-tank Bruegel, which noted that the share of Russian gas was reduced from 40% to 15%. In 2021, Russian gas accounted for about 45% of EU’s imports and nearly 40% of the bloc’s total consumption. However, Russian gas supplies to the region have been on a steady decline since the launch of Moscow’s military operation in Ukraine and the subsequent wave of EU sanctions. Click here to read... [15]

Lebanon's middle class vanishes as economy collapses

Lebanon's capital Beirut has turned into a city of contrasts. Expensive cars park before popular restaurants and bars, while people of all ages rummage through bins for something edible. "Also, more and more people are begging in the streets, mainly children but also elderly people," Anna Fleischer, head of the German Heinrich Böll Foundation's office in Beirut, told DW. While it is hard to tell the nationality, "it can be assumed that there are many Syrian refugees, but also Lebanese," she added. Years of political instability in combination with an ongoing economic crisis — exacerbated by the COVID-19 pandemic and the Port of Beirut blast in August 2020 — have brought the country close to collapse. Lebanon ranks not only "among the most severe crises globally since the mid-19th century," according to the World Bank, but it is also likely that "an unprecedented institutional vacuum will further delay any agreement on crisis resolution and critical reform ratification, deepening the woes of the Lebanese people," the World Bank report says. Following years of massive economic contraction, in combination with a 95% devalution of its currency, the Lebanese middle class has practically vanished. In March 2020, the World Bank devalued Lebanon to a lower-middle income country. "A person that is earning 1,500,000 Lebanese pounds used to have an equivalent of $1,000 before the crisis, and now it is equivalent to less than $200," Hussein Cheaito, a development economist at The Policy Initiative, a Beirut-based research center, told DW. Click here to read... [16]

Strategic

More NATO members pushing for higher defense spending

One look at the map and Lithuania's difficult geopolitical situation is obvious. To the east, the Baltic country shares a 680-kilometer (423-mile) border with Belarus. To the southwest, it borders on the Russian exclave of Kaliningrad. "Being so close to Russia and Belarus, we have to be serious about defense," Zilvinas Tomkus, Lithuania's vice minister of defense, told DW. In 2023, the country's national defense budget will reach 2.52% of its gross domestic product (GDP), according to the government. But Tomkus said Lithuania is ready to spend even more on the modernization of its armed forces and military infrastructure. One of NATO's eight multinational battle groups is based on its territory. "For us, 2% is a bottom line, not a ceiling," Tomkus pointed out. Who is pushing for increased spending at NATO? Together with Poland and the UK, Lithuania is leading a push within the alliance to agree to higher spending goals. If NATO is serious about ensuring and enhancing its defense and deterrence posture, if it aims to defend every inch of its territory, "there is a need to increase defense spending," Tomkus said. Currently, NATO members are expected to reach the benchmark of spending at least 2% of their GDP on defense by 2024. That target was agreed at a 2014 summit in Wales, just after Russia annexed the Ukrainian Black Sea peninsula of Crimea. Click here to read... [17]

NATO hints at more heavy weapons for Ukraine

Kyiv can expect more deliveries of heavy weapons from Western countries soon, NATO said on Jan 15, as President Vladimir Putin praised his forces after their claimed capture of a Ukraine town. The death toll from Russian missile strike on a tower block in the eastern city of Dnipro rose again, this time to 30. People continued their search for survivors trapped under the rubble. NATO Secretary General Jens Stoltenberg said Ukraine could expect more heavy weapons following Kyiv's requests to its allies for the vehicles, artillery and missiles it says are key to defending itself. "The recent pledges for heavy warfare equipment are important - and I expect more in the near future," Stoltenberg told Germany's Handelsblatt daily, ahead of a meeting this week of a group that coordinates arms supplies to Kyiv. Days after Russia claimed to have taken Soledar in eastern Ukraine, a salt-mining outpost home to 10,000 before the conflict, Putin hailed it as a major success. "There is a positive dynamic, everything is developing according to plans," Putin said, in an interview broadcast Jan 15. "I hope that our fighters will please us more than once again." Russia's defence ministry announced this week that it had "completed the liberation" of Soledar. This could be a key gain as Russian forces push towards what has been their main target since October - the nearby transport crossroads of Bakhmut. Click here to read... [18]

Russia to make 'major changes' to armed forces from 2023 to 2026

Russia said on Jan 17 that it would make "major changes" to its armed forces from 2023 to 2026, promising to shake up its military structure after months of setbacks on the battlefield in Ukraine. In addition to administrative reforms, the Defence Ministry said it would strengthen the combat capabilities of its naval, aerospace and strategic missile forces. "Only by strengthening the key structural components of the Armed Forces is it possible to guarantee the military security of the state and protect new entities and critical facilities of the Russian Federation," Defence Minister Sergei Shoigu said. Kremlin spokesman Dmitry Peskov said the changes had been made necessary by the "proxy war" being conducted in Ukraine by the West, which has been sending increasingly heavy weaponry to Ukraine to help it resist Russian forces. The defence ministry, which has faced sharp domestic criticism for the ineffectiveness of its drive to take control of large tracts of Ukraine, vowed in December to boost its military personnel to 1.5 million. It has made numerous changes to its leadership in the 11 months of what it terms a "special military operation", in which its forces initially seized large areas of southern and eastern Ukraine but have since suffered a series of painful defeats and retreats. Last week, Shoigu appointed Army General Valery Gerasimov, the chief of the military general staff, to take charge of the Ukraine campaign. Click here to read... [19]

China faces growing threats from ‘external forces’, former spy chief warns

A former Chinese spy chief has warned that China is facing increasing threats from “external forces” that risk thrusting the country into food shortages and financial instability. In an article in Communist Party mouthpiece People’s Daily on Jan 17, Qiu Jin, a former deputy state security minister, said China should prepare for the potential escalation of “bullying by the hegemonies”, which aimed to exert “extreme pressure” on the country and push for zero-sum games. “The instability and uncertainty of the international situation have increased significantly, and the world has entered a new period of turmoil and change,” Qiu said in the article. “Malicious practices such as blackmail, containment and blockades … by external forces may escalate at any time. The global energy crisis, food crisis and financial turmoil may also … pose a threat to our country’s national security and social stability.” Qiu, 69, said China’s domestic challenges included “resolving contradictions among the people”, resulting from the country’s “deep-seated contradictions that cannot be avoided”. The commentary from the former spy chief came on the same day as an annual high-level meeting of the Central Political and Legal Affairs Commission, the party’s top security and law enforcement body, which is expected to lay out its priorities for the year ahead. Click here to read... [20]

Big Tech in CPPCC: Baidu’s Robin Li, NetEase’s Ding Lei no longer delegates of China’s top political advisory body

Several of China’s biggest names in technology have stepped down from their delegate roles in China’s top political advisory body, which announced its latest list of members on Jan 18. Robin Li Yanhong, co-founder and CEO of internet search and artificial intelligence giant Baidu; William Ding Lei, founder and CEO of China’s second-largest video gaming firm by revenue NetEase; and Wang Xiaochuan, founder of the country’s second-largest search engine Sogou, are not among the 2,172 delegates of the 14th Chinese People’s Political Consultative Conference (CPPCC). The CPPCC meets annually in Beijing in March to submit policy proposals and discuss topics regarding the nation’s most pressing political, economic and social issues. Along with the National People’s Congress (NPC) gathering, which takes place concurrently, the “two sessions” are considered the biggest event on the Chinese political calendar. CPPCC delegate candidates are nominated by legally recognised minor political parties, associations and industry leaders; reviewed by authorities designated by the Chinese Communist Party; and voted on by the CPPCC’s standing committee, according to the body’s website. Delegates are elected on five-year terms, and there is no age or term limit, according to the official rules. Li, 54, completes his two terms this year, while Ding, 51, and Wang, 44, will both wrap up their first term. Click here to read... [21]

Vietnam’s President Nguyen Xuan Phuc resigns as scandal engulfs top leaders

Vietnam’s President Nguyen Xuan Phuc resigned on Jan 17, state media reported, as an apparent corruption purge by the Communist leadership claimed its highest-level scalp, bringing into the public eye power plays at the top of the country’s usually cloistered politics. Phuc, 68, a former prime minister who held the largely ceremonial position for less than two years, is alleged to have been responsible for “violations, wrongdoing” by junior officials, Vietnam News Agency said in a statement, without providing further details. “Fully being aware of his responsibilities before the party and people, he submitted an application to resign from his assigned positions, quit his job and retire,” the Vietnam News Agency reported, citing the party’s powerful Central Committee. It was not immediately clear who would replace Phuc. His resignation came ahead of an extraordinary meeting by the National Assembly on Jan 18 seemingly called to sign off on his exit from office and rubber stamp a reshuffle by the Central Committee, which may see the promotion of several security officials. There had been widespread speculation over an imminent resignation by Phuc following the dismissals in early January of two deputy prime ministers, who were working under him when he led the government. Click here to read... [22]

Sri Lanka to downsize army to 135,000 next year

Sri Lanka will reduce the size of the army to 135,000 by 2024 from the current approved number of 200,783, a state minister said here on Jan 13. The number will be further reduced to 100,000 by 2030, State Minister of Defense Pramitha Bandara Tennakoon said in a press release. Tennakoon said that the strength of the military and sustainable economic development are two sides of a coin. He said that military spending indirectly stimulates and opens avenues for economic growth by way of assuring national and human security. The government has come up with a strategic blueprint to establish a technically and tactically sound and well-balanced defense force by the year 2030 to meet future security challenges on a par with the national security needs of the country, he said. Click here to read... [23]

Positive consensus reached at Expert Group Meeting on China-Bhutan Boundary Issues held in Kunming

China and Bhutan border expert groups held their 11th meeting in Chinese city of Kunming from Jan 10 to Jan 13, during which both sides agreed to implement all measures included in the Three-Step Roadmap for expediting boundary talks, and to keep contact through diplomatic channels on convening the 25th round of border talks. The Chinese delegation was led by H.E. Mr. Hong Liang, Director-General of the Department of Boundary and Ocean Affairs of the Ministry of Foreign Affairs of China. The Bhutanese delegation was led by Dasho Letho Tobdhen Tangbi, Secretary of the International Boundaries of Bhutan. The two sides, in a frank, cordial and constructive atmosphere, held an in-depth exchange of views on implementing the MOU on the Three-Step Roadmap for Expediting the China-Bhutan Boundary Negotiations, and reached positive consensus. The two sides agreed to simultaneously push forward the implementation of all the steps of the Three-Step Roadmap. The two sides also agreed to increase the frequency of the Expert Group Meetings and to keep contact through diplomatic channels on holding the 25th Round of China-Bhutan Boundary talks as soon as possible at mutually convenient dates. Last year, China and Bhutan signed a Memorandum of Understanding (MoU) on a Three-Step Roadmap to help speed up boundary talks. The MoU is of historic significance and is the result of years of joint efforts and sincere cooperation between the two sides. Click here to read... [24]

News Analysis: High consumption, past policies, U.S. sanctions lead to Iran's gas shortage

High domestic consumption, ineffective policies of the past and the U.S. sanctions are among the factors behind the recent gas shortage in Iran that led to nationwide closures over the previous days, according to Iranian analysts and media. Iran, which has the second-largest gas reserves in the world behind Russia, has experienced a gas shortage since the start of the winter. While most Iranian provinces had sub-zero temperatures, the Iranian government had to temporarily shut down factories, companies, as well as schools and colleges in a number of cities from Jan 14 to Jan 16 in order to keep people's homes warm. In an analysis piece, the news website Shahrara News wrote that gas consumption by the residential as well as trade and industrial sectors in Iran has surpassed 700 million cubic meters (mcm) per day this winter, indicating a 150-mcm increase year on year. It said the figure is 6.7 times higher than the global per capita and three times more than that of the entire consumption by the European Union states. According to the Iranian Oil Ministry, the country's current daily gas production stands at close to 1 billion cubic meters, of which only 850 mcm remain after the separation of gas condensate. Iran's daily gas consumption reaches between 650 mcm and 750 mcm during winter, leading to an imbalance of 200 mcm in the gas network, according to the analysis. Click here to read... [25]

Japan and U.K. sign landmark defense cooperation treaty

Japan and the U.K. have signed a landmark defense pact that allows forces from both countries to be deployed to the other for training, joint exercises and disaster relief activities. Prime Ministers Fumio Kishida and Rishi Sunak inked the Japan-U.K. Reciprocal Access Agreement on Jan 18 in London. The deal expands Japan's network of defense pacts and enables Britain to deepen military cooperation in the Indo-Pacific region against a backdrop of China's increasing assertiveness in the region. The treaty will be put before the parliaments of both countries. The agreement "cements" Britain's commitment to the region, Sunak said. "In this increasingly competitive world, it is more important than ever that democratic societies continue to stand shoulder to shoulder as we navigate the unprecedented global challenges of our time," he said. In a Japanese government readout, Kishida said the agreement will become "the foundation" for defense cooperation between the two countries. "Japan and the U.K. are partnering to take on the responsibility of addressing the strategic issues faced by the international community," Kishida said while meeting with Sunak. The two leaders held their bilateral meeting at the historic castle of the Tower of London. Sunak showed Kishida Japanese armor that was gifted to the British sovereign in 1613 by the shogun of Japan to mark the occasion of the first trade agreement between the two countries. Click here to read... [26]

Japan, U.S. extend security treaty into space to protect satellites

Japan and the U.S. affirmed that Washington will extend its security umbrella to its treaty ally into space, a move that would seek to protect Japanese satellites as China and Russia ramp up military activity in the arena. The foreign and defense ministers of the two countries issued a joint statement Jan 11 saying that Article 5 of their security treaty, which obligates the U.S. to defend Japan if it comes under attack, could be applied to space. "The ministers consider that attacks to, from or within space present a clear challenge to the security of the alliance, and affirmed such attacks, in certain circumstances, could lead to the invocation of Article 5 of the Japan-U.S. Security Treaty," the statement said. Military activity in space is rising. China and Russia have intensified efforts to obstruct the use of space by others, interfering with satellite communications and developing missiles and laser weapons to destroy satellites. Russia's invasion of Ukraine has shown how satellite communications are essential for launching missiles and operating drones, as well as locating troop positions on the battlefield. Japanese Foreign Minister Yoshimasa Hayashi and Defense Minister Yasukazu Hamada and U.S. counterparts Antony Blinken and Lloyd Austin attended the meeting in Washington -- the first so-called two-plus-two dialogue between the countries since January 2022, when it was held online. Click here to read... [27]

1st release of treated water from Fukushima to start soon

Japan will start releasing tons of treated radioactive water from the crippled Fukushima No. 1 nuclear power plant into the Pacific Ocean in spring or summer, the government confirmed on Jan. 13. The government announced the controversial plan in April 2021, saying the release would start in about two years. It has been opposed by fisheries in Fukushima Prefecture and neighboring countries. “Before releasing the water, the government will take steps to ensure safety and protect local communities from unfounded rumors,” said Chief Cabinet Secretary Hirokazu Matsuno. “We will listen to local communities and the fishing industry, and carefully explain that necessary measures are in place for them.” In August 2022, Tokyo Electric Power Co., the plant operator, started building an underwater tunnel to the sea and other facilities designed to discharge the water. TEPCO says the facilities should be ready by spring but bad weather and other disruptions could delay the start until summer. Click here to read... [28]

Tokyo, Seoul still at impasse over compensation of wartime labor

High-level diplomats from Japan and South Korea working to resolve one of the thorniest bilateral issues in decades are still feeling each other out over the latest proposed solution. Takehiro Funakoshi, director-general of the Foreign Ministry’s Asian and Oceanian Affairs Bureau, met on Jan. 16 with his South Korean counterpart, Seo Min-jeong, to discuss the issue of compensating Korean wartime laborers. But the two sides have so far failed to make any traction on the most recent idea floated by Seoul. Seo said South Korean officials laid out their proposal to settle the dispute at an open forum on Jan. 12 in Seoul. It involves setting up a foundation that would pay the Korean laborers in place of the defendant Japanese companies. The foundation would receive donations from companies in both South Korea and Japan. But when lawyers for the plaintiffs who sued Japanese companies and their clients for compensation voiced their views on the proposal, they were mostly negative. The plaintiffs want the Japanese companies to respond in a manner that is clearly apologetic, and they want a better picture of where the money will come from. Observers said Seo likely sought something at the Jan. 16 meeting that would show a sincere response, such as an apology and firm monetary contribution from the Japanese companies, to appease the South Korean plaintiffs. Click here to read... [29]

South Korean president travels to UAE, seeks arms sales

South Korean President Yoon Suk Yeol received an honor guard welcome Jan 15 on a trip to the United Arab Emirates as he hopes to expand his country's military sales here. Yoon's visit comes as South Korea conducts business deals worth billions of dollars and stations Special Forces troops to defend the UAE, an arrangement that drew criticism under his liberal predecessor. Now, however, it appears the conservative leader wants to double down on those military links even as tensions with neighboring Iran have already seen Tehran seize a South Korean oil tanker in 2021. “I think that the situation in the Middle East is changing very rapidly when it comes to geopolitics,” said June Park, a fellow with the International Strategy Forum at Schmidt Futures. “So Korea wants to make sure some of the strategic partnerships and the components ... with the UAE" remain strong. Yoon arrived at Qasr Al Watan palace in Abu Dhabi on Jan 15. He was greeted by Emirati leader Sheikh Mohammed bin Zayed Al Nahyan, who took office in May after serving as the country's de facto ruler for years. An honor guard of traditionally dressed Emiratis greeted Yoon and his wife, Kim Keon Hee. They twirled model Lee-Enfield rifles alongside troops on camelback and horseback. Inside, a military band played the South Korean and Emirati national anthems. Click here to read... [30]

Iraq prime minister al-Sudani backs continued US troop presence

Iraqi Prime Minister Mohammed Shia al-Sudani has defended the presence of United States troops in his country in an interview with the Wall Street Journal, his first since taking office in October. The position contradicts the stance of several Iran-aligned groups that in part make up the Shia-dominated Coordination Framework, the political bloc that nominated the prime minister last year. Al-Sudani was subsequently appointed by President Abdul Latif Rashid, whose election ended more than a year of political deadlock fuelled by scholar and political leader Muqtada al-Sadr. In the interview published on Jan 15, al-Sudani did not give a timeline for US and NATO forces – who are currently serving in a training capacity – to leave Iraq, despite calls from some political allies for a full withdrawal. “We think that we need the foreign forces,” al-Sudani said. “Elimination of ISIS needs some more time.” The US invaded Iraq in 2003 amid its global “war on terror”, with troop numbers reaching a peak of about 170,000 soldiers in 2007 before forces were withdrawn in 2011. They were redeployed to Iraq in 2014 in response to the rise of ISIL (ISIS), as the armed group overran a large swath of territory across Iraq and Syria. However, combat operations largely fizzled in the wake of ISIL’s territorial defeat in 2019. Two years later, Washington officially ended the US-led combat mission in Iraq and transitioned to an advisory role assisting Iraqi forces. Click here to read... [31]

Health

Nearly 60,000 COVID-19-related deaths reported in China in the past month; peak infection has passed: NHC

China announced the latest figures of epidemic-related deaths, as the National Health Commission (NHC) revealed on Jan 14 a total of 59,938 COVID-19-related deaths between December 8, 2022 and January 12 this year, explaining that China has insisted on classifying deaths of patients with a positive nucleic acid test as COVID-19-related deaths, which is in line with WHO and international standards. The number was revealed by Jiao Yahui, an official from the NHC. She said that the average age of those who died of COVID-19 in the period was 80.3 years old, with 90.1 percent of the fatalities above 65 years old, and 56.5 percent were aged above 80 years old; more than 90 percent suffered from underlying conditions. China has insisted on classifying deaths of patients with a positive nucleic acid test as COVID-19-related deaths, which is in line with the WHO and international standards, Jiao noted. The causes of COVID-19 deaths are twofold: coronavirus infection leading to respiratory failure and death, or underlying diseases interacting with the coronavirus leading to death, Jiao said. Among the reported 59,938 COVID-19 deaths, 5,503 were due to respiratory failure caused by the virus, and 54,435 were from underlying conditions interacting with epidemic infection, according to the NHC. Click here to read... [32]

Britain’s National Health Service Meltdown

The National Health Service’s winter crisis has become an annual tradition, but this year’s troubles for the free-at-point-of-service system are significantly worse. The NHS never recovered from the Covid pandemic. That means the normal winter wave of flu, Covid and other respiratory ailments is swamping hospitals and doctors’ offices already coping with a backlog of patients awaiting tests and treatments deferred by lockdowns. Meanwhile, unions representing nurses and ambulance drivers have gone on strike for days at a time to demand higher pay from their government employer. Perhaps sensing the political weakness of Prime Minister Rishi Sunak’s Conservative Party, the unions are resisting calls for work-rule changes to boost efficiency. They claim strikes don’t affect critical care, but work stoppages inevitably mean more treatment delays. The effects of all this on patient care can be lethal. Waiting times for ambulances for the most serious calls are getting longer, with the average response time reaching 10 minutes 57 seconds in December, compared to a target of seven. Once patients reach the emergency room, 35% now face waits above four hours between a decision to admit and transfer to an appropriate bed for treatment, the worst performance since 2010. Click here to read... [33]